January 9, 2015

Groundhog Day (economics)

Comment on 'Extraordinarily absurd things called ‘Keynesian’' 

Blog-Reference

Lars Syll writes: “All the neoclassical professors were there. Their theories were totally mangled and no one -- absolutely no one -- had anything to say even remotely reminiscent of a defense.”

A field day for Heterodoxy. One of many.

In 1898 the great heterodox economist Thorstein Veblen asked: “Why is Economics Not an Evolutionary Science?” What he pointed out was that the equilibrium models of his neoclassical fellow economists were mistaken, useless, and misleading.

He famously ridiculed homo oeconomicus: “The hedonistic conception of man is that of a lightning calculator of pleasures and pains who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact.”

Well said. Yes, Orthodoxy is a failure. Yes, the emperor has no clothes. Yes, the textbooks are wrong. Yes, equilibrium is a nonentity and rational expectations are a green cheese assumption. Yes, the economy is non-ergodic. Yes, Keynes has been distorted beyond recognition. Yes, economics is the finest salmagundi of all times.

We know all this. It does not help. More than 100 years after Veblen homo economicus is still with us. How to get out of the time loop?

“... if we wish to place economic science upon a solid basis, we must make it completely independent of psychological assumptions and philosophical hypotheses.” (Slutzky, quoted in Mirowski, 1995, p. 362)

Time for Heterodoxy to switch from deconstruction to construction (2015).

Egmont Kakarot-Handtke


References
Kakarot-Handtke, E. (2015). Essentials of Constructive Heterodoxy: The Market. SSRN Working Paper Series, 2547098: 1–10. URL
Mirowski, P. (1995). More Heat than Light. Cambridge: Cambridge University Press.