June 19, 2016

Don’t tell me that Krugman’s economics is false, tell me instead what is true

Comment on Lars Syll on ‘Paul Krugman — mistaking the map for the territory’


Science is about true/false. The first error/mistake of the representative economist is to mess up things by tacitly replacing the scientific distinction true/false by the political distinction right/left (see graccibros’s post above). With this methodological shell game theoretical economics degenerates to political economics. Political economics is scientifically worthless since Adam Smith and Karl Marx.

The fundamental problem of economics is that it claims to be a science but is not. In fact, economics violates the standards of material and formal consistency on a daily basis, that is, it is PROVABLE false. This holds for Walrasianism, Keynesianism, Marxianism, and Austrianism.

By implication, ALL textbooks since Samuelson’s prototype of 1947 are false. This includes Krugman, Mankiw, Blanchard, Lavoie, Rodrik and so on.*

Krugman’s blunder does NOT consist of simplification or abstraction or thought experiments but of taking the wrong axiomatic starting point. Boiled down to the essentials: “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’s blog). Maximization-and-equilibrium are nonentities and this neatly explains why standard economics has never found a counterpart in the real world. The neoclassical map is for all practical purposes as good as the Map of Middle-earth.

The fact that Krugman’s map is worthless does NOT prove that maps are worthless, it only proves that Krugman is an unskilled map maker: “My opinion continues to be that axiomatics, like every other tool of science, is no better than its user, and not all users are skilled.” (Clower, 1995, p. 308)

As a result of elementary methodological blunder ALL of Econ 101 (except plain descriptions or historical facts/data, of course) is as false as the Geo-centric theory ever was.**

Economics is still at the proto-scientific level of ‘Babylonian incoherent babble’ (Davidson) because of a manifest ‘failure of reason’: “... we may say that the ... omnipresence of a certain point of view is not a sign of excellence or an indication that the truth or part of the truth has at last been found. It is, rather, the indication of a failure of reason to find suitable alternatives ...” (Feyerabend, 2004, p. 72)

This failure, though, is due to the scientific incompetence of Orthodoxy AND Heterodoxy. The tragedy of traditional Heterodoxy is that it is well aware of all orthodox blunders but has no idea of how to rise above incoherent proto-scientific babble.***

The original task of Heterodoxy is ― NOT to waste time criticizing scientific write-offs like Krugman ― but to fully REPLACE all this Econ 101 maximization-and-equilibrium garbage by a superior paradigm.

Egmont Kakarot-Handtke

Clower, R. W. (1995). Axiomatics in Economics. Southern Economic Journal, 62(2): 307–319. URL
Feyerabend, P. K. (2004). Problems of Empiricism. Cambridge: Cambridge University Press.

* See ‘Coming soon: the canonical economics textbook’.
** See ‘What’s wrong with Econ 101? Economists, of course!’.
*** See ‘The scientific self-elimination of Heterodoxy’.