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Even before the Covid-19 crisis began, the global economy was not in good shape, and neither was economic theory. The biggest economic crisis since the Great Depression began late in the first decade of the twenty-first century. Called the ‘Global Financial Crisis’ (GFC) in most of the world, and the ‘Great Recession’ in the United States, it saw unemployment explode from 4.6 per cent of the US workforce in early 2007 to 10 per cent in late 2009. The S&P500 stock market index, which had boomed from under 800 points in 2002 to over 1,500 in mid-2007, crashed to under 750 by early 2009. Inflation of 5.6 per cent in mid-2008 turned into deflation of 2 per cent in mid-2009.

The US economy recovered very slowly, under the influence of an unprecedented range of government interventions, from the ‘Cash for Clunkers’ scheme that encouraged consumers to dump old cars and buy new ones, to ‘Quantitative Easing’, where the Federal Reserve purchased a trillion-dollars-worth of bonds from the financial sector every year, in an attempt to stimulate the economy by making the wealthy wealthier.

The crisis, and the sluggish recovery from it, surprised both the economists who advise governments on economic policy, and the academics who develop the theories and write the textbooks that train new economists. Not only had they expected a continuation of the boom conditions that had preceded the crisis, they in fact believed that crises could not occur.

In his Presidential Address to the American Economic Association in January 2003, Nobel Prize winner Robert Lucas declared that crises like the Great Depression could never occur again, because ‘Macroeconomics … has succeeded: Its central problem of depression prevention has been solved, for all practical purposes, and has in fact been solved for many decades’ (Lucas 2003, p. 1). Just two months before the crisis began, the Chief Economist of the Organization for Economic Cooperation and Development (OECD), the world’s premier economic policy body, declared that ‘the current economic situation is in many ways better than what we have experienced in years’, and predicted that in 2008, ‘sustained growth in OECD economies would be underpinned by strong job creation and falling unemployment’ (Cotis 2007, p. 7, emphasis added). In the depths of the crisis, George W. Bush’s Chief Economic Advisor Edward Lazear argued that, because the downturn had been so deep, the recovery would be very strong (Lazear and Marron 2009, Chart 1-9, p. 54). He was bitterly disappointed by the actual outcome, which was the slowest recovery from an economic crisis since the Great Depression itself.

How could economists be so wrong about the economy?

They could be excused their failure to see the Great Recession coming if the crisis were something like Covid-19, when a new pathogen suddenly emerged out of China. As long ago as 1995, Laurie Garrett declared that such a plague was inevitable (Garrett 1995). But predicting when the pathogen would emerge, let alone what its characteristics would be, was clearly impossible. However, the epicentre of the Great Recession was the US financial system itself: the crisis came from inside the economy, rather than from outside. Surely there were warning signs? As Queen Elizabeth herself put it when she attended a briefing at the London School of Economics in 2008, ‘If these things were so large, how come everyone missed them?’ (Greenhill 2008).

Not all economists did: there were some who warned that a crisis was not merely likely, but imminent. The Dutch economist Dirk Bezemer identified a dozen, of whom I was one (Bezemer 2009a, 2009b, 2010; Keen 1995, 2007). Though these economists came from disparate backgrounds, Bezemer noted that they had one negative characteristic in common: ‘no one predicted the crisis on the basis of a neo-classical framework’ (Bezemer 2010, p. 678).

One would expect that the failure by economists to anticipate the biggest economic event of the post-Second World War world would cause economics to change dramatically. But it hasn’t. What Bezemer called ‘Neoclassical economics’ was the dominant approach to modelling the economy before the GFC, and it has remained dominant since.¹

The failure of economics to reform itself after such a profound empirical failure has led to strong criticism of economics from within – even by economists who have been awarded the Nobel Prize in Economics. Robert Solow, the 1987 recipient, told a United States Congressional Hearing into economics in 2010 that:

We are in desperate need of jobs, and the approach to macroeconomics that dominates the elite universities of the country and many central banks and other influential policy circles, that approach seems to have essentially nothing to say about the problem. (Solow 2010, p. 12)

Paul Romer, who received the Prize in 2018, argued in 2016 that economics had such a ‘noncommittal relationship with the truth’ that it deserved the label of ‘post-real’ (Romer 2016, p. 5).

