The Mint:         Good day, Steve. How are you doing down there?

Steve Keen:      I’m actually up here, I’m actually in Amsterdam, about an hour’s time difference away from you.

The Mint:         Oh, right. I’m so used to you being on the other side of the world, either in Australia or Bangkok. But, great to have you on, and thanks very much for giving some time to talk to The Mint.

Steve Keen:      Well, it’s good to be back in the throw again. I was taken out of it by the election campaign, and all the living in Thailand rather than Europe. So, hopefully I’ll be more engaged in future.

The Mint:         Well, great to have you back in the fray. Well, you mentioned the Australian election, and I thought it would be good to just get your take on what happened, and what its significance is.

Steve Keen:      Well I mean, the overwhelmingly good thing is that the leader that virtually everybody loathed, including a large number of people in his own party, tried a divide and conquer electoral campaign where he deliberately provoked the gay and the transsexual community by putting up an anti-transsexual candidate in a conservative seat, expecting to lose the seat because of it but to win votes from what he saw as redneck voters in the western suburbs, and it failed completely. He lost both the western suburbs, and the seat that he put the anti-trans candidate into. And in effect, his party has lost about half its seats in Parliament. The overall Liberal National Coalition didn’t fall as much, because no National Party lost their seat, they’re the country party, members effectively in the country in Australia.

                        But all the urban ones who are Liberal, half of them lost their seats. So, it was a disastrously bad campaign, and we’ve gone from somebody with no charisma and no empathy to somebody with not much charisma, but a lot of empathy, and that’s Anthony Albanese. And one of his very first acts as Prime Minister was to put an Aboriginal flag on the stage behind him when he spoke, which is a sign of the change in the orientation of the country that’s come from the change from the conservatives, the misnamed Liberals, to the Labour Party. And now of course, they’re looking aside, and nothing has been done apart from grandstanding and press releases in the previous nine years of the Liberal Party government. So, they’re finding an absolute mess.

                        So many acts have been passed, and nothing had been done about them. Legislation hasn’t been brought forward, and so on. So, they’ve got a huge cleaning up act to do after the conservatives have been there, and literally… Certainly for the last three years, done nothing worth speaking of.

The Mint:         Just before we get onto the challenges the new government faces, I just wonder about the sort of parallels. Here we had a Prime Minister, Liberal Prime Minister who was a sort of… Could be said to be a slight Trumpian figure, who-

Steve Keen:      Oh yeah, Trump without the hairdo and the personality.

The Mint:         But, he didn’t manage to keep control, and he split, but the more sort of middle of the road lost out? I suppose, and compare that to obviously the Republicans where Trump seems to be still in control, and the centre is keeping with Trump. I mean, how do you see Australia’s difference? Do you think that’s a sign of where the Republicans could go, or just that Australia actually is just not like America?

Oh, it’s very not like America. You see, we haven’t got the religious lunatics dominating politics in Australia

Steve Keen:      Oh, it’s very not like America. You see, we haven’t got the religious lunatics dominating politics in Australia. America’s just a, you realise how weird the country is in terms of its religious component compared to any other Anglo-Saxon nation, and virtually any other Western nation. You can’t find the same emphasis upon church and religion and different factions of God-believers in any country, apart from America. And the term fundamentalism actually originated to describe the so-called reform elements of the American churches, so that fundamentalism doesn’t exist elsewhere. And actually nonetheless, Morrison, the ex-Prime Minister, was a religious fundamentalist, he belonged to a Pentecostal religious sect.

                        And when you look at the proportion who are putting themselves down as religious in Australia, more than half the country when they’re asked at the census said they’re agnostic or atheist. And then the fraction that belongs to one of these extreme religious groups like the Pentecostals, is of the order of 1% of the population. But with the way in which candidates are chosen, for every election you have to have a candidate standing for reelection, to be the party’s representative in their own seat, unlike the crazy UK system when somebody gets in there until they die, or lose the vote. But, every three years therefore there’s an internal vote. And if you have 1% of the population in an electorate of 100,000 people, that’s 1,000 people can turn up from your church.

