December 30, 2014

What the Top 20 heterodox economists say

Comment on  'Mainstream macroeconomics distorts our understanding of economic reality'


In its present state, economics is unsatisfactory. Most economists can agree with this, albeit for different reasons. It is not surprising then that blaming and debunking flourish. Not much can be said against this, except that it is a detour. As Schumpeter, one of the 20 top heterodox economists (see here), already noted:

“If we feel misgivings nevertheless, all we have to do is to start appropriate research. Anything else is pure filibustering.” (1994, p. 577)

So, what is urgently needed is a paradigm shift. Is Heterodoxy following Schumpeter's advice? What can be seen all around resembles nothing so much as pure filibustering.

The two criteria of science are material and formal consistency. The latter is guaranteed by the axiomatic-deductive method. What does Georgescu-Roegen, one of the 20 top heterodox economists, say about axiomatization (= arithmetization in his terminology)?

“Lest this position is misinterpreted again by some casual reader, let me repeat that my point is not that arithmetization of science is undesirable. Whenever arithmetization can be worked out, its merits are above all words of praise. My point is that wholesale arithmetization is impossible, that there is valid knowledge even without arithmetization, and that mock arithmetization is dangerous if peddled as genuine.” (Georgescu-Roegen, 1971, p. 15)

Repeat: the merits of axiomatization are above all words of praise (if properly applied, of course, which is not the case with Orthodoxy).

Tony Lawson, also one of the 20 top heterodox economists, on the other hand does not get tired since 17 years of characterizing deductivism as the main culprit of all that went wrong in economics. “In his seminal book Economics and Reality (1997) Tony Lawson traced this irrelevance to the failure of economists to match their deductive-axiomatic methods with their subject.” (see intro)

It would be helpful to learn who of the two top heterodox economists is right on methodology.

We can agree that the axioms of Orthodoxy are uncertain and false. This fully explains its failure. But what about the premises and the formal consistency of Heterodoxy?

The profit theories of Marx, Schumpeter, Keynes, Kalecki, Davidson, Minsky, Keen, all on the list of the 20 top heterodox economists, are demonstrably false (2014; 2011a; 2011c; 2011b; 2013b). Despite the obvious fact that they cannot all be correct at the same time, all are propagated under the banner of pluralism as heterodox alternatives. As it happens, they are all different AND false. Real scientists would feel the need to clear up this internal contradiction and not to hail it as freedom of opinion.

Is the heterodox understanding of economic reality less or just as confused as DSGE or even worse if that is possible at all (2013a)?

By not strictly insisting on material and formal consistency Orthodoxy and Heterodoxy in effect cooperate on the widely visible crappyfication of economics.

Egmont Kakarot-Handtke

Georgescu-Roegen, N. (1971). The Entropy Law and the Economic Process. Cambridge, MA: Cambridge University Press.
Kakarot-Handtke, E. (2011a). Schumpeter and the Essence of Profit. SSRN Working Paper Series, 1845771: 1–26. URL
Kakarot-Handtke, E. (2011b). What is Wrong With Heterodox Economics? Kalecki’s Profit Theory as an Example. SSRN Working Paper Series, 1845803: 1–9. URL
Kakarot-Handtke, E. (2011c). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–15. URL
Kakarot-Handtke, E. (2013a). Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist. SSRN Working Paper Series, 2207598: 1–16. URL
Kakarot-Handtke, E. (2013b). Debunking Squared. SSRN Working Paper Series, 2357902: 1–5. URL
Kakarot-Handtke, E. (2014). Profit for Marxists. SSRN Working Paper Series, 2414301: 1–25. URL
Schumpeter, J. A. (1994). History of Economic Analysis. New York, NY: Oxford University Press.

For the Top 20 Heterodox Economics Books see here and here