These criticisms of Neoclassical economics by prominent Neoclassical economists echo criticisms that economists from other schools of thought have been making for many decades. These rival approaches to economics are very different to the specializations that exist in sciences like physics. Some physicists specialize in General Relativity, others in Quantum Mechanics, Statistical Mechanics, Newtonian physics, and so on. Each of these approaches has different perspectives on how the Universe operates, but each works very well in its respective domain: General Relativity in the realm of the very large (the Universe), Quantum Mechanics in the realm of the very small (the atom), while Newton’s equations work very well in between, and so on.

But in economics, different schools of thought have visions of how the economy works that are fundamentally in conflict. There is no way to partition the economy into sections where Neoclassical economics applies and others where rival schools of thought like Post Keynesian, Austrian or Biophysical economics apply. On the same topic – say, for example, the role of private debt in causing financial crises – these schools of thought will often have answers that flatly contradict Neoclassical economics, and frequently also, each other. These non-mainstream schools of thought, which are collectively known as ‘heterodox’ economics, are followed by a significant minority of academic economists – as many as 10 per cent of the discipline, going on a campaign in France in 2015 to establish a separate classification there (Lavoie 2015b; Orléan 2015).²

The economists who did warn of the Global Financial Crisis came almost exclusively from these dissenting schools of thought.³ Though they differed from each other in significant ways, Bezemer noted that they shared ‘a concern with financial assets as distinct from real-sector assets, with the credit flows that finance both forms of wealth, with the debt growth accompanying growth in financial wealth, and with the accounting relation between the financial and real economy’ (Bezemer 2010, p. 678).

If you haven’t yet studied economics, or you’re in your early days of doing so at school or university, I hope this gives you pause: shouldn’t mainstream economics also concern itself with finance and debt? Surely they are essential features of the economy? Au contraire, the mainstream long ago convinced itself that even money doesn’t really affect the economy, and hence monetary phenomena – including money, banks and private debt – are omitted from Neoclassical models. One Neoclassical economist put it this way on Twitter:

Most people who teach macro do it by leading people through simple models without money, so they understand exchange and production and trade, international and inter-temporal. You can even do banks without money [yes!]. And it’s better to start there. Then later, study money as it superimposes itself and complicates things, giving rise to inflation, exchange rates, business cycles.

This statement was made in late 2020 – a dozen years after the failure of Neoclassical models to anticipate the crisis.

Why didn’t mainstream economists change their beliefs about the significance of money in economics after their failure in 2007? Here, paradoxically, economics is little different to physics, in that significant change in physics does not, in general, occur because adherents of an old way of thinking are convinced to abandon it by an experiment whose results contradict their theory. Instead, these adherents continue to cling to their theory, despite the experimental evidence it has failed. Humans, it appears, are more wedded to their beliefs about reality – their ‘paradigms’, to use Thomas Kuhn’s famous phrase (Kuhn 1970) – than reality itself. Science changed, not because these scientists changed their minds, but because they were replaced by new scientists who accepted the new way of thinking. As Max Planck put it:

a new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it. (Planck 1949, pp. 33–4)

Here, economics is different, largely because economic ‘experiments’ are different to scientific ones, in that they are historical events, whereas scientific experiments are deliberate attempts to confirm a theory – some of which fail. The Michelson–Morley experiment attempted to measure the speed of the Earth relative to ‘the aether’, the medium that scientists then thought allowed light to travel through space. The experiment found that there was no discernible relative motion, which implied that the aether did not exist. This unexpected discovery led to the rejection of the aether theory, and ultimately the adoption of the Theory of Relativity. This experiment can be repeated at any time – and it has been repeated, with increasingly more sophisticated methods – and the result is always the same. There is no way of getting away from it and returning to a pre-Relativity science, and nor is there any desire to do so by post-Relativity physicists.

