August 23, 2015

United in confusion

Comment on ‘Lucas’ caricature of economic science’

Blog-Reference and Blog-Reference

You write: “Economics confuses mathematicisation and internal consistency with science. It is amateurism at its worse. And it has gone on for too long.”

That is not quite correct. Science is defined by its methodology: “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)

So, one needs always both. Orthodoxy cannot be criticized for insisting on formal consistency but for lacking material consistency.

What you are proposing as remedy — historicism, sociologism, psychologism — is not the way forward. We know from the examples of Veblen or the German Historical School that this program, too, has produced much storytelling but nothing of real scientific value.

The failure of Orthodoxy is due to the following set of foundational propositions: “... HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub, 1985, p. 147)

HC1 is vacuous and HC2 to HC5 lack material consistency. This is sufficient for the refutation of Orthodoxy.

The whole discussion about formalization and mathiness is beside the point. Science is defined by formal and material consistency. Economics lacks both. Ergo, economics is not a science. There is no difference between Orthodoxy and Heterodoxy in this respect. The representative economist is a confused confuser (2013), that is all.

Egmont Kakarot-Handtke

Kakarot-Handtke, E. (2013). Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist. SSRN Working Paper Series, 2207598: 1–16. URL
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield, VT: Edward Elgar.
Weintraub, E. R. (1985). Joan Robinson’s Critique of Equilibrium: An Appraisal. American Economic Review, Papers and Proceedings, 75(2): 146–149. URL

Preceding post 'No foundations'