Comment on Lars Syll on ‘Why critique in economics is so important’
Blog-Reference and Blog-Reference on Sep 22
It is long known that DSGE is a failed approach and nobody needs the critique of Romer et al. which amounts to not much more than the smarter rats abandoning the sinking ship. What is needed is a constructive idea about how to switch from the degenerated neoclassical research program to a progressive paradigm. As Blaug put it: “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)
The only reason why DSGE is still around despite the fact that even its dullest proponents have realized by now that it is indefensible rubbish is that Heterodoxy has failed to develop a suitable alternative: “... 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 which might be used to transcend an accidental intermediate stage of our knowledge.” (Feyerabend, 2004, p. 72)
Heterodoxy’s failure is due to the fact that it stands methodologically still in the Cambridge tradition of loose verbal reasoning: “For Keynes as for Post Keynesians the guiding motto is ‘it is better to be roughly right than precisely wrong!’” (Davidson, 1984, p. 574).#1 This contrasts with the motto of science “it is better to be precisely right than roughly wrong!”
There is nothing to choose between failed Orthodoxy and failed Heterodoxy. Both are logically and empirically refuted. Effective critique does NOT consist in Romer’s folk-psychological crap about heroic critique and killing poor Bob, it consists in throwing false theories out of the window and incompetent scientists out of science.
As Feynman knew: “The problem is not just to say that something might be wrong, but to replace it by something ― and that is not so easy.”
Egmont Kakarot-Handtke
References
Blaug, M. (1998). Economic Theory in Retrospect. Cambridge: Cambridge University Press, 5th edition.
Davidson, P. (1984). Reviving Keynes’s Revolution. Journal of Post Keynesian Economics, 6(4): 561–575. URL
Feyerabend, P. K. (2004). Problems of Empiricism. Cambridge: Cambridge University Press.
#1 Marshall and the Cambridge school of plain economic gibberish
Related 'The end of traditional Heterodoxy in the Malmö coal pit'