Going beyond Wicksell, Keynes, and MMT

Comment on Lars Syll on ‘The origins of MMT’

Blog-Reference and Blog-Reference and Blog-Reference

No doubt, with regard to the theory of money Wicksell, Keynes, and MMT are superior to DSGE/RBC/New Keynesianism. However, Wicksell, Keynes, and MMT failed to integrate the theory of money into a consistent macroeconomic framework.

MMTers are right: mainstream economics is a failed approach and irrecoverably lost in the parallel universe of error, inconsistency, feeblemindedness, and aberration. But MMTers are wrong in believing that MMT is firmly on the right track.#1, #2

MMT is still caught in the PsySoc trap by maintaining that economics is about human behavior. The first point to realize is that economics is about the behavior of the economic system. Economics is NOT a social science but a systems science. To derive the theory of money from the history of money is therefore doomed to failure.

The second point to realize is that all variants of Keynesianism suffer from methodological self-delusion. Paul Davidson maintains: “Post Keynesian models are designed specifically to deal with real-world problems.” And Bill Mitchell adds: “In this tradition, MMT ... is not an imaginary approach that deals with imaginary problems. It is about the real world and starts with some basic macroeconomic principles like ― spending equals income.”

Time to wake up to the fact that this ‘principle’ is provably false since Keynes applied it in the General Theory.#3 Because of this, the whole analytical superstructure of Keynesianism, Post Keynesianism, and MMT breaks apart. From this, in turn, follows that policy guidance with regard to monetary and fiscal policy has no sound scientific foundation.#4

Monetary theory has to be based on axiomatically true macrofoundations.#5, #6

Egmont Kakarot-Handtke


#1 The final implosion of MMT
#2 Rethinking MMT
#3 Why Post Keynesianism Is Not Yet a Science
#4 Rethinking deficit spending
#5 Reconstructing the Quantity Theory
#6 First Economic Law, derived from the correct macrofoundations

First Economic Law

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REPLY to Auburn Parks on Jan 30

Keynesianism, Post Keynesianism, and MMT are provably false in the same sense as 2+2=5 is false. The fact of the matter is that the MMT folks do not even get the elementary mathematics of accounting right.

The economy is a complex system and a system is subject to systemic laws.#1 The obvious analogy is an aircraft that is subject to the laws of aerodynamics, thermodynamics, etcetera. Only the retarded folks from the economics department believe that utility maximization or animal spirits make an aircraft fly.

Keynesianism, Post Keynesianism, and MMT is provably false and because of this Keynesians, Post Keynesians, and MMTers are forever unacceptable in the scientific community.#2

The good thing in economics is that morons have always an alternative career path open as political soapbox blatherers in the Circus Maximus.#3


#1 For details see From PsySoc to SysHum and Complexity and stupidity
#2 Why Post Keynesianism Is Not Yet a Science
#3 Political economics: a deadhead sitcom

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REPLY to Tom Hickey on Jan 30

The theory of money has to be embedded in a consistent macroeconomic framework or in what Keynes called the ‘monetary theory of production’. MMT gives a historical account of how money came into existence as a creation of the state. This historical account is not false but methodologically it is NO substitute for the theory of money, just as the history of the burning of Rome, London, and San Francisco is no substitute for the theory of thermodynamics.

There is NO way around the macrofoundations of the theory of money. And this, indeed, is the route Keynes took.

The formal foundation of the General Theory is given with: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

This syllogism is conceptually and logically defective because Keynes did not come to grips with profit: “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)

Because profit is ill-defined the WHOLE theoretical superstructure of Keynesianism is false. The foundational mistake/error/blunder carries over to Post Keynesianism and MMT. As Bill Mitchell says: “It [MMT] is about the real world and starts with some basic macroeconomic principles like ― spending equals income.”

It is pretty obvious that an economist who cannot tell the difference between the fundamental economic magnitudes of profit and income is a laughing stock. This applies to Walrasians and Keynesians of all colors. It applies, of course, to the MMT folks in general and more specifically to Auburn Parks and Ralph Musgrave.

Neither Keynesians nor Post Keynesians nor MMTers will make it into the future of economics because of proven logical incompetence.

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REPLY to Auburn Parks, Ralph Musgrave, Six, TofuNFiatRGood4U, and other blogging cranks on Jan 31

In the political sphere, we have freedom of speech, so everybody can climb on a soapbox and make an economic policy proposal: “A sure sign of a crisis is the prevalence of cranks. It is characteristic of a crisis in theory that cranks get a hearing from the public which orthodoxy is failing to satisfy. In the thirties we had Major Douglas, and social credit ― it can all be done with a fountain pen ― and Warren and Pearson who convinced President Roosevelt that raising the dollar price of gold would raise the price of everything else and bring the slump to an end. The cranks are to be preferred to the orthodox because they see that there is a problem. Nowadays we have plenty of cranks taking up the problems that the economists overlook.” (Joan Robinson)

Everybody can make a soapbox economic policy proposal EXCEPT an economist because: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

The big, big, big problem is that economists do NOT have the true theory. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, and ALL got profit wrong.

Because economists lack the true theory there is no significant difference between a crank and an economist.#1 The general public, of course, does not know that the profit theory is false for 200+ years, marginalism and supply-demand-equilibrium are false for 150+ years and Keynesianism is false for 80+ years. False means scientifically false, that is, materially and formally inconsistent.

From this follows that economic policy guidance with regard to monetary, fiscal, and employment policy has NO sound scientific foundation.#2 In the political sphere, this is a matter of indifference, because here only political beliefs matter. But the fact that false theories are politically useful does not make them scientifically acceptable.

The MMT folks make policy proposals that are commonsensically acceptable but this does not change the fact that MMT is false because it is based on faulty macrofoundations. It is of utmost importance to keep politics and science apart and this implies that political agenda pushers have to be thrown out of science.#3

Political economics has produced NOTHING of scientific value in the last 200+ years. This includes MMT. The way forward is: “Scrap the lot and start again.” (Joan Robinson)


#1 There is NO such thing as an economic expert
#2 Unemployment is high because economics is false
#3 Scientific suicide in the revolving door

Related 'Why Bernie Sanders is unintentionally a godsend for the one-percenters' and 'Keynesianism as ultimate profit machine' and 'Macroeconomics without Keynes'.

