Talk:Steve Keen

MR=MC etc

I added some elaboration to the part about MR=MC not maximizing firm's profits. It is somewhat "original research". However, no serious economist would bother with publishing results which debunk Keen's circular claim since it involves fairly elementary logic, hence no citation. Furthermore, all it takes to see it is just working through Keen's math as provided in his paper. And finally I'm pretty sure the relevant result that Keen calls "The Stigler Conjecture" is due to Cournot - but in a different context in which he shows that the equilibrium of his model involves lower aggregate profits than monopoly profit - but I don't have the reference handy. Hence the tag, while I look it up.radek 04:02, 19 November 2006 (UTC)

Ok, here's the issue with the whole Mr=Mc thing. If you work through Keen's "proof" (which is mathematically correct) then you see that what he's showing is that if every firm sets (its own) marginal revenue equal to (its own) marginal cost then INDUSTRY profits are not maximized. Instead if firms choose their quantities according to his rule, industry profits would be maximized, each firm getting a share that would be higher if it followed the mr=mc rule. But this ASSUMES that firms collude and act as a single monopolist, which Neoclassical theory DOES NOT ASSUME, so he's proving something totally different. So, while mathematically correct, the "proof" doesn't show what Keen claims it shows. This isn't subject to debate, it's there plainly to see in his paper for anyone who bothers to work through the math. In fact, this is a major problem with Keen who very often makes a particular claim, then goes on to prove something completely different and then says that he has just proved his original claim. In fact Keen's rule is not an equilibrium since at those quantity any one firm would have an incentive to produce more, and get higher profits at expanse of all the others. I don't know how to write this into the article without POV or OR. What are standard policies in the case where something is untrue (like say, creationism) but continues to be believed by some people? Can we say that it is subject of debate, or is leaving out the details POV itself?radek 03:02, 22 November 2006 (UTC)

The webpage usually is in Top 50 (as it was today => 49th). Keen's website says it hit top 6 in June 2006. So if it goes up again and stabilizes 'around' top 20 or so I'll put it back at Top 20. AlexIvanov2 21:00, 22 November 2006 (UTC)

I don't know, this "Top 20" thing just smacks of promotion and advertising which is not the purpose of an encyclopedia. If you go to, say, Paul Krugman's wikipage (or any other economists wikipage) you don't see anything about the Yahoo, Google, or Amazon ranks of his books. And anyway, if you were to put this in, shouldn't it rather be Google, widely recognized as a much more better search engine?radek 00:50, 23 November 2006 (UTC)

As Krugman is quite famous (coed of New York Times!) he don't need rankings-info on him to be published. But, since Keen and his critique are new it is neccessary to present the reader with the significance Keen (or his page) has. Also, it's TopFIFTY, not Top20 anymore. Radek, you've put forward a bunch of "explanations" why the paper is wrong. I don't see how they can possibly save neoclassical theory. Can you provide an actual disproof instead of just verbal rejoinders? AlexIvanov2 16:41, 23 November 2006 (UTC)

Alex, 1. I don't think the purpose of wikipedia is to serve as a promotion website for a commercial book. I don't see ANY other author's wikipages making reference to their Yahoo ranking. Also, even if it was to be included I don't see why it should be Yahoo rather than Google which is generally used as a standard (you haven't addressed this) and he's barely holding on in that top 50 - when I just checked he was 51. Are we supposed to be updating this as it fluctuates? Or should we just say top 100? This is more trouble than it's worth, and leaving it in there will be misleading.

2. Alright, I'm giving up because this isn't worth a revert war. My "explanations" however were correct and adequate. I never said Keen made a mathematical mistake - so there's nothing to "disprove". He just isn't proving what he claims he is proving. For example in his paper Keen writes that the Neoclassical/Marshallian model claims that "the market demand function has the dual properties that P'(Q)<0 and P'(qi)=0 for large n". He then goes on to prove, correctly, that since Q=sum_q_i this cannot be true. BUT THE MARSHALLIAN MODEL DOESN'T CLAIM THAT P'(qi)=0!!!!!!! It assumes that firms are price takers which is a different thing all together! See Straw_man

3. With respect to the mr=mc I think I explained adequately what's going on, but you feel the need to remove it. This again is another instance of Keen claiming that neoclassical theory says one thing, then proving something completely else (he does this with the DMS theorem as well). It's true that if each firm sets (its own) mr = (its own) mc then INDUSTRY profits are not maximized - if all firms could agree (i.e. collude) to restrict their output they would all make higher profits. INDUSTRY profits get maximized where Industry MR = Industry MC, this is all that Keen shows with his formula, but this has been known since Cournot. But if, as in standard neoclassical theory (actually this isn't even perfect competition but the Cournot model - again, Keen confuses/obfuscates things), you do NOT assume that firms can collude then at Keen's solution each individual firm has an incentive to expand its own input to increase profits. But when all firms do that market price falls and profits decline until you get to the "true" equilibrium where, guess what, each firm sets (its own) mr = (its own) mc.

