Comment on Paul Krugman on ‘Macroeconomics: The Simple and the Fancy’
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“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 fact of the matter is that economists do NOT have the true theory. More precisely, economists do not know how the price- and profit mechanism works. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit wrong.
In science, the primary question is NOT about the simple or the fancy but about the true and the false, with truth well-defined as material and formal consistency. The point is that BOTH the simple and the fancy models are provable false. This includes Paul Krugman’s IS-LM version.#1
Economics is a failed science and Paul Krugman is a failed scientist.#2 Since Adam Smith, economic policy guidance never has had sound scientific foundations. It is as simple as that.
Egmont Kakarot-Handtke
#1 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#2 For details see references Just another wreck.