What’s the use of economists?

Comment on Lars Syll on ‘What’s the use of economics?’

Blog-Reference and Blog-Reference

Lars Syll summarizes: “Much work done in mainstream theoretical economics is devoid of any explanatory interest. And not only that. Seen from a strictly scientific point of view, it has no value at all. It is a waste of time.”

True. The state of economics is this: theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years.

Economics, though, is not alone orthodox economics but also heterodox economics. Fact is that Heterodoxy has been complicit in the failure. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong. As a result of the utter scientific incompetence of the representative economist, what has been achieved is the pluralism of provably false theories.#1, #2

The simple fact of the matter is that economists ― orthodox or heterodox do not matter ― are either stupid or corrupt or both. Take note:

(i) Economics is not a science but what Feynman called a cargo cult science.
(ii) To maintain that economics is a social science is the foundational blunder. Economics is a system science.#3
(iii) Economists have not figured out to this day how the price- and profit mechanism works.#4
(iv) Economists have not even figured out what profit is.#5
(v) Economists are too stupid for the elementary mathematics of macroeconomic accounting.#6
(vi) Walrasian Micro and Keynesian Macro are both built upon false premises/axioms.#7 Because of this, the whole analytical superstructures are scientifically worthless. The same holds for Marxianism and Austrianism.
(vii) Economic policy guidance has no sound scientific foundations since Adam Smith/Karl Marx.
(viii) Economists have been political agenda pushers/useful political idiots from day one onward.

Economists are storytellers. Economics is a failed science. All microfounded (Walrasian) and macrofounded (Keynesian) models are provably false. Economists do not know how the economy works. Economics is a cargo cult science. The ‘Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel’ is a fraud. Heterodoxy has always been complicit in the fraud.

What’s the use of scientifically incompetent economists? Ask those who use them.

Egmont Kakarot-Handtke


#1 Economics: a science without scientists
#2 And the answer is NCND ― economics after 200+ years of Glomarization
#3 For details of the big picture see cross-references Not a Science of Behavior
#4 For details of the big picture see cross-references Failed/Fake Scientists
#5 Profit: after 200+ years, economists are still in the woods
#6 Wikipedia and the promotion of economists’ idiotism
#7 The miracle cure of economists’ micro-macro schizo

***

REPLY to Andrew Anderson on Jul 20

You say: “I’d first ask what’s the use of the Fundamental Accounting Equation, Assets=Equity+Liabilities, with Liabilities that are largely a sham?”

The Fundamental Accounting Equation Assets=Equity+Liabilities is methodological garbage that proves only one thing: economists are too stupid for the elementary logic/ mathematics that underlies macroeconomic accounting. The formally correct equation reads Equity≡Assets−Liabilities.#1

For 200+ years, economists do not understand what science is all about and what the subject matter of economics is. This includes Orthodoxy, Heterodoxy, Walrasianism, Keynesianism, Marxianism, Austrianism, MMTers, Lars Syll, Tom Hickey, Matt Franko and you.


#1 Wikipedia and the promotion of economists’ idiotism (II)

***

REPLY to Matt Franko on Jul 20

What’s the use of economists?

It would certainly be a good thing if economists could increase scientific knowledge about how the monetary economy works. They have done nothing of the sort in the last 200+ years.

Does Tom Hickey’s and Matt Franko’s blather about methodology and the curriculum at Wharton and elsewhere contribute to anything that is of interest to anybody?

No, not at all, as far as scientific knowledge is concerned. But to filibuster about God, his wife, his poor qualification, and the rest of the world is a tried and tested method to distract from the point at issue. The point at issue is that MMTers are failed/fake scientists and that MMT is (i) proto-scientific garbage, and (ii), a political fraud.

While economists are useless for science, even the dumbest moron is useful as a sand sack in political warfare.

