May 20, 2017

Getting out of the economics swamp

Comment on Noah Smith on ‘Vast literatures as mud moats’

Blog-Reference and Blog-Reference adapted to context

You say: “The point is, a bunch of smart people can get very big things wrong for a very long period of time, and that period of time may include the present.”

True, this happened with Geo-centrism for roughly 1500 years starting with the smart mathematician, astronomer and geographer Ptolemy around 100 AD. It happened again with economics, starting 200+ years ago with the not so smart Adam Smith. As a result it holds for economics in general “the vast literature actually contains more misinformation than information.”

The situation in economics is special insofar as there are TWO economixes: political economics 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 scientific standards are observed.

Political economics as a whole is scientifically worthless. The proper place for this “vast literature” is the waste basket. Political economics is easily recognizable by its swampiness. Swampiness is what what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) Therefore, the political economist is mainly occupied with producing a methodological smoke screen that consists of vague concepts, anything goes, pluralism of false theories, alleged complexity, ontological uncertainty, unreliable data, the faux humility of ‘I know that I know nothing’, and the post-modern replacement of true theory by an emotional narrative.#1

The beauty of the swamp ‘where nothing is clear and everything is possible’ (Keynes) is that logical and empirical failure is inconsequential.#2 What you call the mud moat has indeed saved the life of the representative economist since 200+ years.

The other part of the “crappy vast literature” consists of methodological blunder, i.e. stuff that does not satisfy the scientific criteria of material and formal consistency. This holds for everything that comes under the banner of Walrasianism, Keynesianism, Marxianism, Austrianism and Pluralism. These approaches are mutually contradictory, axiomatically false, materially/formally inconsistent and ALL got the pivotal economic concept profit wrong.

There are the hard rocks of true or false and the swamp between them. The swamp is the natural habitat of agenda pushers, confused confusers, incompetent scientists, political economists, status-quo inertionalist, commonsensers, and anti-scientists. The very characteristic of science is to relentlessly drive the question under discussion to the point of a clear-cut decision between true or false, in other words, to get out of the swamp: “We are lost in a swamp, the morass of our ignorance. … We have to find the roots and get ourselves out! … Braids or bootstraps are necessary for two purposes: to pull ourselves out of the swamp and, afterwards, to keep our bits an pieces together in an orderly fashion.” (Schmiechen)

The braids or bootstraps of science are material and formal consistency. Formal consistency is established by the axiomatic-deductive method, material consistency by state-of-the-art testing.

The very characteristic of economics is that the “vast literature” consists of inconsistent and inconclusive blather or politics dressed up as science. So, perhaps 90 percent of the content of peer-reviewed quality journals consists of models/theories that are axiomatically false. Axiomatically false means based on false Walrasian microfoundations or false Keynesian macrofoundations or ad hoc plucked out of thin air. Therefore, the one and only interesting question in the given situation is how to achieve the paradigm shift from defective micro- and macrofoundations to materially and formally consistent macrofoundations.#3

Accordingly, the straightforward criterion for disposing the “crappy vast literature” speedily into the waste basket is: If it isn’t macro-axiomatized, it isn’t economics.

Egmont Kakarot-Handtke

#1 See also ‘What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#2 The political economist and incompetent scientist Keynes was one of the loudest defenders of conceptual vagueness: “Another danger is that you may ‘precise everything away’ and be left with only a comparative poverty of meaning. ... Such a problem was avoided, said Keynes, by Marshall who used loose definitions but allowed the reader to infer his meaning from ‘the richness of context’.” (Coates)
#3 See ‘True macrofoundations: the reset of economics

REPLY to Barkley Rosser & other swampies on May 21

Noah Smith’s post has been titled “Vast literatures as mud moats” and deals with the use of cargo cult science for agenda pushing. Mud moats is just another term for the phenomenon which I call swampiness.

Noah Smith’s argument does not only apply to the production of scientifically worthless papers but a fortiori to blog posts.#1 It is pretty obvious that EconoSpeak is in the business of swampification. The proof is in Barkley Rosser’s recent posts about Trump, Putin, populism etcetera which do not contain one single atom of valid economics.

When Barkley Rosser occasionally turns to economics, swampiness goes into hyper-drive. To recall, Noah Smith’s argument has been: “If you and your buddies have a political argument, a vast literature can help you defend your argument even if it’s filled with vague theory, sloppy bad empirics, arguments from authority, and other crap.”

This is the actual situation in economics: economic policy arguments and proposals have NO sound scientific foundation. How does Barkley Rosser counter this argument which applies to Walrasianism, Keynesianism, Marxianism, Austrianism and Pluralism alike? With the recommendation to read good review essays. This is off the point like recommending not to drink leaded water but to take the lead in the more convenient pill form.

Good review essays, of course, are NOT the way to get rid of the “crappy vast literature” that has been produced by incompetent scientists and agenda pushers. Good review essays only preserve the swamp. Harcourt’s review of the capital controversy is a case in point.

The ambition of science is, of course, to drain the swamp of mere opinion and to eventually reach the firm ground of true theory. Lifelong swampies who see their natural habitat in jeopardy quite naturally defend it.#2 This is why Walrasians, Keynesians, Marxians, Austrians are currently so busy with producing even more mud in the econoblogosphere. Barkley Rosser and his buddies in their utter scientific incompetence are setting up new records in mud production.

#1 See ‘Feynman Integrity, fake science and the econoblogosphere
#2 See ‘Failed economics: The losers’ long list of lame excuses