YouSaid · the spoken record

Steve Keen

lines on the record: 271
first: 2022-07-17
most recent: 2022-07-17
sittings or episodes: 1
sources: podcast

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“The book. And Marx was then at that stage reading through all the classical theorists again. And he was suddenly he read Hegel again. And if you know Hunter S. Thompson Okay”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“This is another intriguing history because Marks, when he first started, had what you can call an exclusivist. And that was to say that the labor is the only commodity with both what he called commodity and commodity power. So you have labour and labor power. Labour is, and I get fuzzy about this, I haven't read it for something like 30 years, but labour has both commodity and commodity power. The commodity is you can buy labor, which is the means of subsistence. Labor power is the capacity to work inside a factory. There's a difference between the two. Therefore, that difference will give rise to surplus and there's no other commodity that has this essence of commodity and commodity power. So that was exclusive for starguard argument. In the middle of the 1857, he was visited by a guy called Otto Brough in his home in Chelsea. And Otto returned to Marx a copy of Hegel's phenomena, I think it's called Phenomenology of Wright. I haven't read it, but that's...”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“He's okay with that? He was okay with that because he could move between different levels because he had a structured foundation of this dialectical vision, a foreground, background tension, commodity having used value exchange value and a gap between the two. You're talking about machines, when you're buying stuff for production. And then the next level, you could look at workers, worker organization, and say that's driven by being treated as a commodity when you're a non-commodity.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“So he said it can't be the value of money cannot be its cost of production. Or there must value, I think if I remember the phrase properly, almost its value here as it must mean the effectively uncertain expectations or subjective valuation.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Think you have to have the capacity to move between one and the other. A structured My base model is the objective. But above that, as soon as you start talking is a bit about the worker, for example, then you get involved in subjectivity because a worker will be angry. Unjustifiably so about being treated as a commodity because I'm not a commodity, I'm a human being. And that's where Marx or political organization coming from. And that's subjective now. And then when you get to money itself, Marx actually said, well, what's the value of money? Now, if you use an objective theory of value, you would say, well, the value of money is this cost of production. What's the cost of producing a dollar? It's about two cents.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Vary, and this is a huge problem in economics arguments of what does value mean. And the neoclassicals came down as that it's subjective. Its value is whatever you get out of it. It's your personal evaluation of something, your personal feelings. So they've got that very subjective idea of value. Whereas the Marxists and being inherited as a classical school talk in terms of objective value. The value is the number of hours it takes to make something. The effort. Value is the effort that goes into making something in the classical school.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Get political and you get money coming above that and so on. But the basic idea starts from the commodities, the fundamental unity in capitalism. The important commodity in Marx's thinking was the worker, because that's where he said profit came from. And then that explains the motivation of the capitalist, and that ultimately leads to the labor theory of value and Marx's arguments about how capitalism will come to an end.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's actually the next layer. What Mark's give us is like a layered cake starting from a foundation of saying straight commodity exchange and then saying, well, you're treating a work as a commodity. Now a commodity is something, you know, like this. Okay, that has, so far as I'm aware, no sold. Okay. Going to be complain if I turn it upside down, it'll fall over, but it, you know. So there's no soul there as a human is both a commodity and a non commodity. And therefore, there'll be a tension in the person I'm being treated as a commodity here. I'm being paid just enough to stay alive. I've got a wife and kids back at home. So that is another layer of thinking and Marx. And on that layer, he then says, well, workers will therefore demand more than their value.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“The work is the commodity in this case because if you're going to make stuff in a factory, you've got to hire workers. And what Marx is saying, the buyer in that situation is a capitalist. So, what does the buyer pay? He says he pays the exchange value. We get back to the commodity thing, because that's the starting point. He said the essential unity in a capitalist economy is the commodity. A commodity has two characteristics, exchange value and use value. Exchange value of a commodity in a capitalist economy will be its cost of production. The use value is what you do with it. Once you've purchased it.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's a very different vision of how prices set. And Marx used that to explain where profit comes from. But he made a mistake. And his argument was that talking about a worker, as now your unity, these foreground background tension thing, the foreground is that you hire a worker for their cost of production. And the cost of production is a subsistence wage. The utility to the buyer is the fact that they can work in a factory. Now, it might take six hours, let's say, to make the means of subsistence. And that's the exchange value, and that's what the capitalist pays as a wage to the worker. But they can work in the factory for 12 hours. That's the utility. 