Keen's full-range critique of neoclassical economics is contained in his book Debunking Economics. Keen collects and popularizes a wide variety of critiques of numerous aspects of neoclassical economic theory and argues that together they show that neoclassical assumptions are badly flawed.
Keen's book closes his book with a survey of various schools of heterodox economics, concluding "None of these is at present strong enough or complete enough to declare itself a contender for the title of ?the? economic theory of the 21st century." However, he argues that neoclassical economics is a degenerative research program, not generating new knowledge but growing a belt of protective auxiliary hypotheses to shield its core beliefs from critique.
Critique of neoclassical theory of the firm
Keen's own work (as opposed to his popularization) has focused on refuting the neoclassical theory of the firm, which argues that firms will set marginal revenue equal to marginal cost. Keen notes that empirical research finds real firms set marginal revenue well above marginal cost. He cites Eiteman & Guthrie (1952), finding 89% of firms do so, as well as more recent work by Alan Blinder. He argues (in a paper published in Physica A[1]) that this is because economic theory neglects the effect on price of increasing or reducing supply by a single item and finds that charging a markup is actually a more stable, profitable equilibrium. Other economists argue that Keen has badly misunderstood the economic theory involved.[2]
Debunking economics has the interesting feature of being written for a lay audience, but with an accompanying web site which provides more detailed mathematical expositions for experts.
Co-editor of: Commerce, Complexity and Evolution: Topics in Economics, Finance, Marketing, and Management: Proceedings of the Twelfth International Symposium in Economic Theory and Econometrics. New York: Cambridge University Press. ISBN 0-521-62030-9.
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