August 26, 2017

Marx and the curious coexistence of provably false economic theories

Comment on Radhika Desai/counterpunch on ‘Marx’s “Capital” at 150: History in Capital, Capital in History’


There is no such thing as economics. 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 consists of four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― which are mutually contradictory, axiomatically false, materially/formally inconsistent, and which got the foundational economic concept profit wrong. What we actually have is the peaceful coexistence of provably false theories. Pluralism, to recall, is a political ideal that does NOT apply to science. The goal of science is the one true theory.

Political economics is scientifically worthless and it does not matter at all whether it is right-wing or left-wing. Both, orthodox and heterodox economics has achieved NOTHING of scientific value in the last 200+ years.

The practical consequence of scientific failure is that economic policy guidance has NO sound scientific foundations since Adam Smith/Karl Marx. Political economics never had been more than poultry entrails reading and storytelling and agenda pushing.#1 Scientifically incompetent economists are the major cause of economic crises.

What is missing among economists of ALL political colors is (i) an idea 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/history/ political science and economics. 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

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. 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 scientifically worthless since it came into being. This, it has in common with Walrasianism, Keynesianism, and Austrianism. All these approaches have no truth value but merely political use value. This is why this proto-scientific rubbish is still around.

Egmont Kakarot-Handtke

#1 The end of political economics
#2 Profit for Marxists
#3 The abject failure of orthodox and heterodox distribution theory
#4 Mathematical Proof of the Breakdown of Capitalism

Related 'Karl Marx, fake scientist' and 'Austerity and the total disconnect between economic policy and science' and 'Ricardian vice and Keynesian confusedness' and 'The Law of Economists’ Increasing Stupidity' and 'Why not simply throw all economists under the bus?'