12 minus 6 is six surplus of value hours, and that's where profit comes from. And that was Marx's argument. And I thought it was brilliant. But it also applied to machinery”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Therefore, the comparison is difficult, and therefore working out a ratio involves you've got to decline each time you give away a chair in exchange for an iPhone, you have a fall in your utility. And then therefore, you want to hire a return because you're losing more utility each time. The more chairs you give away, the less utility you're getting from chairs. There's a decline in your utility. That's your marginal utility. So it's including your subjective valuation in setting the price. And what Mark's pointed out is this is a caricature of actual change in a capitalist economy because we have in a capitalist economy huge factories, turning out huge quantities specifically for sale. They've got no utility to the seller unless they're sold.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Turns marginal utility, well, that's the utility itself has different meanings than the two schools of thought. If you take the classical school of thought, which when Marx comes from, utility is effectively objective. So the utility of a chair is that you can sit in it. Not how comfortable it makes you feel. Okay, now if you think about the utility of the chairs, we're both sitting and they're identical from a classical point of view, we're both sitting. But from a neoclassical point of view, it's how comfortable it makes you feel. And that depends upon your subjective feelings of comfort. You might be far more comfortable in the identical chair that I'm sitting in than I am.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“And you start making stuff specifically for sale. So Elon's not losing personal utility each time a Model 3 goes out the door. He gets utility out of the fact that he's created that vehicle, that concept and manufactures it and so on, but he's not losing utility each time a Model T Ford goes out the door for going back for the ancient commodity there. The utility plays no role in setting price in Marx's model. Whereas it's essential in the neoclassical model.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Exchange stuff that you happen to have for stuff somebody else happened to have without any real production mechanism being involved. And he said, that's like when you have two ancient two tribes meeting for the very first time. And one tribe can make something the other tribe can't make. And they will therefore, the price they were willing to pay will reflect how unique this other object is that this one tribe can make and the other can't. So for example, the story of Manhattan being sold for 40 glass beads It's actually 40 glass trading beads I believe it is a true story. But the thing is the Indians couldn't make glass beads so they valued the glass bead and the island of Manhattan, which is a utility-based comparison. What Mark said, that's the very initial contact over time, even if you don't know the technology, over time you start to realize how much work goes involved to making what they're selling you versus what you're selling to them.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“And so the use value is necessary but irrelevant to forming the price. Now that was a completely different vision of exchange and capitalism to what I found in the neoclassical theory because that says it's the marginal utility and the marginal cost of everything that determines the exchange ratio. And the crazy thing about that is not so much the marginal utility, but the argument in the neoclassical theory is that the price ratio, the price will, when there's an exchange going on, there's two person, two commodity exchange of two commodities between two people, the price will change until such time as the ratio of the marginal utilities is equal to the ratio of the marginal costs. That's supposed to be the equilibrium. And Mark says, that's bullshit. That's a previous society where you”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“I walked away, she caught up with me about 20 minutes later. I asked one of the guides, it is a backscratcher. So here's a backscratcher for the emperor made of solid gold with diamonds and rubies and emeralds during the scratching. That's a commodity in a feudal society. Cost doesn't matter. You want the most elaborate, beautiful thing because you are the emperor. So in a feudal society, the commodity, what's focused upon is the utility and the cost of production when you're the emperor is immaterial. Capitalism reverses that. So the commodity in a capitalist economy is a plastic $2 scratchy you can get from Kmart or Target.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“As well as the objective. So the objective is what capitalists worry about. I'll give you my favorite counter example of that. I was in, I took a bunch of Australian journalists to China way back in the period when the Gang of Four was being on trial. And we did a tour of the Forbidden City in Beijing. And at that stage, all the artifacts of the royal family, the emperor, were actually in the building still. And we walked past one of them. And it was this gold, solid gold bar about this long, shaped like a fist, turned over like this. And on this side, there were rubies, emeralds, diamonds. You'd never seen gemstones. I mean, gems that big. And one of the journalists asked me what I thought it was. And I said, oh, it's obvious. Jane is a backscratcher. Ha ha ha.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so if you made something which didn't work, okay. Then you might be able to sell it, but it has no utility. You can't make that into a commodity. A broken thing can't be sold.