December 2, 2015

Economics is a scientific zombie waiting to be put down

Comment on Peter Radford on ‘Tower of Babel’

Blog-Reference

Heterodox economists sometimes wonder why Orthodoxy, which is patently absurd/silly/ unrealistic, endures (See intro). The sad fact of the matter is that it is clueless Heterodoxy itself that keeps obsolete Orthodoxy straying around.

Orthodox economists are well aware that their stuff is junk but they know also that Heterodoxy cannot do better. Hence, there never has been any lack of sneering challenges “... if you think you can do better with a non-neoclassical model ..., then you are quite welcome to try.” (Boland, 1992, p. 19)

Obsolete Orthodoxy endures for one single reason: the lack of something better. Orthodoxy is a scientific zombie waiting to be put down, however, “There is no evidence to suggest that economists abandon degenerating programs in the absence of a progressive alternative.” (Weintraub, 1985, p. 148)

Obsolete Orthodoxy clutches at a shipwreck and cannot let loose. “There is no alternative that is so obviously superior that it would justify everyone abandoning the current orthodoxy.” (Hausman, 1992, p. 255)

Economics is still at the proto-scientific stage of ‘Babylonian incoherent babble’ (Davidson) because of a manifest ‘failure of reason’: “... 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 ...” (Feyerabend, 2004, p. 72)

A sure indicator of Heterodoxy’s own disorientation is the plea for pluralism — a pluralism of admittedly false theories, that is. Because “If you believe in the correctness of your ideas, you do not want pluralism; you want your ideas to win out because they are correct.” (Colander et al., 2007, p. 308)

An explanation of the failure of economics, though, is by no means an exculpation. Economists violate scientific standards on a daily basis by the endless recycling of refuted theories “... suppose they did reject all theories that were empirically falsified ... Nothing would be left standing; there would be no economics.” (Hands, 2001, p. 404)

This malpractice is long known but has never been rectified “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941, pp. 369-370)

The tragedy of Heterodoxy is that it is well aware of all blunders but has no idea of how to escape the cul-de-sac.

The first step in the right direction is a clear distinction between theoretical and political economics. The goal of political economics is to push an agenda, the goal of theoretical economics is to explain how the actual economy works. From the viewpoint of science political economics is worthless, no matter what the agenda is.

Theoretical economics has from the very start been hijacked by the agenda pushers of political economics. Smith and Ricardo defined themselves as political economists, Marx and Keynes were agenda pushers, so were Hayek and Friedman, and so are Krugman and Varoufakis.

Below the political surface, there is no difference between Walrasians, Keynesians, Marxians, or Austrians. All these approaches fail to satisfy the well-defined criteria of science. As a general rule, economic policy proposals have no sound theoretical foundation.

The original task of Heterodoxy is — not to waste time criticizing scientifically incompetent write-offs but — to fully replace all this junk by a superior paradigm.*

“The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug, 1998, p. 703)

Egmont Kakarot-Handtke


References
Blaug, M. (1998). Economic Theory in Retrospect. Cambridge: Cambridge University Press, 5th edition.
Boland, L. A. (1992). The Principles of Economics. Some Lies my Teacher Told Me. London, New York, NY: Routledge.
Colander, D., Holt, R. P., and Rosser, J. B. (2007). Live and Dead Issues in the Methodology of Economics. Journal of Post Keynesian Economics, 30(2): 303–312. URL
Feyerabend, P. K. (2004). Problems of Empiricism. Cambridge: Cambridge University Press.
Hands, D.W. (2001). Reflection without Rules. Economic Methodology and Contemporary
Science Theory. Cambridge, New York, NY, etc: Cambridge University Press.
Hausman, D. M. (1992). The Inexact and Separate Science of Economics. Cambridge: Cambridge University Press.
Morgenstern, O. (1941). Professor Hicks on Value and Capital. Journal of Political Economy, 49(3): 361–393. URL
Weintraub, E. R. (1985). Joan Robinson’s Critique of Equilibrium: An Appraisal. American Economic Review, Papers and Proceedings, 75(2): 146–149. URL

* For a start see cross-references Paradigm shift


Related 'Political economics and intellectual corruption' and 'Profit and the collective failure of economists' and 'Heterodoxy, too, is scientific junk' and 'Economists and the destructive power of stupidity'