                        And therefore with that scale, if you have a dedicated campaign in that church to select the local member for a conservative party, you will get in. So, it’s one of the dangers of a… You have to be careful when you design a system where the party members vote for the candidates. Because if you do it at the electorate level, then that means that a tiny minority in the overall country can overwhelm the number of people in that electorate who are themselves willing to go and get involved in politics. So, 1% of the population, 100,000 people, 1,000 potential voters, to select candidates. You could literally have them take over every seat in the country, even though they’re only 1% of the population. It didn’t get that bad in Australia, but we got about…

                        I think we’ve got about four people from Pentecostal religions in the Morrison cabinet, I think, let alone the government. So what you had… And of course what happens in the Republicans, rather than 1% of the population being religious junkies, it must be of the order of 20% at least. So, it’s quite possible for the Republican Party to be dominated by religious nutjobs, pardon me being rude about this, but I’m quite happy to be rude about extreme beliefs in Christianity. And therefore, you’ve lost the party permanently.

The Mint:         So, what about, do you think more parallels with the UK, and yeah, we’ve got obviously a Labour opposition that doesn’t currently have a lot of policies, and I don’t think the Labour opposition in Australia had many policies either, tried to keep a low profile. Is that right?

Steve Keen:      Well, what happened at the previous election, the reason why people were so scarred by Morrison winning back in 2019, was that we had a very comprehensive set of policies put together by Bill Shorten, who was the leader of the Labour Party at that time. And one of them involved changes to a tax concession for older voters, so an offset tax system which they were going to reform. And that was used as a scare campaign to get the older voters to vote against them and for the conservatives, so your very, very detailed sort of policies were seen as losing the election. So this time around, Albanese basically had to just say, go along with the government on a huge range of things, including stuff that the left abhorred.

                        Batoning down on refugees, really terrible terms for migrants, et cetera, et cetera. And now that’s being rolled back, so they didn’t want them to be targeted by Morrison on a whole range of issues where he could have done a divide and conquer approach. So, they did take a low profile. But, the person in charge is someone who nobody would argue is a Keir Starmer, okay? So, you have somebody who doesn’t have a great deal of charisma, this is the new leader, Anthony Albanese. He wasn’t a big personality, like a Gough Whitlam, or a Ben, or a Galloway, that kind of personality. But he’s a very decent human being, that’s always been accepted. And that’s rare in politics, as you’d be aware. And yeah, his background, he was born to a single mother, and raised in a council flat.

                        So, his identity is with the poor and the working class in that sense, rather than the top end of the world. So, a small target with somebody like that is probably more successful than a small target with somebody like Keir Starmer.

The Mint:         Well, Starmer is from a working class background.

Steve Keen:      Oh, he is? Oh, my apologies, I didn’t realise that.

The Mint:         No, yeah, no, he is.

Steve Keen:      He doesn’t look it, okay.

The Mint:         He doesn’t look it, but-

Steve Keen:      Okay, okay, my apologies. I’m wrong, I’m wrong.

The Mint:         I think his father was a railway worker, I think if I remember right. And I suppose he presents himself as sort of decent… He’s tried to actually challenge the fact he’s boring, but other people are saying, “Boring is good, we need more boring now. We’ve had enough excitement with the likes of Johnson.”

There was no internal shafting in the Labour Party when Albanese won, there was no shafting of a left-wing alternative.

Steve Keen:      I’m just annoyed by the extent to which you’ve been shafting Jeremy Corbyn all the way through. There was no internal shafting in the Labour Party when Albanese won, there was no shafting of a left-wing alternative. And in fact in that sense, Albanese would be regarded as more on the left, closer to the left than Bill Shorten was. So, he didn’t go from a very charismatic left figure like Corbyn, to a less charismatic, centre-right candidate like Keir Starmer, who went from a centre-right with not a great deal of charisma, but some solid presence, to somebody who’s also sort of centre-left, I’d imagine you’d say, Albanese is. So, he doesn’t have the same unfortunate baggage as the change in the leadership of the British Labour Party.

The Mint:         But will he lack a sort of mandate, because he hasn’t come in with a set of things he’s going to do? A vision, a sort of direction?

