According to the provided content, a century of research has undermined the core components of Marshall’s supply-and-demand picture. Key elements shown to be false( are: The upward-sloping market supply curve rising marginal cost). Textbook reliance on rising marginal cost as the foundation for an upward-sloping supply curve is contradicted by empirical studies showing many firms face constant or falling marginal costs as output rises. , The downward-sloping market demand curve (“the law of demand”). Mathematical results (Sonnenschein–Mantel–Debreu and related work) show that even if individual demand curves are well behaved, an aggregated market demand curve need not obey Marshall’s law and can take almost any shape. , The assumption that individuals behave exactly as utility‑maximizers (revealed‑preference axioms). Experimental evidence finds widespread violations of the axioms used to derive individual downward‑sloping demand, undermining the microfoundations of the diagram. The idea that independent supply and demand schedules neatly marry objective production costs to subjective utility in a stable, welfare‑maximizing equilibrium. Modern results and critiques show that aggregating individual behaviour into a single market‑level welfare‑maximizing equilibrium requires unrealistic restrictions (including effectively assuming a highly interventionist redistributor), and that real economies are rarely—in practice—at such equilibria. , The underlying diminishing marginal productivity story used to justify rising marginal costs. Both logical critiques (e.g., Sraffa) and empirical work (Hall & Hitch, Means, Andrews, etc.) argue diminishing marginal productivity and the implied cost structure are poor descriptions of real firms. , The sources summarize this diagnosis bluntly: the conventional Marshallian meme—independent, well‑behaved supply and demand schedules meeting at a socially optimal equilibrium—has been shown false in its individual pieces by decades of Here are the most important key points from the provided text: A century of research has significantly undermined the core components of Marshall's traditional supply-and-demand model. The conventional idea of independent, well-behaved supply and demand schedules meeting at a socially optimal equilibrium has been shown false in its individual pieces by decades of research. The assumption of an upward-sloping market supply curve based on rising marginal costs is largely contradicted by empirical evidence. Many firms, in reality, experience constant or even falling marginal costs as their output increases, directly challenging the textbook foundation for this curve. The underlying concept of diminishing marginal productivity, used to justify rising marginal costs, is also critiqued as an inaccurate description of real firms. Both logical arguments and empirical studies suggest that this story does not accurately reflect the cost structure of actual businesses. The "law of demand," which posits a downward-sloping market demand curve, is not universally valid at the aggregate level. Mathematical findings (like Sonnenschein–Mantel–Debreu results) demonstrate that even if individual demand curves behave as expected, the aggregated market demand curve does not necessarily follow Marshall's law and can exhibit almost any shape. The microfoundations of the demand curve, based on individuals acting as perfect utility-maximizers, are undermined by experimental evidence. Studies reveal widespread violations of the revealed-preference axioms, which are crucial for deriving individual downward-sloping demand curves. The idea of supply and demand schedules neatly combining objective production costs with subjective utility into a stable, welfare-maximizing equilibrium is considered unrealistic. Modern research indicates that achieving a market-level welfare-maximizing equilibrium through the aggregation of individual behaviors requires highly unrealistic restrictions, such as the assumption of a highly interventionist redistributor, and such equilibria are rarely observed in practice. Unknown Title Here's a breakdown of the content into well-defined chapters and sections: The New Economics: A Sampler - Dr. Steve Keen Chapter 1: Introduction: The Crisis in Neoclassical Economics 1.1 Critical Acclaim for Dr. Steve Keen Summary: Presents testimonials highlighting Dr. Steve Keen's significant contributions to economics, his rigorous critique of orthodox theories, and his relevance in addressing contemporary challenges like climate change . Key terms: Rebel Economist , Debunking Economics Review , orthodox economics , mainstream economists . 