Thermodynamics 2.0 Program: Sessions and Abstracts

Mon - Wed, June 22 - June 24 , 2020 , Massachusetts, USA

Session T20: Plenary III: Scientific Advances on Thermodynamics

8:30-10:30. Tuesday June 23, 2020

Chair: Cal Abel

Title: Why System Dynamics Must Supplant Equilibrium Modelling

Presenter:

  • Stephen Keen

(ISRS, University College London)

Bio-sketch

Distinguished Research Fellow at the Institute for Strategy, Resilience and Security at University College London (https://www.isrs.org.uk/). Crowdfunded via Patreon at https://www.patreon.com/ProfSteveKeen. Author of Debunking Economics (https://www.zedbooks.net/shop/book/debunking-economics/) and Can We Avoid Another Financial Crisis? (https://www.wiley.com/en-us/Can+We+Avoid+Another+Financial+Crisis%3F-p-9781509513727). Developer of the Open Source system dynamics program Minsky (https://sourceforge.net/projects/minsky/). Winner of the Revere Award (https://rwer.wordpress.com/2010/05/13/keen-roubini-and-baker-win-revere-award-for-economics-2/) from the Real World Economics Review (https://rwer.wordpress.com/) for being the economist “who first and most clearly anticipated and gave public warning of the Global Financial Collapse and whose work is most likely to prevent another GFC in the future.” Specialist in complex systems modelling in economics, especially of Hyman Minsky’s Financial Instability Hypothesis. Publications also on environmental economics, the role of energy in production, critiques of Neoclassical and Marxian economics, monetary dynamics, empirical data on causes of financial crises, and economic methodology (https://scholar.google.com/citations?user=hbcdga0AAAAJ&hl=en&oi=sra). Previously Professor of Economics at Kingston University London UK (2014-2018) and University of Western Sydney, Australia (2007-2013).

Author(s):

  • Stephen Keen

(ISRS, University College London)

images

Abstract:T20.W159

Abstract

Mainstream economics is still dominated by equilibrium methodology. William Nordhaus, the person most responsible for trashing the intellectual standing of system dynamics was awarded that discipline’s most prominent prize [1]. Yet economic policy today is dominated by real-world issues that defy its equilibrium, barter model of the economy. The need for system dynamics methods within economics has never been more pressing. I am working to bring this about via several interrelated research projects:

 

  • The development of Minsky [2], an Open Source system dynamics platform with the unique capacity to generate coupled ordinary differential equations describing financial flows using a system of interlocking double-entry bookkeeping tables that we call Godley Tables;
  • Developing a realistic foundation for an integrated approach to economics and ecology by incorporating the role of energy in economic models of production, springing from the insight that “labor without energy is a corpse; capital without energy is a sculpture”[ 3]; and
  • Critiquing the appallingly bad work on climate change and economics that Nordhaus and his associates developed in place of the Limits to Growth study.

 

Though Neoclassical economics developed to defend capitalism against Marx’s critique of it, today the main threat to the continued existence of capitalism is Neoclassical economics itself [4]. An alternative paradigm is desperately needed, and it will not come from within economics itself [5].

 

Keywords: system dynamics, neoclassical economics, Minsky, energy and economy