The inexorable paradigm shift in economics

Comment on Asad Zaman on ‘Radical paradigm shifts’

Blog-Reference

If you can read this statement on the RWER blog
REAL-WORLD ECONOMICS REVIEW BLOG BLOCKS/DELETES ALL UNDESIRED COMMENTS
then it is NOT true.
However, if you CANNOT read the statement on the RWER blog then it is true.

For further details related to the ongoing paradigm shift in economics see suggested links:

• Refutation of Asad Zaman’s heterodox methodology: all arguments you ever need
• And the answer is NCND ― economics after 200+ years of Glomarization
• All models are false because all economists are stupid
• Throw them out! Orthodox and heterodox economists are unfit for science
• There is no soft science only soft brains
• Profit: after 200+ years, economists are still in the woods
• How the intelligent non-economist can refute every economist hands down
• Wikipedia and the promotion of economists’ idiotism (II)
• Hooray! The formalization issue is finally settled
• Enough! Economists, retire now!

For details of the big picture see:

• cross-references Failed/Fake Scientists
• cross-references Scientific Incompetence
• cross-references Heterodoxy
• cross-references Paradigm Shift

Egmont Kakarot-Handtke

MMTers make capitalism work

Comment on John Atcheson on ‘Let’s Just Admit It: Capitalism Doesn’t Work’

Blog-Reference

John Atcheson summarizes: “In short, we are essentially creating debt for future generations and calling it wealth creation.”

That, of course, is true because Public Deficit = Private Profit. But who is “We”?

“We” that are the Deficit Owls on Twitter, that is Stephanie Kelton et al. in the yellow press,#1 Warren Mosler et al. in the financial community,#2 Bill Mitchell et al. in academia,#3 that is the philosopher Tom Hickey in the econoblogosphere, one Konrad in the spiritual parallel universe, that are the deficit-spenders/money-creators from the history of economic thought,#4 and many others. “We” that are first and foremost the MMT agenda pushers.#5

Capitalism works because of the macroeconomic Profit Law Q_m=Y_d+(I−S_m)+(G−T)+(X−M) which, oddly enough, economists do not understand since the founding fathers.#6, #7 The Profit Law tells “Us” also that capitalism will eventually break down.#8

The MMTers’ assertion that debt does not matter and that the sovereign money creator cannot go bust is somewhat beside the point. Capitalism lives literally on borrowed time.

Egmont Kakarot-Handtke


#1The Kelton-Fraud
#2 MMT: The one deadly error/fraud of Warren Mosler
#3 Bill Mitchell, MMT’s fake scientist
#4 Keynes, Lerner, MMT, Trump and exploding profit
#5 For the full-spectrum refutation of MMT see cross-references MMT
#6 Truth by definition? The Profit Theory is axiomatically false for 200+ years
#7 Wikipedia and the promotion of economists’ idiotism (II)
#8 Mathematical Proof of the Breakdown of Capitalism

***

REPLY to Tom Hickey on Jul 19

“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

The true theory states that macroeconomic profit is given by Q_m=Y_d+(I−S_m)+(G−T)+(X−M).#1 Because all variables are measurable with the accuracy of two decimal places the Profit Law is testable.

The Profit Law is free of all Human-Nature factors.

The minimum condition for the monetary economy ― Capitalist, Socialist, Communist does NOT matter ― to work is that macroeconomic profit is greater zero. Otherwise, the monetary economy breaks down.

According to the axiomatically correct Profit Law, one way to produce profit is deficit-spending/money-creation, i.e. Qm=G−T, i.e. Public Deficit = Private Profit.

MMT’s economic policy guidance boils down to deficit-spending/money-creation.

MMT agenda pushers promote the production of profit.

Ultimately, MMT policy is causal for the unequal distribution of income/financial wealth.

It does not matter how MMTers see themselves or present themselves in public ― that’s all in the imagination ―, objectively they secure the self-financing of the oligarchy.


