December 31, 2014

The pluralism of nonsense is still nonsense

Comment on 'Pluralism is not enough'


According to scientific criteria conventional economics is a failure. From this you draw the conclusion: “Sack the economists and disband their departments.” This seems to be a straightforward conclusion, however, it is not because it takes us beyond the realm of science into the realm of politics. Within the confines of science the only legitimate and praiseworthy action is to replace a theory/paradigm by a better one.

Again, it is a logical mistake to conclude from the fact that conventional economics is defective that the curriculum can be improved by counterbalancing it with other defective approaches.

We can agree, for example, that the orthodox profit theory is false (Desai, 2008). But what about Heterodoxy? The profit theories of Marx, Schumpeter, Keynes, Kalecki, Davidson, Minsky, Keen are also demonstrably false (2014; 2011a; 2011c; 2011b; 2013). 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 contradictions and not to advertise them as pluralism.

As there is only one Law of the Lever, there can be only one objective Profit Law for the economy as a whole as long as profit cannot be created by wishful thinking. And, being a scientist, you know this quite well: “Coherence in economic theory will only come from deeper insights into how economies work.” (see intro)

As it happens, this coincides perfectly with my recent post: “This, then, could be the new directive: Economics is the science which studies how the monetary economy works.” See here.

What is needed is a paradigm shift. The problem is that Heterodoxy has no clue how to achieve this. And because it cannot be claimed that the heterodox paradigm is better it is claimed that heterodox policy is better.

While this may be the case, it begs the question. To argue that orthodox theory is false but heterodox policy is right is simply a category mistake.

There is no way around it: "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 is expected from economists is the true theory and not the pluralism of false theories. After Orthodoxy has failed, quite naturally all hopes rest on Heterodoxy.

Don't dally until someone demands: Sack them all!

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. (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. (2013). 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
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge, MA: MIT Press.