Steve Keen

And I remember just being, what the hell?

Because the conventional theory argues in favor of competition everywhere, and particularly competition in labor markets.

So the idea is that the best outcome for both workers and firms is that the workers aren't organized and neither are the firms, and you get a competitive market determining the wage rate and the number of people with a job.

And the idea is that if you have trade unions, they get in the way of that.

They demand a higher wage and that leads to lower employment, et cetera, et cetera.

So you're better off abolishing trade unions.

And of course, that's been a focus of economic pressure for the last half century.

But if you also acknowledge that the firms are organized, so you have employer associations bargaining with trade unions, the theory of the second best shows that if you remove one or the other, but not both, you're

According to conventional economic theory, you reduce social welfare.

Now, that means that what the theory says in the first pass, you know, get rid of all impediments to competition.

That's the way to have the best possible outcome.

Then you take account there's more than one flaw in terms of the difference between the real world and what the economic theory says is the ideal situation.

There's more than one flaw.

Then getting rid of one of them alone is not enough.

It makes things worse.

So I thought this is stupid because you shouldn't have –

something which is a realistic extension of your theory, which undermines the proposition your theory teaches you in the first place.

It should attenuate in some way, but it shouldn't totally contradict it.

So I was just horrified by that.

And I went down and at the time I was doing...