Book Review
Can We Avoid Another Financial Crisis by Professor Steve Keen
Paul Gambles  10th August 2017
The recent twentieth anniversary of the Asian economic crisis reminded me
just how limited the information available on the Internet actually was back in
the mid-1990s.
Today, thanks to the steady evolution of technology that as early as 1965
prompted Intel co-founder Gordon Moore to observe that the number of
transistors per square inch of integrated circuits had been doubling every
year since they were first invented (“Moore’s law”), data and commentary
have expanded to a degree that’s almost incomprehensible.
Yet as Robert Wilensky, another pioneer of computer science, put it some
three decades later, in response to what he saw as the immeasurable volume
of content being spewed out, the quality of the information on offer hasn’t
improved at nearly the same rate as the amount of it:
“we’ve all heard that a million monkeys at a million keyboards could produce
the complete works of Shakespeare; now, thanks to the Internet, we know that
isn’t true.”
Certainly, there aren’t many golden needles to be found nestled in the world’s
digital haystack when it comes to the field of economics.
 Book Review
(Which is why HM Queen Elizabeth II’s now-famous question, to the London
School of Economics in 2008
“Why did nobody notice it?”1
about what Kingston University professor Steve Keen calls
“the most significant economics event of our lifetimes” 2
remains as valid today as it was the day she posed it.)
Australian Steve Keen was, in fact, one of just 13 registered economists3, out
of a global total of around 36,000 (yes that really comes out as 0.04%), who
actually anticipated the global financial crisis.
Knowing this, I think it’s almost impossible not to want to read his latest book,
especially given that it’s entitled Can We Avoid Another Financial Crisis?
Who, after all, can resist wanting to know the answer, from one of the few
people on the planet who predicted the last crisis?
1
https://democracyjournal.org/magazine/45/why-did-nobody-notice-it/
Professor Steve Keen presenting at “WTF- What The Future Holds”, Bangkok, November 4th, 2013
3
This claim has been made by sources such as Australian economics blog, Barnaby Is Right
(https://barnabyisright.com/2013/02/10/will-you-help-revolutionise-economics/) but without providing source data
or methodology. Other studies, articles and blogs identify various numbers, for instance
https://intheblack.cpaaustralia.com.au/economy/6-economists-who-predicted-the-global-financial-crisis-and-why-weshould-listen-to-them-from-now-on but certainly the majority of economics professionals and policymakers were
blindsided by or engaged in deliberately obfuscating events (https://knowledge.wharton.upenn.edu/article/whyeconomists-failed-to-predict-the-financial-crisis/). Professor Keen received the Revere Award for having ‘first and
most cogently warned the world of the coming Global Financial Collapse’ (https://rwer.wordpress.com/2010/05/13/keenroubini-and-baker-win-revere-award-for-economics-2/)
2
 Page 1
 Book Review
I certainly couldn’t: but then, I’ve been a fan of Keen’s published work for
some time.
I first came across his writings online, beginning sometime in the late 1990s; I
then quickly devoured his first book, Debunking Economics: The Naked
Emperor Dethroned?
Before long I found myself keeping an eye out for his latest online articles and,
as the content of the Internet changed, for Steve Keen videos, which at a
certain point began to appear as one of those rare golden needles in the
exponentially increasing haystack of digital economic content.
I even reached out to him in person around five years ago, when looking for
answers about the likely impacts of the various economic stimulus policies,
adopted in response to the global financial crisis. (He replied quickly, clearly
and extremely helpfully.)
Not long after this, he was the keynote speaker at an event organised by
MBMG in Bangkok (where we’re based), addressing the question “WTF! What
the future holds!”.4
‘Not magnum opus’
Most recently, when Steve mentioned to me in passing that Polity Books
would shortly be publishing his second book, Can We Avoid Another
Financial Crisis?, he indicated that this would be a much smaller and less
4
https://www.nationthailand.com/business/30218602
 Page 2
 Book Review
academic work than the magnum opus that I’m continually nagging him to
finish, as the follow-up to Debunking.
Having now read it, I can confirm this.
However, it might be just as influential and significant, if not even more so,
than if it were a weighty academic tome. Because what Professor Keen has
done here with his latest book is to recognise and highlight the barriers to
wider economic and financial understanding that are caused by jargon,
theory, abstruse mathematical formulae, and sheer length of argument.