Steve Keen:      Mandates are sort of the term that the other party uses when they lose, and that’s what’s happening right now. They’re saying, “Yeah, only 38% of the population voted for the Labour Party,” which is a caricature of Australia’s proportional voting system. Which means you put the party you want to vote for first, and then your second, and third, and fourth preferences. So, 38% of people gave the Labour Party first preference, but of the order of 12% gave Greens their first preference and Labour second. So, if you actually had a two-party system with the Australian electorate, the vote wouldn’t have been 38% in favour of the Labour party, it would have been 52, 53%, and 47% for the conservatives. And of course as you know, that relatively small margin translates into a landslide in the number of electoral seats won.

The Mint:         So, you think they can actually develop-

Steve Keen:      Oh yeah.

The Mint:         … direction and policies, et cetera, and get them through, without that election platform?

Steve Keen:      Well, once you’re in power you can make up your own platform. We know roughly what they intend doing, but see, a lot of this involves one of the weaknesses of any political system when private money can dominate who gets election funding, and this is the great tragedy of our electoral systems. We let the private sector decide the funding, well, that meant for the conservatives they were beholden to the coal companies, and for the Labour Party, they were beholden to the coal unions. So therefore, coal wins, and I think something of the… There’s some ridiculous number of fossil fuel projects have been approved by both parties, something like close… I think it must be about 100 new coal mines, or gas strikes and so on have been approved.

                        And that’s the problem, because in this current environment, literally environment, you want us to be shutting down fossil fuel ventures, not opening up new ones. So, that’s the negative side.

The Mint:         So, you don’t think the new Labour government is going to be radical from a climate change perspective?

Steve Keen:      No, not on that front until they’re forced to, and that’s a great weakness. The Labour Party will do for the sake of the trade unions in the fossil fuel sector what the conservatives are doing for the sake of the fossil fuel companies.

The Mint:         What about the concept of a just transition? I mean, in the US I believe they’re trying to work with the unions, because I mean, they have similar, obviously, issues I think everywhere obviously, some people are going to lose.

Steve Keen:      That’ll be the background text of what they’re doing. So you’ll find they’ll be establishing solar power plants, and wind generation systems, and battery systems in the regions that are currently the fossil fuel mining areas. But it’ll be a slowly, slowly process, and I’m pretty… I mean, I tend to see trends before most people, and they take longer to break than I expect. But that caveat aside, I think we’re going to see such drama on the climate front that at some point, their hand is going to be forced. We’re going to be saying, “We simply can’t allow any further use of coal or oil,” coal certainly first off for power. And that is likely to happen I think in the next 10 years. And so, I think the softly, softly approach is still thinking we’ve got until 2050 to bring our carbon emissions to zero, and I think that’s wishful thinking.

The Mint:         And do you think the people who voted TEAL, voted for sort of blue/green on a sort of climate change agenda, are they going to have any influence?

Steve Keen:      Yeah, that’s one reason the UK should… If you want to do something decent in the UK, campaign to copy the Australian or New Zealand electoral systems. Because we have, and there seems also a similar system of course on the continent. There is proportional representation in a lot of seats, we actually… There’s one system called the Hare-Clark System, which applies in both Tasmania and the Australian Capital Territory, where the House of Representatives seats have multiple candidates. So, each House of Reps, rather than being, say, 100,000 and one person elected, you have say, 500,000, and five people elected. And then if you have a 60/40 break in progressive to conservative, you get three progressive and two conservative candidates representing that larger electorate. And that is a very sensible way to go, you actually get much more meaningful democracy than you get in the UK or the USA, and-

The Mint:         The Labour government has a majority, doesn’t it? So, it could rule without the need for support.

Steve Keen:      Yeah, it has a majority, I think it’s a majority of one, and in the Senate they’re a minority. So, to get legislation passed, they have to negotiate with both the Greens and the TEALs. And I think they’re aware that they have to include everybody on the progressive side of politics in decision-making in the House of Reps now, in a way that wasn’t necessary for the previous government, or the government before that.

The Mint:         Okay. Let’s now look at the challenges the government faced, because for all its… If it has a progressive agenda, it’s facing presumably huge financial macroeconomic challenges, with inflation growing and so on. So, how do you see the situation, the financial situation it’s facing?

