Comment on Lars Syll on ‘The most devastatingly important trade-off in mainstream economics’
Blog-Reference
“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)
Repeat: formal and material consistency, both! There is no trade-off in science, never was, and never will be. The misleading idea that there could be a conflict between ‘theory and practice’ or ‘rigor and relevance’ is very old and immensely popular among laypersons. So much so that Kant bothered to refute it in an essay, first published in 1793, with the title ‘On the Old Saw: That May Be Right in Theory But It Won’t Work in Practice.’
Kant exploded the silly saw with the famous punch-line: “Es gibt nichts Praktischeres als eine gute Theorie“ or “There is nothing as practical as a good theory.”
Hence, Lars Syll’s summary: “the higher the level of rigour and precision, the smaller is the range of real-world application. So the more mainstream economists insist on formal logic validity, the less they have to say about the real world” has already been refuted in 1793.
The devastating crux of Orthodoxy stems not from formal logic validity but from the set of absolutely unacceptable premises. The intellectual catastrophe that is economics starts with the maximization-with-equilibrium assumption, which is common to the sorta-kinda funny crowd of spacy DSGEers.
As soon as Heterodoxy agrees on superior axioms Orthodoxy’s conceptual green cheese will be gone for good. Heterodoxy will outperform Orthodoxy in logical consistency “... for he who contradicts himself proves nothing.” (Klant, 1988, p. 113)
Egmont Kakarot-Handtke
References
Klant, J. J. (1988). The Natural Order. In N. de Marchi (Ed.), The Popperian Legacy in Economics, 87–117. Cambridge: Cambridge University Press.
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield: Edward Elgar.