Comment on Brad DeLong on ‘DSGE as a Degenerating Research Program in Lakatosian Terms’
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Krugman put it nicely: “... most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point.”
Methodologically, the maximization-and-equilibrium approach is axiomatically unacceptable but economists swallowed it hook, line and sinker from Jevons/Walras/Menger onward to DSGE. The microfoundations approach is not degenerating but has already been dead in the cradle.#1
This is the current state of economics: Walrasian microfoundations are false for 150+ years and the Keynesian macrofoundations are false for 80+ years.#2 As a consequence, all models that contain maximization-and-equilibrium or I=S/IS-LM are a priori false and together this is roughly 90 percent of the content of peer-reviewed economic quality journals and 100 percent of textbooks.
Brad DeLong and his friends are active participants in one of the most embarrassing failures in the history of scientific thought.
Because they either do not fully realize that their research program has already been dead in the cradle or because they have not the slightest idea about what a progressive alternative could look like, the present generation of economists has not made and cannot make a significant contribution to the discussion about how the actual economy works.
These folks are not part of the solution they ARE the defunct research program.#3
Egmont Kakarot-Handtke
#1 No future for axiomatically false economics
#2 Marshall and the Cambridge school of plain economic gibberish
#3 The trouble with economics prizes
