March 10, 2016

Sickness and remedy

Comment on Lars Syll on ‘Modern economics is sick’

Blog-Reference and Blog-Reference on Mar 12

Mark Blaug is the towering methodologist because he was not only good at diagnosis but because he came up with the effective therapy: “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.” (1998, p. 703)

Keynesians are since more than 80 years in the dark. Marginalists are since more than 140 years in the dark. The representative economist has not figured out since more than 200 years what profit is.* If there is such a thing as ‘original sin’ in economics then it is the ineradicable scientific incompetence of both orthodox and heterodox economists.

Before Blaug, Keynes knew already what the remedy was: “Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. Something similar is required to-day in economics.” (1973, p. 16)

Keynes set the overdue paradigm shift in motion but After-Keynesians messed it up. Not only neo-Walrasianism is sick but Post-Keynesianism, too (2011).

We are still where Blaug has already been 40 years ago: “The moral of the story is simply this: it takes a new theory.”**

Egmont Kakarot-Handtke

Blaug, M. (1998). Economic Theory in Retrospect. Cambridge: Cambridge University Press, 5th edition.
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. The Collected Writings of John Maynard Keynes Vol. VII. London, Basingstoke: Macmillan.

* For details see the posts ‘Why economics is a failed science: the 25 best explanations/ excuses’ and ‘Economists’ three-layered scientific incompetence’.
** See cross-references Paradigm shift.