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It’s taken us a few years to tackle the obvious topic for the Debunking Economics podcast, what are the biggest failings of neoclassical economics. Prof Steve Keen tells Phil Dobbie that it starts on page one of rudimentary economics textbooks, which the idea of the demand curve.  Having debunked that, he moves on to the capital market line, used to determine investment decisions. Then it’s the models being used to determine the impact of climate change. Then the concept of diminishing marginal productivity. And finally, the process of simplifying assumptions. Having dismissed all the major tenants of economics Phil asks Steve if there any laws that apply to the ‘science’, in the same way that gravity applies to physics. Or is it all lost in the realm of unproven speculation?

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It’s one of the basic constructs of classical economics – the concept of the opportunity cost. Steve Keen admits it works at the individual level – you are listening to this podcast at the expense of doing something else, for example. But does the theory work when applied to broader economic thinking? No, says Steve – it’s a case of false equivalences, that renders it meaningless. Does that mean it’s useless as a tool for economists? And is there a way Phil Dobbie can use it as a way of getting out of mowing the lawn?

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In this FREE edition of the Debunking Economics Podcast Phil Dobbie and Steve Keen discuss business cycles. What causes them and how can we reduce their impact. As Steve explains, neo-classical economics teaches us that the turns in a cycle are caused by exogenous shocks when, in reality, it is the economies own internal cycle that is the root cause. Listen in to find out why business cycles really occur and what we can do to lessen their impact. Plus, Phil asks, why has the cycle stalled all of a sudden, and is it necessarily a bad thing?

To hear the full version subscribe by picking a plan in the right column of the Debunking Economics website (not the mobile app). Or become a patron at https://www.patreon.com/ProfSteveKeen

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Economists predict GDP growth by looking at business investment, government and consumer spending, plus the net level of exports. In the long term, of course, growth only comes from the products and services you sell and for that the Atlas of Economic Complexity, developed by Harvard University, is a powerful tool. It demonstrates how growth comes to countries with a highly complex mix of products for export – the less complex, the less the growth potential. As Prof Steve Keen says to Phil Dobbie in this week’s Debunking Economics podcast, it is the exact opposite of Ricardo’s argument of Comparative Advantage.

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Economists love the concept of externalities - factors that cost you or benefit you, for which you made no contribution, or for which you bare no blame. In this week’s podcast Phil Dobbie describe show his new neighbour said he hopes he does his house up, because gentrification benefits everyone in the street because everyone’s house goes up in value. He asks Steve Keen whether, if that’s the case, he should charge his neighbour for some of the work, given he will benefit financially. Increasingly it’s possible to find ways that people can pay for the external benefits you receive – but, the fact that you can, does that mean that you should?

To hear the full version subscribe by picking a plan in the right column of the Debunking Economics website (not the mobile app). Or become a patron at https://www.patreon.com/ProfSteveKeen

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