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“The essential unity. Unity is an object in society. So he started from the point of view of trying to understand how exchange occurs. How do we set prices? And his starting vision was to say that a commodity is a unity in a capitalist economy. The part of the unity... That we focus upon is the exchange value, a capitalist produces a commodity, not because of its qualitative characteristics, but because it'd be sold for a profit. So the foreground aspect of a commodity is its exchange value. The background aspect of it, it won't succeed as a commodity unless it has a use value.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Effectively, and when you look at it in terms of a human. But what Marx did is apply this to a commodity. He said, what is the essential unity in a capitalist economy? And the essential unity is a commodity.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Because if you imagine the unity, like if you take a human, because you go back to Chromagnon days when we're living in caves and And we've got to go hunting and cook food and stuff like that, but there's no social hierarchy as we've become used to. So, you don't get laboured as a worker or a capitalist, you're just a human in that situation, then you've got more an integrated view of who you are. And I think that's one of the appeals of a tribal, a genuine tribal culture, that you get treated for the whole of who you are. You've certainly categorized your male, your female, you're young, you're old, you're a hunter, you're a toolmaker, etc., etc. But you're treated as more an integrated object. When you get put in a complex society like a capitalist society, then one side of you is emphasized and the others are de-emphasized.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“One particular aspect will be focused upon. So if you think about the human being in capitalism, the focus on the human being as an object is their capacity to work. A worker. That's put in the foreground The fact that you're human and you want to play a guitar and go surfing and make love and all the other things that humans do is pushed into the background. There's a tension between the two of those. And that can transform that unity over time. And that's a beautiful dynamic vision. Of change. So dialectics is a philosophy of change”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Looking at these cranes, I'm thinking, I want a very good explanation by Marx as to why these cranes don't add value. So reading through the first seven chapters of capital, what you found was Marx applying this dialectic. And like the Fichte and stuff is bullshit. That is not how Marx thought at all. I was reading, trying to find the thesis, antithesis, synthesis, and it's not there at all in any of Marx's works. And I read everything he's ever written on economics from 1844 to 1894 when his last books were published. There's not one word of mention of that. What he does talk about is foreground and background and tension. And his idea of a dialectic is that there is a unity will exist in society and that unity can be an individual, there can be a commodity, anything at all. The unity will be understood by that society.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“I looked at those mechanisms and I knew Marx argued that labour was the only source of value. Said machinery doesn't add value.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Volume one capital. And I remember walking off to that meeting with one of my friends, who's a law student. And this was a period of a huge construction boom in Sydney. So the whole skyline, which we could see from the campus, was full of what they call kangaroo cranes, which were an Australian invention that are cranes that can leapfrogged over each other to build a skyscraper.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, inside the room of the philosophy department at the University of Sydney in the main quadrangle, sandstone all around us and we have a bunch of about 20 or 30 of us reading our way through Marx.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“It was much more libertarian in the genuine sense of the word period of time at the end of the 60s, beginning of the 70s, then the word libertarian has been corrupted since then. But it really was about free thought. And you went to university to learn. It was about education. I remember having a fight with my father once where dad was angry about the marks I was getting for some of my courses. And he said, if you don't get a decent result, you won't get a decent job. And I said, I'm not here to get a job. I'm here to get an education. Now, the thing is, ultimately, it's been a pretty good job for me as well. This is in Sydney, by the way, and Sydney In summer is absolutely gorgeous. And what a spunch of lefties decide to do during summer but read Karl Marx.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Such a different life to what we're living now. That's the academic milieu in which I developed all my ideas. And I had become a critic. I've gone from being a believer of mainstream economics when I was a first year student to disbelieving it halfway through first year. And I then spent a long time trying to change it, getting nowhere. And then this philosophy strike happened. And we took it on in economics and we formed what's called the political economy movement and had a successful strike. We actually managed to pressure the university into establishing a department of political economy at Sydney University as well as the Department of Economics.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“It. So that led to a strike over the teaching of philosophy at Sydney University, which at one stage, over half the students were on strike Economics began out of that”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“But if you look at this beautiful book called Marx and Contradiction, you want to find a great explanation for Marxist philosophy. I forgot the author. I think it's wild, W-I-L-D-E, Marx and Contradiction. And he points out the actual origins of Marx's philosophy. I didn't know that when I first read Marx. So I became exposed to Marx when I was a student at Sydney University. And we'd had a strike at the university over the teaching of philosophy. And what happened was the philosophy department had a lot of radical philosophers in it and a conservative chief philosopher. And the radicals wanted to have a course in what they called feminist aspects of philosophical aspects of feminist thought. And the staff voted in favor of it. This is back in the days when university departments were democratic. The professor opposed it. He got it blocked at a high level. The staff leapfrogged over that and then finally the vice chancellor blocked.