March 12, 2015

From proto-science to science

Comment on ‘What is science?’


“Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant, 1994, p. 31)

Neither orthodox nor heterodox economics satisfies the scientific criteria of material and formal consistency. Economists cannot explain how the economy works. The profit theory is false since Adam Smith, that is, economists do not understand the two most important phenomena in their universe: profit and income. Economics still stands where physics stood in the Middle-ages before the concepts of force and mass were properly defined and clearly understood.

Orthodox economics is founded on behavioral assumptions. This has been the wrong starting point because no way leads from there to an understanding of how the economic system works. Critical Heterodoxy is one step ahead insofar as it does not accept the green cheese assumptionism of optimization and supply-demand-equilibrium, yet this is not sufficient to establish a superior paradigm. What we have at the moment is a plurality of debunked theories. This is not a tenable situation. Consequently, Constructive Heterodoxy is focused on the formally consistent reconstruction of the central economic phenomena market, money, profit, employment, etcetera.

“Economics today is a discipline that must either die or undergo a paradigm shift ...” (Kaletsky, 2009, p. 156)

This is a critical juncture. From the fact that the behavioral axioms of Orthodoxy are forever beyond acceptability does not follow that axiomatization is inapplicable or dispensable. Formal consistency is as important as material consistency. It follows therefore that the axioms of Orthodoxy have to be replaced by the axioms of Heterodoxy (2014). That is in technical terms what a paradigm shift is all about.

Egmont Kakarot-Handtke

Kakarot-Handtke, E. (2014). Economics for Economists. SSRN Working Paper Series, 2517242: 1–29. URL
Kaletsky, A. (2009). Goodbye, Homo Economicus. real-world economics review, 50: 151–156. URL
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield, VT: Edward Elgar.

For the systematic clarifying of foundational concepts see also the references overview