The Peter McCormack Show

#134 - Steve Keen - How Modern Economics Became Ideology

16 snips
Dec 9, 2025
Guest
Steve Keen
Steve Keen, a heterodox economist noted for his critique of mainstream economic theories, dives deep into the flaws of modern economics. He argues that real-world complexities are overlooked in favor of ideology, emphasizing how debt, banking, and housing crises play pivotal roles in economic instability. Keen dismantles the myth of equilibrium economics, analyzes the evolution of capitalism, and explains the true nature of money creation. His insights reveal the dangers of private debt and the pressing need for a reality-based economic model.
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INSIGHT

Economics Should Describe Reality Not Ideology

  • Economics describes how our social system functions but current economics largely fails that task.
  • Steve Keen argues ideology replaced empirical reality, so you can't reform what you don't understand.
ANECDOTE

WWII Lesson: Governments Create Money

  • Beardsley Ruml's 1946 paper argued taxes aren't needed to fund government spending in wartime.
  • Keen recounts how post-war economists then unlearned that lesson and revived myths about borrowing.
INSIGHT

Cost Of Production Often Sets Prices

  • Price formation divides schools: cost-of-production vs. utility-driven demand.
  • Keen aligns with post-Keynesian view that production costs largely set prices for manufactured goods.
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