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Marx once described his major work as towards a critical examination of everything existing. He's a modest So he wanted to understand and criticize everything. And even he wasn't trained directly by Hegel, but he was his teachers were Hegelian philosophers. And what Hegel developed was a concept called dialectics. And dialectics is a philosophy of change. And when most people hear the word dialectics, they come up with this unpronounceable tree of words called thesis, antithesis, synthesis. I can barely get the words out myself And that actually is not Hegel at all. That's another German philosopher.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“The bank has to be part of it when I hand you the money, you accept that as you've now got, rather than it's the bank promising to pay me something, it's now the bank promising to pay you something. And we exchanged the promises of banks and that's fundamentally money.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Money is a triangular transaction. There is one commodity. I want to buy that can of drink off you. Two people and the price that's worked out ends up being in a transfer from the promises to pay the bank that the buyer has to the promises to pay the bank that the seller has. So if I, so what you have is a monetary transaction in a capitalist economy involves three agents, the buyer, the seller, and the bank.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Here's the most wonderful personality. Augusto, I met him on a few occasions, is one of the few human beings who can speak in perfectly formed paragraphs, superbly eloquent. And what he did was write a paper called The Monetary Theory of Production. Can find it downloaded on the web. It's pretty much open source now. And what he said is what distinguishes a monetary economy from a barter economy? So he said, in a barter economy, what we do is, you know, I'll give you two of these for one of those. Okay, barter. Working at a relative price. There are two of us involved and there are two commodities. So with money”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Bank, yeah, this is one of the most important works I've ever read, it's a work by a wonderful, now unfortunately disceased tiny Italian economist called August”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, yeah You have a bank account, like you'd have a bank account and you'd have some cash. Okay, those are your assets. But the bank account is a liability of the banking sector. And the cash is a liability of the Federal Reserve.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the right. The money is the liability side of the banking sector. Okay, assets are the assets on the other side can be either created by the banking sector, which is where you get bank loans or created by the government where you get reserves. But money is the liabilities. If you think about protons and antiprotons in that sense, money is like the antiproton. It's the negative, the liability.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“No, there isn't. I had arguments with physicists over this, and it took me a long time to answer it. They thought the sum total of all money is zero. It's the title of all assets and liabilities is zero. So if you imagine your assets minus your liabilities is your equity and your asset is somebody else's liability and your liability is somebody else's asset, when we're talking about financial assets, and this is another mind-blowing thing that I've just recently solved myself. So the sum total of all financial assets and liabilities is zero.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Their bank accounts increase so a government deficit creates money for the private sector. So that's where money creation occurs from the government. So it puts money in people's money into people's bank accounts by spending, by welfare payments than it takes up by taxation. So that's creating new money. And then on the other side on the bank, the money turns up in the reserve accounts of the banks, which are basically the private banks' bank accounts at the central bank. So rather than the asset of private money creation being loans, the asset of government money creation is reserves”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“But more liabilities means the banking sector means more money. So that's how private banks create money. And that's what I first started working on when I became an academic about 35 years ago, the actual dynamics of private money creation. But the government has the same sort of story. If the government runs a deficit, it spends more money on the individuals in the economy than it taxes them, which means”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“They're fundamentally the liabilities of the banking sector. If we make a transfer between us, your depositor card goes down, my deposit account goes up. Those are exchanges on the liability side of the banking sector. But if we have a transaction with the bank, then if the bank lends us money, its loans go up, its deposits go up, again, that same balance. So you've got to look and say money, therefore, is fundamentally the liabilities of the banking sector. So how do you create additional liabilities? You must have an operation which occurs both on the liability side and the asset side of the banking sector. So if you and I make a transaction, no money is created. Existing money is redistributed. But if you go to a bank and take out a bank loan, then money is created by the bank loan. So the liabilities of the banking sector rise, the assets rise.