It would be wrong to sub-title Can We Avoid– even though one arguably
might – as “debunking for dummies”, (since most of the first few chapters
focus on pulling the rug out from underneath the multiple fallacies of
conventional economic theory), because it quickly moves on from debunking,
and it is the subsequent material which really comprises the heart of the book.
In the initial “debunking” section, Keen indulges in puncturing once and for all
many of the economic myths those of us who follow his writings know that he
has previously railed against – although here with the added perspective of
nearly a decade since the first signs of the pending global financial crisis were
beginning to become undeniably obvious to wider audiences.
The first part of Can We Avoid, therefore, ends up being, really, an
explanation of just how conventional economics has failed us, and why – a
 Page 3
 Book Review
belated answer to the question asked during the royal tour of LSE.
In the second and meatiee part of his book, Keen proceeds to examine the
global macro-economic conditions as they stand today, initially by segregating
countries into:
i) Those that joined Japan in the “Debt Zombie” category as a result of the GFC,
and have stagnated since then (these include the USA, UK, Denmark, Ireland,
New Zealand, Portugal and Spain);
ii) those that are in imminent danger of a crisis (Australia, Belgium, Canada,
China, Hong Kong, Norway, South Korea and Sweden);
iii) those that aren’t yet in danger, but soon will be if they don’t change course
(Finland, France, Holland, Malaysia, Singapore, Switzerland and Thailand).
Keen concludes by examining what he says are the necessary policy actions
needed to be taken to prevent a future crisis.
In my opinion, this conclusion is the weakest part of an otherwise excellent
book, largely because the complexities inherent in finding successful formulae
for keeping the inherent instincts of free-market capitalism from tipping over
into excess is much more difficult to condense into easily understood
demonstrable thinking. (these complexities, it seems to me, would be the
obvious preserve of Keen’s eventual magnum opus – which I’ll continue to
lobby for.)
 Page 4
 Book Review
As a long-time admirer and more recently, friend of Professor Keen, I’m
personally slightly disappointed that we may have to wait a little longer for
his full and definitive pronouncement on what is ultimately needed to force
policymakers and the greater, global economics establishment to change the
innumerable errors of their ways.
On the other hand, knowing what we do now about Thomas Piketty’s Capital
in the Twenty-First Century– a 650-pages-plus volume bought by more than
3 million people but, if reports are to be believed, actually read cover-to-cover
by rather fewer – it might actually be just as well that we have this shorter,
practical, easily-understood guide to what’s wrong with economics and
policies to hand.
Particularly right at the moment, as a growing number of economists and
“experts” seem to be tripping over one another in their efforts to be among
the first to intone that the next crisis is imminent, and that it will make the
last one look like a walk in the park on a sunny day.
Because unlike a lot of other economics treatises, this is a book everyone can
read, and understand.
So there really is no excuse now for investors or investment professionals to
get caught off guard by the next crisis, nor for electorates to tolerate the
appallingly misguided policies of pretty much all the political parties out
there. (With respect to that point, Keen quite rightly casts Margaret Thatcher
and Ronald Reagan as the villains of the piece, in terms of bearing most of the
 Page 5
 Book Review
responsibility for the GFC. However, he also shows his political impartiality by
eviscerating the economic policies of Bill Clinton with equal disdain.)
As for whether we can or cannot avoid another financial crisis – this is the
main reason you’ve read this far, right? – the short answer, perhaps not
surprisingly, is “yes, we can but we probably won’t”.
To do justice to Professor Keen’s nuanced conclusion, it would be better to say
that he says we can in theory avoid another financial crisis, but that it would
require such a major change in mindset that, in practice, we almost certainly
won’t.
Even if I’ve given away the punchline, non-academics interested in economic
or financial markets should, if they read only one book on the topic, absolutely
read this one. The majority of academic economists of course won’t. Which is
why they’ll be surprised to be caught out again the next time.
Can We Avoid Another Financial Crisis? (The Future of Capitalism)
By Steve Keen
Polity Books, 140pp
May 2017
ISBN- 978-1-5095-1373-4 [Paperback] UK RRP £9.99
ISBN- 978-1-5095-1372-7 [Hardcover] UK RRP £40.00
 Page 6