December 31, 2014

Stop talking, start thinking

Comment on  'Seven things that economists could usefully do or call for over the next several years'


Economists love to give advice. Time to face reality: economists had no solutions, they have no solutions, they are the problem.

“Late in life, moreover, he [Napoleon] claimed that he had always believed that if an empire were made of granite the ideas of economists, if listened to, would suffice to reduce it to dust.” (Viner, 1963, p. 1)

There seems to be complete ignorance among both orthodox and heterodox economists that they have nothing to offer in the way of a scientifically founded advice.

“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, 1991, p. 30)

What we currently have are the opinions of folks with political agendas but certainly with nothing resembling a true theory.

It is a unique fact of the history of economic thought that neither Classicals, nor Walrasians, nor Marshallians, nor Keynesians, nor Marxians, nor Institutionialists, nor Monetary Economists, nor Austrians, nor Sraffaians, nor Evolutionists, nor Game theorists, nor Econophysicists, nor New Keynesians, nor New Classicals ever came to grips with profit (Desai, 2008, p. 10). Hence, 'they fail to capture the essence of a capitalist market economy' (Obrinsky, 1981, p. 495), see also (2013b).

Economists do not understand the two most important phenomena in their universe: profit and income (2014). This is like physics before the proper understanding of the elementary concepts force and mass.

An economist stepping forward and explaining how a crisis could be fixed or how to make the world a better place is in the state of severe self-delusion (2013a). And there is no remedy against this than doing one's scientific homework.

Stop talking, start thinking. This is a manageable agenda for the next several years.

Egmont Kakarot-Handtke

Desai, M. (2008). Profit and Profit Theory. In S. N. Durlauf, and L. E. Blume
(Eds.), The New Palgrave Dictionary of Economics Online, pages 1–11. Palgrave
Macmillan, 2nd edition. 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). The Three Fatal Mistakes of Yesterday Economics:
Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Obrinsky, M. (1981). The Profit Prophets. Journal of Post Keynesian Economics,
3(4): 491–502. URL
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic
Method in Economics and Econometrics. Cambridge, MA: MIT Press.
Viner, J. (1963). The Economist in History. American Economic Review, 53(2): pp.
1–22. URL