1.2 Why a New Economics is Needed: Debunking Marshall's Meme Summary: Explores the foundational " supply and demand diagram " of mainstream, or " Neoclassical ," economics, introduced by Alfred Marshall . It details how decades of economic research have systematically undermined its core assumptions, revealing it as a flawed basis for understanding economic reality. Key terms: Neoclassical economics , supply and demand diagram , Alfred Marshall , Principles of Economics , equilibrium , social welfare . 1.2.1 The Flawed Assumption of Rising Marginal Cost Explanation: Neoclassical theory assumes that marginal cost rises with output, forming the basis of the upward-sloping supply curve. Empirical evidence, however, demonstrates that the vast majority of firms experience constant or falling marginal costs , directly contradicting this fundamental assumption. Key terms: marginal cost , upward-sloping supply curve , marginal productivity . Data point: "only 11 percent of GDP is produced under conditions of rising marginal cost. Almost half is produced under constant MC … But that leaves a stunning 40 percent of GDP in firms that report declining MC functions." (Blinder 1998, pp. 101-102) 1.2.2 The Problem with Utility Maximization and Individual Demand Explanation: The concept of a downward-sloping individual demand curve is derived from Samuelson’s " axioms of revealed preference ," intended to provide a scientific foundation for utility maximization . Yet, experimental tests show that most subjects violate these axioms, indicating that real consumer behavior does not align with the theoretical " rational consumer " model. Key terms: law of demand , utility-maximizing individuals , axioms of revealed preference , utility maximization . 1.2.3 The Aggregation Problem of Market Demand Explanation: Even if individual demand curves were "well-behaved," mathematical economists proved that aggregating these into a market demand curve does not necessarily result in the expected downward slope; it can take "any shape at all" that could be fitted by a polynomial, further undermining Marshall's " law of demand ." Key terms: market demand function , consumer demand function , utility hypothesis . Chapter 2: The Persistence of a Flawed Paradigm Summary: This chapter explains why Neoclassical economics continues to dominate despite its foundational flaws, attributing its persistence to a lack of awareness among practitioners, illogical rationalizations, the transient nature of economic crises, and its ideological appeal as a "nirvana" model of capitalism. 2.1 The "Why Wasn't I Told?" Phenomenon Explanation: A primary reason for the persistence of flawed economic theories is the lack of awareness among textbook authors and students about the deep-seated anomalies. Textbooks perpetuate the belief that " The Market is God ," ignoring the underlying theoretical contradictions. Key terms: paradigm , Thomas Kuhn , Debunking Economics , The Market is God . 2.2 Irrational Rationalizations by Neoclassical Theorists Explanation: Advanced Neoclassical economists, upon discovering anomalies (e.g., the inability to aggregate individual demand curves), often resort to " seriously crazy rationalizations " to maintain their theoretical framework, such as assuming a " benevolent central authority " that redistributes income to maximize social welfare. Key terms: Gorman's condition , Samuelson's rationalization , benevolent central authority . 2.3 The Transient Nature of Economic Anomalies Explanation: Unlike permanent empirical anomalies in physical sciences (e.g., Michelson-Morley experiment), economic anomalies (like the Great Depression ) are often transient and can be ignored or forgotten by new generations of economists, preventing genuine scientific revolutions . Key terms: scientific revolution , empirical anomalies , Michelson-Morley experiment , Great Depression . 2.4 Capitalism as Nirvana: The Ideological Appeal Explanation: Neoclassical economics models capitalism as a perfect society or " nirvana ," where power is unnecessary and problems are solved by anonymous markets. This ideological vision appeals deeply to human desires for utopia and leads economists to ignore contradictory evidence. Key terms: nirvana , meritocracy , marginal productivity , equilibrium , value-free science , rational expectations . 2.4.1 Forgetting the Great Depression Explanation: Despite the profound impact of the Great Depression, which led economists like Irving Fisher to abandon Neoclassical thought, the mainstream largely forgot this anomaly, instead developing models that assumed well-functioning markets and agents with " rational expectations ." Key terms: Irving Fisher , Debt Deflation Theory of Great Depressions , Financial Instability Hypothesis , Robert Lucas . 