#1 Wikimedia, Profit Law and Balances Equation

There is no soft science only soft brains

Comment on Lars Syll on ‘Hard and soft science — a flawed dichotomy’

Blog-Reference and Blog-Reference

When economists are ridiculed for not having achieved anything of scientific value since Adam Smith they retort with the Cobden-Con: “Years ago I heard Mr. Cobden say at a League Meeting that ‘Political Economy was the highest study of the human mind, for that the physical sciences required by no means so hard an effort.’” (Bagehot, 1885)

Nothing has changed since 1885, economics is still a failed science and the excuses are still the same: “The distinctions between hard and soft sciences are part of our culture … But the important distinction is really not between the hard and the soft sciences. Rather, it is between the hard and the easy sciences. Easy-to-do science is what those in physics, chemistry, geology, and some other fields do. Hard-to-do science is what the social scientists do and, in particular, it is what we educational researchers do. In my estimation, we have the hardest-to-do science of them all! We do our science under conditions that physical scientists find intolerable. We face particular problems and must deal with local conditions that limit generalizations and theory building-problems that are different from those faced by the easier-to-do sciences …” (Berliner)#1

The simple fact of the matter is that economists ― orthodox or heterodox do not matter ― are either stupid or corrupt or both. Take note:

(i) Economics is not a science but what Feynman called a cargo cult science.#2
(ii) To maintain that economics is a social science is the foundational blunder. Economics is a system science.#3
(iii) Economists have not figured out to this day how the price- and profit mechanism works.#4
(iv) Economists have not even figured out what profit is.#5
(v) Economists are too stupid for the elementary mathematics of macroeconomic accounting.#6
(vi) Walrasian Micro and Keynesian Macro are both built upon false premises/axioms. Because of this, the whole analytical superstructures are scientifically worthless. The same holds for Marxianism and Austrianism.
(vii) Economic policy guidance has no sound scientific foundations since Adam Smith/Karl Marx.
(viii) Economists have been political agenda pushers/useful political idiots from day one and nothing has changed since.

Soapbox economics is easy but science is hard. So, why should a utility maximizing economist do science: “If the real world is fuzzy, vague and indeterminate, then why should our models build upon a desire to describe it as precise and predictable?” (Syll)

The first rule for soapbox economists is to never leave the swamp where “nothing is clear and everything is possible” (Keynes). Every half-witted agenda pusher knows that “With enough fog emitted, almost anything becomes possible.” (Mirowski) The foggy swamp of political economics is the natural habitat of confused confusers. And Lars Syll is obviously one of them.#7

Egmont Kakarot-Handtke


#1 Failed economics: The losers’ long list of lame excuses
#2 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#3 For details of the big picture see cross-references Not a Science of Behavior
#4 For details of the big picture see cross-references Failed/Fake Scientists
#5 Profit: after 200+ years, economists are still in the woods
#6 Wikipedia and the promotion of economists’ idiotism (II)
#7 Cryptoeconomics ― the best of Lars Syll’s spam folder

Related 'And the answer is NCND ― economics after 200+ years of Glomarization'

Wikipedia and the promotion of economists’ idiotism (II)

Comment on Wikipedia ‘Accounting identity’#1

Own post, no external Blog-Reference

“In accounting, finance and economics, an accounting identity is an equality that must be true regardless of the value of its variables, or a statement that by definition (or construction) must be true.” and “The term accounting identity may be used to distinguish between propositions that are theories (which may or may not be true, or relationships that may or may not always hold) and statements that are by definition true.”

The first point to notice is that there is NO such thing as “true by definition”.#2 Truth has to be established by proof. Scientific truth is well-defined by material and formal consistency: “Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)

The second point is that the term “accounting identity” shows that economists do not understand the elementary mathematics that underlies accounting.

The third point is that identities that are incompatible are declared “true by definition”. Simple logic tells everyone that wildly different accounting identities cannot all be “true by definition”.

Economists have obviously a serious problem with methodology. More specifically, they suffer badly from the Humpty Dumpty Fallacy which is expressed in these familiar slogans:

• “You can define anything you want but as a sage once said ‘A rose by any other name will smell as sweet!’” (Davidson)
• “For, on principle, we may call things what we please.” (Schumpeter)
• “This is a tough question to adjudicate on scientific grounds since the issue is largely definitional and, as Lewis Carroll pointed out, everyone is entitled to his own definitions. (Blinder)
• “’When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’ ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all’.”

