August 1, 2016

Post Keynesianism, science, and universal idiocy

Comment on Lars Syll on ‘What is Post Keynesian Economics?’

Blog-Reference and Blog-Reference on Nov 10 and Blog-Reference on May 30, 2017

There are science and non-science. The former is the realm where the criterion true/false is applied and nothing else, the latter is the vast realm of what John Stuart Mill called universal idiocy (1879, p. 26).

True/false in turn has two inseparable aspects: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant, 1994, p. 31)

Logical consistency is methodologically secured by the axiomatic-deductive method. This method presupposes firm ground to start with or, as Aristotle put it: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.” Without firm ground logic runs amok and thus contributes to universal idiocy. As Keynes aptly remarked: “... a remorseless logician can end up in Bedlam.” (Moggridge, 1976, p. 36). This, clearly, is NOT an argument against logic but against logic that lacks firm ground. Logical consistency is indispensable.

Refutation of a theory/model consists in the proof that it is either logically inconsistent or empirically inconsistent. Theories/models that take nonentities into the premises (angels, unicorns, Santa Claus, utility, equilibrium, etcetera) are a priori OUT of science. However, sometimes it is not immediately obvious whether a word denotes a nonentity or not, e.g. ether or phlogiston or extraterrestrials. Nonentities are the conversation topic of universal idiocy, entities are the subject matter of science.

Keynes was very clear about the all-decisive importance of sound premises: “For if orthodox economics is at fault, the error is to be found not in the superstructure, which has been erected with great care for logical consistency, but in a lack of clearness and of generality in the premises.” (1973, p. xxi)

Keynes left not the slightest doubt that Orthodoxy’s premises are false. Consequently, he left them behind and formulated the foundational syllogism of the General Theory as follows: “Income = value of output = consumption + investment. Saving = income - consumption. Therefore saving = investment.” (1973, p. 63)

This elementary two-liner, though, is conceptually and logically defective because Keynes did not come to grips with profit and therefore “discarded the draft chapter dealing with it.” (Tómasson et al., 2010, p. 12). As a result, the whole Post Keynesian theoretical superstructure is false (2011).

Because Keynes did not get the macrofoundations right the Keynesian Revolution ultimately failed. Just like his predecessors, Keynes had no idea of the fundamental concepts of economics, viz. profit and income. Yet, neither Keynesians nor Post Keynesians nor New Keynesians nor Anti-Keynesians ever spotted the logical inconsistency in Keynes’s macrofoundations. Not very profound thinkers these Walrasian, Keynesian, Marxian, Austrian folks.

As as result, model bricolage, discussion, and debate drifted away into the realm of economic nonentities like general equilibrium, ergodicity, rational expectations or the vacuous pseudo-realism of uncertainty, animal spirits, or folk psychology/sociology/ politics.

The axiomatic foundations of economics are provably false since more than 140 years in the case of Walrasianism and since more than 80 years in the case of Post Keynesianism. Because of this, economic policy advice of BOTH Walrasians AND Keynesians has no sound scientific foundation (2015). Like Walrasianism, Post Keynesianism is NOT an instantiation of science but an instantiation of universal idiocy.

Egmont Kakarot-Handtke


References
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. London, Basingstoke: Macmillan.
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield, VT: Edward Elgar.
Mill, J. S. (1879). Utilitarianism. URL
Moggridge, D. E. (1976). Keynes. London, Basingstoke: 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


Related 'Post Keynesianism, too, is proto-scientific rubbish' and 'Keynesianism ― the economists’ senile dementia' and  'Economists: just too stupid for counting'