User talk:AlexIvanov2

Alex, thanks for being open minded about this. For the record, let me just say that I do think that there are valid criticisms of neoclassical economics out there and there are people who are making important contributions to the debate. Unfortunetly, Keen is not one of them. Pretty much everything in his book is 'sleight-of-hand' and erronous. I will address the particular topic under discussion in more detail once I know that this talk page actually works as it may be quite involved and will take a while to write up. If it doesn't work, I don't want to waste my time. So this is a "test" message.radek 03:52, 4 November 2006 (UTC)

Alright, I guess I'm confident that this works. Ok, here's the rub. Forget about Keen's mathematical "proof" for a second (this is the sleight-of-hand) - what matters is not whether or not you differentiate the profit function correctly but HOW you differentiate the function - which aspects constitute choice variables and which are parameters from the point of view of the firm.radek 05:01, 4 November 2006 (UTC)

On this particular topic Keen basically makes two assertion about claims of "neoclassical" economics First he says that neoclassicals posit a flat, horizontal demand curve for each individual firm, but a downward sloping market demand curve. Since, according to Keen, neoclassicals believe that the market demand curve is a sum of demand curves of individual firms, this is logically inconsistent. This assertion is just plain wrong for two reasons; neoclassical economics doesn't really talk about the demand curve that faces individual firms and more importantly, the market demand curve IS NOT the sum of demand curves facing individual firms. It is the sum of of quantities demand by all individuals - he's summing up over a wrong index Second Keen asserts that neoclassical economics claims that if one firm increases (or decreases) its output then market output will stay constant. This is a bit more tricky (depends on how you model perfect competition) but essentially neoclassical economics does not claim this - what it does claim is that in a competitive market, a change in output by any one firm is (perceived or actually is) "negligible" relative to total market output. "Negligible" is not equal to zero (as Keen himself titles one of his chapters "infintesimals are not zero!" - true, they're infintesimal. And a finite number of infintesimals is still infintesimal. Keen needs to pay attention to his own advice). At any rate, this assertion of Keen's is a red herring. What matters is not whether a change in output by any one firm affects total market output but rather how the firm perceives its own actions (in terms of its profit maximization problem) and accordingly, how it actually acts. I got more details but want to keep this (sort of) short.radek 05:01, 4 November 2006 (UTC)

Alex, I'm fine with the latest version that you made. I still think it's way to lenient on Keen (particularly with regard to the first claim I mentioned above), but I'm willing to compromise.radek 22:35, 6 November 2006 (UTC)