Steve Keen

Steve Keen (born 28 March 1953) is an Australian economist and author. He considers himself a post-Keynesian, criticising neoclassical economics as inconsistent, unscientific and empirically unsupported. The major influences on Keen's thinking about economics include John Maynard Keynes, Karl Marx, Hyman Minsky, Piero Sraffa, Augusto Graziani, Joseph Alois Schumpeter, Thorstein Veblen, and François Quesnay. Hyman Minsky's financial instability hypothesis forms the main basis of his major contribution to economics[1] which mainly concentrates on mathematical modelling and simulation of financial instability. He is a notable critic of the Australian property bubble, as he sees it.

Steve Keen
Steve Keen in 2013.png
Keen in 2013
Born (1953-03-28) 28 March 1953 (age 68)
School or
Post-Keynesian economics Ecological economics
InfluencesJohn Maynard Keynes
Hyman Minsky
Irving Fisher
Karl Marx
Basil Moore
Piero Sraffa
Augusto Graziani
Thorstein Veblen
Joseph Schumpeter
François Quesnay
Richard M. Goodwin
Nicholas Georgescu-Roegen
ContributionsMathematical models of financial crises and debt-deflation
Information at IDEAS / RePEc

Keen was formerly an associate professor of economics at University of Western Sydney, until he applied for voluntary redundancy in 2013, due to the closure of the economics program at the university.[2] In autumn 2014, he became a professor and Head of the School of Economics, History and Politics at Kingston University in London. He is also a fellow at the Centre for Policy Development. He has since taken retirement and is crowd source funded to undertake independent research as well as being a Distinguished Research Fellow at the Institute for Strategy Resilience & Security, University College of London.[3]

Early life and educationEdit

Keen was born in Sydney in 1953. His father was a bank manager. Keen graduated with a Bachelor of Arts in 1974 and a Bachelor of Laws in 1976, both from the University of Sydney. He then completed a Diploma of Education at the Sydney Teachers College in 1977.

In 1990, he completed a Master of Commerce in economics and economic history at the University of New South Wales. He completed his PhD in economics at the University of New South Wales in 1998.[citation needed]


Financial instability and debt deflationEdit

Most of Steve Keen's recent work focuses on modeling Hyman Minsky's financial instability hypothesis and Irving Fisher's debt deflation.[4][5] The hypothesis predicts that an overly large private debt to GDP ratio can cause deflation and depression. Here, the falling of the price level results in a continually rising real quantity of outstanding debt. Moreover, the continued deleveraging of outstanding debts increases the rate of deflation. Thus, debt and deflation act on and react to one another, resulting in a debt-deflation spiral. The outcome is a depression. Steve Keen argues that the current global economic crisis is the result of too much private debt.

Debunking EconomicsEdit

Keen's full-range critique of neoclassical economics is contained in his book Debunking Economics.[6] Keen presents a wide variety of critiques on neoclassical economic theory, and argues that they show neoclassical assumptions that are fundamentally flawed. Keen claims that several neoclassical assumptions are empirically unsupported (that is, they are unsupported by observable and repeatable phenomena) nor are they desirable for society at large (that is, they do not necessarily produce either efficiency or equity for the majority). He argues that economists' overall conclusions are very sensitive to small changes in these assumptions.

Keen has attempted to counter Karl Marx's theory (in his view Marx's pre-1857 view, specifically) from a post-Keynesian perspective, by arguing that machines can add more product-value over their operational lifetime than the total value of depreciation charged "during those asset lives". For example, the total value of sausages produced by a sausage machine over its useful life might be greater than the value of the machine. Depreciation, he implies, was the weak point in Marx's social accounting system all along. Keen argues that all factors of production can add new value to outputs. However he gives credit to Marx for contributing to the "financial instability hypothesis" of Hyman Minsky.[7][full citation needed]

Keen's book closes with a survey of various schools of heterodox economics, concluding "None of these is at present strong enough or complete enough to declare itself a contender for the title of 'the' economic theory of the 21st century." However, he argues that neoclassical economics is a degenerative research program, not generating new knowledge but growing a belt of protective auxiliary hypotheses to shield its core beliefs from critique. There is an accompanying web site which provides more detailed mathematical expositions.

Critique of neoclassical theory of the firmEdit

Keen's work 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: they charge a markup, often cost-plus pricing.[citation needed]

Keen's article on "profit maximisation, industry structure, and competition"[8] has had counter-arguments by Paul Anglin.[9] Chris Auld has additionally shown that Keen & Standish's argument is inconsistent with standard assumptions used in perfect competition, and their analysis uses calculus improperly.[10]


In August 2015, Keen endorsed Jeremy Corbyn's campaign in the Labour Party leadership election.[11]

Views on the UK's EU referendumEdit

Keen was in favour of the UK leaving the European Union, stating that mainstream economists were over-certain and exaggerating as regards the likely effects following the country's withdrawal. Keen regards the open-borders free-movement policy of the EU as precipitate and unsustainable in the absence of a common fiscal policy, all the more so given that migrants impose burdens on public services in destination countries also experiencing austerity. He also states that the Euro is destined to fail, not least because of the way it penalises recession-hit countries unable to pursue expansive fiscal policy, and indeed considers the whole EU project as a failed one destined for[12] collapse.[13]

Minsky software projectEdit

Recently, Keen commissioned the development of a software package called Minsky[14] for visually modelling national economies, in a way that is intended to be more accurate than mainstream macroeconomic models – which he contends do not properly include debt and banking. He envisages it being used for both educational and research purposes.

