Comment on Diane Coyle on ‘How to be a good economist’
Blog-Reference
Towards the end of his book, Rodrik gives a summary for non-economists: “maths is useful; economists are not all alike; economists typically do understand how markets work.” (See intro)
While the triviality of the first two items is unsurpassable, the third assertion is simply false. Economics is a failed science and the representative economist can until this very day not tell the difference between profit and income. Because they do not understand what profit is, economists do not understand how the market system works (2015). Most of them have not yet realized that supply-demand-equilibrium is a ridiculous construct.
It is of utmost importance to distinguish between political and theoretical economics.
(i) The goal of political economics is to push an agenda, the goal of theoretical economics is to explain how the actual economy works and nothing else.
(ii) In political economics anything goes; in theoretical economics, scientific standards are observed.
Theoretical economics has to be judged according to the criteria true/false. The history of political economics, on the other hand, can be summarized as good/bad-moralizing and the perpetual violation of well-defined scientific standards.
The fact of the matter is that theoretical economics has since Adam Smith been dominated by the agenda pushers of political economics which can be characterized by three common traits.
(i) They are mainly occupied with sociology, psychology, anthropology, political science, history, etcetera. By dabbling in the so-called social sciences they miss the core of the subject matter, that is, the objective properties of the economic system.
(ii) They use theoretical economics as a means/support for their agenda. By this, they abuse science.
(iii) As far as they have tried to underpin their agenda theoretically it can be rigorously demonstrated in each case that their approaches lack formal and material consistency.
Political economists are incompetent scientists and, by the same token, bad economists.
“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion. (Stigum, 1991, p. 30)
Economists lack the true theory. Eclecticism is not a merit in science. Just the contrary: a heap of loosely connected and contradicting models is the very proof of failure. Rodrik defends the indefensible. A good scientist would not do this.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge, MA: MIT Press.
Related 'Feeble thinkers, feeble rethinkers: The perennial misery of economics' and 'Knowledge only — no opinion'. For details of the big picture see cross-references Methodology.