The point is that a single definition is indeed arbitrary but one NEVER has only one definition. So, one has to make sure that the set of definitions which refer to one subject matter is internally consistent.

From methodology, it is known that “The often heard rule that concepts are to be defined before they are used in a discussion is much too simple minded pre-Hilbertian. The only way to arrive at coherent languages is to set up axiomatic systems implicitly defining the basic concepts.” (Schmiechen) The fact of the matter is that the foundational concepts of economic are ill-defined. And this is why economics never rose above the proto-scientific level.

For compelling methodological reasons, economics has to be built upon objective-systemic macrofoundations.#3, #4, #5

(A0) The objectively given and most elementary systemic configuration of the world-economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. For a start, the elementary production-consumption economy is given with three macroeconomic axioms.
(A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L.
(A2) O=RL output O is equal to productivity R times working hours L.
(A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.

From the macroeconomic axioms follow models by specification. The Ur-Model is given by two conditions (X=O, C=Yw) and two definitions (monetary profit/loss Qm≡C−Yw, monetary saving/dissaving Sm≡Yw−C).

It always holds Qm+Sm=0 or Qm=−Sm, in other words, at the heart of the monetary economy is an identity: the business sector’s deficit (surplus) equals the household sector’s surplus (deficit). Put bluntly, loss is the counterpart of saving and profit is the counterpart of dissaving. This is the most elementary form of the macroeconomic Profit Law.

The point to notice is that a definition is a one-way relation. The new term “monetary profit Qm” (= definiendum) is derived from the terms already given by the axioms, i.e. C and Yw (= definiens).

From the definition (≡) of the balance of the business sector Qm≡C−Yw follows that to write down the identity Qm+Yw=C is INADMISSIBLE. So, one is NOT permitted to say that “total income” is the “sum of profits and wages” and that “total income” is equal to household sector spending C or that Income = Value of Output (Keynes). Economists, though, do not get it to this day.#6, #7

What should be quite clear is that profit Qm is a balance, i.e. a difference of flows, and wage income is a flow from the business to the household sector. So profit is NOT a sub-category of total income but a balance. A balance can either be positive or negative while a flow like wage income is always greater than zero.

So, Qm+Yw=C is NOT a balance identity that is “true by definition” but plain methodological garbage. From Qm=−Sm, in turn, follows immediately that the Keynesian accounting identity I=S and the MMT balances equation (I−S)+(G−T)+(X−M)=0 are methodological garbage by logical implication.

What holds for the flows of the Profit-and-Loss-Account holds also for Wikipedia’s “most basic identity in accounting”, that is, Assets=Liabilities+Equity. The correct definition for the Asset-and-Liability-Account of the business sector is the one-way relation Equity≡Assets−Liabilities.

The economic Ur-Model above tells us two important things: (i) under the condition of market clearing X=O and budget balancing C=Yw, macroeconomic profit is zero and independent of employment, productivity, wage rate, etcetera, and (ii), because of Qm=−Sm macroeconomic profit comes in the most elementary case from dissaving, i.e. the growth of household sector debt.#8

From the fact that the foundational concepts of economics ― profit and income ― are ill-defined follows (i) that the Wikipedia entry “Accounting identity” is proto-scientific garbage, and (ii), that all Wikipedia entries which directly or indirectly depend on the definition of profit/income are proto-scientific garbage by logical implication.#9, #10

Egmont Kakarot-Handtke


#1 Wikipedia, Accounting identity
#2 Truth by definition? The Profit Theory is axiomatically false for 200+ years
#3 For details of the big picture see cross-references Axiomatization
#4 The Common Error of Common Sense: An Essential Rectification of the Accounting Approach
#5 Wikimedia, Macrofoundations
#6 How the Intelligent Non-Economist Can Refute Every Economist Hands Down
#7 For details of the big picture see cross-references Profit
#8 The Profit Theory is False Since Adam Smith. What About the True Distribution Theory?
#9 Wikipedia and the promotion of economists’ idiotism (I)
#10 Hooray! The formalization issue is finally settled

Related 'Humpty Dumpty is back again' and 'The Humpty Dumpty methodology' and 'Hooray! The formalization issue is finally settled' 'Economics: 200+ years of scientific incompetence and fraud'.

