Comment on Mark Thoma/Simon Wren-Lewis on ‘Reform and Revolution in Macroeconomics’
Blog-Reference
You say: “This is something I've stressed with respect to the failure of macroeconomic models, the failure to ask the right questions prior to the crisis.”
The problem of economics is not that this or that model is insufficient. The problem is that economics as a whole is a failure.
All theories/models that take at least one of the following concepts into the premises are scientifically worthless: utility, expected utility, rationality/bounded rationality, equilibrium, constrained optimization, well-behaved production functions/fixation on decreasing returns, supply/demand functions, simultaneous adaptation, rational expectation, total income=value of output/I=S, real-number quantities/prices, and ergodicity. All these items are economic nonentities comparable to the perpetual motion machine, unicorns, or dancing-angels-on-a-pinpoint.
Economists have no clue how to do economics without these concepts and are hopelessly chained to their degenerating program. They are simply not up to the challenge: “A new idea is extremely difficult to think of. It takes a fantastic imagination.” (Feynman) A scarcity of imagination and an abundance of self-delusion has always been the hallmark of economists.
As Joan Robinson put it: Scrap the lot and start again.
Egmont Kakarot-Handtke