Macroeconomics without Keynes

Comment on Roger Farmer on ‘Keynesian Economics Without the Consumption Function’

Blog-Reference and Blog-Reference and Blog-Reference on Apr 11 adapted to context

Roger Farmer announces: “In Prosperity for All, I describe a theory of Keynesian economics, developed in my recent body of work, in which the transmission mechanism from demand to employment is through wealth, not through income. I call this, a theory of Keynesian economics without the consumption function.”

This does not go far enough. Keynesianism as a WHOLE, and not only the consumption function, has to be buried because it is axiomatically false.

1. How Keynes got it wrong

Keynes formulated the formal core of the General Theory as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

This elementary syllogism is conceptually defective because Keynes never came to grips with profit (Tómasson et al.). As a result, all I=S models and the Keynesian multiplier are false.#1,#2

2. Rectification

The defective Keynesian premises have to be replaced by the correct macrofoundations.
(A0) The objectively given and most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm.
(A1) Y_w=WL wage income Y_w is equal to wage rate W times working hours. L,
(A2) O=RL output O is equal to productivity R times working hours L,
(A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.

These macroeconomic axioms replace Keynes’ provably false formal foundations and by implication the false Walrasian microfoundations.

3. The correct Employment Law

The elementary version of the objective systemic Employment Law for the investment economy which follows from (A1)/(A3) is shown on Wikimedia.#3

From this equation follows: (i) An increase of the expenditure ratio ρ_E leads to higher employment (the Greek letter ρ stands for ratio). An expenditure ratio ρ_E greater than 1 indicates credit expansion, a ratio ρ_E less than 1 indicates credit contraction. (ii) Increasing investment expenditures I exert a positive influence on employment, a slowdown in growth does the opposite. (iii) An increase in the factor cost ratio ρ_F≡W/PR leads to higher employment.

The complete Employment Law gets a bit longer and contains in addition profit distribution, the government sector, and foreign trade.

Item (i) and (ii) cover Keynes’ arguments about aggregate demand. The ratio ρ_E replaces the Keynesian consumption function. The factor cost ratio ρ_F as defined in (iii) embodies the price mechanism which, however, does not work as standard economics assumes. As a matter of fact, overall employment INCREASES if the AVERAGE wage rate W INCREASES relative to average price P and productivity R. This implication is readily testable against standard economics.

4. Conclusion

The replacement of Keynes' false macrofoundations with the true macrofoundations yields the objective systemic (= behavior-free) Employment Law. This equation is the one stone that kills the Keynesian multiplier, all IS-LM models, the stickiness argument, the false Keynesian profit theory, and the (bastard-) Phillips Curve including the natural rate hypothesis.#4

Egmont Kakarot-Handtke


#1 How Keynes got macro wrong and Allais got it right
#2 Why Post Keynesianism Is Not Yet a Science
#3 Wikimedia AXEC62
#4 Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster

Related 'New IS-LM macro ― just another fake revolution' and 'Windmill economics' and 'Keynes saw the problems but did not solve them' and Ch. 13, The indelible scientific disgrace of economics, in Sovereign Economics.

Friedman and the cluelessness of fake scientists

Comment on Lars Syll on ‘Milton Friedman’s pet theory finally shown to be wrong’

Blog-Reference

Lars Syll comments on the refutation of the permanent income hypothesis (PIH): “My doubts regarding macro economic modelers’ obsession with Euler equations is basically that, as with so many other assumptions in ‘modern’ macroeconomics, Euler equations, and the PIH that they build on, don’t fit reality. ... But it is still an undeniable fact that theoretical models building on piles of known to be false assumptions — such as PIH and the Euler equations that build on it — in no way even get close to being scientific explanations. On the contrary. They are untestable and hence totally worthless from the point of view of scientific relevance.”

This is true but not new. Economics is built for 200+ years now on false premises. In other words, economics is what Feynman called a cargo cult science. Friedman is but one fake scientist in the long line that stretches from the storyteller Adam Smith to the loudspeaker Paul Krugman.

It is 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, and 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. Scientific truth is well-defined by material and formal consistency. But theoretical economics had been hijacked from the very beginning by the agenda pushers of political economics. Can there be the slightest doubt that Smith, Ricardo, Malthus, Marx, Keynes, Hayek, Friedman, Krugman, Syll, and almost everybody in between fall into the category of a political economist or fake scientist?

Political economics has produced NOTHING of scientific value in the last 200+ years. Since the founding fathers, economists claim to do science but they have never risen above the level of opinion, belief, wish-wash, storytelling, soapbox propaganda, and sitcom gossip. Milton Friedman produced plain proto-scientific garbage during his lifetime and never realized that his axiomatic foundations were false.

Friedman’s policy prescriptions are regarded as outdated but the representative economist still applies Friedman’s false premises. Orthodox economics is built since Jevons/Walras/ Menger upon this set of foundational propositions, a.k.a. axioms: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub)

Methodologically, these premises are forever unacceptable. The microfoundations approach has already been dead in the cradle. The axiom set contains three NONENTITIES: (a) constrained optimization HC2, (b) rational expectations HC4, (c) equilibrium HC5. Every theory/model that contains just one nonentity is a priori false. So, not only Friedmanian economics but orthodox economics from Jevons/Walras/Menger to DSGE/RBC/New Keynesianism is axiomatically false. There is no need to go into the details of the analytical superstructure, axiomatically false is the death sentence for a Paradigm.

There is not much use criticizing a stupid/corrupt political clown like Friedman for much longer. Getting out of failed economic theory requires nothing less than a full-blown Paradigm Shift from false Walrasian microfoundations and false Keynesian macrofoundations to entirely NEW macrofoundations. Everything else is a continuation of fake science.

Egmont Kakarot-Handtke


Related 'Forget Friedman, forget the Quantity Theory' and  'If it isn’t macro-axiomatized, it isn’t economics' and cross-references Political Economics/Stupidity/Corruption and cross-references Failed/Fake scientists and cross-references Paradigm Shift.

For more about Milton Friedman see AXECquery.

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Wikimedia AXEC158a

Profit and price ― solving the mystery

Comment on David Ruccio on ‘Profit inflation’

Blog-Reference

David Ruccio takes Commerce Department data and performs an eyeball analysis of the relationship between profit and inflation. This is an absolutely ridiculous exercise because David Ruccio lacks a valid profit and price theory.