And the answer is NCND ― economics after 200+ years of Glomarization

Comment on Lars Syll on ‘What are axiomatizations good for?’

Blog-Reference

Gilboa, Postlewaite, Samuelson, Schmeidler ask: “What have these axiomatizations done for us lately?” Wrong question, of course. The right question economists have to ask themselves is: what have WE done for the proper axiomatization of economics lately.

Fact is, to begin with, that economic methodologists do not understand to this day what axiomatization is all about. Lars Syll even maintains that is a kind of mental body-building: “Studying mathematics and logic is interesting and fun. It sharpens the mind.”

It is not at all a surprise, therefore, that economics is a failed science. Walrasianism, Keynesianism, Marxianism, Austrianism is mutually contradictory, axiomatically false, and materially/formally inconsistent. As a result, economic policy guidance has NO sound scientific foundations since Adam Smith/Karl Marx.

This pluralism of provably false theories is pretty strange. How could it happen that economics is still at the proto-scientific level while science has made such incredible advances? The answer is that economics had been captured from the very beginning by political agenda pushers. Agenda pushers, though, have no truck with science except for building Potemkin facades.

Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false where “nothing is clear and everything is possible” (Keynes). Vagueness/ inconclusiveness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) While scientifically this is a bad thing, politically it is a good thing.

Because economists are not scientists but swamp creatures they see to it that no analysis and no debate ever leave the swamp. This is achieved by the tried and tested method of Glomarization.#1 For example, to the central question Does a General Economic Equilibrium exists? the answer is: “We can neither confirm nor deny the existence of a General Equilibrium.” And so on with NCND for any other question.#2, #3, #4

Accordingly, if a clear-cut refutation occasionally happens it is simply filibustered away: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern)

Glomarization is the communicative modus operandi in the political sphere. Science is the exact opposite of the political swamp. Science aims at a clear-cut true/false answer with truth well-defined as material and formal consistency. The methodological tool to achieve this is the axiomatic-deductive method. As Aristotle put it 2000+ years ago: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.” This is why axiomatization is of overriding importance.

Neither orthodox nor heterodox economists know how to apply the axiomatic-deductive method correctly.#5 This is why their economic policy proposals have no sound scientific foundation. To the question What have economists ever done for their fellow citizens? the clear-cut answer is nothing but vacuous political blather.

Egmont Kakarot-Handtke


#1 Wikipedia, Glomar response
#2 How the representative economist gets it wrong big time
#3 Economic recommendations out of the swamp between true and false
#4 Failed economics: The losers’ long list of lame excuses
#5 For details of the big picture see cross-references Axiomatization

Related 'Clueless about money and profit' and 'Keynesianism ― the economists’ senile dementia' and 'Buridan’s ass economics' and 'Knowledge is attainable ― even in economics' and 'Failed critique of failed economics' and 'Stop knowing nothing, start knowing something' and 'The scientific self-elimination of Heterodoxy' and 'The prophets of wish-wash, ignoramus et ignorabimus, and preemptive vanitizations' and 'Economics as fool’s paradise' and 'A heap of proto-scientific rubbish' and 'Truth by definition? The Profit Theory is axiomatically false for 200+ years.'

***

Wikimedia, AXEC121e

***

REPLY to John Vertegaal on Jul 15

You say: “Lars and Asad, great minds but still groping after all these years… All reasoning starts from assumptions, but in order to be valid in the real world, those assumptions require empirical confirmation. All economists, as far as I know, assume that the present is complete and we live within our economy. Hence, they come up with assumed points of departure like the accounting identity: Y=C+I, blissfully unaware that accounting itself is based on unprovable assumptions.”

