Blog-Reference and Blog-Reference
In the beginning, there was Political Economy. J. S. Mill defined it clearly as a social science: “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.”
Clearly, from the very beginning the two issues ‘how society works’ and ‘how the economy works’ were not properly kept apart.
Then, there is the political sphere and there is the scientific sphere. It is quite obvious that both are ontologically different and because of this, it is of utmost importance to keep them apart.
Politics is about the realization of the Good Society. This presupposes an idea what the Good Society is and the practical capacity to make things happen. In very general terms, the political sphere is about values and action, and the crucial distinction is between good/bad or better/worse. Science is about knowledge and the crucial distinction is between true/false with truth unequivocally defined by material and formal consistency.
Scientific knowledge is embodied in the true theory. The true theory is the best possible mental representation of reality. Scientific knowledge satisfies two criteria: material and formal consistency. The economist needs the true theory: “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)
So, how does MMT fit into the grand scheme?#1
The first thing to realize is that economics is still a hodgepodge of social science and political agenda pushing. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/ formally inconsistent, and all got profit wrong. With the pluralism of provably false theories economics sits squarely at the proto-scientific level. Economics has NO truth value, merely some political use value.#2
Bill Mitchell’s post ‘Reclaiming the State’ argues for more national/regional sovereignty. Sovereignty, clearly, is a political issue and NOT an economic issue even though it has economic implications.
Bill Mitchell is out of economics and obviously pushing a political agenda. Of course, this is what most economists#3 do but this does not make it any better. Economists could know from J. S. Mill that they are NOT entitled to dabble in politics. What is worse, though, is that Bill Mitchell underpins his political arguments with MMT which claims to be an economic theory. As such, MMT is supposed to explain how the actual economy works. Unfortunately, MMT is materially and formally inconsistent, that is, scientifically worthless.#4
Economics always claimed to be a science but never rose above the level of a proto-science. What MMTers fail to understand is that economics (i) is NOT a social science, and (ii), does NOT scientifically support any political program. Both right-wing and left-wing economists commit a crime against science by weaponizing it in a political confrontation.
MMT is materially/formally inconsistent, does not deserve the title of a science, but is politics in a bluff package, just like Walrasianism, Keynesianism, Marxianism, and Austrianism.
Egmont Kakarot-Handtke
#1 Wikimedia, Positioning of economics
#2 Economics: 200+ years of scientific incompetence and fraud
#3 Krugman is not an economist
#4 For the full-spectrum refutation of MMT see cross-references
Related 'MMT: another case of inverted economics' and 'Cryptoeconomics ― the best of Bill Mitchell’s spam folder'.