In economics, however, it is possible to get away from the failure of theory to play out as expected in reality. An event like the GFC occurs only once in history, and it cannot be reproduced to allow old and new theories to be tested against it. As time goes on, the event itself fades from memory. History can help sustain a memory, but economic history is taught at very few universities. Economists don’t learn from history because they’re not taught it in the first place.

The economy is also a moving target, whereas the physical world, relatively speaking, is a stationary one. When a clash between theoretical prediction and empirical results occurs in physics, the state of unease persists until a theoretical resolution is found. But in economics, though a crisis like the GFC can cause great soul searching when it occurs, the economy changes over time, and the focus of attention shifts.

Finally, unlike physicists, economists do want to return to pre-crisis economic theory. Events like the GFC upset the ‘totem’ that characterizes Neoclassical economics, the ‘supply and demand’ diagram (Leijonhufvud 1973),⁴ in which the intersecting lines determine both equilibrium price and equilibrium quantity, and in which any government intervention necessarily makes things worse, by moving the market away from this equilibrium point. This image of a self-regulating and self-stabilizing market system is a powerful intellectual, and even emotional, anchor for mainstream economists.

These factors interact to make economics extremely resistant to fundamental change. In physics, anomalies like the clash between the results of the Michelson–Morley experiment and the predictions of pre-Relativity physics persist until the theory changes, because the experimental result is eternal. The anomaly doesn’t go away, but the theory that it contradicted dies with the pre-anomaly scientists. Try as they might, they can’t recruit adherents to the old theory amongst new students, because the students are aware of the anomaly, and won’t accept any theory that doesn’t resolve it.

In economics, anomalies are gradually forgotten, and new students can be recruited to preserve and extend the old beliefs, and to paper over anomalous phenomena. School and university economics courses become ways of reinforcing the Neoclassical paradigm, rather than fonts from which new theories spring in response to failures of the dominant paradigm.

In physics, intellectual crises are intense but, relatively speaking, short-lived. The crisis persists until a new theoretical breakthrough resolves it – regardless of whether that breakthrough persuades existing physicists (which as a rule, it doesn’t). The ‘anomaly’, the empirical fact that fundamentally contradicts the existing paradigm, is like the grain of sand in an oyster that ultimately gives birth to a pearl: the irritation cannot be avoided, so it must be dealt with (Woit 2006).⁵ It is the issue that believers in the existing paradigm know they cannot resolve – though it may take time for that realization to sink in, as various extensions of the existing paradigm are developed, each of which proves to be partially effective but inherently flawed. It is the thing young scientists are most aware of, the issue they want to be the one to resolve. As their lecturers who stick to the old paradigm age, the students take in the old ideas, but they are actively looking for where they are wrong, and how these contradictions might be resolved.

Once a solution is found, the protestations of the necessarily older, ageing, sometimes retired and often deceased champions of the previous paradigm mean nothing. Ultimately, all the significant positions in a university department are filled by scientists who are committed to the new paradigm. Then, as the new paradigm develops, it first undergoes a period of rapid extension, but ultimately confronts its own critical anomaly, and the science falls into crisis once more, as philosopher of science Thomas Kuhn (Kuhn 1970) explains.⁶

This is a punctuated path of development. It starts with the development of an initial paradigm by a great thinker, around whom a community of followers coalesces. They extend the core insights and thus form a new paradigm in that science. Initially, they enjoy a glorious period of the dance between observation and theory, where observations confirm and extend the paradigm. But finally, some prediction the theory makes is contradicted by observation. After a period of denial and dismay, the science settles into an unhappy peace: the paradigm is taught, but with less enthusiasm, the anomaly is noted, and the various within-paradigm attempts to resolve it are discussed. Then, out of somewhere, whether from a Professor (Planck) or a patents clerk (Einstein), a resolution comes. Rinse and repeat.

Those punctuations never occur in economics, and because the punctuations don’t occur, neither does the kind of revolutionary change in the discipline that Kuhn vividly describes for physics and astronomy. Economics is, therefore, not a science. As Kuhn explains brilliantly, a real science goes through a process of paradigm change via a shift from what he calls ‘normal science’, to a scientific revolution triggered by a fundamental anomaly and resolved by a new paradigm, after which normal science resumes once more with the new paradigm. Economics has experienced many theoretical and empirical crises since the Neoclassical school became dominant in the 1870s, but none have resulted in a revolution to a new paradigm akin to the shift from Ptolemaic to Copernican astronomy.