The scientific fact of the matter is that economists do NOT know what profit is. More specifically, the main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, and ALL got profit wrong. As Mirowski put it, “... one of the most convoluted and muddled areas in economic theory: the theory of profit.”

Thus, everything economists have said since Adam Smith about the relationship between profit and inflation is proto-scientific garbage.

Because the formal proof can be found elsewhere#1,#2,#3 we can confine ourselves here to simply taking notice of the solution. For the most elementary case of an elementary production-consumption economy, the macroeconomic Profit Law is given on Wikimedia AXEC08

and the macroeconomic Law of Supply and Demand is given on Wikimedia AXEC64

Legend: Q_m monetary profit, ρ_E expenditure ratio, ρ_D distributed profit ratio, Y total period income, P price, W wage rate, R productivity.

From these two equations then follows the relationship between monetary profit and inflation.

The systemic Profit Law says for the economy as a WHOLE that it is NOT wage income that is the antagonist of profit but monetary saving. Put the other way round: it is deficit-spending/dissaving of the household sector, i.e. ρ_E greater than 1, and profit distribution, i.e. ρ_D greater than 0, that are the profit determinants in the elementary production-consumption economy. For the price determination, unit wage costs come in as the third factor.

ALL textbook profit and price theories are false and neither orthodox nor heterodox economists have realized it until this very day.

Egmont Kakarot-Handtke


#1 The Profit Theory is False Since Adam Smith. What About the True Distribution Theory?
#2 Inequality: Market failure or theory failure?
#3 How the intelligent non-economist can refute every economist hands down

Economism, vulgar economics, and the curse of goofy critics

Comment on David Ruccio on ‘Economism — or vulgar economics’

Blog-Reference

David Ruccio comments on James Kwak’s summary#1 of labor market theory and the minimum wage controversy: “That is the very definition, in our own time, of vulgar economics: ‘interpret, systematise and defend in doctrinaire fashion the conceptions of the agents of bourgeois production who are entrapped in bourgeois production relations.’”

One wonders why vulgar economics is not simply replaced by something better. After all, the vulgarity critique goes back as far as Marx. Time enough, one tends to think, to not only repetitively point out the numerous defects of the ridiculous Econ 101 supply-demand-equilibrium construct but to explode economism/vulgarity once and for all with a superior approach.#2

The fact of the matter is, though, that the critics never tried to replace Econ 101 in earnest. They only put lipstick on a dead pig by adding more ‘realism’ or ‘complexity’: “The supply-and-demand diagram is a good conceptual starting point for thinking about the minimum wage. But on its own, it has limited predictive value in the much more complex real world.”#1

This is like adding just another epicycle to the false Geo-centric theory instead of replacing it by the Helio-centric theory. What incompetent critics like Kwak and Ruccio do not realize is that the supply-and-demand diagram can by NO stretch of the imagination be accepted as ‘a good conceptual starting point’ but has to go DIRECTLY into the wastebasket. What is needed is an entirely NEW conceptual starting point.

Econ 101 as a whole ― not only the labor market theory ― is false. The ultimate reason is that it rests on false premises. As a result, the standard analytical tool, i.e. SS-curve―DD-curve―equilibrium, is absolutely useless because it represents a NONENTITY. So, (i) the formal representation of “the” market is false to start with, and (ii), it is, as a matter of principle, inadmissible to generalize the results of partial analysis for the economy as a whole. This is the Fallacy of Composition which pervades the whole of economics.

Walrasian, Keynesian, Marxian, and Austrian economists are groping in the dark with regard to the two most important features of the market economy, that is, the profit mechanism and the price mechanism. To get out of failed economic theory requires nothing less than a full-blown paradigm shift from false Walrasian microfoundations and false Keynesian macrofoundations to entirely NEW macrofoundations.

In the following, a sketch of the correct employment theory is given.#3 The elementary version of the objective systemic Employment Law for the investment economy is shown on Wikimedia AXEC62:

From this equation follows
(i) An increase in the expenditure ratio ρ_E leads to higher employment (the Greek letter rho ρ stands for ratio). An expenditure ratio ρ_E greater than 1 indicates credit expansion, a ratio ρ_E less than 1 indicates credit contraction.

(ii) Increasing investment expenditures I exert a positive influence on employment, a slowdown of growth does the opposite.
(iii) An increase in the factor cost ratio ρ_F≡W/PR leads to higher employment.

The complete Employment Law gets a bit longer and contains in addition profit distribution, public deficit spending, and foreign trade.

Item (i) and (ii) cover Keynes’s well-known arguments about aggregate demand. The factor cost ratio ρ_F as defined in (iii) embodies the price mechanism which, however, does not work as standard economics hallucinates. As a matter of fact, overall employment INCREASES if the AVERAGE wage rate W INCREASES relative to average price P and productivity R. This is the OPPOSITE of what standard economics teaches and has profound implications for the minimum wage discussion.

The systemic Employment Law contains nothing but measurable variables and is therefore readily testable. As always in science, a test decides the matter.

Right policy depends on true theory: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

Standard supply-demand-equilibrium economists lack the true theory. Econ 101 is provably false.#4 Standard labor market theory is provably false. The age-old minimum wage discussion is a moronic joke. Scientifically incompetent orthodox AND heterodox economists are ultimately responsible for mass unemployment, deflation, depression, and stagnation.#5

Egmont Kakarot-Handtke


#1 Kwak The Curse of Econ 101
#2 Traditional Heterodoxy’s paradigmatic impotence
#3 For details see the working papers
► The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment
► Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster
► The Truly General Theory of Employment: How Keynes Could Have Succeeded
► Towards Full Employment Through Applied Algebra and Counter-Intuitive Behavior
► Essentials of Constructive Heterodoxy: Employment
#4 The father of modern economics and his imbecile kids
#5 Economists: Incompetent? Stupid? Corrupt?