Steve Keen:      With the last election, the 2019 election, I wrote a semi-facetious blog post called the Hospital Pass Election. In other words, you’re about to get dumped by reality, give the ball to the other side so they can get dumped by reality. Well, I was right about the reality, but the experience of the conservatives running, when we had the enormous bushfires that wiped out a large part of some of the southern and northern states, then floods, then COVID, then more floods, it was appalling having the conservatives in charge. If you look what’s happening right now, we have the global outbreak of inflation driven by supply chain problems to begin with, global warming, even more amplified than three years ago. And they are making the mistake, and this is the great problem, they still think about budget deficits in the same way the conservatives do.

                        They think they’ve got to get involved in budget repair, and there are leading economists that influence, like Steve Koukoulas, who’s the bloke that I have absolutely no time for, and he has no time for me. But he’s advising Labour, it’s absolutely necessary to get your deficit down. Now, that’s the exact opposite of what they should be doing. So, it’s possible they’ll focus on that, and minimise what they should be doing for both global warming, and social justice, and also minimising the impact of pretty much unavoidable inflation on working class incomes.

The Mint:         So, how would they… If they did what you think they should be doing, what exactly would be… What would you advise them to do?

What we’re really seeing is a breakdown of the production system, simply meaning it costs more for all sorts of reasons.

Steve Keen:      They’d be running a deficit that would finance, basically subsidising energy consumption by workers. And while trying to keep the minimum wage rising at the same rate of inflation, because what we’re seeing in the average wages are rising less than inflation. So, the rate of inflation, that was about two or three percent higher than wage rises. So, all this talk of a wage price spiral, if there was a wage price spiral that is heading back towards zero again, because the wage prices have fallen all the way through. What we’re really seeing is a breakdown of the production system, simply meaning it costs more for all sorts of reasons. Even when it just takes more time for a commodity to be manufactured and shipped to the final buyer from a production system, that involves an increase in cost.

                        And what we’re seeing is a breakdown in the production system, the global supply chain falling apart, firstly driven largely by COVID and the fact that you’ve never got enough workers on-hand, therefore you’re under-capacity, not because you haven’t got the demand. The demand is there, but you haven’t got the workers to man the production lines, and particularly man the shipping lines to get the stuff from the factory to the home. And that is causing just a rise in the physical cost of production, and it’s a question of which social class cops it. Is it going to be the workers or the capitalists?

The Mint:         So, you can’t really do anything about that supply [inaudible 00:18:35]-

Steve Keen:      Not by putting up the rate of interest, no. Putting up the rate of interest is likely to cause the economy to tank, because it’ll push credit demand from positive to negative. And as you and I know, the neo-classicals don’t think that matters because they don’t understand the role of credit and aggregate demand. But, credit is part of both aggregate demand, then income. So, if we go from positive credit to negative credit, we’re likely to see a large slump in GDP. And that can be driven by the fact that interest rates are rising of the order of mortgage rates, of the order of 2% in some countries to five and 6%. With the level of debt that people have got right now, with the household debt pretty much around the 100% of GDP mark all around the western world, then suddenly 6% of GDP not even including working class incomes.

                        But, 6% of GDP is going to be going towards servicing that debt, and that will both encourage bankruptcies, people will not be able to maintain their current mortgages. But also, an absolute unwillingness to borrow. So, we’ll see credit turn negative, and that will take demand out of the economy.

The Mint:         And how far do you see parallels with the ’70s? Because obviously, post ’70s you have this huge change in sort of not just governments, but the dominant philosophy, rise of Reagan, Thatcher, et cetera, on the back of the inflation, unemployment and so on.

According to the salespeople for neo-liberalism, there would be no problems afterwards. There would be a painful adjustment period, and everything would be so much better.

Steve Keen:      Well, just to make one point quite clear, according to the salespeople for neo-liberalism, there would be no problems afterwards. There would be a painful adjustment period, and everything would be so much better. You wouldn’t need social security, because you’d all have well-paying jobs. You could pay for your own health, you wouldn’t need to have government provision of health. You could afford your own housing, you wouldn’t need benefits, et cetera, et cetera.

The Mint:         This is the sales pitch, post the ’70s?

