Minsky!

I have long admired Steve Keen, the contrarian Australian economist who wrote Debunking Economics.

Every leftist and contrarian knows intuitively that capitalist Economics is propaganda dressed up with mathematics.

But what about, actually deconstructing and debunking capitalist Economics in its own terms?  That's what Steve Keen does in Debunking Economics.

In some sense, that's also what Karl Marx did with the essentially "intuitive" Economics of the mid 1800's, along with creating a whole new edifice of "Marxist Economics" in his three volume magnum opus Capital.

Capital has many profound insights, ignored by capitalist "economists" and other propagandists, and fellow Communists want me to learn more about it (now that I'm retired and have more free time).

I think Capital is worth reading, and many of the better contemporary economists (including Keen and Piketty) are not apologetic for having done so.

But it's also very tough reading, and somewhat dated.  Marx is now more valued generally for his essentially political insights, not his economic machinery.  There aren't many Marxist Economists and one can imagine it would be hard to get an endowed Economics Chair with such a specialty in the west.  The closest and best I know of is Richard Wolff who considers himself a Marxian economist.  And I should follow Wolff more indeed, he has many fine videos in a category of political economics.

Personally, however, I have long been interested in Keynes who was a radical of his time, who was mainly concerned with human issues like unemployment, as well as all economists whose primary interest is inequality and sustainability.  These are the good Economists in my opinion, and it's a notable slice of the profession, including Brad Delong and indeed Paul Krugman.  Paul Krugman may use garbage ISLM models, but he knows how to use them so well, he actually gets a few things right from time to time.

Actually, ISLM, being sort of quasi-Keynesian in my view, has some intrinsic validity, even though it compounds it with market-equilibrium-crap.  The problem with basic world models on Smith's market intuition is that every market is only a 1 dimensional fragment of a 4 dimensional world.  Generally speaking, in any market transaction, the universe outside the transaction is far larger than the world within.  The market intuition therefore suffers from hyperselectivity in the extreme.  Markets are social constructs which define an inside and an outside by essentially social rules...rules that tend to reinforce pre-existing power, making the rich richer at the expense of everyone else and so on.  It is market-modeling that is fundamentally incompatible with world modeling, not world modeling that somehow needs microfoundations based on market-modeling, unless your primary goal is to make the rich richer at everyone else's expense ad infinitum.  Market-modeling starts by assuming what it proports to prove...that markets find the optimal solution.  What markets actually do, is provide the best deal (in limited short term sense) the rich can get.  Thankfully, market processes are actually a tiny sliver of what actually goes on in the world of which human biosphere is itself a tiny part and human economy  a still tinier part, or they tyranny and idiocy would be even greater.


 Keynes's own economics was not based on Equilibrium it was based on Circular Flows  and Uncertainty.  However, John Hicks applied Keynes-like ideas to equilibrium modeling, and that's what American "Keynesian" (properly called Hicksian) ISLM economics is.  Now, the radicals of our time include the Marxians, Post-Keynesian, and some others.  Keynes' view of circular flows in the economy was an early form of System Dynamics thinking.  Now we can realize such visions more completely...though it's still a work in progress.

Capitalist economics itself is very different from what was performed in the mid 1800's.  It's all mathematical now, based on physics statistical-gas-law equations rejiggered for use in economic modeling by Walras, Jevons, and others around 1900.  Strangely I never heard about Walras and Jevons when I took Econ 101 in College (in which, I might add, I got an A).   They are now further dressed up into the modern packages of ISLM (praised by Hicksian-Keynesians like Paul Krugman who intuits ISLM better than anyone), DSGE (used by modern bankers like Ben Bernanke), and RBC (used by Chicago-school economists).   These are all built on the concept of Equilibrium, and when Economists use that word they actually mean optimality, as in the notion that markets automagically deliver us to the best of all possible worlds, except for certain minor issues that can either be calculated or hand-waved away .  This is ultimately based on a few intuitive ideas (and ignoring others) from Adam Smith about how an individual marketplace could reach such an optimum point for buyers and sellers, but aggregated and extrapolated and stretched to entire economies and how they change over time.

Like Marx (who Keen mentions in Debunking Economics as having figured out the essence of capitalism better than capitalist Economists) Keen has his own alternative Economics, this time countering the nonsensical mathematical models of mainstream economics with models based on the modern intuitively valid concepts of system dynamics.

Keen's modeling program is called Minsky, named after one of his favorite predecessors.  Minsky eschewed equilibrium modeling and followed more in the footsteps of Keynes himself than Hicks did.

I am proud to have now downloaded Minsky and run one of Keen's latest models.  It's cool!  Over time, in this model economy, we see business cycles and we see rising private debt and slowing growth, just like real capitalist economies.

I'm quite fond of the ideas behind and often generated by systems dynamics modeling, such as the Limits to Growth school and tendency.  I've always wanted to run Limits to Growth models on my very own.  And now it may not be far (in time) away.  It looks like the same or similar World models can be run on several low cost modeling programs.

One popular system dynamics modeler available now is Numerous, which has a $0 starter package I'm downloading today.  Numeris is an update, they say, to Nova, an early free software system dynamics modeler.  (I'm still looking for Nova.)

Ah, but for really really free, you can't beat Insight Maker.  It's fully open source Javascript ECMA Script (though relying on some other packages, as they all do).  Because it's ECMA Script, it runs in browsers.  It does System Dynamics, Agent Based Modeling, and other things.

Insight Maker users are posting new models daily!  There's a whole page devoted to Limits to Growth inspired modeling.

WOW!!!

If I were anything but the lazy bum I am...  Here I am, and the edge of The Collapse of Modern Human Society and I can run system dynamics models like, even far better than, many of my favorite well known sages.  What am I waiting for???