Related 'Traditional Heterodoxy’s paradigmatic impotence' and 'The end of traditional Heterodoxy in the Malmö coal pit' and 'Economics, methodology, and the Molehill Impossibility'

Traditional Heterodoxy’s paradigmatic impotence

Comment on Editor on ‘The static analysis of the supply and demand model’

Blog-Reference

Editor quotes Stuart Birks’s critique: “Note that the supply and demand model is, like much of economics, based on static analysis. Consequently, the focus will be on the market equilibrium. It is based on the idea that you have a scenario within which you can have as much costless adjustment as required to achieve some final end state which will be the equilibrium (issues of existence and uniqueness aside). This does not reflect the real world. In reality, there is a starting point, A. This is more than just an initial resource endowment. It also specifies an application of those resources, for example producing and consuming goods and services at some rate of output (as we are actually moving through time). There is also a path to be taken to the endpoint.”

This critique is absolutely correct. Economists think they can answer any question by painting the triad SS-function―DD-function―equilibrium. Leijonhufvud called this analytical tool Totem of the Micro/Totem of the Macro. What the representative economist does not understand to this day is that there is NO such thing as an economic equilibrium and NO such thing as SS and DD functions. The Totem of Micro/Macro is a NONENTITY like the Tooth Fairy or the Easter Bunny.

While traditional Heterodoxy has correctly identified the core of every economic textbook as proto-scientific garbage it has failed to provide the methodologically correct replacement of the methodologically unacceptable supply-demand-equilibrium construct. This is the methodological imperative: "The problem is not just to say that something might be wrong, but to replace it by something — and that is not so easy." (Feynman)  In other words, traditional Heterodoxy failed at its mission to bring about the necessary Paradigm Shift.

The Paradigm Shift has been accomplished by Constructive Heterodoxy, see
► Essentials of Constructive Heterodoxy: The Market
► The Law of Supply and Demand: Here It Is Finally
► How to Get Rid of Supply-Demand-Equilibrium

What both orthodox and heterodox economists in their innate scientific incompetence have failed to realize is that the economy as a system is defined by the interrelationship of a number of elementary variables. Every model, no matter how differentiated, must contain these objective SYSTEMIC interrelationships as its formal hardcore. This is an imperative methodological necessity.

The false Walrasian microfoundations and the false Keynesian macrofoundations have to be replaced with the true macrofoundations. The graphical representation of this absolute formal minimum is given on Wikimedia AXEC31:

This chart replaces the hare-brained Totem of SS-function―DD-function―equilibrium. A detailed description of the elementary macro relationships has been given in the papers referenced above.

It is time now for traditional Heterodoxy, which has exhausted itself in repetitive critique, to get out of the way and no longer hamper Constructive Heterodoxy.

Egmont Kakarot-Handtke

For details of the big picture see cross-references Paradigm Shift.

For more about Heterodoxy see AXECquery.

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Wikimedia AXEC121i

Economists: Incompetent? Stupid? Corrupt?

Comment on Michael Norman on ‘Stephanie Kelton BLOCKED ME on Twitter. Wow.’

Blog-Reference

This is the normal reaction of a scientifically trained non-economists when he is for the first time confronted with standard economics: “What is now taught as standard economic theory will eventually disappear, no trace of it will remain in the universities or boardrooms because it simply doesn’t work: were it engineering, the bridge would collapse.” (McCauley, 2006)

Economists, though, are a different species.

(i) The representative economist who takes his academic degree and is convinced that supply-demand-equilibrium provides an acceptable theory of how the economic system works and accepts standard economics (with the usual reservations/disclaimers/excuses#1) is scientifically incompetent.

(ii) The representative economist who communicates/defends standard economics on his own blog or on the numerous economics blogs propagates a provably false theory. Walrasianism, Keynesianism, Marxianism, and Austrianism are mutually contradictory, axiomatically false, and ALL got the foundational concepts of the subject matter, i.e., profit and income, wrong.

(iii) The representative economist who is given proof in the course of a discussion that standard economics is false and does not understand the argument is not only scientifically incompetent but stupid.

(iv) The economist who understands the proof and deletes it from his blog or automatically filters all serious counter-arguments out violates scientific standards and undermines the claim that economics is a science as expressed in the title: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.

The current state of economics is that of a failed science. The propagation of the four main approaches, therefore, amounts to unintentional disinformation or intentional misinformation.

Which blogs promote serious research/discussion and which are corrupted can only be found out by testing, that is, by submitting well-argued posts. From concrete experience follows this random selection of blogs that block/delete occasionally/permanently challenging contributions (last updated Sep 20, 2019):

• Economist’s View
• Uneasy Money
• Billy blog
• Real-World Economics Review blog
• Lars P. Syll blog
• EconoSpeak
• Worthwhile Canadian Initiative
• The Baseline Scenario
• Social Democracy For The 21st Century
• bradford-delong.com: Grasping Reality with Both Hands
• Stumbling and Mumbling
• Roger Farmer's Economic Window
• evonomics
• Critical Macro Finance
• Institute for New Economic Thinking
• Naked Keynesianism
• The Conversation
• Information Transfer Economics
• Bloomberg View
• Dietrich Vollrath
• EconBlog101
• heteconomist
• Fresh Economic Thinking
• Noahpinion
• Robert Skidelsky
• Angry Bear
• Renegade Inc
• Social Europe
• The Everyday Economist
• Dani Rodrik's Weblog
• On the Economy Jared Berstein Blog
• New Economic Perspectives
• Michael Roberts Blog
• The Harvard Crimson
• Asymptosis
• longandvariable
• taxresearchuk
• bruegel
• THE REAL MOVEMENT
• The Case For Concerted Action
• Mises Institute
• SEE IT market
• Progressive Pulse
• Mike Norman Economics
• The British Academy
• mainly macro
• J. W. Mason
• naked capitalism
• etcetera

Note that the blog owner is entitled to reject submissions for whatever reason. There is nothing illegal in selecting the content of one’s own blog. What is at issue is the violation of well-established and well-known SCIENTIFIC standards.

How to double-check the past and actual intensity of scientific corruption in three easy steps:
(1) Go to the AXEC Blog
(2) Click the label zML (ML = missing link). All posts that have been submitted but did not appear or vanished later are selected.
(3) Click Blog-Reference at the post’s header for jumping to the discussion thread and looking for the submitted AXEC post.

If you cannot find it this can mean two things: (i) a technical glitch, (ii) censorship. If this happens more than two times with the same blog it is very probable (ii). What can also happen is that a post reappears after some time. In this case, the ML label is corrected as soon as it is noticed.

