July 7, 2015

Heterodoxy's big fat Greek error

Comment on Paul Schächterle on ‘In Greece, NO is the answer’

Blog-Reference

You say: “I am by no means against theorising as a part of an economic science.”

Theorizing is not a nice add-on, it is the very task of science. What we expect from physics is the correct theory of how Nature works, from the universe down to the smallest particle. Along the same line, we expect from economics the correct theory of how the economy works. Theory is not some exotic and inconsequential speculation, it is the incorporation of knowledge — the best thing we can achieve as humans.

The situation in economics is this: what has been produced in the last 200 years has objectively not much scientific value. Take Newton and Smith as the base line, then physics has arrived in the meantime at quantum theory while economics has not even produced something like the law of the lever.

Could it be that economists have been too much occupied with playing political games and writing pamphlets instead of doing serious scientific work?

The crucial point is this:
“Whatever knowledge we possess is either knowledge of particular facts or scientific knowledge.” (Russel, 1961, p. 620)

What you can learn in business schools and most universities is knowledge of particular facts, eg. how the Federal Reserve System or the gold standard works. This is all good and fine and useful but it is not science.

Heterodoxy criticizes Orthodoxy, and rightfully so. But here care has to be taken. Is it on political grounds or on scientific grounds?

My point is this: both Orthodoxy and Heterodoxy is mired in political economics. What they have both produced so far is good practical political ammunition but scientific crap.

In my view, Heterodoxy is not another political movement, nor a charity for the Greeks that suffer much from financial deficits but most from deficits in institution-building which cannot be repaired by throwing money at it. In my view, Heterodoxy's task is to get economics out of the political swamp and to make it a science.

You say “I mean, we should try, but we should not see it as an easy task.”

No it's not easy — to become another quacking frog in the swamp is much easier.

Egmont Kakarot-Handtke

References
Russel, B. (1961). The Basic Writings of Betrand Russel, chapter Limitations of Scientific Method, pages 620–627. London: Routledge.