January 1, 2016

Economics as fool’s paradise

Comment on Ken Zimmerman on ‘Clarence Ayres on the economic concept of capital’


You say: “The confusion and uncertainty is inherent in the social sciences, including economics.” Here you have in a nutshell the triple self-deception of Heterodoxy which neatly explains its own failure.

(i) I said “The confusion starts already with the elementary concepts income and profit.” This, clearly, has nothing to do with the distinction between social and natural sciences but only with logical consistency which applies to all sciences. Now, the fact of the matter is, that four heterodox economists apply four different definitions of income/profit.* Elementary logic tells one that not all four can be true (in fact all four are provable false**). This conceptual confusion is indefensible. Heterodoxy as it stands now is out of science just like Orthodoxy. The utter foolishness of Heterodoxy consists in idealizing its own unresolved contradictions as pluralism. Pluralism is a political concept which relates to opinions. In science there can be no pluralism of false theories.

(ii) But things are far worse. When the representative economist is criticized for his gross conceptual blunders he defends them like a feudal prerogative. Both orthodox and heterodox economists subscribe to the Humpty Dumpty methodology "’When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’ ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master — that's all’.” (Carroll, Through the Looking-Glass).*** The utter foolishness of Heterodoxy consists in idealizing arbitrariness and sloppiness as superior methodology and praising Keynes and the Cambridge School of Loose Verbal Reasoning as role model.****

(iii) The worst self-deception of Heterodoxy, though, is not to realize that economics, to begin with, is not a science of behavior (Hudík, 2011). Economics is not a social science like psychology/sociology and not a natural science like physics but a system science.***** The foolishness of Heterodoxy consists in sharing with Orthodoxy the fundamental error that economics is primarily about individual/social behavior. The not so new news is that the so-called social sciences are no sciences at all but what Feynman famously called cargo cult sciences because “By having a vague theory it is possible to get either result. ... It is usually said when this is pointed out, ‘When you are dealing with psychological matters things can't be defined so precisely’. Yes, but then you cannot claim to know anything about it.” (Feynman, 1992, p. 159)

Science, to recall, is about knowledge. Waffling about things that cannot be known is left to sitcoms.

As you correctly observe ‘confusion and uncertainty is inherent in the social sciences’. The fact of the matter is that Heterodoxy has not found in the last 100 years — roughly since Veblen — the way out of the fool’s paradise ‘where it is possible to get either result’ or, as Keynes aptly put it, where ‘nothing is clear and everything is possible’ (1973, p. 292). To the contrary, it is pretty obvious that most orthodox and heterodox economists feel well at home there.

Heterodoxy, though, has one valid point: there is no good reason at all why orthodox fools should occupy more space in academia than heterodox fools.

Egmont Kakarot-Handtke

Feynman, R. P. (1992). The Character of Physical Law. London: Penguin.
Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. The Collected Writings of John Maynard Keynes Vol. VII. London, Basingstoke: Macmillan.

* See post ‘Heterodoxy, too, is scientific junk
** ‘How the intelligent non-economist can refute every economist hands down
*** ‘The Humpty Dumpty methodology
**** ‘Sloppiness as economic methodology
***** ‘Still on the wrong track

Immediately preceding post 'Conceptual blunder'
Immediately following post 'The future of economics: why you will probably not be admitted to it, and why this is a good thing'

Related 'Are economists natural born scientific failures?'