This exercise confirms in greater detail what is already known since the founding fathers: economics has been hijacked and corrupted by politics. The representative economist as he presents himself on the economics blogs is a rather stupid flag-waving agenda pusher and NOT acceptable in the scientific community.

Egmont Kakarot-Handtke


#1 Failed economics: The losers’ long list of lame excuses

Related 'Why is economics a total scientific failure?' and 'Did economics fail? No! Yes, and everybody knows it!' and 'Profit: after 200+ years still elusive' and 'Gossip economics' and 'Economics: communication without content' and 'What comes first: eco-self-destruction or oeco-self-destruction?' and 'Oxford economics — still at the proto-scientific level'. For details of the big picture see cross-references Incompetence and cross-references Failed/Fake Scientists and cross-references Political Economics/Stupidity/Corruption.

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COMMENT on Dan Lynch on Jan 25

You say: “I take from MMT certain parts that I like, and leave the rest.” This is (i) not very interesting for the rest of the world, (ii) entirely beside the point.

As a matter of principle, everybody has the right to his own opinion no matter how stupid, crazy, wrong, or absurd; the only exception is scientists. The ancient Greeks started science with the distinction between doxa (= opinion) and episteme (= knowledge). Scientific knowledge is well-defined by material and formal consistency. Knowledge is established by proof — belief or opinion counts for NOTHING.

Opinion is the currency in the political sphere, and knowledge is the currency in the scientific sphere. It is extremely important to keep both spheres separate. Since the founding fathers, though, economists have not emancipated themselves from politics. They claim to do science but they have never risen above the level of opinion, belief, wish-wash, storytelling, soapbox propaganda, and sitcom gossip.#1

So, the point with MMT is this:
1. There is a mistake/error/blunder in the formal foundations of MMT. In other words, MMT does not satisfy the scientific criterion of logical consistency.#2
2. The formal proof has been submitted to an MMT blog.#3
3. This proof has NOT been answered but simply deleted.
4. It is against the most elementary scientific rules to suppress refutation. As everybody knows from Popper “... science is one of the very few human activities — perhaps the only one — in which errors are systematically criticized and fairly often, in time, corrected.”
5. MMT is fake science or what Feynman called cargo cult science. The same holds for Walrasianism, Keynesianism, Marxianism, and Austrianism.

The point is this: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

Economists do NOT have the true theory and because of this, all economic policy proposals are worthless — nothing more than personal opinion and soapbox blather.

Economics in general, and this includes MMT, has to be thrown out of science because of the 200+ years of violation of well-defined and well-known scientific standards.


#1 Gossip economics and Delusions of useful idiots
#2 The final implosion of MMT
#3 Modern Moronomic Theory

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COMMENT on Dan Lynch, Neil Wilson on Jan 25

Dan Lynch says: “Instead it [economics] should be taught as philosophy, ethics, or religion.”

Now, this is exactly what has happened in the past 200+ years.#1 And this is why economics is a failed science: “... we know little more now about ‘how the economy works,’ ... than we knew in 1790 after Adam Smith completed the last revision of The Wealth of Nations.” (Clower) In the same time span, physics went from the Law of Gravity to Quantum Mechanics.

Imagine a philosopher and a guru discussing. Says the philosopher, let’s build an aircraft and fly to a South Sea island and have a good life there. Says the guru, better let’s fly to Tibet and search for spiritual enlightenment there. Enters the physicist with the remark: you folks will go nowhere because you have no idea of the laws of aerodynamics, thermodynamics, material science, etcetera and because of this you will never get anything off the ground.

The situation in economics is analogous. The discussion about capitalism and communism has always been a pointless distraction because economists do NOT know how the monetary economy works. Walrasianism, Keynesianism, Marxianism, and Austrianism are mutually contradictory, axiomatically false, and ALL got the foundational concepts of the subject matter, i.e., profit and income, wrong. Economists do not even understand the elementary algebra of accounting as the discussion about MMT has shown.#2

The primary question is how to get out of the state of a proto-science, fake science, pseudoscience, cargo cult science, failed science ... Certainly NOT with more philosophy or religion or more sitcom blathering.#3

A side issue is how did we get into this mess? The most obvious hypothesis is that both orthodox and heterodox economists are incompetent, stupid, and corrupt. Your brain-dead posts about capitalism and communism corroborate this hypothesis.

By the way, the economic laws for the monetary economy are the SAME under capitalism and communism just as the laws of aerodynamics are the same whether one flies to the South Sea or to Tibet.#4


#1 Economics: Poor philosophy, poor psychology, poor science
#2 The final implosion of MMT
#3 From Orthodoxy to Heterodoxy to Sysdoxy
#4 See the First Economic Law on Wikimedia AXEC06 and the Macroeconomic Profit Law on Wikimedia AXEC08.

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#PointOfProof

#EconBlocker

Three sickening facts about Keynesianism

Comment on Lars Syll on ‘The inequality gap — five sickening facts’

Blog-Reference and Blog-Reference and Blog-Reference on Jan 24

Paul Davidson argues: “In the GT Keynes noted that the two major faults of the capitalist monetary system was (1) its failure to provide full employment and (2) its arbitrary and inequitable distribution of income and wealth.” (see post of Jan 22)

The three facts about the General Theory are
(i) Keynes messed up the employment theory, see Mass unemployment: The joint failure of orthodox and heterodox economics.
(ii) Keynesian deficit spending literally produced the extremely biased income distribution, see Keynesianism as ultimate profit machine.
(iii)  After-Keynesians neither detected nor rectified Keynes’ elementary mistakes/errors/ blunders but parrot them to this very day. For the sole exception see How Keynes got macro wrong and Allais got it right.

In sum: Keynesians are NOT scientists but clowns/useful idiots/agenda pushers in the political Circus Maximus.

Egmont Kakarot-Handtke

For more about Keynesianism see AXECquery.

Gossip economics (I)

Comment on Barkley Rosser on ‘The Worst Human Being Ever Elected President Of The USA’

Blog-Reference

The title of this blog is EconoSpeak and this suggests that it is, in broad terms, about how the actual economy works. However, the packaging and the content obviously do not fit together. What you get under the bluff package of EconoSpeak is the following.

― Sandwichman’s post of Jan 22 deals with chimpanzee poo-flinging and sums up: “People really need to learn to stop trying to ‘refute’ the ‘alternative facts’ that are being flung. Shit is shit. You cannot refute feces.”