2.4.2 The Illusion of Perfect Foresight and DSGE Models Explanation: Modern Neoclassical macroeconomics, particularly Dynamic Stochastic General Equilibrium (DSGE) models , assumes "rational agents" with perfect foresight , which implies that active economic policy is impossible. This theoretical framework famously failed to anticipate the Global Financial Crisis . Key terms: Global Financial Crisis , exogenous shocks , Dynamic Stochastic General Equilibrium (DSGE) models , rational expectations macroeconomics , perfect foresight . Chapter 3: The Emergence of Rival Schools of Thought Summary: This chapter details how, in the absence of a scientific revolution, economics has fragmented into diverse schools of thought. It highlights key figures and movements that broke away from the Neoclassical paradigm, offering alternative understandings of economic systems. 3.1 Fragmentation Instead of Revolution Explanation: Instead of a unified scientific revolution , economics experiences fragmentation , where minority schools of thought emerge as individual economists break away from the dominant Neoclassical paradigm due to its inability to explain real-world anomalies. Key terms: scientific revolution , dominant paradigm , school of thought . 3.2 Key Breakaways and Influences Explanation: Figures like Irving Fisher (with his rejection of equilibrium and Debt-Deflation Theory ) and the empirical work of Sraffa , Hall, Hitch, Andrews, and Means (challenging diminishing marginal productivity ) formed early foundations for alternative economic theories. Key terms: Irving Fisher , equilibrium , diminishing marginal productivity , Piero Sraffa . 3.3 Post-Keynesian Economics and MMT Explanation: Inspired by Keynes's focus on uncertainty rather than equilibrium, Post-Keynesian Economics developed as a significant non-mainstream paradigm. More recently, Modern Monetary Theory (MMT) emerged as an outgrowth, bringing contrarian economics into popular culture. Key terms: Keynes , uncertainty , Post-Keynesian Economics , Modern Monetary Theory (MMT) . 3.4 The Student Movement: Rethinking Economics Explanation: Following the Global Financial Crisis, a student movement like Rethinking Economics emerged, providing crucial support and resources for students who question mainstream economic teachings, affirming that their skepticism is a sign of wisdom. Key terms: student movement , Rethinking Economics . Chapter 4: Dr. Steve Keen's "New Economics": Foundations and Contributions Summary: This chapter outlines Dr. Steve Keen's career-long endeavor to develop a new economic paradigm, detailing his intellectual influences from neglected economic giants and iconoclastic predecessors, his collaborations across disciplines, and his original contributions, including the development of innovative modeling software. 4.1 Building on Giants and Iconoclasts Explanation: Keen's "New Economics" is built upon the insights of neglected economists like Richard Cantillon , Francois Quesnay , Karl Marx (excluding the Labour Theory of Value ), Joseph Schumpeter , and Irving Fisher , as well as iconoclastic predecessors like Hyman Minsky , Richard Goodwin , John Blatt , and Wynne Godley . He also draws from colleagues in non-mainstream economics and experts in mathematics and physics. Key terms: Richard Cantillon , Francois Quesnay , Karl Marx , Labour Theory of Value , Joseph Schumpeter , Irving Fisher , Hyman Minsky , Richard Goodwin , John Blatt , Wynne Godley , Marc Lavoie , Michael Hudson , Stephanie Kelton , Matheus Grasselli , Tim Garrett . 4.2 Original Contributions to a New Economics Explanation: Keen's original contributions include deriving the real mathematics of profit maximization , exposing flawed assumptions in climate change economics , explaining the crucial role of energy in production , demonstrating how credit impacts aggregate demand , inventing Godley Tables , predicting the Global Financial Crisis , and modeling Minsky's Financial Instability Hypothesis . Key terms: profit maximization , global warming , energy in production , credit , aggregate demand , Godley Tables , Global Financial Crisis , Minsky’s Financial Instability Hypothesis , Marx’s philosophy , Labour Theory of Value . Key Aphorism: "Labour without Energy is a Corpse, while Capital without Energy is a Sculpture." 4.3 New Tools for Economic Modeling: Minsky and Ravel Explanation: Keen developed Minsky , an open-source system dynamics program for modeling monetary dynamics using double-entry bookkeeping , and Ravel , a business intelligence tool for multidimensional data analysis , both designed to facilitate proper economic modeling. Key terms: Minsky software , system dynamics , double-entry bookkeeping , Godley Tables , Ravel , business intelligence , multidimensional data . Chapter 5: Core Concepts of the New Economics: Session Overviews Summary: This chapter provides a detailed overview of 13 core topics, each presenting a critical analysis of Neoclassical assumptions and introducing more realistic, dynamic, and interdisciplinary approaches to understanding the economy. 