On Wednesday, November 28, 2001 5:02 AM Chen Yixiong, Eric
cyixiong@yahoo.com wrote:
> I figured that having someone to do some debunking
> for me would save me quite a lot of effort. Hope this
> helps. Bear in mind that I may not fully agree with
> what the website says.
>
> http://www.debunking-economics.com/
It looks like some much hand waving. If you accept Keen's
oversimplifications, then some of what he says follows. For instance, he
reduces markets to the models Neoclassical economists use. These models are
highly abstract and very unrealistic. The main criticism made of
Neoclassical economics by Austrian economists is that if their models really
were the way things are, then there would be no need for change,
entreprenuership, or any economic activity. Prices would match costs and
everything would be in equilibrium. Since no real world market is this way,
the thing to do is change the model -- not give up the market.
This is why he is so surprised, e.g., prices aren't set by firms seeking the
intersections of supply and demand curves. Well, the intersection is based
on a simplified model. At best, it can be a teaching tool, but since it's
very hard to figure out what exactly what the demand curve is, especially
what it is in equilibrium. Any market price is always a disequilibrium one.
Generally, a successful entrepreneur will find a price that enough people
are willing to pay which is above the costs enough to make the effort
worthwhile. (In other words, the goal should be to figure out _expected_
price _first_ -- what people are willing to pay -- then see if one can keep
costs under that price and, of course, afterwards, whether the expectation
was correct. Note: "expected" here means one can't really be sure. The
future is unknown.)
For more on this see "Macroeconomics for the Real World" at
http://uweb.superlink.net/neptune/Macro.html
and the books cited therein, especially Estaben Thomsen's _Prices and
Knowledge: A Market-Process Perspective_.
Anyhow, with immediate and obvious problems like the above, I don't want to
plunk down any money for his book right now.
Cheers!
Daniel Ust
http://uweb.superlink.net/neptune/
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