July 16, 2017

How economists habitually mess it up

Comment on Bradford DeLong on ‘How to Think Like an Economist’

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Economics is a failed science. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/ formally inconsistent and all got the pivotal economic concept profit wrong.#1

Economists are well aware of the stagnation of economics: “... 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) Economists, though, do not locate the reasons for failure in themselves but in the specifics of their subject matter. These explanations have to be taken for what they are: as excuses.#2, #3, #4

Fact is that the subject matter of economics is ill-defined or, in methodological terms, that economics is axiomatically false.#5

Bradford DeLong argues: “While economics is not a natural science, it is a science — a social science.” False. Economics is a system science.

Therefore “… to understand people you have to get inside their heads: understand their hopes, fears, desires, reasoning, plans, expectations, and actions” is NOT AT ALL the business of economics. This is the subject matter of psychology, sociology, anthropology, political science etcetera.

The business of the economist is to figure out how the economic system behaves and how the economic phenomena and variables are structurally interrelated. In an analogy: economics is not about the motives/behavior/action of passengers/crew on an airplane but about how flight is possible.

Bradford DeLong explains why economist have always three answers for any question: “The major reason is that different people have different views of what makes a free, a good, a just, or a well-ordered society.”

Note well that the question about the good society is a political question that has to be answered in the political realm and NOT in the scientific realm. John Stuart Mill was quite explicit about the separation of politics and science: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.”

The main reason why economics is a failed science is that economists are not scientists but agenda pushers. 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 the scientific standards of material and formal consistency are observed.

Economics has been hijacked 200+ years ago by agenda pushers. Political economists have not figured out until this day how the market economy works.#6

Economists do not need a prescription ‘How to Think Like an Economist’ but an idea how to get out of the self-created proto-scientific mess.

Egmont Kakarot-Handtke

#1 Economics: 200+ years of scientific incompetence and fraud
#2 Economists and their silly excuses
#3 Failed economics: The losers’ long list of lame excuses
#4 Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist
#5 First Lecture in New Economic Thinking
#6 Macro for dummies


Immediately following 'New Economic Thinking: the 10 crucial points'