September 21, 2015

Economics is an abysmal failure of reason

Comment on ‘What went wrong with economics?’

Blog-Reference

There can be only one answer to this question: economists are scientifically incompetent. Since more than two centuries Orthodoxy is unacceptable because of material and formal inconsistency,* and Heterodoxy failed to produce a superior alternative: “... we may say that ... the omnipresence of a certain point of view is not a sign of excellence or an indication that the truth or part of the truth has at last been found. It is, rather, the indication of a failure of reason to find suitable alternatives which might be used to transcend an accidental intermediate stage of our knowledge.” (Feyerabend, 2004, p. 72)

Of course, ‘economies operate according to universal laws’ but they do not operate according to behavioral laws because something like a behavioral law does not exists to begin with. Standard economics has been built upon the green cheese behavioral assumption of constrained optimization and from there onwards all went wrong.

Economists never understood what science is all about and this is why they never secured correct premises. “To Plato’s question, ‘Granted that there are means of reasoning from premises to conclusions, who has the privilege of choosing the premises?’ the correct answer, I presume, is that anyone has this privilege who wishes to exercise it, but that everyone else has the privilege of deciding for himself what significance to attach to the conclusions, and that somewhere there lies the responsibility, through the choice of the appropriate premises, to see to it that judgment, information, and perhaps even faith, hope and charity, wield their due influence on the nature of economic thought.” (Viner, 1963, p.12)

The whole of economics is built upon inappropriate premises. What is needed is a paradigm shift, that is, a move from subjective behavioral premises to objective structural premises (2014).**

Because of scientific incompetence, the present generation of economists has not gotten the point and will not get it. There is no hope, all that can be done is a dishonorable discharge of these people from science.

Egmont Kakarot-Handtke


References
Feyerabend, P. K. (2004). Problems of Empiricism. Cambridge: Cambridge University Press.
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL
Viner, J. (1963). The Economist in History. American Economic Review, 53(2): pp. 1–22. URL

* Watch Feynman on material consistency
** See cross-references Paradigm shift