April 1, 2017

The economist as moralist

Comment on Lars Syll on ‘The limits of formal models’


Lars Syll frames his critique of formal economic models with a caricature. It shows two theater entrance areas with billboards above the doors saying ‘An Inconvenient Truth’ and ‘A Reassuring Lie’. People are all queuing at the lie-door. The caricature suggests that Orthodoxy with its plethora of tidy deductive-axiomatic models is merely a convenient lie.

This makes it immediately clear that Lars Syll has no idea what science is all about. The scientific criteria are true and false with truth objectively defined as material and formal consistency. Truth and lie, on the other hand, are moral criteria.

It was obvious to John Stuart Mill that these are entirely different spheres: “The physical sciences are those which treat of the laws of matter, and of all complex phenomena in so far as dependent upon the laws of matter. The mental or moral sciences are those which treat of the laws of mind, and of all complex phenomena in so far as dependent upon the laws of mind.”

For deeper methodological reasons, the ‘moral sciences’ are NO sciences at all. However, moral scientists have a strong tendency to back up their arguments with some authority. Before the Enlightenment they abused God, after the Enlightenment they abuse science.

The fact of the matter is that the term ‘moral science’ is an oxymoron because science deals with IS and moral deals with OUGHT. Both spheres are known to be disjunct and from this immediately follows that a moral scientist is a fake scientist. A moralizer does not solve scientific problems but claims to fight for a good cause.

The situation in economics is a bit perplexing for laypersons because there are TWO economixes: theoretical and political 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 deals with the OBJECTIVE properties of the economic system and NOTHING else: no psychology, no sociology, no moralizing.

Standing at the cross-roads of science and politics, the classical economists opted for Political Economy: “From the above considerations the following seems to come out as the correct and complete definition of Political Economy: ― ‘The science which treats of the production and distribution of wealth, so far as they depend upon the laws of human nature.’ Or thus ― ‘The science relating to the moral or psychological laws of the production and distribution of wealth’.” (Mill)

There is NO such thing as moral and psychological laws and economics found none in the past 200+ years. But there are objective systemic laws of the monetary economy, for example the all important Profit Law,* but economists did not find them because they were mainly occupied with agenda pushing.

Political economics is utter scientific rubbish. But there is a way out for the incompetent scientist, that is, to politicize and moralize: “When economists address normative questions of economic welfare, they speak at least with an air of moral authority. They purport to know how to make life better.” (Hausman)

Because the moralizing economist is a storyteller and incompetent scientist his economic policy proposals have NO sound scientific foundations. This applies to ALL political economists ― there is no difference between Orthodoxy or Heterodoxy or Walrasianism or Keynesianism or Marxianism or Austrianism.

What the general public does not realize is that one of the greatest dangers it faces next to a mad head of state are the politicizing scientific failures called economists who are ultimately responsible for the social devastation of mass unemployment, deflation, and stagnation. There is nothing more repugnant than a scientifically incompetent moralizing political economist.

Egmont Kakarot-Handtke

* The Profit Law

Related 'True macrofoundations: the reset of economics'and 'From the pluralism of false models to the true economic theory' and 'Political economics: a deadhead sitcom'