4. Like I said I don't know about the journal he published it in. Obviously it is not an economic journal. It may be respected in other fields, but the fact that they published this means that they have no idea what economic theory is or what it says. Keen pulled a fast one on them it's as simple as that, whether delibratly or in good, ignorant, faith.

5. I'm thinking that as it is the article does not provide the reader with an honest version of the situation. There should be at least a POV tag.

---

I think Keen's critique of MR=MC / "Theory of the Firm" is confusing, not least because he makes so many contradictory arguments one after another, but then he's trying to "prove" that the elementary presentation in textbooks is (his word) "mendacious" or if not that, at least incoherent. He's not the only one who has made many of the arguments he invokes. If he had taken Paul Samuelson or some other actual textbook as an authoritative source for textbook "neoclassical theory" that would clarify things, too. I chose to edit out the wikilink to "theory of the firm" which Wikipedia article does not reference the issues addressed by Keen and replaced it with links to the "Monopoly" and "Perfect competition" articles which arguably do.

I don't see the back-and-forth with critics over whether something is "mathematically correct" is productive, as the foundational argument is about whether the economics as expressed mathematically is correct or incoherent, taken altogether. References to "collusion" for example imply that various forms of coordination in the choice of output by firms have been well-defined in the textbook or "Stigler" exposition, but they haven't been, as far as I know, and Keen is making that point part of his critique -- he proposes a "Keen equilibrium" which seems almost like parody.

My personal understanding of the economic theory involved is that realistically a profit-maximizing, strategically-aware firm is going to be rent-seeking and that in most even-half-way realistic circumstances, a rent-seeking firm will try price discrimination. A "monopolist" (and "most" firms are monopolists if the only criteria is the firm's perception of a download sloping demand curve for the firm's product) with economies of scale available that can price-discriminate will not constrain output, but just the opposite: will expand output beyond any counterfactual competitive one-price standard. Keen and Standish, which I added as a citation, does not take any of that up, but it is part of the background for economists who are not complete hacks. BruceW07 (talk) 03:41, 9 June 2022 (UTC)

Use of VisSim software

The following text was abbrevieated on the VisSim article (it was more about the person than the article topic). But some of it might be useful here.

Though VisSim was originally designed for use by electronics engineers, it can be used for any type of mathematical model. A good example is Steve Keen, who claims that too much debt is the cause of the current financial crisis and is the result of common errors in modern-day risk modeling. He bases his research on VisSim models that he has designed and made available via his website, most notably modeling Hyman Minsky's Financial Instability Hypothesis.

David Hollman (Talk) 16:41, 26 August 2010 (UTC)

References

Debunking Economics book reference

Having bought Prof. Keen's book "Debunking Economics" I would disagree with the statement that it is designed for the lay person. Apart from the Preface, I found the concept of Neoclassical Economics totally baffling, Keen's arguments and diagrams further beyond comprehension. The book reference NEEDS CHANGING or deleting. I work in manufacturing supplying goods to supermarkets, so have a very good understanding of basic economics (I work in IT!). I intend to edit the main page to reflect a more honest description. As Joe Average, I can say it would go over most people's head. If you understand economics (???) then this book will tell you nothing, if you don't, it's only use is as a fire lighter! Joe Average —Preceding unsigned comment added by 79.121.186.28 (talk) 15:44, 4 October 2010 (UTC)

I have removed the dishonest reference about the book being written for the "lay person" as it was clearly a misleading attempt to peddle it to unsuspecting "punters" - also, the sentence was not fitting as an encyclopaedic entry. This book could NEVER be described as being for the "lay person", by it's nature! Joe Average —Preceding unsigned comment added by 79.121.186.28 (talk) 07:44, 5 October 2010 (UTC)

It is targeted for the layperson. Whether it succeeds is a different question. Keen goes out of his way to avoid mathematical equations, for example. I would not be surprised, though, if many react to much in the book as if it is incomprehensible math. Anyways, Keen's book, from the viewpoint of academics economics, is quite introductory. (By the way, I'm in a list of 20 or so people in Keen's acknowledgements. 209.217.195.110 (talk) 06:23, 26 January 2011 (UTC)

Blackburn Rovers

Nice bit of humour there, but it has to be removed as it relates to Steve Kean ;) — Preceding unsigned comment added by 84.45.215.177 (talk) 20:07, 15 August 2012 (UTC)

Minsky model versus Minsky software

We have to be more careful with this. There are two separate items here and it is easy to confuse them. So easy that our articles have blithely gone ahead and done so. They're going to have to be fixed.

So let's get it right. The first item is the Minsky economic model which Minsky created in verbal form during the 1970s. Prof Keen first produced a mathematical version of that model in 1995 and has produced more versions in the intervening years using a variety of different software tools from Mathcad to Vissim. While funding may be necessary to extend the model, the 2013 Kickstarter project has not been raising money for that purpose. The purpose of the model it to explain why our economy goes through boom-bust cycles despite efforts to bring them under control.