― Sandwichman’s post of Jan 20 deals with the hitherto overlooked erotic dimension of exchange: “This calls attention to the erotic dimension of the sales transaction. Sometimes the commodity isn’t the most auspicious thing being exchanged. Cue the traveling salesman jokes... did you hear the one about Amway Dream Night?”.

― Barkley Rosser’s post brings a historically exhaustive top ten list of corrupt/ pathological/ perverse presidents and places Mr. Trump at the bottom of all nine circles of Dante’s Inferno: “The Worst Human Being Ever Elected President Of The USA”.

The point is NOT whether all this information is true or false but that it has NOTHING to do with the economist’s first priority, that is, to explain how the economic system works. The point is that all this information turns in the given context to disinformation. Worse, moralizing belongs, as a matter of principle, to the sphere of politics and NOT of science. Science is about facts, consistency, and proof.

It is of utmost importance to keep political and theoretical economics apart. 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, scientific standards are observed.

In the given context, the irrelevant posts about chimpanzees and Mr. Trump effectively DISTRACT from the crucial facts: (i) economics is a failed science,#1 (ii) economists are incompetent scientists,#2 (iii) economists’ policy proposals never had a sound scientific foundation, (iv) to determine the “Worst Human Being” in politics or any other walk of life is NOT the business of the economist, (v) economists are the Trumps of science,#3 (vi) Sandwichman and Barkley Rosser are the Trumps of economics.

Egmont Kakarot-Handtke


#1 Failed economics: The losers’ long list of lame excuses
#2 Delusions of useful idiots
#3 Economists: The Trumps of science

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ADDENDUM on Jan 26

In analogy to Barkley Rosser’s ‘The Worst Human Being Ever Elected President Of The USA’ I would like to nominate Barkley Rosser and Sandwichman as ‘The Worst Human Beings Ever Corrupting Economics Blogs’ because they will suppress this post as they have many times suppressed posts which expose their abject incompetence and stupidity.#1


#1 Gossip economics

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COMMENT on Sandwichman on Jan 28

Political fraud is a bad thing and inexcusable. As bad as it is, it is surpassed in the negative by scientific fraud. Generally, fraud comes in three variants (i) fake news/information, (ii) confusing and distracting disinformation, (iii) suppression of true news/information. Economics is a failed/fake science and EconoSpeak is (i) promoting economic approaches that are known to be false, and (ii), stonewalling/ suppressing true theory.

It is of utmost importance to keep political and theoretical economics apart. Political economics is just as corrupted as politics itself and scientifically absolutely worthless. Political economics has hijacked theoretical economics. This explains why economics is, after 200+ years, still at the proto-scientific level. EconoSpeak is a particularly crass example of political economics and manipulative attention management in its two forms of cheerleading and slander.

There is not much to say about Trump-bashing except that it is NOT economics and those incompetent economists like Sandwichman and Barkley Rosser are NOT qualified to pass judgment on politicians or anything else on this planet.


Related 'Economists: Incompetent? Stupid? Corrupt?' and 'Delusions of useful idiots' 

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Wikimedia AXEC176b Gossip is one of the many brain mashers

Delusions of useful idiots

Comment on Simon Wren-Lewis on ‘Attacking economics is a diversionary tactic’

Blog-Reference and Blog-Reference on Jan 23

1. When economists daydream they fancy that practical men/politicians/heads of state are the intellectual ‘slaves of some defunct economist’. Keynes’ closing sentence in the General Theory is a fine example of self-delusional grandiosity: ‘... it is ideas, not vested interests, which are dangerous for good or evil’.#1

2. The fact of the matter is that practical men/politicians/heads of state DO NOT listen to economists: “Late in life, moreover, he [Napoleon] claimed that he had always believed that if an empire were made of granite the ideas of economists if listened to, would suffice to reduce it to dust.” (Viner)

3. Practical men/politicians/heads of state do not take economists seriously but use them as testimonials for already decided policy measures in order to anoint them with some scientific prestige. This is NOT different from selling toothpaste with the testimonial of a man in a white lab coat.

4. In their self-delusion, economists get the causality wrong. Mrs. Thatcher did NOT intend for one moment to put Hayekian economics into practice but employed him as a ‘scientific’ legitimation for her union-crushing agenda. The same causality holds for FED chairs and their decorative staff of cutting-edge economists.

5. It is important to distinguish between political and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, and the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, scientific standards are observed.

6. Economists never got out of political economics. In other words, theoretical economics (= science) ultimately could not emancipate itself from political economics (= agenda-pushing). And this is how economics became one of the most embarrassing scientific failures of all time.

7. Economics is NOT part of science but of Circus Maximus. Political economics has produced nothing of scientific value in the last 200+ years. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, and ALL got the foundational concepts of the subject matter ― profit and income ―wrong.

8. The point is this: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum) Economists do NOT have the true theory and this means that economic policy guidance has NEVER had sound scientific foundations.

9. In economics, everything and the exact opposite has already been said sometime, somewhere, by somebody. So it is very easy after every economic calamity to present somebody who ‘saw it coming’ and to shift the blame: “Economists have come up with clear proposals about how to avoid the crisis happening again. And these proposals have been pretty well ignored.” (SWL’s intro)#2

10. It is NOT a divisive attack on economics but a statement of fact that (i) economics is a failed science, (ii) both orthodox and heterodox economists are incompetent scientists, (iii) economic policy guidance never has had sound scientific foundations, (iv) economics is useless except for political agenda pushing or sitcom entertainment.

Egmont Kakarot-Handtke


#1 References, further details, and proofs are given elsewhere, see blog and working papers
#2 Science does NOT predict the future

Related 'Failed economics: The losers’ long list of lame excuses' and 'The economist as useful political idiot' and 'Economists: Incompetent? Stupid? Corrupt?' and 'Mission accomplished: Economists as useful idiots of the Oligarchy'. For details of the big picture see cross-references Political Economics/Stupidity/Corruption.