An economic crisis, when it strikes, does disturb the mainstream. Their textbook advice – if the crisis is empirical rather than theoretical – is thrown out of the window by policymakers while the crisis lasts. Mainstream economists react defensively – which is not significantly different from what happens in a science. They can justify the extraordinary policy measures undertaken by the unexpected nature of the crisis, but then treat the contradiction the crisis poses for their theory as an aberration, which can be handled by admitting some modifications to peripheral aspects of the core theory. One example is the concept of ‘bounded rationality’ promoted by Joe Stiglitz (Stiglitz 2011, 2018). This can be invoked to say that, if everyone were strictly rational, then the problem would not have arisen, but because of ‘bounded rationality’, the general principle didn’t apply and, in this instance, a deviation from policies recommended by the pure theoretical canon is warranted.

Minor modifications are made to the Neoclassical paradigm, but fundamental aspects of it remain sacrosanct. Again, this is comparable to the reactions to an anomaly by adherents to an existing paradigm in a science.

Over time, the crisis passes – whether that passing was aided or hindered by the advice of economists. A handful of economists break with the majority because of the anomaly, which is how heterodox economists are born. But the majority of students become as entranced as their teachers were by the fundamentally utopian Neoclassical vision of capitalism as a system without power, in which everyone receives their just rewards, and in which regulation and punishment are unnecessary, because The Market does it all. These new students replace their masters, and they continue to propagate the Neoclassical paradigm.

This is the first hurdle at which economics fails to be a science. The process Planck describes, of the death of adherents of the old (Neoclassical) paradigm resulting in them being replaced by a ‘new generation’ that is familiar with the ‘new scientific truth’, does not occur in economics.

The second hurdle is the political role of economic theory. The last genuine scientific revolution in economics occurred in the 1870s, when the Neoclassical took over from the Classical school of thought – the approach developed by Adam Smith (Smith 1776), extended by David Ricardo (Ricardo 1817) and commandeered by Marx (Marx 1867). Neoclassical economists imagine that their theories originated with Smith (Samuelson and Nordhaus 2010a, p. 5), but in fact Smith, Ricardo and Marx used an ‘objective’ theory of value that is completely at odds with Neoclassical theory. Ricardo explicitly rejected the utility-oriented, scarcity-based proto-Neoclassical economics of his contemporary Jean-Baptiste Say, declaring emphatically that:

There are some commodities, the value of which is determined by their scarcity alone … These commodities, however, form a very small part of the mass of commodities daily exchanged in the market … says Adam Smith, ‘… It is natural that what is usually the produce of two days’, or two hours’ labour, should be worth double of what is usually the produce of one day’s, or one hour’s labour.’ …

That this is really the foundation of the exchangeable value of all things, excepting those which cannot be increased by human industry, is a doctrine of the utmost importance in political economy; for from no source do so many errors, and so much difference of opinion in that science proceed, as from the vague ideas which are attached to the word value. (Ricardo 1817, Chapter 1, emphasis added)

The Classical school of thought had logical problems of its own (Keen 1993a, 1993b; Steedman 1977), but a key factor in its demise, and the rise of the Neoclassical school, was that Marx turned the Classical approach into a critique of capitalism itself (De Vroey 1975). Since then, the fact that Neoclassical economics supports wealthy interests, via its merit-based theory of income distribution, has played a major role in cementing the dominant position of Neoclassical economics. Well-funded ‘thinktanks’ promote its analysis of capitalism, so that its analysis of the economy dominates popular and political discourse on economics. This ideological role of Neoclassical economics means that it is defended vigorously, even when reality proves it to be wildly wrong about the nature of capitalism itself.

