March 9, 2016

Why economics is a failed science: the 25 best explanations/excuses

Comment on ‘Krugman’s textbook — mistaking the map for the territory’

Blog-Reference  extended version of 'The 22 best explanations/excuses'

1. It is all just a matter of opinion and negotiation; there is no such thing as a clear-cut objective true/false conclusion in economics.

2. Economists do not care much about consistency. Pluralism/anything goes/eclecticism/ wish-wash is almost instinctively preferend to clear-cut true/false. With postmodern flexibility economists model/explain every contingency and the opposite of it. WYWIWYG — what you want is what you get.

3. Economics as ‘separate and inexact science’ (J. S. Mill) has its own criteria of success/ failure. Given the peculiarities of the subject matter, economics is always reasonably successful according to its own criteria. This is known as playing tennis with the net down.

4. Strictly speaking, economics as a science does not yet exist. It has always been dominated by politics and has served various agendas independent of any scientific content.

5. Economics is not a Science with a capital S (Solow, 1998, p. x).

6. Economics lacks the experimental method as a way of testing hypotheses.

7. Rival theories cannot be put to an experimental test. This is why the contradictions between various approaches cannot be resolved and false theories cannot be eliminated.

8. All there is to observe is history, and history does not conduct experiments: too many things are always happening at once.

9. The inferences that can be made from history are always uncertain, always disputable.

10. The ‘laws’ of behavior change and evolve.

11. Economists cannot predict, and novelty/emergence is unpredictable in principle.

12. Economists employ a host of nonentities (utility, equilibrium, rational expectations, etc) which are not testable in principle.

13. Ontological uncertainty: “We simply do not know.” (Keynes, 1937, p. 214)

14. Too much abstraction, distorting simplification, mathiness, flawed formalization, misplaced rigor, and phony precision.

15. Economists cannot keep the scientific realm of true/false and the political realm of good/bad apart. Because of positive/normative confusion, they mess up both.

16. Economists violate well-defined scientific standards on a daily basis.

17. Economic methodology is borrowed from old-fashioned physics (instead of evolution theory, chaos theory, complexity theory, information theory, sociology, history, new EconoPhysics, etc).

18. To begin with, the definition of the subject matter is dead wrong: “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” (Robbins, 1935, p. 16)

19. Economists never realized that economics is not a social science but a system science. A system can be unambiguously defined, but human behavior cannot: “The human or personal factor will remain the irrational element in most, or all, institutional social theories.” (Popper, 1960, pp. 157)

20. False axiomatic foundations: “most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point” (Krugman). Maximization-and-equilibrium are inadmissible as axioms.

21. Economists oscillate between vacuous model bricolage and crude empiricism but never managed to formulate a logically consistent and testable theory of how the monetary economy works.

22. There is ineradicable scientific incompetence of both orthodox and heterodox economists since Adam Smith.

23. Bad luck: “But we can never make sure that the right man will be attracted to scientific research.” (Popper, 1960, p. 157) It seems that economics somehow got more than a fair share of lemons.

24. Economics was never meant to be a science but a placebo: “But he [Adam Smith] had no such ambitions; in fact he disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along.” (Schumpeter, 1994, p. 185) And this is why economics teachers pass on until this very day the silly story of supply-demand-equilibrium to their dull 101 students (2013).

25. Economists have not figured out since more than 200 years what profit is (2015). When the pivotal economic concepts profit and income are inconsistent all the rest of the theoretical superstructure is logically defective and, as a consequence, bound to fail when applied as economic policy guidance.

Egmont Kakarot-Handtke

Kakarot-Handtke, E. (2013). How to Get Rid of Supply-Demand-Equilibrium. SSRN Working Paper Series, 2263172: 1–24. URL
Kakarot-Handtke, E. (2015). How the Intelligent Non-Economist Can Refute Every Economist Hands Down. SSRN Working Paper Series, 2705395: 1–6. URL
Keynes, J. M. (1937). The General Theory of Employment. Quarterly Journal of Economics, 51(2): 209–223. URL
Popper, K. R. (1960). The Poverty of Historicism. London, Henley: Routledge and Kegan Paul.
Robbins, L. (1935). An Essay on the Nature and Significance of Economic Science. London, Bombay, etc.: Macmillan, 2nd edition.
Schumpeter, J. A. (1994). History of Economic Analysis. New York, NY: Oxford University Press.
Solow, R. M. (1998). Foreword, volume William Breit and Roger L. Ranson: The Academic Scribblers. Princeton, NJ: Princeton University Press, 3rd edition.

Related 'How economics finally became a science' and 'Coming soon: the canonical economics textbook' and 'MIT dilettantes' and 'How to restart economics' and 'Sickness and remedy'.