Steve Keen:      Yeah, for the ’70s, for the de-regulation, okay?

The Mint:         Yeah.

Steve Keen:      High rate of economic growth would have occurred, economy would have grown faster. All utterly bullshit, everything I said, the working class people can’t afford… Medical costs have got out of reach, particularly in America. Social security is lousy for the people at the bottom, the schemes we have, the superannuation schemes, and 401(k)s and things like that are… Your retirement income is based on your work income, which means if you’re a poor person while working you’re going to be a poor person when you can’t work anymore. Unemployment has been higher for most of that period, though it’s lower right now, and economic growth has been lower in the neo-liberal period. So, all the advertising wasn’t there. And now, you’ve got to pick up the pieces.

The Mint:         I mean, so that was the sales pitch then, and you’d say it’s been discredited. What’s the new sales pitch? Because presumably, people are going to look for someone to save the situation, aren’t they?

Steve Keen:      Yeah.

The Mint:         As the crisis worsens.

Steve Keen:      Well, a major thing about… One of the reasons for the dramatic fall in prices, inflation, wasn’t just of course Volcker’s interest rate rise, it was globalisation, moving production offshore. That both hit employment in the west, so there were no longer the working class jobs, the skilled labour jobs weren’t there anymore, they were transferred to China in particular. But then you had far lower costs coming back, so your job as a security clark at a retail outlet could enable you to buy some of the goods made in China, because they were so much cheaper than they would have been if they were made by you when you used to work as a fitter and turner in an American factory. Well, that’s gone, I think we’re starting to see a collapse of globalisation.

                        The impact of COVID is only the very first taste of that. But, those long supply chains just aren’t reliable anymore, and therefore you’re going to get onshoring of production to some extent, so costs are going to rise. And also at the moment, we’ve got rising costs because the globalised supply chain is fragile. So, all that means basically, your cost of production has risen. And then the question is, of what’s left… There’s less room in other words for profit and wages. So, which one’s going to go down? And the likelihood is, it’ll be wages that go down. So, what you would need is the state to compensate for that, you need a government which is going to do more social security. If you don’t give people the money to pay for energy bills, they freeze to death in northern Europe, particularly England, the world’s worst insulation.

                        And they melt in the tropics. So, you’re going to face an absolute need to provide the capacity to buy that, and it won’t be coming out of people’s pockets, it’ll need to be state-provided. So, you’d need larger deficits as part of this to compensate for the extremely low wages which are not going to rise enough to compensate for the inflation.

The Mint:         But I suppose, what happened just in the ’70s is that there was a sort of, a rise of a new ideology which said the past was a failure, we’ve got a new solution, we’re going to do things differently, therefore, bet on us. And I wonder what the narrative is potentially now to say, the past has failed, the ideas were wrong, these are the new ideas that we’re going to promote, back us. Because what you’re saying is, it sounds more like there’s going to be blood, sweat and tears, we’re going to have to go into debt, things are going to cost more, it’s going to be tough. That’s not a great sales pitch, is it?

Steve Keen:      It’s a Winston Churchill sales pitch, you’re right. “I can offer you nothing but blood, sweat…” Was it, “Offer you nothing but blood sweat and tears,” was that the actual-

The Mint:         That’s right, and the thing is the actual… But in a war, you might say, “Okay, but when the war’s over things are going to get better.” But it’s blood, sweat and tears, and it’s climate change, and ecological breakdown. And it’s blood, sweat and tears as far as we can see into the future.

Steve Keen:      Unfortunately that’s true, and it’s only a question of when people realise that that you can actually get political acceptance of it. Because the hassle at the moment, if you run on a campaign like that you’ll lose, because the person promising fairy floss every day is going to win over the person who says, “We can’t afford to floss anymore.” And that is the dilemma we face, that we are massively over-consuming on this planet, we’re about to see the ecology’s reaction to the extra energy we’ve made it absorb, as well as the damage we’ve done to the biodiversity and the breakdown of ecological systems with the chemicals we’ve pumped into the atmosphere, and into the ground and soil and waters.