These same factors isolate those economists who refuse to ignore the empirical and theoretical failings of Neoclassical economics, and who form rival paradigms like Post Keynesian, Marxian, Austrian and Biophysical Economics. These academics survive as marginalized iconoclasts within the economics departments of leading universities (like Ha Joon Chang and Tony Lawson at Cambridge University), as leading academics in Departments of Business or Management rather than Economics (like Mariana Mazzucato at UCL’s Faculty of the Built Environment), or as lecturers in Economics in low-ranked universities that prominent Neoclassicals don’t want to work in (such as the University of Western Sydney in Australia, and Kingston University in the UK, where I was respectively a Professor and Head of School).

Given this dominance of the Neoclassical paradigm despite numerous crises, both empirical and logical (Keen 2011), and the co-existence of incompatible rival paradigms, the discipline sits in a state of perpetual, understated and unresolved crisis. Neoclassical economics evolves over time, in ways that its adherents believe are scientific revolutions, but it is never replaced in the way that obsolete paradigms are replaced in science. Rival paradigms develop as well, but never lead to the discredited Neoclassical paradigm being displaced.

Perhaps you’re thinking ‘But what about the Keynesian Revolution?’. Keynes certainly saw his work as constituting a clear break with the Neoclassical orthodoxy – which he described as ‘classical economics’:

I accuse the classical economic theory of being itself one of these pretty, polite techniques which tries to deal with the present by abstracting from the fact that we know very little about the future. (Keynes 1937, p. 215)

However, Keynes’s revolutionary ideas were snuffed out by John Hicks, in a paper that purported to reach a reconciliation between ‘Mr Keynes and the Classics’ (Hicks 1937) by developing what became known as the IS-LM model.⁷ Hicks interpreted Keynes as not revolutionary at all, but merely adding ‘the Economics of Depression’ to the existing Neoclassical toolkit:

With this revision, Mr. Keynes takes a big step back to Marshallian orthodoxy, and his theory becomes hard to distinguish from the revised and qualified Marshallian theories, which, as we have seen, are not new. Is there really any difference between them, or is the whole thing a sham fight? Let us have recourse to a diagram. (Hicks 1937, p. 153)

Though he presented his model as ‘a convenient synopsis of Keynesian theory’, and it was accepted as such by the majority of economists, Hicks later admitted that it was a Neoclassical, ‘general equilibrium’ model he had sketched out ‘before I wrote even the first of my papers on Keynes’ (Hicks 1981, p. 140).

The gap between what this model alleged was Keynesian economics, and the actual economics of Keynes, was enormous, as can readily be seen by comparing Hicks’s ‘suggested interpretation’ of Keynes, and Keynes’s own 24-page summary of his economics in ‘The General Theory of Employment’ (Keynes 1937), which was published two months before Hicks’s paper. The key passage in Keynes’s summary of his approach – which reflects the accusation he levelled at ‘classical economic theory’ above – is the following:

The theory can be summed up by saying that … the level of output and employment as a whole depends on the amount of investment … More comprehensively, aggregate output depends on the propensity to hoard, on the policy of the monetary authority, on … But of these several factors it is those which determine the rate of investment which are most unreliable, since it is they which are influenced by our views of the future about which we know so little.

This that I offer is, therefore, a theory of why output and employment are so liable to fluctuation. (Keynes 1937, p. 221, emphasis added)

Keynes’s summary of his theory asserts that the level of investment depends primarily upon investors’ expectations of the future, which are uncertain and ‘unreliable’. Hicks completely ignored expectations – let alone uncertainty – and instead, modelled investment as depending upon the money supply and the rate of interest:

This brings us to what, from many points of view, is the most important thing in Mr. Keynes’ book. It is not only possible to show that a given supply of money determines a certain relation between Income and interest…; it is also possible to say something about the shape of the curve. It will probably tend to be nearly horizontal on the left, and nearly vertical on the right …

Therefore, … the special form of Mr. Keynes’ theory becomes valid. A rise in the schedule of the marginal efficiency of capital only increases employment, and does not raise the rate of interest at all. We are completely out of touch with the classical world. (Hicks 1937, p. 154; see also Hicks 1935; 1981)⁸

The schism between Hicks’s purported model of Keynes and Keynes’s own views was so great that it gave rise to the key heterodox school of thought, ‘Post Keynesian Economics’. So ‘the Keynesian revolution’ didn’t happen, though Post Keynesians themselves have developed approaches to economics that are revolutionary (Eiteman 1947; Godley 1999; Goodwin 1967; Graziani 1989; Keen 2020b; Minsky 1977; Moore 1979; Sraffa 1926, 1960). But a revolution in mainstream economic thought, like the rejection of Ptolemy’s earth-centric vision of the solar system and its total replacement by Copernicus’s sun-centric vision, has not happened.

