December 31, 2016

A political stench is in the air

Comment on James Kwak on ‘A Change Is in the Air’

Blog-Reference and Blog-Reference and Blog-Reference on Jan 15 adapted to context

Most people/economists have no proper understanding of what economics is all about. Therefore it is, first of all, of utmost importance to distinguish between political and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics the scientific standards of material and formal consistency are observed.

Theoretical economics has to be judged according to the criteria true/false and NOTHING else. The history of political economics from Adam Smith to Keynes and beyond can be summarized as utter scientific failure. A closer look at the history of economic thought shows that theoretical economics had been hijacked from the very beginning by the agenda pushers of political economics. Smith and Ricardo fought for liberalism, Marx and Keynes were agenda pushers, so were Hayek and Friedman, and so are Krugman and Varoufakis.

Political economics has produced NOTHING of scientific value in the last 200+ years. The four major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism — are mutually contradictory and materially/formally inconsistent. Economics is a failed science.

Neither the orthodox defense of the market economy nor the heterodox critique can be taken seriously. Since the founding fathers, economists claim to do science but they have never risen above the level of opinion, belief, wish-wash, storytelling, soap box propaganda, and sitcom gossip.#1

Keynes is a case in point. His political critique of Laissez-faire was spot on. But Keynes himself was a political economist and an incompetent scientist. He did not even get the elementary conceptual foundations of economics right.#2

Political economists of all stripes are characterized by four common traits: (i) They are mainly occupied with sociology, psychology, political science, social philosophy, history, anthropology, Darwinism/evolution theory, etcetera. That is, they miss the essentials of economics proper, viz. the systemic properties of the monetary economy. (ii) They use theoretical economics to advance their agenda. By this, they abuse science unknowingly or knowingly. (iii) As far as they have tried to underpin their agendas theoretically it can be proved in each case that their approaches lack formal and material consistency. (iv) They have NO idea about how the actual economy works because they lack the correct profit theory since Adam Smith/Karl Marx.#3

It is not decisive what the political agenda is: ALL of political economics is what Feynman called cargo cult science or what we call today fake science.#4 Kwak’s attempt to reanimate the absolute scientific failure Keynes is just another smelly exercise in political economics.

Egmont Kakarot-Handtke

#1 See ‘Americans believe crazy things, yet they are outdone by economists
#2 See ‘How Keynes got macro wrong and Allais got it right
#3 See ‘The distribution theory is false because the profit theory is false
#4 See ‘FakeNews, FakeScience: economics in the information age

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Related NOTE on Bob Jan 1

Most people/economists have no proper understanding of what economics is all about. Therefore it is, first of all, of utmost importance to distinguish between political and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics the scientific standards of material and formal consistency are observed.

Political economics has produced NOTHING of scientific value in the last 200+ years. The four major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism — are mutually contradictory and materially/formally inconsistent. Economic policy guidance never had sound scientific foundations.

What we have at the moment is the pluralism of provable false theories. Instead of teaching the true economic theory Steve Keen is “Teaching Economics the Pluralist Way”.

It is high time to take away from ALL orthodox and heterodox failures their fake scientific diplomas and to sue them for damages.

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REPLY to Bob on Jan 1

I said that there is political economics (= agenda pushing) and theoretical economics (= science). Science is supposed to give us the true mental representation of reality.

You said: “In practice, there is no such thing as theoretical economics.” In other words, economics is not or cannot be a science.

Obviously, you are not familiar with the definition of economics: “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” (Robbins, 1935, p. 16) Economists repeat this claim once a year very publicly with a prize which explicitly says: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.

Either you are not familiar with the definition of economics or with the definition of science.*

* See also ‘A political stench is in the air’ and ‘The real problem with the economics Nobel

Immediately following 'Will economics ever become a science?'