(Conversation Recorded on June 22, 2022.)
On this episode, we meet with Economist, Author, and Research Fellow at the Institute for Strategy, Resilience, and Security at University College in London, Steve Keen.
Keen discusses how mainstream economics misses the centrality of energy to our economy and to our futures, the naive treatment to the risks of money and debt creation, and the disconnect economic theory has to climate change risks.
About Steve Keen:
Steve Keen is an economist, author of Debunking Economics and The New Economics: A Manifesto, a Research Fellow at the Institute for Strategy, Resilience, and Security at University College in London.
Show Notes & Links to Learn More
03:30 – Frank Stilwell
03:50 – Theory of the Second Best
05:17 – Paul Samuelson and paper (1966)
07:30 – Neoclassical economics
07:40 – Alfred Marshall
09:45 – Basic assumptions of economics
09:30 – Contemporary macroeconomics is applied microeconomics
11:12 – We are deeply social creatures, and this isn’t accounted for in economics
11:40 – Theory of supply (rising marginal costs)
12:15 – In reality, supply has a falling marginal cost (pg 102)
12:35 – Alan Blinder + survey on marginal falling costs (pg 22) and vs his textbook
18:30 – Energy is not included as an input (factor of production)
18:44 – Computable general equilibrium models
19:02 – Rational Expectation Revolution
19:20 – Intertemporal equilibrium models
19:21 – Cobb-Douglas Function
19:24 – Constant elasticity of production function
20:26 – When energy is included it is to a very minimized extent
20:41 – Working paper by Rudy Backmann looking at energy fall implications in Germany
21:57 – Change in energy and change in GDP is 1:1 (or .99)
22:11 – Reiner Kümmel and paper factoring energy into CD Production Function
23:10 – CO2 at 420 ppm
23:48 – Energy consumption/output in roman slaves (pg 558)
24:44 – A barrel of oil is equivalent to 5 years of human labor (Section 4.3)
25:59 – Adam Smith
26:03 – Physiocrats
26:59 – Evolution of Labor Theory of Value
28:40 – Robert Solow
29:30 – The assumption is that technology is responsible for our massive growth
30:12 – Bob Ayres
31:10 – James Watt – Steam Engine
31:00 – Energy is the true driver of growth, not technology
32:10 – Many cheap processes and productions would break down without cheap energy
33:01 – Second Law of Thermodynamics
35:00 – William Nordhaus and work on climate (1991)
37:43 – Larry Summers
39:44 – Steve’s paper with Matheus Grasselli and Tim Garrett
40:54 – Limits to Growth
40:55 – Graham Turner and review on Limits to Growth
41:03 – Gaya Herrington
41:48 – Tipping Points
41:59 – 2 degree celsius tipping point
42:45 – Mainstream economics model of money creation is also insufficient
46:00 – Errors in Economics mathematics
46:21 – Nate Hagens Paper
47:22 – George Soros, Institute for New Economic Thinking
48:30 – Steve’s critique of the logic Marxist Labor Theory of Value
49:03 – Minsky Software, Hyman Minsky
49:25 – Systems Dynamics
49:41 – Veil of money over barter – David Andolfatto tweet
51:05 – 2% growth is expected every year forever
51:29 – Bank of England paper on banks creating money
51:54 – Interest is not created when money is created
52:40 – Mainstream economics loanable credit model
54:10 – Positive vs negative credit and its role in the recession
54:50 – Nate’s animated movie on The Great Simplification
55:20 – Japanese market and JGB’s
55:46 – Oil depletion
55:55 – How Russia and Ukraine war affects oil supplies
56:48 – EROI
56:57 – Simon Michaux + TGS Episode
58:20 – We need a 70-80% fall in consumption to be within planetary boundaries
*Note from Steve Keen – Arguing that humans alone are consuming 175% of the renewable capacity of the biosphere, cutting that back to leave headroom rather than overshoot implies a 50% fall in consumption–which would take us to 85% (roughly) of the planet being used by humans. To leave roughly 50% of the planet to other species implies another 50% cut. So a 75% fall in human consumption would about get us there.
58:45 – France and Germany turning back to coal
58:55 – Australia reopening up coal plants
59:17 – Nate prediction that world GDP will fall 30-50% in the decade
1:02:01 – UnTax
1:07:04 – Effects of studying economics on the brain/mindset
1:07:54 – Brisbon climate dangers
1:08:34 – California drought and resulting fires
1:09:09 – We are burning through fossil energies 10 million times faster than they were created
1:09:20 – Overshoot
1:10:53 – AMOC Climate dangers
1:14:42 – Food shortage risks
1:16:53 – *James Anderson (correction from Philip Anderson) on climate
1:18:07 – Richard Tol paper
1:22:05 – Raised by Wolves
1:23:20 – Stuart Kirk Speech
Teaser photo credit: Roman mosaic from Dougga, Tunisia (2nd century AD), featuring Roman slaves. By Pascal Radigue – Own work, CC BY 3.0, https://commons.wikimedia.org/w/index.php?curid=4966082. How many Roman slaves does it take to heat our homes?
