SASE 2011 Presentation: The Failure of Neoclassical Macro & the Monetary Circuit Theory Alternative

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This is the pre­sen­ta­tion I gave at the 2011 con­fer­ence of the Soci­ety for the Advance­ment of Socio-Eco­nom­ics (SASE) annu­al con­fer­ence in Madrid last week:

It com­bines four themes that will be promi­nent in my pub­lic talks from now on:

  • Neo­clas­si­cal econ­o­mists don’t under­stand neo­clas­si­cal eco­nom­ics;
  • Neo­clas­si­cal “rep­re­sen­ta­tive agent” macro­eco­nom­ics (both the so-called New Clas­si­cal and New Key­ne­sian vari­ants) vio­late fun­da­men­tal research by neo­clas­si­cal econ­o­mists into the foun­da­tions of neo­clas­si­cal the­o­ry;
  • The Cred­it Accel­er­a­tor explains the Great Depres­sion and the Great Reces­sion (here my argu­ments are sim­i­lar to those of Richard Koo, and the Cred­it Accel­er­a­tor is the same con­cept ini­tial­ly derived by Big­gs, May­er and Pick that they called the Cred­it Impulse); and
  • The “Mon­e­tary Cir­cuit The­o­ry” mod­el (my thanks to Mike Hon­ey­church for sug­gest­ing this name for my approach).

I had some soft­ware hassles–I changed the screen res­o­lu­tion after load­ing my screen cap­ture pro­gram, which caused it to crash!–so I had to “dub” the talk lat­er, and so there’s a bit of chat­ter about that at the start, and the sound lev­els are rather low. So my apolo­gies, but it’s all I had time for when also cop­ing with a brand new HP lap­top that has been hav­ing BSOD events so reg­u­lar­ly that I am now pin­ing for Mephistophe­les, my Dell lap­top that I left back in Syd­ney.

In the 30 min­utes I had, I only cov­ered about half the mate­r­i­al in the Pow­er­point slides; a sim­i­lar issue will apply when I present at the Cen­tral Bank of Argenti­na’s annu­al con­fer­ence on Thurs­day. Hope­ful­ly one day I’ll get the chance to present this talk over an hour or so, which would be need­ed to cov­er all the infor­ma­tion in it.

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About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.