2009 Quote by Steve Keen
““The fallacy that dynamic processes must be modeled as if the system is in continuous equilibrium is probably the most important reason for the intellectual failure of neoclassical economics. Mathematics, science and engineering developed tools long ago to model outside of equilibrium processes. This dynamic approach to thinking about the economy should become second nature to economists.””
About This Quote
Source Speech: Interview on Economic Modeling, 2015
Argues that assuming equilibrium in dynamic systems leads to flawed economic theories; advocates for modeling real-world, out‑of‑equilibrium behavior.
In simple terms: Equilibrium assumptions mislead economics; use dynamic models.
Key Takeaway
Adopt out‑of‑equilibrium analysis.
Themes
economics
modeling
theory
methodology
Mood
critical
analytical
Type
theoretical
academic
When to use this quote
- policy design
- financial forecasting
- academic research
- market analysis
Key Concepts
Dynamic systems
equilibrium
neoclassical critique
Questions to Reflect On
- How can dynamic models improve policy outcomes?
- What tools best capture out‑of‑equilibrium behavior?
A Different Perspective
Equilibrium models can still be useful for certain stable contexts.