The above paints a bleak picture of the prospects of replacing Neoclassical economics with a fundamentally different and far more realistic paradigm. But there have been changes over time that make this more feasible now than it was at Keynes’s time.

Foremost here is the development of the computer, and computer software that can easily handle large-scale dynamic and even evolutionary processes (Gooding 2014). These developments have occurred outside economics, and especially in engineering, physics and meteorology. There are limitations of the applicability of these techniques to economics, largely because of the fact that economics involves human behaviour rather than the interaction of unconscious objects, but these limitations distort reality far less than the Neoclassical fantasy that economic processes occur in or near equilibrium.⁹

The development of the Post Keynesian school of thought after the Great Depression is also crucial. There were strident critics of the Neoclassical mainstream before the Great Depression, such as Joseph Schumpeter and Thorstein Veblen (Schumpeter 1928; Veblen 1898, 1908, 1909), but there was no truly revolutionary school of economic thought.¹⁰ The development of this heterodox school over the eight decades between the Great Depression and the GFC meant that, when that crisis struck, there were coherent explanations of it – indeed, prescient warnings of it (Godley 2001; Godley and Izurieta 2002; Godley and Wray 2000; Keen 1995, 2006, 2007) – that did not exist when Keynes attempted his revolution.

Modern Monetary Theory (MMT), which arose out of interactions between the entrepreneur Warren Mosler (Mosler 1998, 2010) and a group of Post Keynesian economists – primarily Randy Wray (Wray 1994, 1997, 1998), Stephanie Kelton (Bell 2000, 2001), Scott Fullwiler (Fullwiler 2003, 2005) and Bill Mitchell (Mitchell 1987, 1994; Mitchell and Mosler 2002; Mitchell and Watts 2002) – has also done something that has not been achieved since Keynes: it has made the public at large aware of a distinctly non-Neoclassical approach to economics. A non-Neoclassical economics book, Stephanie Kelton’s The Deficit Myth (Kelton 2020), has become a best-seller, ranking in the top 300 on Amazon on its debut. MMT is challenging the stranglehold that the Neoclassical school has on public opinion, and their myriad protestations about MMT are a sign that they are, for once, worried about losing their dominance.

Similarly, non-Neoclassical scholars like Mariana Mazzucato (Mazzucato 2015, 2019), Bill Janeway (Janeway 2012) and Kate Raworth (Raworth 2017) have, if not broken the hold that the Neoclassical meme of ‘supply and demand’ has on how the public thinks about economics, at least shaken it by showing that there are alternative, and empirically grounded, ways to thinking about the public and private sector’s roles in innovation, and the dependence of the economy on the environment. Statistically-oriented researchers like Schularick, Jordà, Taylor and Bezemer are analysing issues, such as the role of credit in macroeconomics, which are ignored by Neoclassical econometricians (Bezemer and Grydaki 2014; Jordà et al. 2011, 2019; Schularick and Taylor 2012; Zhang and Bezemer 2014). Some mathematicians have become aware of fundamental fallacies in economics, such as the timeless, ‘ergodic’ foundations of Neoclassical finance theory (Peters 2019; Peters and Gell-Mann 2016) and are actively working on alternative approaches (Costa Lima et al. 2014; Grasselli and Costa Lima 2012; Grasselli and Nguyen-Huu 2018).

Finally, social media has allowed student movements critical of Neoclassical economics to evolve, flourish and persist in a way that was impossible before the Internet. I led the first ever student revolt against Neoclassical economics, at Sydney University in 1973 (Butler et al. 2009).¹¹ This revolt succeeded, in that the University finally agreed to create a Department of Political Economy to house the dissidents, but the protest and its success were restricted to just one university in far-away Australia. French students established the ‘Protest Against Autistic Economics’ in 2000, which had somewhat more traction, but no changes in economics teaching occurred: its main legacy was an online journal called the Real World Economic Review.

