August 25, 2017

Karl Marx, fake scientist

Comment on Jayati Ghosh on ‘150 years of ‘Das Kapital’: How relevant is Marx today?’

Blog-Reference and Blog-Reference

In the beginning, there was Political Economy. J. S. Mill defined it clearly as a social science: “The fundamental problem, therefore, of the social science, is to find the laws according to which any state of society produces the state which succeeds it and takes its place.” Or, a bit more specific with regard to economics: “The science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object.”

Economics started as a hodgepodge of sociology, history, folk psychology, and folk philosophy (a mixture of utilitarianism, Hegelianism, Malthusianism/Darwinism, Individualism/Protestantism). The two issues ‘how society works’ and ‘how the economy works’ were never properly kept apart.

Since Adam Smith/Karl Marx economics defined itself as science. It was obvious, however, that the subject matter of what was the epitome of science, physics and mathematics, was qualitatively different from the so-called social sciences. With regard to the subject matter, there is no difference between Mill and Marx: “My stand-point, from which the evolution of the economic formation of society is viewed as a process of natural history, …” (Marx)

This is the exact point where things went wrong because history is storytelling: “That is why Descartes said that history was not a science ― because there were no general laws which could be applied to history.” (Berlin)

Science, in contradistinction, is ahistorical and universal because it looks for laws, or more generally, for invariances (Nozick), i.e. for that which does NOT change but remains invariant below the surface of phenomenological change. Marx understood this in principle: “That in their appearances things are often presented in an inverted way is something fairly familiar in every science, apart from political economy.” Fact is, though, that Marx never rose above the level of storytelling and agenda pushing, which is the definition of political economics. The goal of theoretical economics (= science) is the true theory with truth defined by material and formal consistency.

Economics always claimed to be a science but never rose above the level of a proto- or cargo cult science. Feynman defined it as follows: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... So I call these things cargo cult science because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”#1

What is missing among economists of ALL political colors is (i) an idea of what science is all about, and (ii), a commitment to the scientific standards of material and formal consistency. The lethal scientific blunder of Marx was to confound sociology and economics. This disqualifies him as a scientist. To recall, Marx’s cardinal facts are:
• capital is a social relation,
• ownership of capital gives power analogous to state power,
• capitalist production is characterized by commodity fetishism, alienation, unfreedom,
• capitalism as a system is characterized by contradiction, competition, aggression, destruction, conflict, class war, Darwinian struggle, worldwide expansion,
• the capitalistic system is dysfunctional with recurring crises and a final big crunch.
All this is descriptively, commonsensically, and phenomenologically convincing as far as it relates to society.

Fact is, though, that Marx never understood how the economic system works, or more specifically, how the profit- and price mechanism works:
• he got profit, the foundational concept of all of economics, wrong,#2
• he did not realize that what appears as exploitation is, in fact, cross-over exploitation,#3
• he got the breakdown of the market system wrong,#4
• he failed to see that there are no ‘natural’ economic classes and that class war is a sociological construct.#3
When the foundational concept of profit is false the whole analytical superstructure falls apart.

What economists including Marxians do not get until this day is that economics is NOT a science of Human Nature or individual/social/political behavior but of the behavior of the monetary economy.#5 Accordingly, the correct definition of the subject matter is objective/structural/systemic: “Economics is the science which studies how the monetary economy works.”

What Marx failed to understand is that economics is neither a social science nor a natural science but a system science. The scientific incompetence of Marxians consists in not having figured out until this very day what profit is.

Marxian economics is as scientifically worthless as it was 150 years ago.

Egmont Kakarot-Handtke

#1 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#2 Profit for Marxists
#3 The abject failure of orthodox and heterodox distribution theory
#4 Mathematical Proof of the Breakdown of Capitalism
#5 For details see cross-references Not a Science of Behavior

Related 'Marx and the curious coexistence of provably false economic theories' and 'Marx, the moron' and 'No exploitation, no classes' and 'Ricardo, too, got profit theory wrong. Sad!' and 'Ricardo and the invention of class war' and '200 years in the dark ― how Marx got it wrong'. For details of the big picture see cross-references Failed/Fake Scientists.