The first phase of the development was funded by an academic research grant, as is typical for academic research projects – but in February 2013 Keen launched a crowdfunding project on Kickstarter to allow members of the public to contribute towards taking MINSKY to the next level of development.[15] In the first 24 hours, this project raised approximately 15% of its funding target, and has since fully achieved its initial funding goal of $50,000.00.


Chris Auld claims that many of the arguments in Keen's "Debunking Economics" against modern economics are invalid. He asserts that Keen's critique of perfect competition is based on mathematical mistakes, and misconceptions of basic microeconomics theory. Regarding Keen's critique that modern economics does not consider dynamics, he claims that this is wrong, even in undergraduate textbooks. He also asserts what he claims are mathematical flaws of the model Keen proposes.[16]

Matthijs Krul[17] maintains that Keen, while broadly accurate in his criticism of the neoclassical synthesis, generally misrepresents Marx's views in Debunking Economics and in earlier work when asserting that, in the production of commodities, machinery produces more value than it costs.[18]

Austrian School economists Robert P. Murphy and Gene Callahan claim that Keen's 2001 book "suffers from many of the very faults of which he accuses the mainstream". They also claim that much of his work is "ideologically motivated even while criticising neoclassical economics for being ideological". They praise his critique of perfect competition and his chapter on dynamic vs. static models, whilst they criticise his attempts at objective value theory and what they claim is his misrepresentation of the Austrian School interpretation of Say's law.[19]

Other publicationsEdit

  • Keen, Steve (2017). Can We Avoid Another Financial Crisis? Polity. ISBN 9781509513734.
  • Keen, Steve (2015). Developing an economics for the post-crisis world. World Economics Association and College Publications. ISBN 9781848901865.
  • Lee, Frederic S. and Steve Keen (2004): "The Incoherent Emperor: A Heterodox Critique of Neoclassical Microeconomic Theory", Review of Social Economy, V. 62, Iss. 2: 169–199
  • Co-editor of: Commerce, Complexity and Evolution: Topics in Economics, Finance, Marketing, and Management: Proceedings of the Twelfth International Symposium in Economic Theory and Econometrics. New York: Cambridge University Press. ISBN 0-521-62030-9.
  • The Debunking Economics Podcast: with Phil Dobbie and Prof. Steve Keen (

See alsoEdit


  1. ^ Keen, Steve The Debtwatch Manifesto 2012
  2. ^
  3. ^ ISRS, UCL staff ]
  4. ^ The Roving Cavaliers of Credit
  5. ^ Steve Keen (1995): "Finance and economic breakdown: modelling Minsky’s Financial Instability Hypothesis", Journal of Post Keynesian Economics, Vol. 17, No. 4, 607–635
  6. ^ Debunking Economics: The Naked Emperor of the Social Sciences (2001, Pluto Press Australia) ISBN 1-86403-070-4
  7. ^ Keen, Steve The Debtwatch Manifesto 2012
  8. ^ Steve Keen & Russel Standish (2006):"Profit Maximization, Industry Structure, and Competition: A critique of neoclassical theory" Archived 2 November 2006 at the Wayback Machine, Physica A 370: 81–85
  9. ^ Paul Anglin (2008): On the proper behavior of atoms: A comment on a critique Physica A 387: 277–280
  10. ^ Chris Auld (2012): Steve Keen still butchering basic microeconomics
  11. ^ "The Labour party stands at a crossroads". The Guardian. 14 August 2015. Retrieved 15 July 2017.
  12. ^ Unia to tonący statek/Rzeczpospolita/2016/09/29
  13. ^
  14. ^ "Minsky". IDEA Economics: Institute for Dynamic Economic Analysis. Retrieved 21 November 2019.
  15. ^ Steve Keen (2013). "Kickstarter project". Retrieved 10 February 2013.
  16. ^ Chris Auld (2002): Debunking "Debunking Economics"
  17. ^ Steve Keen’s Critique of Marx’s Theory of Value: A Rejoinder
  18. ^ Keen, S., "Use-value, Exchange-value, and the Demise of Marx's Labor Theory of Value", Journal of the History of Economic Theory, 15 (Spring 1993).
  19. ^ Review of Austrian Economics 2003 –

External linksEdit