Comment on Carola Binder on ‘Rethinking Macroeconomic Policy’
Blog-Reference and Blog-Reference and Blog-Reference on Oct 18
This is the track record of economics: provably false:
• profit theory, for 200+ years,
• Walrasian microfoundations (including equilibrium), for 150+ years,
• Keynesian macrofoundations (including I=S, IS-LM), for 80+ years.
The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of profit wrong.#1
Economics is a failed science or what Feynman called a cargo cult science: “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.”
What is entirely missing among economists is scientific competence. The familiar research programs have produced nothing but proto-scientific garbage but neither orthodox nor heterodox economists have any clue of how to get out of the mess: “There is another alternative: to formulate a completely new research program and conceptual approach. As we have seen, this is often spoken of, but there is still no indication of what it might mean.” (Ingrao et al.)
This is why rethinking-this-and-that-and-everything is all the rage.#2 It cannot produce anything worthwhile for obvious reasons. Those economists who in their Econ101 youth unthinkingly swallowed supply-demand-equilibrium, which is one the worst proto-scientific idiocies of all time, are in NO position to perform the necessary Paradigm Shift: “A new idea is extremely difficult to think of. It takes a fantastic imagination.” (Feynman)#3
Carola Binder maintains: “The fact that the conference speakers are so distinguished is both an upside and a downside. They have the greatest understanding of our current models and policies, and in many cases were central to developing them. They can rethink, because they have already thought, and moreover, they have large influence and loud platforms. But they are also quite invested in the status quo, for all they might criticize it, in a way that may prevent really radical rethinking (if it is really needed, which I’m not yet convinced of).”
Obviously, Carola Binder is still in a hallucinatory state. The only thing the Blanchard’s and Summers’ and Bernanke’s and the rest of the rethinking-macro crowd can do for the advancement of economics is to get out of the way.
Egmont Kakarot-Handtke
#1 Where modern macroeconomics went wrong
#2 New Economic Thinking, or, let’s put lipstick on the dead pig
#3 Fact of life: your econ prof is scientifically incompetent
Related 'This is New Economic Thinking? Give me a break!' and 'New Economic Thinking = old scientific garbage' and 'How to make economics a science'. For details of the big picture see cross-references New Economic Thinking.