The real breakthrough came with a protest by economics students at the University of Manchester¹² in the UK in 2012, in response to the failure of their teachers to take the GFC seriously in their macroeconomics courses. As they put it, ‘The economics we were learning seemed separate from the economic reality that the world was facing, and devoid from the crisis that had made many of us interested in economics to begin with’. Their Post-Crash Economics movement in turn spawned the international Rethinking Economics campaign, which now has groups in about 100 universities across the world (you should join one, if you’re not already a member), and inspired the Institute for New Economic Thinking to fund the Young Scholars’ Initiative.

There are therefore students eager for approaches to economics that break away from the Neoclassical mainstream, methods of analysis which can easily supplant the dated equilibrium methods used by Neoclassical economics, and rival schools of thought with an intellectual tradition spanning almost a century, on which an alternative paradigm can be constructed. What we lack is a university system in which these conditions can foment a paradigm shift, as has occurred several times in physics in the last one and a half centuries, but not once in economics.

Fortunately, the GFC was such an extreme shock to the policy bodies around the world, which were and are still dominated by Neoclassical economists, that at least some of them – such as the OECD, which established the unit New Approaches to Economic Challenges (NAEC) in 2012 (see https://www.oecd.org/naec/) – have started to explore alternative approaches, including the application of ideas from other disciplines (largely physics, engineering and computer programming) to economics. Change is more likely to come from these institutions than from within academic economics itself, though even here, the alternative approaches experience hostility from entrenched Neoclassical economists.

There is also one negative factor that may finally force the change needed in economics, which is closer to the Reformation of a degenerate religion than a standard scientific revolution (Elliott 2017). Climate change is the dominant issue for the human species – and all other species – during the twenty-first century, and the work that Neoclassical economists have done on climate change is, in my considered opinion, the worst work they have ever done (Keen 2020a). And yet Neoclassical economists gave their highest accolade, the deceptively named ‘Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel’, to the chief proponent of this work, William Nordhaus. When reality exposes how low grade and utterly misleading this work has been, the revulsion that policymakers and the public will feel at how they have been deceived by economists may finally terminate Neoclassical economics.

I don’t want you to be on the wrong side of this stage in history. If you are a potential or current student of economics, I want to reach you before you embark on, or get too deeply into, a university course of study that will attempt to inculcate a near-religious belief in the Neoclassical paradigm, and that will drive you away if you can’t accept it. I want you to arrive at university knowing of the modern methods of analysis that are commonplace in the sciences and engineering, but which have been excluded from economics by the hegemony of Neoclassical economics. Then, perhaps, there will be a chance for a real revolution in economics, and it can become, if not a fully-fledged science, then at least more like a science and less like a religion.

It’s not possible to state ahead of time what the entire new paradigm will be, but the following features are fundamental. The new paradigm will:

 be fundamentally monetary, in contrast to the false, moneyless barter model that underlies Neoclassical economics;

 acknowledge that the economy is a complex system, not an equilibrium system;

 be consistent with the fundamental physics known as the Laws of Thermodynamics;

 be grounded in empirical realism, rather than the fantasy of ‘as if’ assumptions about reality; and

 be based on the techniques of system dynamics and related non-equilibrium analytic approaches.

I explore each of these theses in the following chapters. What follows is a Manifesto, both because it is a call for change in economics every bit as emphatic as Martin Luther’s call for the reform of the Christian religion, and also because it states my own distinctive approach to economics. However, this approach has been guided by the genuine giants of economics, philosophy and mathematics who influenced me, and I hope I do them justice in both the text and the many references on which it is based.

Lastly, this book makes heavy use of the modelling program I have designed, which I named Minsky in honour of the great Post Keynesian economist Hyman Minsky. I encourage you to download Minsky yourself, and use it to run the models in this book as you read about them here. The Minsky program (which runs on Windows, Apple and Linux PCs), all the models in this book, and a free manual, Modelling with Minsky, are available at http://www.profstevekeen.com/minsky/.