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Macro poultry entrails reading

Comment on Nick Rowe on ‘AD/AS: a suggested interpretation’

Blog-Reference

Economists think they can answer any question by painting the triad SS-function―DD-function―equilibrium. Leijonhufvud called this analytical tool totem of the micro/totem of the macro. What economists do not understand until this day is that there is NO such thing as an economic equilibrium and NO such thing as SS and DD functions. The totem of micro/macro is a NONENTITY like the Tooth Fairy or the Easter Bunny. This means in turn that the AD/AS analysis is a perfect instantiation of economists’ bad habit of confused interpretation of silly charts, an exercise which is in no way different from the poultry entrails reading of the old Roman haruspex.

Nick Rowe claims: “If you explain the AD/AS framework my way, you will see that it portrays a deep and realistic understanding of macroeconomics that is lost in more ‘sophisticated’ models. If you don’t start with the AD/AS framework you are doing it wrong.”

The plain fact of the matter is that Nick Rowe is in a state of manifest and incurable self-delusion. Keynesian macro in general, and AD/AS in particular, has always been methodologically unacceptable and its proper place is the wastebasket.#1

What economists’ in their innate scientific incompetence fail to realize is that the economy as a system is defined by the interrelationship of a number of elementary variables. Every model, no matter how differentiated, must contain these OBJECTIVE SYSTEMIC interrelationships as its formal hardcore. This is an imperative methodological necessity.

The false Walrasian microfoundations and the false Keynesian macrofoundations have to be replaced by the true macrofoundations. This is achieved by taking Keynes’ idea of a ‘monetary theory of production’ as the starting point.

(A0) The objectively given and most elementary configuration of the (world-) economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm.
(A1) Y_w=WL wage income Y_w is equal to wage rate W times working hours. L,
(A2) O=RL output O is equal to productivity R times working hours L,
(A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.

The graphical representation of this absolute formal minimum is given on Wikimedia AXEC31

This chart replaces the hare-brained totem of SS-function―DD-function―equilibrium (S-D-E). A detailed description of the elementary macroeconomic relationships has been given elsewhere.#2

The systemic macro axiom set (A1) to (A3) is the one stone that kills, for a start, the Keynesian multiplier, ALL IS-LM models from Hicks onward, ALL AD/AS models, the stickiness argument, and the (Bastard-) Phillips curve including the natural rate hypothesis.#3

This, though, is forever beyond the horizon of the representative economist who flunked the intelligence test already by accepting the totems of micro and macro. If you don’t start macro with (A1) to (A3) you are doing it wrong.

Egmont Kakarot-Handtke


#1 Keynesianism is broken: Get over it!
#2 Getting out of IS-LM = Getting out of despair
#3 For details of the big picture see cross-references Paradigm Shift

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Mass unemployment: The joint failure of orthodox and heterodox economics

Comment on Asad Zaman on ‘Theory of Employment’

Blog-Reference and Blog-Reference on Apr 4, 2017, adapted to context

Asad Zaman recapitulates: “In chapter 2 of General Theory, Keynes wishes to develop a theory of employment. He claims that classical economics does not have a theory of employment because it assumes that all resources will be fully employed.”

What can be said after 80+ years is that Keynesian employment theory is an abject failure.#1 So, after more than 200 years economists still have no valid employment theory. The ultimate reason is that economists in general and Keynesians is particular are incompetent scientists.#2

Walrasian, Keynesian, Marxian, and Austrian economists are groping in the dark with regard to the two most important features of the market economy, that is, the profit mechanism and the price mechanism. The fault lies in the fact that economists argue from the micro-level upwards to the economy as a whole. And here the Fallacy of Composition regularly slips in. To get out of failed economic theory requires nothing less than a full-blown paradigm shift from accustomed microfoundations to entirely new macrofoundations.

In the following, sketch#3 of the correct employment theory is given. The most elementary version of the objective systemic macroeconomic Employment Law is shown on Wikimedia AXEC62:

From this equation follows:
(i) An increase in the expenditure ratio ρ_E leads to higher employment (the Greek letter ρ stands for ratio). An expenditure ratio ρ_E greater than 1 indicates credit expansion, a ratio ρ_E less than 1 indicates credit contraction.
(ii) Increasing investment expenditures I exert a positive influence on employment, a slowdown of growth does the opposite.
(iii) An increase in the factor cost ratio ρ_F≡W/PR leads to higher employment.

The complete Employment Law contains in addition profit distribution, public deficit spending, and the trade balance.

Item (i) and (ii) cover Keynes’ well-known arguments about aggregate demand. Here, though, the focus is on the factor cost ratio ρ_F as defined in (iii). This variable embodies the macroeconomic price mechanism which, however, does NOT work as standard economics claims. As a matter of fact, overall employment INCREASES if the average wage rate W INCREASES relative to average price P and productivity R. This is the opposite of what standard economics teaches.

The objective-systemic Employment Law contains nothing but measurable variables and is therefore readily testable. There is no need for further discussion. As always in science, a test decides the matter.

Right policy depends on true theory: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum, 1991)

Economists do NOT have the true theory. In their scientific incompetence, both orthodox and heterodox economists are ultimately responsible for the enormous social devastations of mass unemployment. Economists are not only fake scientists but a serious hazard to their fellow citizens.

Egmont Kakarot-Handtke


#1 Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster
#2 Why Post Keynesianism Is Not Yet a Science
#3 For details see Essentials of Constructive Heterodoxy: Employment

Related 'NAIRU and the scientific incompetence of Orthodoxy and Heterodoxy' and 'The set screws of overall and individual employment' and 'Wage rate and employment: the basics' and 'Why is economics a total scientific failure?'. For details of the big picture see cross-references Employment/Phillips Curve.

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JFTR at RWER on Nov 9

Clearly, neoliberal policy has NO sound scientific foundations. Orthodox economics is a scientific failure. But, clearly, the same holds for Keynesianism. Both approaches are proto-scientific garbage. See Mass unemployment: The joint failure of orthodox and heterodox economics.

How the 99 percent can bring overall profit of the 1 percent legally down to zero in 2017

Comment on David Ruccio on ‘Mind the growing gap’

Blog-Reference and Blog-Reference on Jan 23 and Blog-Reference on Jan 26 adapted to context

David Ruccio summarizes: “In recent years, corporate profits have been rising because they’ve been able to squeeze their own workers, by forcing more of them to work not for themselves but for corporate giants and, when they do, paying them a smaller and smaller share of the value that is created. ...”