Scientific analysis starts with premises and these have to be clearly stated. This is the minimum requirement.#1 Otherwise, things end after a few steps in confusion and blather. This happened with economics in general and this happens every day in the econoblogosphere.

The current state of economics is that neither Orthodoxy nor Heterodoxy nor Lars Syll nor Asad Zaman nor Craig nor Dave Marsay nor the rest has gotten the foundational concepts profit and income right.#2

Economists are swampies. Economics is a failed science. All microfounded (Walrasian) and macrofounded (Keynesian) models are provably false. Economists do not know how the economy works. Economics is a cargo cult science. The “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a fraud.

“The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug) Economics needs a paradigm shift and the expulsion of the scientifically incompetent or the “throng of superfluous economists” as Joan Robinson called them.#3

#1 United in the social science delusion

#2 Wikipedia and the promotion of economists’ idiotism (II)

#3 Joan Robinson and the ‘throng of superfluous economists’

***

REPLY to Asad Zaman on Jul 16

Since Adam Smith/Karl Marx economics claims to be a science but is NOT. Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years.#1

Fact is that economics is a failed science and that Heterodoxy has been complicit in the failure.#2 Whether this outcome was unintended/intended by individual economists does not matter. What counts is the collective effect which is the perfect Glomarization of economics. There is not one policy proposal drawn from employment theory to monetary theory that embodies valid scientific knowledge about how the economy works, it is just opinion: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

Economists do not have the true theory. For every opinion, there is an equally plausible counter-opinion and that is Glomarization ― hailed as pluralism and anything goes.#3

The political beauty of Glomarization is that it is paralyzing and therefore secures the status quo. Hayek, for one, instrumentalized this effect by arguing that just because of the lack of knowledge of economists and politicians about how the economy works there is NO such thing as economic policy. For this epistemological reason, everything has to be left to the market as an information processor and knowledge producer.

To say economics needs a paradigm shift is to say that traditional Heterodoxy, too, has to be buried at the Flat-Earth-Cemetery.#4 This applies also to Asad Zaman who has been refuted on all methodological counts.#5

By denying that, in principle, axiomatization produces logical consistency and that state-of-art econometrics produces material consistency, heterodox methodologists in effect prevent scientific progress and indirectly support the political status quo.

#1The myth of economics knowledge

#2 Both orthodox and heterodox economists are cargo cult scientists

#3 The philosophy of know-nothingers

#4 Throw them out! Orthodox and heterodox economists are unfit for science

#5 Refutation of Asad Zaman’s heterodox methodology: all arguments you ever need

Truth by definition? The Profit Theory is axiomatically false for 200+ years

Comment on Brian Romanchuk on ‘Primer: The Kalecki Profit Equation (Part I, II)’

Blog-Reference and Blog-Reference

(i) You said in the intro: “This article continues the discussion of the Kalecki Profit Equation. The Kalecki Profit Equation is an account identity (a statement that is true by definition) that determines the level of aggregate business sector profits in terms of other national accounts variables. The full equation is somewhat imposing, so the strategy employed here is to build up the equation by starting off with a simplified model economy that results in a brief equation, then adding new terms progressively.”

(ii) You say in your latest post: “Egmont, the expression ‘I could care less’ best summarises my views on this topic. If a ‘senior MMTer’ wrote something that contradicts standard accounting identities, feel free to take it up with said ‘senior MMTer.’ I cannot recall reading anything like that, so as far as I am concerned, you are beating up on a straw man. (The complaint I saw revolved around MMTers using ‘saving’ to refer to sectoral balances, and not the standard national accounting version. Since ‘saving’ and ‘investing’ are commonly used to refer to things not matching the national accounting definition, I view that as grasping as straws.)”

