Debunking Economics: An Interview with Steve Keen – Part II

Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland


Part I of the interview can be found here.

PP: Let’s move on to another interesting point about neoclassical economic theory. It’s my understanding that the whole system is assumed to be, at its very essence, one of ‘truck and barter’. In that I mean that they tend to ignore the fact that capitalist economies are, in reality, monetary economies and have nothing to do with barter-based economies. Yet, am I correct in saying that the neoclassicals abstract away from this in order to get away from all sorts of things that make their type of analysis more difficult? I’m thinking in particular of where profits come from and the role of credit in the capitalist system of production. Could you talk about this a little?

SK: That’s actually a strange point of the theory. There was no need to assume the non-existence of money in building a model of capitalism – fundamentally, it makes as much sense as assuming the non-existence of wings when building a model of flight. But this was an established aspect of pre-neoclassical economics long before Walras came on the scene.