This story has been told again and again since Adam Smith. It is commonsensically convincing but, on closer inspection, nothing but soapbox economics. The scientific fact of the matter is that economists do NOT know what profit is. More specifically, the four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, and ALL got profit wrong.#1 As Mirowski put it, “... one of the most convoluted and muddled areas in economic theory: the theory of profit.”

By consequence, everything economists have said since Adam Smith about distribution is scientific rubbish.#2 It does not matter which political flag an economist is waving, ALL economists are scientifically incompetent.

The mistake/error/blunder of economists is that they argue from the micro perspective of the firm or the worker. Thus, they inevitably crash against a logical wall. The run-of-the-mill-best-and-brightest economists correctly observe that profit rises, for example, with productivity or increasing monopoly power or lower wages. Now, these factors are indeed effective for a SINGLE firm or a sub-sector. But what is true in partial analysis is NOT true for the economy as a whole.#3 This false generalization is known since antiquity as Fallacy of Composition. Most of the economics consists of this Fallacy.

For the economy as a WHOLE neither productivity nor monopoly power plays a role; overall profit for the closed investment economy is given by the macroeconomic 2-sector Profit Law Q_m≡Y_d+I−S_m. Legend: Q_m monetary profit, Y_d distributed profit, I investment expenditures, S_m monetary saving. With the trade balance and government added the equation becomes a bit longer.

The systemic Profit Law says that for the economy as a WHOLE it is NOT wage income that is the antagonist of profit but monetary saving S_m (see the minus sign). Put the other way round: it is deficit spending/dissaving of the household sector (and the government sector) that is a major profit determinant. Distributed profit, investment, and an export surplus are the others.

The size of OVERALL profit is NOT an indicator that American firms are particularly productive or that American businesspeople are particularly smart or greedy or monopolistically. These factors only influence the distribution of profits WITHIN the business sector. Overall profit is in the main the mirror image of GROWING private and public debt.#4

The Profit Law tells the ninety-nine-percenters how to bring overall monetary profit down to zero: save and pay back your debt. No further action is needed (if prices fall proportionally).#5

ALL commonsensical partial profit theories are false and neither orthodox nor heterodox economists have realized it to this day. Economics is a failed science and the proof is in the profit and distribution theory.

Egmont Kakarot-Handtke


#1 The Profit Theory is False Since Adam Smith. What About the True Distribution Theory?
#2 Inequality: Market failure or theory failure?
#3 How the intelligent non-economist can refute every economist hands down
#4 Rethinking deficit spending
#5 Mathematical Proof of the Breakdown of Capitalism

Economics ― worse than fake

Comment on Simon Wren-Lewis on ‘Fake Economics and the media’

Blog-Reference and Blog-Reference

There are political economics and theoretical economics. The founding fathers called themselves political economists, that is, they left no doubt that their main business was agenda pushing. Economists NEVER got out of political economics. In other words, theoretical economics (= science) ultimately could not emancipate itself from political economics (= agenda-pushing). And this is how economics became one of the most embarrassing scientific failures of all times.#1

The fact of the matter is that economists do not know how the actual economy works. They do not even understand the foundational concepts of their subject matter, that is, profit and income.#2

The current state of economics is that of a failed science or what Feynman famously called a cargo cult science. The point is this: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum, 1991)

Economists do NOT have the true theory, that is, the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory and axiomatically false. In other words, since Adam Smith, economic policy guidance has NO sound scientific foundation.

Because of this, the claim as expressed in the title ‘Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel’ is false. The Bank of Sweden is, of course, entitled to award prizes but is in NO position to upgrade a cargo cult science to a science. Actually, the Bank is misleading the general public about the dismal state of economics.#3

In their scientific incompetence, both orthodox and heterodox economists are ultimately responsible for the enormous social devastations of mass unemployment.#4 Economists are not only fake scientists but a hazard to their fellow citizens.

Egmont Kakarot-Handtke


#1 Failed economics: The losers’ long list of lame excuses
#2 For details and proof see cross-references Refutation of I=S
#3 FakeNews, FakeScience: economics in the information age
#4 How economists murdered the economy and got away with it

Related 'Economists and the destructive power of stupidity'

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COMMENT on William Ryan on Jan 21

The statement ‘William Ryan killed JFK’ is true or false and nothing in between. What is likewise obvious is that it can be practically very difficult to establish the truth.

But you announce: “It won’t be long before nobody will know or trust anything about what to believe nobody will really know.”

This may be the case or not but your prophecy of a state of perfect disinformation is entirely misplaced in the present context. What is at issue here is economics understood as science. In science, truth is well-defined by material and formal consistency (Klant, 1994). From history, we know that it is by no means an easy task to establish scientific truth but this does not invalidate the concept: “Tarski’s theory shows that we are fully entitled to use, without any qualms, the words ‘true’ and ‘false’ in their ordinary senses.” (Popper, 1994)

Science is NOT AT ALL about trust or belief or credibility, science is about proof. The problem in economics is that there are political economics and theoretical economics. Political economics has nothing to do with consistency and proof, it is plain and simple storytelling or rhetoric. Political economics is the realm of the Sophist who is since Plato defined by his claim to win any case INDEPENDENTLY of the truth or falsity of the matter.

Accordingly, the ancient Greeks introduced the distinction between opinion (= doxa) and knowledge (= episteme). This distinction parallels the distinction between political economics and theoretical economics and it parallels the distinction between the pseudo and the genuine inquirer: “A genuine inquirer aims to find out the truth of some question, whatever the color of that truth. ... A pseudo-inquirer seeks to make a case for the truth of some proposition(s) determined in advance. There are two kinds of pseudo-inquirer, the sham and the fake. A sham reasoner is concerned, not to find out how things really are, but to make a case for some immovably-held preconceived conviction. A fake reasoner is concerned, not to find out how things really are, but to advance himself by making a case for some proposition to the truth-value of which he is indifferent.” (Haack, 1997)

Can there be any doubt that Smith, Ricardo, Malthus, Marx, Keynes, Hayek, Friedman, Krugman, Varoufakis, and almost everybody in-between falls into the category of political economist or fake scientist? Fake scientists thrive in the swamp between the rocks of true and false where ‘nothing is clear and everything is possible’ (Keynes).

There is not much use whining about the gigantic heap of proto-scientific garbage and fake that is called economics. Nothing hinders an economist from leaving the swamp except his own scientific incompetence.

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