In (i) you say that you are dealing with “an account identity (a statement that is true by definition)”. In (ii) you say that there are standard accounting identities. Now, the standard identities are also known to be “true by definition”. In fact, this is a very common phrase in economics.

Simple logic tells everyone that wildly different accounting identities cannot all be “true by definition”. Economists have obviously a serious problem with understanding the elementary mathematical logic of accounting. This problem is unsolved since Keynes. After-Keynesians still claim that Keynes’ famous I=S is an accounting identity.#1

Kalecki came up with a quite different accounting identity: “The economy is closed (there is no international trade) and there is no public sector. With these assumptions Kalecki derives the following accounting identity: P+W=Cw+Cp+I where P is the volume of gross profits (profits plus depreciation), W is the volume of total wages, Cp is capitalists’ consumption, Cw is workers’ consumption and I is the gross investment that have been made in the economy. Since we have supposed workers who do not save (that is W=Cw in the preceding equation), we can simplify the two terms and arrive at: P=Cp+I. This is the famous profits equation, which says that profits are equal to the sum of investment and capitalists’ consumption.” (Wikipedia)#2

Kalecki’s profit equation is axiomatically false, that is, beyond repair.#3

In my post ‘The final implosion of MMT’ I came up with the axiomatically correct accounting equation for the most elementary economic configuration, Qm=−Sm #4, which you commented on with the blog post ‘Fun With Accounting Identities’#5: “An article with the flamboyant title ‘The final implosion of MMT’ by Egmont Kakarot-Handtke caught my eye. As I observed at Mike Norman Economics, this was probably just an attempt to troll people. That said, I think it provides another useful example of national accounting works (or does not work...).”

You did not get the point then and I commented: “Which part of Qm=−Sm do you not understand? The equation says: at the heart of national income accounting is an identity — the business sector’s deficit (surplus) equals the household sector’s surplus (deficit).” and summarized “The current state of economics is that national accounting is provably false and that economic theory is axiomatically defective and that the ‘throng of superfluous economists’ (including Brian Romanchuk) has no clue and cannot rise above brain-dead blathering.”

Now, your post ‘Primer: The Kalecki Profit Equation (Part I)’ starts with (Model 1 Profits) = −(Household savings), in symbols, Qm= −Sm.

In principle, it is a good thing that you corrected your false assertions about macroeconomic accounting and adopted the axiomatically correct macroeconomic Profit Law. However, you are deceiving the general reader by attributing it to Kalecki.

I hereby inform you publicly that false attribution not only constitutes a violation of the standards of scientific discussion/publication but also of Wikimedia’s ‘Creative Commons Attribution-Share Alike 4.0 International’ as well as the International Copyright © and Trademark ® Laws. The correct attribution of the Model 1 to Model 5 profit equations is to AXEC/Egmont Kakarot-Handtke.#6, #7, #8

Egmont Kakarot-Handtke


#1 For details of the big picture see cross-references Refutation of I=S
#2 Wikipedia, Kalecki, The profit equation
#3 Refutation of Kalecki’s profit equation

• What is Wrong with Heterodox Economics? Kalecki’s Profit Theory as an Example
• The magic circuit and how economists got it wrong
• Kalecki got it wrong, Allais got it right
• Kalecki: the man who missed it by a hair's breadth
• Kalecki’s wrong definition of profit and income
• Loanable funds ― no hoax, just breathtaking stupidity
• Macro for dummies (II)
• Economists: scientists or political clowns?
• Profit and stupidity
• How the Intelligent Non-Economist Can Refute Every Economist Hands Down

#4 AXEC, Oct 31, 2016, The final implosion of MMT
#5 BondEconomics, Nov 1, 2016, Fun With Accounting Identities
#6 Rectification of MMT macro accounting
#7 DSGE and profit―forget it! MMT and profit―forget it!
#8 Keynes’s Missing Axioms

Immediately preceding 'MMT: How mathematical incompetence helps the Kelton-Fraud'.

Related 'Wikipedia and the promotion of economists’ idiotism (II)'.