The second item is the Minsky dynamic modelling tool. This is what the Kickstarter project is raising money for. While it is possible to use the Minsky tool to implement the Minsky model (and indeed Prof Keen has used it for exactly that purpose) the tool can also be used to implement other models since it is intended to be a general purpose dynamic modelling tool, similar to other dynamic tools on the market but with enhancements that make it particularly suited to economic modelling. The purpose of the tool is to make it easy for economists to develop non-equilibrium (dynamic) models of the economy rather than the equilibrium (static) ones which currently rule the roast.

So some editing required. -- Derek Ross | Talk 01:10, 4 March 2013 (UTC)

MR=MC again

Keen's work (as opposed to his popularization) has also focused on refuting the neoclassical theory of the firm, which argues that firms will set marginal revenue equal to marginal cost. Keen notes that empirical research finds real firms set price well above marginal cost

Prices>MC is consistent with MR=MC if firms have some market power. There is no inconsistency here nor refutation of "neoclassical theory of the firm". I'm also pretty sure the following sentence misrepresents Eitman and Guthrie.Volunteer Marek 13:27, 9 April 2013 (UTC)

Fine, but this article is about Keen, his views and his peers' reactions to them. The above quote accurately describes his view on the theory of the firm, whether that view is correct or incorrect, so it belongs in the article. -- Derek Ross | Talk 20:36, 9 April 2013 (UTC)

Except the way it is right now seems to purposefully confuse the reader, pulling a little switcheroo.Volunteer Marek 00:15, 10 April 2013 (UTC)

How do you suggest that it be reworded then? -- Derek Ross | Talk 15:34, 10 April 2013 (UTC)

I'd just drop the second sentence since it's a non-sequitur to the first.Volunteer Marek 15:43, 10 April 2013 (UTC)

A non-sequitur. How so? Sentence one says that theory states that "firms will set marginal revenue equal to marginal cost". Sentence two says that the evidence shows that they don't. So we can draw a conclusion from the two sentences. That conclusion being that "Either the theory or the evidence is wrong". If sentence two was a non-sequitur -- "Keen notes that chicken soup is tastier than mushroom soup", for instance -- we would be unable to draw any conclusion.

Perhaps the first sentence should be reworded, "Keen's work (as opposed to his popularization) has also focused on refuting the neoclassical theory of the firm, which argues that firms will set price so that marginal revenue equals marginal cost" and the second sentence should be reworded, "Keen notes that empirical research finds that real firms set price so that marginal revenue is well above marginal cost" to make it clearer. -- Derek Ross | Talk 22:27, 10 April 2013 (UTC)

A non-sequitur. How so? Sentence one says that theory states that "firms will set marginal revenue equal to marginal cost". Sentence two says that the evidence shows that they don't. - uhhh, no, that's exactly the non-sequitur. Sentence one says that theory states that firms will equate marginal revenue equal to marginal cost (true). Sentence two says that the evidence shows that they don't set price equal to marginal cost. Neoclassical theory says that except for the case of perfect competition price and marginal revenue are different. So we can draw a conclusion "either the theory or the presentation of the theory is wrong".

"Keen notes that empirical research finds that real firms set price so that marginal revenue is well above marginal cost" - I'm not sure if Keen says this. Maybe he does (which would be really silly, even for Keen, since empirical research doesn't say that at all). The empirical research quoted by Keen says that firms set price above marginal cost, period. That's different than "firms set price so that marginal revenue is well above marginal cost".Volunteer Marek 00:18, 11 April 2013 (UTC)

I think Marek is right. Was this discussion dropped? 170.70.20.39 (talk) 02:12, 23 January 2016 (UTC)

Yes. Marek was right in that final comment. Steve Keen has stated that firms use cost-plus pricing, not marginal pricing and has pointed out empirical research supporting this idea. -- Derek Ross | Talk 23:40, 30 October 2016 (UTC)

Misconduct charges

A correction to the comment on my recent edit: Steve Keen was 'charged' with misconduct, however no action seems to have been taken on it, so I don't think this is appropriate to have in the lead of the article. Either way, the lead previously said he "was charged with 'serious academic misconduct' and fired", implying he was 1: fired and 2: the reason behind it was misconduct - I've done a lot of searching, and no sources say either that he was fired, or that anything ever came from the misconduct accusations. Arfed (talk) 11:14, 27 July 2014 (UTC)

Alleged Mathematical flaws

I saw mathematical flaws mentioned but no details. Is there any discussion to that effect? Limit-theorem (talk) 14:54, 28 December 2014 (UTC)

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Current employment?

Does anyone know if Steve Keen is still employed by a university? I cannot find him listed at Kingston University. I can't find him listed as a fellow of the Centre for Policy Development.

In a presentation at BitBrum (19 November 2017), he said "I'm now leaving the university sector ... I'm going out on Patreon and being crowdfunded in future." (comments occur 10 minutes into the video).

--Jonathan O'Donnell (talk) 07:32, 22 May 2021 (UTC)