Home > Uncategorized > Steve Keen vs. Nordhaus – regarding humankind’s greatest ever crisis

Steve Keen vs. Nordhaus – regarding humankind’s greatest ever crisis

from Edward Fullbrook

Steve Keen’s new paper “The appallingly bad neoclassical economics of climate change,” would benefit humankind if it were widely read by economists.¹  There are two ways you can obtain it:

  1. Go here at Taylor & Francis and pay £35
  2. Go here and download it for free.

Here is its conclusion:

Conclusion: drastically underestimating economic damages from global warming

Were climate change an effectively trivial area of public policy, then the appallingly bad work done by Neoclassical economists on climate change would not matter greatly. It could be treated, like the intentional Sokal hoax (Sokal, 2008), as merely a salutary tale about the foibles of the Academy.

But the impact of climate change upon the economy, human society, and the viability of the Earth’s biosphere in general, are matters of the greatest importance. That work this bad has been done, and been taken seriously, is therefore not merely an intellectual travesty like the Sokal hoax. If climate change does lead to the catastrophic outcomes that some scientists now openly contemplate (Kulp & Strauss, 2019; Lenton et al., 2019; Lynas, 2020; Moses, 2020; Raymond et al., 2020; Wang et al., 2019; Xu et al., 2020; Yumashev et al., 2019), then these Neoclassical economists will be complicit in causing the greatest crisis, not merely in the history of capitalism, but potentially in the history of life on Earth.

1. More than once Keen distances his usage of “climate change” from greenwash usage, as when he writes: “these Neoclassical economists are on a par with United States President, Donald Trump, in their appreciation of what climate change entails. . . . . They are equating the climate to the weather.”

  1. Nuno Cassola
    February 19, 2021 at 9:32 am

    Steve Keen has some unsuspected allies. Please read Bolton et al. (2020) “The green swan – central banking and financial stability in the age of climate change”, BIS, Banque de France, January, 2020. Downloadable in http://www.bis.org
    The report not only refers to Stev Keen’s work on climate change but also on energy. The report calls for an epistemological break in economics and argues convincingly in favor of complex systems dynamics analysis and a shift away from risk management (probabilistic world) in the direction of sustainabilty/resilience management (deep uncertainty world). Highly recommended reading.

  2. February 20, 2021 at 12:28 pm

    Yes, Nuno. I hadn’t expected a Bank of International Settlements to be one of them, for as Steve is quoted above, “these Neoclassical economists are on a par with United States President, Donald Trump, in their appreciation of what climate change entails”. It is likewise on the significance of Information Science https://rwer.wordpress.com/2021/02/18/information-take-two/#comment-178492) and the development of of PID remote control as the simplest example of “complex systems dynamics analysis”, [The development of Cartesian co-ordinates and a reliable clock simplified “cybernetics” (steering by knowledge of landmarks) into the mathematical science of navigation to anywhere on Earth, knowing just latitudes, longitudes and local time].

    That the Bank of International Settlements has been able to argue “convincingly” in favour of these is welcome news indeed. Their involvement at at that level reinforces my conclusion that a UN convention establishing as a human right the provision of everyone with a Credit Card with a generous but needing to be justified limit, is much to be preferred to banks creating loans at their discretion and governments offering “charity” in the form of context-insensitive and meagre Basic Incomes.

  3. Craig
    February 20, 2021 at 9:16 pm

    Keen of course is right that neo-classical economists and Trump are stupid so far as climate change is concerned but neither he nor anyone here apparently is able to visualize how the combination of a universal dividend and 50% discount/rebate policies at retail sale and the point of loan signing would be the solution to a balky and unstable economy, the way to politically motivate the general populace with the hope of stable financial security for their entire life AND ALSO enable the kind of fiscal mega projects necessary to survive climate change because by forever conquering inflation you are able to pour as much money into the economy as you so wish, specifically to accomplish just that.

    Why aren’t all of you astute economists and pundits bandwagon-ing on these policy solutions???? I don’t get it.

    • February 21, 2021 at 4:39 am

      Craig,

      have you read this post of mine? I have posed you a question there. Before preaching your solution (the combination of a universal dividend and 50% discount/rebate policies at retail sale and the point of loan signing), I believe you are required to prove that you “solution” is at least sustainable.

      • Craig
        February 21, 2021 at 5:22 pm

        Yoshi,

        The 50% discount reduces the price to the consumer at retail thus doubling his/her purchasing power and also doubling the potential margin for the retailer (and the entirety of the macro-economy’s) . The entirety of the discount is rebated back to the retailer by the monetary authority and thus the retailer is made whole on his overheads and profit margins. The policy utilizes the accounting convention that equal debits and credits sum to zero. That’s how it works. It makes the money system serve us instead of allowing it to dominate and manipulate every other business model and 95% of the general populace.

        As for sustainability, by resolving systemic monetary austerity and unemployment and individual monetary scarcity with the universal dividend, and price and asset inflation with the 50% discount/rebate policy it would free advanced economies to re-industrialize in the most efficient and ecologically sane way possible. It would also free us to directly fund the fiscal mega projects necessary to combat and survive climate change like under planeting and/or off planeting the most energy intensive means of production. The second 50% discount/rebate/debt jubilee policy at the point of loan signing for all big ticket and green items would enable a huge up swell of little or no greenhouse gas items like EV’s, solar panels, in house battery storage and retro fitting present infrastructure.

        Has anyone else here suggested more practicable and more sustainable policies than these? If not get on the bandwagon to get such policies implemented. The end IS near after all….unless we do so.

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