The major problem of economics is not that the subject matter is occult but that economists are stupid.
From the Palgrave Dictionary every student of economics can know: “A satisfactory theory of profits is still elusive.” (Desai, 2008, p. 10)
Let this sink in: Neither Classicals, nor Walrasians, nor Marshallians, nor Marxians, nor Keynesians, nor Institutionialists, nor Monetary Economists, nor MMTers, nor Austrians, nor Sraffaians, nor Evolutionists, nor Game theorists, nor EconoPhysicists, nor RBCers, nor New Keynesians, nor New Classicals ever came to grips with profit. Therefore, ALL these approaches fail to capture the essence of the market economy.
It is self-evident: an economist who cannot tell the difference between income and profit has nothing worthwhile to say about how the economy works. Economics is at the level of medieval physics before the concept of energy and the difference between potential and kinetic energy was properly understood.
In fact, it is even worse. Not to understand a physical or social phenomenon is the natural state of human beings. But to offer an explanation that is false on the face of it is to violate well-defined scientific standards.
An orthodox economist subscribes to this set of axioms:
HC1. There exist economic agents.
HC2. Agents have preferences over outcomes.
HC3. Agents independently optimize subject to constraints.
HC4. Choices are made in interrelated markets.
HC5. Agents have full relevant knowledge.
HC6. Observable economic outcomes are coordinated, so they must be discussed with reference to equilibrium states. (Weintraub, 1985, p. 109)
This set is unacceptable as the foundation of economics. Some economists have clearly seen this and drawn the logical conclusion: “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)
And here is the crux: neither orthodox nor heterodox economists have until this very day any clue about ‘what it might mean’.
Orthodoxy is unacceptable and indefensible. Before he even opens his mouth, the orthodox economist has disqualified himself as scientifically incompetent. So, Noah Smith is, to begin with, not at all in the position to criticize Heterodoxy for a lack of methodologically sound foundations.
To top the absurdity, instead of refraining from spreading the provable false orthodox approach and to do his own research Noah complains about not to be spoon-fed with the true economic theory for free. To recall, the first thing every Econ 101 student learns as the gospel of Orthodoxy is that there is no such thing as a free lunch.
Indeed, logic has never been the strong point of economists and this is why they are since more than 200 years behind the curve: “We are not yet out of the wood; in fact, we are not yet in it.” (Schumpeter, 1994, p. 7)
This applies to Orthodoxy in general and to Noah Smith in particular.
Desai, M. (2008). Profit and Profit Theory. In S. N. Durlauf, and L. E. Blume (Eds.), The New Palgrave Dictionary of Economics Online, pages 1–11. Palgrave Macmillan, 2nd edition. URL
Ingrao, B., and Israel, G. (1990). The Invisible Hand. Economic Equilibrium in the History of Science. Cambridge, MA, London: MIT Press.
Schumpeter, J. A. (1994). History of Economic Analysis. New York, NY: Oxford University Press.
Weintraub, E. R. (1985). General Equilibrium Analysis. Cambridge, London, New York, NY, etc.: Cambridge University Press.
Immediately preceding post 'How to rise above Moronomics'.
REPLY to rosserjb on Mar 5
It is widely known that the universal quantifier ALL may in some cases lead to a paradox (see Wikipedia). You are perfectly right to remind me of this.
By consequence, the statement ‘economists are stupid’ has to be replaced by ‘economists are stupid ― except those who assert that economists are stupid’. A good example is provided by Hausman:
“If one takes seriously what Popper says about falsifiability and the critical attitude, then the methodological practice of economics is not only mistaken, it is stupid and intellectually reprehensible.” (1992, p. 275)
This applies to Orthodoxy in general and to Noah Smith and you in particular.
Hausman, D. M. (1992). The Inexact and Separate Science of Economics. Cambridge: Cambridge University Press.