                        That’s all going to come back and bite us, and we have to have a dramatic decline in human consumption levels, what’s being called de-growth, is necessary. But you can’t sell de-growth, you have one person promising-

The Mint:         But maybe people… People do try and sell a better way of life, don’t they? They say that-

Steve Keen:      Yeah, but it’s such a huge-

The Mint:         … it might be a simpler, but a more connected, a slower, a richer way of life.

Steve Keen:      Yeah. But there’s enormous physical changes in all of that. So for example, if you think about our current consumption, it’s completely linear. You buy something, you use it, you throw the packaging in the garbage bin, and ultimately the thing you’ve consumed ends up in the garbage bin as well. Whether that’s your toilet, or the waste dump and the products are thrown out X years in the future when they’ve been exhausted. It’s a totally linear process, and now you can’t make it entirely circular, but you have to. So when you buy milk in the future, it’ll come… You’ll have to bring your own glass bottle to go to a dispensary, to pick it up and bring it back yourself. And there will be no… I think we’ll just have to… Completely banning disposable packaging, that’ll go.

                        But there are so many other elements like that.

The Mint:         All these changes that yes, really, we need to make. Do you see any chance of some leadership in Australia, I mean, what you’re sort of saying is that-

Steve Keen:      No, I don’t.

The Mint:         So, where could that leadership come from?

Steve Keen:      Well, it can come from the Greens to some extent, and it can come from the TEALs. But, none of them really have got their heads around the scale of the problem. This is why in doing my work on climate change, that’s why I agreed to be a candidate for a failed attempt at a new political party. The party’s still continuing on, but it failed to get anywhere at all in any of its election campaigns in this last election. But, we had three top-class climate researchers including myself advising the party, and a range of other highly-skilled people as well in other areas. So, our group would have been in there saying, “Look, this is serious. This is not a case of consuming one less pork pie each day, everything’s going to be fine. This is a need to have…

Steve Keen:      “If we’re going to have a human society, we have to reduce human consumption. And the burden has to fall on the rich as much as it possibly can.” I’d be arguing in favour of, we have to reduce the human population as well, and let’s do it by decision-making and a slow… Having a negative growth process, rather than massive, massive deaths from ecological catastrophes. But that message won’t be listened to until after the Germans have invaded Poland. In other words, just like in the Second World War, nobody listened to Winston Churchill until what he was warning would happen did happen. And then you got rid of Chamberlain, and got Churchill in charge. That, we haven’t had that moment yet, and only when we have a moment on that scale will there be people saying, “Oh, we can negotiate our way out of this.”

They’re going to find in the next two decades is more likely to be when the really serious stuff starts to hit the fan, and the scale of damage is existential. It’s not a couple of percent of GDP in the far-distant future, it’s whether human civilization can survive.

                        You suddenly realise that the climate doesn’t negotiate, and once that sinks in and you see what that actually means, then you’ll get people saying, “Well, we have to do something.” But at that point, in most political parties around the world you’ll have people who are floundering, who still think that the damages are 20 or 30 years in the future, maybe even 80 years in the future if you believe neo-classical economists. And tiny, and they’re going to find in the next two decades is more likely to be when the really serious stuff starts to hit the fan, and the scale of damage is existential. It’s not a couple of percent of GDP in the far-distant future, it’s whether human civilization can survive.

The Mint:         So, it has to get worse before there’s a chance for the voices such as yourselves to get-

Steve Keen:      Which is why I don’t apologise for my flying right now, because I want to get this message out in as many places as possible. Because unless we have people who are aware of it, when this starts to happen, we’re likely to do the exact opposite of what’s necessary. We’re likely to have people putting in more power, “We’ve got to have more power,” you know? Forget about this, this catastrophe over there, we lost that particular country courtesy of a giant storm, that’s their problem. We’ve got to do more domestically.” To get the global agreement at national levels to reduce consumption, you need awareness that this is truly existential, this is not something that you can negotiate anymore.

The Mint:         Well, with that sombre note, but hope that you will get your message out, and make your flights worthwhile, I wish you all the best. Thank you, Steve.

Steve Keen:      Thanks Henry, bye.


Steve Keen

Professor Steve Keen is both critic of mainstream economics and a developer of a modern complex systems approach to economics. Best known for the book Debunking Economics, he was a …

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