October 12, 2015

The proto-scientific state of economics

Comment on ‘The fragile state of the world economy’

Blog-Reference

Financial fragility is real but in the last instance only a surface phenomenon. Even if the financial sector's institutional setup were perfect economic crises would occur. The fact of the matter is that the eventual breakdown is literally built into the monetary economy (2014).

This insight is beyond the horizon of the representative economist. Standard economics is built upon the concept of equilibrium which is a nonentity. Because theoretical economics is built upon false premises it has nothing to offer in the way of a scientifically valid advice.

“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)

Both, Orthodoxy and Heterodoxy, is caught in the proto-scientific state (2015). For the actual situation this means that QE is not much more than clueless hand waving.

Egmont Kakarot-Handtke


References
Kakarot-Handtke, E. (2014). Mathematical Proof of the Breakdown of Capitalism. SSRN Working Paper Series, 2375578: 1–21. URL
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.

See also 'Time to make economics a science' and 'How to be a good scientist'