April 15, 2015

Methodology — Marx, too, messed it up

Comment on ‘On dogmatism in economics’

Blog-Reference

Lars Syll writes: “Abstraction is the most valuable ladder of any science. In the social sciences, as Marx forcefully argued, it is all the more indispensable since there ‘the force of abstraction’ must compensate for the impossibility of using microscopes or chemical reactions.” (See intro)

Marx, of course, was perfectly right, albeit only in the abstract. In the practical art of abstraction he messed things up like his classical predecessors since Adam Smith.

The most embarrassing fact of political economics is that neither the pro-capitalists (2014b) nor the anti-capitalists (2014a) ever came to grips with profit (Desai, 2008). This is really mind boggling. Non-economists take notice: more than 200 years full of sound and fury — signifying nothing.

The good news is that Constructive Heterodoxy finally got the fundamental abstraction right. For the correct profit theory see (2015).

By the way, Marx was only echoing J. S. Mill:
“Since, therefore, it is vain to hope that truth can be arrived at, either in Political Economy or in any other department of the social science, while we look at the facts in the concrete, clothed in all the complexity with which nature has surrounded them, and endeavour to elicit a general law by a process of induction from a comparison of details; there remains no other method than the à priori one, or that of ‘abstract speculation’." (Mill, 1874, V.55)

No dogmatism here! Mill had a profound understanding of economic methodology. In this he was far ahead of those who nowadays busily but unknowingly twitter and blog about the economy.

Egmont Kakarot-Handtke


References
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. (2014a). Profit for Marxists. SSRN Working Paper Series, 2414301: 1–25. URL
Kakarot-Handtke, E. (2014b). The Profit Theory is False Since Adam Smith. What About the True Distribution Theory? SSRN Working Paper Series, 2511741: 1–23. URL
Kakarot-Handtke, E. (2015). Essentials of Constructive Heterodoxy: Profit. SSRN Working Paper Series, 2575110: 1–18. URL

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