February 17, 2016

What heterodox economists are embarrassed to admit

Comment on Lars Syll on ‘What mainstream economists are embarrassed to admit’

Blog-Reference

Economics is practiced by four major sects Walrasians, Keynesians, Marxians, and Austrians. Strictly speaking, there is no economics with an agreed upon corpus of knowledge about the actual monetary economy. What we instead have is a heap of ill-founded opinions.

Needless to emphasize that economists who can explain everything, except how the economy works, have already answered the question ‘Why economists disagree’ (Prychitko, 1998).

Note that there is already a spin in the question. The right question is, of course ‘How to take people to task who have failed to produce anything of real scientific value over more than 200 years and are intellectually responsible for economic crises from the Great Depression onward?’

So how do economists handle the question of why, strictly speaking, economics as a science does not exist at all? “Friedman and Machlup both argued that most of the disagreement among economists is only apparent. We generally agree on theoretical fundamentals — the basic models. ... We economists disagree over applications, and that’s what the public (Machlup’s “outsiders”) hears on the evening news and reads in the financial pages. ... For Friedman, their differences is over politics, not economic theory. The conflation of solid economic theory with political (and moral) judgment helps explain a good deal of the apparent disagreement among economists ....” (Prychitko, 1998, pp. 1-2)

It is only apparent, dear outsiders and laypeople. In reality, Hey presto!, Walrasians, Keynesians, Marxians, and Austrians subscribe to the same theoretical fundamentals.

Does anybody remember the vital distinction between normative and positive (= empirical) and that science restricts itself to the latter? What did J. S. Mill tell you, dear economists of all stripes?

“Mill had grasped clearly in the Logic the distinction between positive and normative propositions, writing that: ‘a scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision’.” (Whitaker, 1975, p. 1047)

In brief: Politics is not your business at all. Your proper business is to figure out how the economy works. Society does not need your unfounded opinion, dear economists, because we have already enough of this garbage, what we really need is rock-solid knowledge.

Of course, economists have nothing to offer that comes close to a valid scientific theory. And here is where the political smokescreen is applied. By declaring an issue as political/normative it becomes insoluble because there is no way to solve a normative problem scientifically, i.e. by applying the criteria of logical and material consistency.

This is the Houdini trick of political economists: When they cannot solve a positive problem, e.g. unemployment, they redefine it as a normative problem, well knowing that everybody accepts that normative questions are insoluble in principle. The ensuing endless blather hides the fact that political economists lack the true theory.

“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)

The first task of Heterodoxy is to establish scientific standards in economics. That means to obviate all questions that fall outside the scientific framework of true/false, and that in turn means to get out of political economics.

Political economics has not produced anything of scientific value since Adam Smith. This is what orthodox economists are embarrassed to admit. Heterodoxy, on the other hand, has failed so far to produce a superior alternative.

“There is another alternative: to formulate a completely new research program and conceptual approach. As we have seen, this is often spoken of, but there is still no indication of what it might mean.” (Ingrao et al., 1990, p. 362)

To this day neither Orthodoxy nor Heterodoxy has any clue of what it might mean.

The plain fact behind the political smokescreen is that economics is a failed science. The one thing Walrasians, Keynesians, Marxians, and Austrians have indeed in common is scientific incompetence. It is absolutely irrelevant whether an orthodox or a heterodox economist admits this or not.

Egmont Kakarot-Handtke


References
Ingrao, B., and Israel, G. (1990). The Invisible Hand. Economic Equilibrium in the History of Science. Cambridge, MA, London: MIT Press.
Prychitko, D. L. (1998). Introduction. In D. L. Prychitko (Ed.), Why Economists Disagree: An Introduction to the Alternative Schools of Thought, pages 1–16. Albany, NY: State University of New York Press.
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge, MA: MIT Press.
Whitaker, J. K. (1975). John Stuart Mill’s Methodology. Chicago Journals, 83(5): 1033–1050. URL

Immediately preceding post 'Political economics: a playground for scientific deadbeats'

Related 'Economists’ three-layered scientific incompetence' and 'Heterodoxy and the nullity of dead horse beating' and 'How to restart economics' and 'Every thinking economist is heterodox by default, but how do we proceed from here?' and 'Heterodoxy, too, is scientific junk'