5.1 Session 01: Introduction to the New Economics Summary: Introduces the author's background as a lifelong critic of mainstream economics, highlighting his early realization of Neoclassical flaws and his prediction of the Global Financial Crisis based on Hyman Minsky’s Financial Instability Hypothesis . It also emphasizes the historical neglect of energy's role in production and its implications for climate change . Key terms: Neoclassical economics , private debt , Financial Instability Hypothesis , energy in production , The Physiocrats . 5.2 Session 02: The Real Role of Money Summary: Critiques Neoclassical models of money (e.g., Money Multiplier , Loanable Funds ) as justifications for ignoring money, and demonstrates that private debt , not government debt, is the primary driver of economic crises. It shows how the Minsky software can model money creation and how macroeconomic models can derive Minsky's hypothesis, advocating for government spending to prevent debt-deflation . Key terms: Money Multiplier , Loanable Funds , private debt , government debt , Minsky software , debt-deflation . 5.3 Session 03: Real-World Microeconomics of Supply Summary: Challenges the Neoclassical assumption of rising marginal cost and profit maximization by equating marginal cost and marginal revenue. Empirical evidence shows most firms have constant or falling marginal costs and prioritize selling as many units as possible at fixed " list prices ," leading to an evolutionary model of competition rather than an equilibrium one. Key terms: rising marginal cost , profit maximization , marginal revenue , list prices , evolutionary model of competition . Formulae: Neoclassical profit maximization: 5.4 Session 04: Real-World Microeconomics of Demand Summary: Explores Marshall's class-based explanation for downward-sloping demand curves versus the Neoclassical insistence on " methodological individualism " and utility maximization . It highlights experimental failures to confirm the " rational consumer " model and the mathematical proof that market demand curves can have any shape, exposing Neoclassical rationalizations as "wildly irrational." Key terms: downward-sloping demand curves , class-based explanation , methodological individualism , utility-maximizing consumers , rational consumer , market demand curves . 5.5 Session 05: Real-World Microeconomics of Evolutionary Dynamics Summary: Discusses the need for new research into multi-agent models of competition that account for constant marginal cost and differentiated products . This approach predicts a " Power Law " distribution of firm sizes in real-world industries, challenging Neoclassical divisions of competition and suggesting that policies based on these flawed models can be detrimental to consumers. Key terms: multi-agent model , constant marginal cost , differentiated products , Power Law , Perfectly competitive , Oligopolistic , Monopolistic . 5.6 Session 06: Understanding Economic Complexity Summary: Argues that the real world is shaped by evolutionary processes and results in complex dynamics , where higher-level systems cannot be simply derived from lower-level components. It emphasizes that complex systems operate "far from equilibrium," which is essential for modeling phenomena like Minsky's Financial Instability Hypothesis using simulation methods. Key terms: evolutionary processes , complex systems , equilibrium , Minsky’s Financial Instability Hypothesis , stability analysis . 5.7 Session 07: Macro from Macro Foundations Summary: Challenges the mainstream obsession with " microfoundations ," demonstrating that a realistic macroeconomics can be derived directly from true-by-definition macroeconomic definitions and simple behavioral assumptions. This approach, which can lead to Minsky’s Financial Instability Hypothesis , is simplified through system dynamics . Key terms: microfoundations , macroeconomic definitions , dynamic statements , system dynamics , Minsky’s Financial Instability Hypothesis . 5.8 Session 08: Financial Instability Hypothesis Summary: Elaborates on Hyman Minsky's Financial Instability Hypothesis , which posits that capitalism is characterized by a tendency towards speculative booms and financial busts , rather than equilibrium or stagnation. It shows how this theory, derived from macroeconomic definitions, is better supported by data, emphasizing the critical role of private debt in economic crises. Key terms: Hyman Minsky , Financial Instability Hypothesis , speculative booms , financial busts , private debt . 