Preface

I closed The New Economics: A Manifesto (Keen 2021) with an observation on the following remark by John Blatt in his brilliant book Dynamic Economic Systems (Blatt 1983):

At present, the state of our dynamic economics is more akin to a crawl than to a walk, to say nothing of a run. Indeed, some may think that capitalism as a social system may disappear before its dynamics are understood by economists . (Blatt 1983, pp. 4–5, emphasis added)

I noted that, when I first read this in 1991, “I thought it was a good piece of hyperbole. I now regard it as a depressingly prescient prediction”, because:

Given the role that Neoclassical economists have played in humanity making only trivial responses to the challenge of climate change to date, the social system that gets us through that challenge—if we do get through it—will be far more a command than a market economy. (Keen 2021, p. 204)

There is therefore a bitter irony in me releasing a modelling tool, and book on dynamic modelling in economics that I hope would meet Blatt’s standards, right at the time that I expect his bleak— though at the time whimsical— prediction to start coming true. The forces humanity has unleashed, by ignoring the damage its production systems have done to the biosphere, will transform that biosphere into something almost certainly inimical to the survival of those production systems, and certainly inimical to their management by the disaggregated market system that is the hallmark of capitalism. Instead, if human civilization survives, it will be because of a centralized, coordinated command system, whose only antecedent is the War Economy of WWII.

The ”Globalist” economy many conspiracy theory nutters fear could come about, but not as the result of a well-thought-out conspiracy coordinated by the World Economic Forum, etc., but as a last-ditch attempt to construct a survival mechanism in the wake of the ecological collapse of industrial capitalism, a collapse brought about in large measure by following the advice of people who are feted by organizations like the WEF.

What then is the point of show how to do dynamic modelling of a monetary production economy properly, when I expect that system to fail sometime in the next two decades, and probably sooner rather than later?

I see two immediate reasons. One is that, having failed to use systems thinking as the ecological crisis unfolded, we are going to need the capacity to think in a systemic way to manage our attempts to cope with the crisis. The second is that, unless an alternative paradigm develops in economics, the old ways of thought—the Neoclassical ways—will keep disturbing our thinking, even as we attempt to cope with the myriad crises which that way of thinking caused.

Minsky is far from complete: there are many ways in which I would extend the program, had I the funding to support it. But as it stands, it is capable of doing far more sophisticated modelling than is the norm in economics, and of supporting a way of thinking about the economy and the planet’s ecology that could have prevented us experiencing this crisis in the first place. I hope that this book will enable you to use not just Minsky , but also the integrated, systems way of thinking about the economy that should always have been the foundation of economics.

Preface

This manual is also incomplete: it lacks a chapter on fitting models to data, but with The New Economics: A Manifesto now published in the USA as well as the UK, I need to have this manual available immediately for those who wish to learn how to model in Minsky .

I will periodically post updates of this book to https://www.patreon.com/ProfSteveKeen and http://www.profstevekeen.com/minsky/

Preface