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Want to get this rider to Elon because I saw I'm making a comment about this a few weeks ago on Twitter. He said that it's wrong for the government. Effectively it seems wrong for the government to always be in deficit. Now, when you look at it and say, well, how is money created? Does money come about when it's not a commodity like gold, which you dig up out of the ground, when it's actually social relations between people that create money? Well, money is the...”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Liabilities, monus equity equals zero. Now that's simply saying money is an accounting, a creature of accounting. It's not a creature of a commodity. So if you think about how Austrians think about money and how gold bugs think about money and Bitcoin enthusiasts, if there are any left, think about money, what they see is money is an object. You and I can both have more gold if we're both willing to go to a mine somewhere and dig a few holes and get a few specks of gold out. So there's no competition or no interaction between you and me if money is gold. And they think money should be an object, a commodity. But money fundamentally is not a commodity. It's a claim on somebody else. That's money is its essence. So when you do it, you must use double entry bookkeeping to do it. And then when you do, you find all the answers that come out of thinking as money as a commodity are wrong. So, for example, they've got Elon on this one.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“This was invented back in the 1500s in Italy. I've forgotten the particular merchant who did it based on some Arabic ideas as well. But the thing is, if you want to keep track of your financial flows, then you divide all the financial claims on you. You divide into claims you have on somebody else, which are your assets, claims somebody else has on you, which are your liabilities, and the gap between the two as your equity. So you record every transaction twice on one row. Okay, so for example, if you and I do a financial transfer, you have a bank account, I have a bank account, your bank account will go down, mine goes up, okay? And that's, some of the operation is zero. But on the other hand, if I go to a bank and borrow money, then my account goes up, they put money in my deposit account, the bank's assets go up, and there's still the same sum applies. Assets minus...”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay. Modern monetary theory is accounting To summarize it bluntly, it's simply saying let's do the accounting because what money is is a creature of double entry bookkeeping.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“All the magic happens. That's the magic of capitalism. And like the Austrians, because they focus on the deviation from equilibrium are better than their classicals, but they still have this belief in the you'll reach equilibrium ultimately or you'll head back towards it, whereas they don't have an explanation of capitalism that gives you cycles apart from having the wrong rate of interest. So there's no role for an accumulation of debt over time. So what Schumpeter gave was a vision of the creativity of capitalism being driven by entrepreneurs who are funded by money creation, by the finance sector. And that's fundamentally the world in which we live.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“I find his worth trivial. But Sean Pater was rich, but with the same foundations as the Austrians. But because he talked about the importance of money that took him away from the Austrian vision, which is very much based on a hard money idea of capitalism, Champeter said, you needed the capacity of the financial sector to create money to empower entrepreneurs. And that's a very important vision.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“So to become a capitalist, you've got to get money. And therefore, you've got to approach the finance sector to get the money. And the finance sector creates money and also creates a debt for the entrepreneur. And so you get this financial engine turning up as well. And you will get movements away from equilibrium out of that. You won't necessarily head back towards the equilibrium. So Schumpeter has a rich vision of capitalism in which money plays an essential role. in which you will be disturbed from equilibrium all the time. And that is really, I think, a much closer vision of actual capitalism than anything by even the Australian Austrian Hayek, et cetera, et cetera, and certainly Rombadu, I find totally reading a cardboard cutout version of the wealth of nature.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“You'll be above or below the equilibrium. And what came out of the Austrian school was an acceptance of that vision that a market should reach equilibrium, but then said, well, you'll get disturbed away from the equilibrium. And that's what gives you the vitality of capitalism because an entrepreneur will see an arbitrage advantage and try to close that gap. And that will give you innovation over time. And Schumpeter went beyond that and saw the role of money and said that entrepreneur is somebody with a great idea and no money.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, Austrian economics grew out of the rebelling against the classical school. So you had three intellects who mainly led the growth of the neoclassical school back in the 1870s. William Jevons from England, Menga, who's from Austria, and Volas from France. And Volas tried to work out a set of equations to describe a multi product economy where there's numerous producers and numerous consumers. Everybody's both a producer and a consumer, and you try to work out a vector of prices that will give you equilibrium in all markets instantaneously. And that's his equilibrium orientation. Jevins is also one about equilibrium, but he worked more at the aggregate level. So there's a supply curve and a demand curve, and that's what Marshall ultimately codified. Menga was pretty much saying that, well, yes, there might be an equilibrium, but you're going to get disturbed from it all the time.”
2022-07-17 · Lex Fridman Podcast · #303 – Steve Keen: Marxism, Capitalism, and Economics · IDENTIFIED FROM THE TRANSCRIPT · source