5.9 Session 09: System Dynamics as a Modeling Tool Summary: Contrasts the "false foundation" of Neoclassical 2-dimensional diagrams (e.g., IS-LM ) with the "correct foundation" of system dynamics . It explains how the Minsky software allows for the construction of rich, empirically realistic economic models using flowcharts, facilitating sophisticated monetary and biophysical modeling . Key terms: 2-dimensional diagram , IS-LM , system dynamics , Minsky software , flowchart , monetary and biophysical models . 5.10 Session 10: Energy and Ecology in Production Summary: Highlights the historical neglect of energy's role in production by economists since Adam Smith, which contradicts the Laws of Thermodynamics . It introduces the aphorism "Labour without Energy is a Corpse, while Capital without Energy is a Sculpture" to show how an energy-based model transforms economics and allows for a realistic, biophysical economics , addressing the mainstream's trivialization of global warming . Key terms: energy in production , Laws of Thermodynamics , biophysical economics , global warming . 5.11 Session 11: Climate Change and Economic Misconceptions Summary: Exposes the "appallingly bad" Neoclassical analysis of global warming , which trivializes its dangers through simplistic models (e.g., quadratic damage functions) that assume minor economic impacts from catastrophic temperature rises. It emphasizes the complexity of climate change , including tipping points , which mainstream models fail to capture, leading policymakers to dangerously underestimate the threat. Key terms: global warming , climate change , quadratic damage function , climate tipping points , integrated assessment models (IAMs) . Formulae: Neoclassical damage function: , where y is damage to GDP and x is the increase in temperature over pre-industrial levels. 5.12 Session 12: Methodology and Philosophy for a New Economics Summary: Critiques Neoclassical economists' misuse of Friedman's argument about unrealistic assumptions, arguing they defend "complicating assumptions" rather than simplifying ones. It proposes Marx's dialectical philosophy (while rejecting the Labour Theory of Value ) as an alternative philosophical foundation for understanding capitalism as a complex, evolutionary system . Key terms: Friedman's argument , simplifying assumptions , complicating assumptions , Marx’s dialectical philosophy , Labour Theory of Value , complex, evolutionary system . 5.13 Session 13: Minsky and Ravel: Tools for the New Economist Summary: Introduces Minsky and Ravel as essential new tools for economic analysis. Minsky is a system dynamics program for modeling financial transactions using Godley Tables and double-entry bookkeeping , while Ravel is a business intelligence tool for multidimensional data analysis , both designed to be powerful and user-friendly for building realistic economic models. Key terms: Minsky , Ravel , system dynamics , Godley Tables , double-entry bookkeeping , business intelligence , multidimensional data . Chapter 6: Conclusion Summary: The document critically examines the foundations of Neoclassical economics, particularly Marshall's supply and demand model, revealing its empirical and logical flaws concerning marginal costs, utility maximization, and market demand aggregation. It explains the persistence of this flawed paradigm through a lack of awareness, irrational rationalizations, the transient nature of economic anomalies, and its ideological appeal as a "capitalism as nirvana" model. In response to these shortcomings, the text highlights the fragmentation of economics into rival schools of thought, such as Post-Keynesian Economics and Modern Monetary Theory (MMT), and the emergence of student movements like Rethinking Economics. Dr. Steve Keen's "New Economics" is presented as a comprehensive alternative, building on neglected giants and iconoclastic predecessors, offering original contributions in areas like profit maximization, energy's role in production, and financial instability. The document concludes by outlining a curriculum based on these new economic principles, emphasizing realistic models of money, supply, demand, evolutionary dynamics, complexity, and the critical integration of energy and ecological considerations, all supported by innovative tools like Minsky and Ravel. his claims in this video here that unless the deficit is cut from its current level of about five or 6% of Gdp down to 3%, we're going to suffer what he calls an economic heart attack in the next 3 years.