December 30, 2014

The way ahead

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


• There is almost unanimous agreement that orthodox macroeconomics is a failed approach.

• Heterodoxy has meticulously worked out the weak spots and provided clues for improvement.

• However, Keynes's and others' alternative approaches are halfway houses.

• Heterodoxy is stuck in the methodological discussion about the best way to proceed.

• Helpers from other fields (physicists, biologists, historians, psychologists, sociologists, mathematicians, engineers, etcetera) have repeatedly tried their tools and tricks to no great effect.

• The definition 'Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses' has misled research in the direction of pseudo-sociology and pseudo-psychology.

• Looking around elsewhere for solutions does not work. Economists have to do the paradigm shift themselves.

• Ingenuity replaces critique as Heterodoxy's primary virtue.

• There is no political presetting about what the new paradigm should look like.

• The new paradigm must only satisfy the criteria of material and formal consistency.

• Economists voluntarily refrain from giving policy advice until they have worked out the true theory.

• “People who say it cannot be done should not interrupt those who are doing it.” G. B. Shaw

• “What particular reality is described by a given theory can be ascertained only from that theory's axiomatic foundation.” N. Georgescu-Roegen

• Psychological, sociological or behavioral assumptionism cannot yield anything else than a gossip model of the world. Second-guessing the agents is not economic analysis.

• 'Nothing is clear and everything is possible' (Keynes) is poor science but good enough to avoid outright refutation. Inconclusiveness is the scholar's magic cap.

Egmont Kakarot-Handtke