May 3, 2016

Joan Robinson and the ‘throng of superfluous economists’

Comment on Barkley Rosser on ‘The Legacy of Joan Robinson’

Blog-Reference and Blog-Reference

For Keynes it was obvious that economists had messed up economics: “The classical theorists resemble Euclidean geometers in a non-Euclidean world ...” (1973, p. 16). And he knew that the fault was in what today is called microfoundations: “For if orthodox economics is at fault, the error is to be found not in the superstructure, ...but ... in the premises. (1973, p. xxi)

Consequently, Keynes started the macrofoundations research program in the General Theory formally as follows: “Income = value of output = consumption + investment. Saving = income - consumption. Therefore saving = investment.” (1973, p. 63)

These formal foundations are conceptually and logically defective because Keynes never came to grips with profit and therefore “discarded the draft chapter dealing with it.” (Tómasson et al., 2010, p. 12).

Keynes’s original blunder kicked off a chain reaction of errors/mistakes:
• All I=S/IS-LM models are are false since Keynes and Hicks.
• Keynes’s profit conundrum has not been solved by After-Keynesians.
• Keynes got the employment equation/Phillips curve wrong.

Joan Robinson shared Keynes’s assessment of Orthodoxy but did not, just like the rest of After-Keynesians, spot the fatal mistake/error in Keynes’s approach. She was well aware that there was something wrong with profit but missed the solution by a hair’s breadth (Robinson 1956, p. 402, for details see 2011, eq. (32)). At this analytical peak things went inexorably into reverse.

After-Keynesians can until this day not tell the difference between income and profit. For want of the pivotal concept of their subject matter, economists fail to capture the essence of the market economy. The actual situation is this: the familiar profit theories are provable false (2014). Therefore, ALL models that have been built and are still being built on either the Walrasian or the Keynesian axioms are false.

This is why ‘economic science’ does not exist until this day. The gigantic heap of peer-reviewed incoherent and inconsistent models is what Feynman called cargo cult science (Wikipedia). Scientific ethic demands that this is clearly communicated to the general public. Therefore, as an all-important first step the word ‘sciences’ has to be deleted from the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”. It is important to clearly understand that ALL economic policy guidance lacks sound scientific foundations. This is not at all a matter of political left or right.

Joan Robinson opened the Ely-Lecture in 1972: “When I see this throng of superfluous economists ... I am reminded how much the profession has grown since the thirties and how many more there are now to suffer from the second crisis than there were to be discredited in the first.”

So, who is discredited in 2016? All those who have still not realized that the pivotal economic concept profit is ill-defined and that all I=S/IS-LM model are false since Keynes. Featuring in the “throng of superfluous economists” are:* Krugman, Wren-Lewis, Rowe, Farmer, Syll, Glasner, Radford, DeLong, Douglas, Mitchell, Keen, Smith and, last but not least, Barkley Rosser.

It is high time to fulfill Joan Robinson’s scientific legacy: “Scrap the lot and start again.”

Egmont Kakarot-Handtke

Kakarot-Handtke, E. (2011). Keynes’s Missing Axioms. SSRN Working Paper Series, 1841408: 1–33. URL
Kakarot-Handtke, E. (2014). The Profit Theory is False Since Adam Smith. What About the True Distribution Theory? SSRN Working Paper Series, 2511741: 1–23. URL
Keynes, J. M. (1973). The General Theory of Employment Interest and Money.  London, Basingstoke: Macmillan.
Robinson, J. (1956). The Accumulation of Capital. London: Macmillan.
Tómasson, G., and Bezemer, D. J. (2010). What is the Source of Profit and Interest? A Classical Conundrum Reconsidered. MPRA Paper, 20557: 1–34. URL

* For links to papers and blog discussions see cross-references ‘I=S: Mark of the Incompetent’

Immediately preceding post 'Let’s do it'.
Immediately following post 'The overdue public clarification of economics’ actual scientific state'.