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Stop beating mainstream economics ― it is long dead.#1 Bill Mitchell, though, does not get tired of enumerating, again and again, the flaws and idiocies of DSGE/RBC/New Keynesianism.
This is Bill Mitchell’s Groundhog Day indictment:#2
- “The problem is that their conclusion is flawed at the most elemental level …”
- “And so, mass unemployment was seen to be a problem of minimum wages, excessive trade union power, other legal constraints on wage cuts etc.”
- “New Keynesian specifications have to be overly simplistic and reliant on behavioural assumptions … that no self-respecting social scientist that actually studies human behaviour would consider to be credible in the least.” [“No science has been criticized by its own servants as openly and constantly as economics. The motives of dissatisfaction are many, but the most important pertains to the fiction of homo oeconomicus.” (Georgescu-Roegen, 1971)]
- “The mainstream proponents want to claim virtue based on the fact that their models are rigourous… but then respond to empirical anomalies with ad hoc (non rigourous) tack ons.”
- “The results they end up producing … are not ‘derivable’ from first-order, microfounded principles at all. Their claim to theoretical rigour fails.”
Yes, mainstream economics is a ludicrous, proto-scientific exercise. The axioms are false, the analytical superstructure is false, and from this follows that economic policy guidance NEVER has had sound scientific foundations. Mainstream economics is refuted on all counts and therefore scientifically indefensible. Who still defends it is stupid or corrupt or both.
More is not to say about the failed/fake science economics.#3 And now the real task begins: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug)
Is MMT the new theory? No, because MMT, too, is axiomatically false.#4 Because of this, MMT policy guidance, too, has no sound scientific foundations.#5, #6
#1 Stop beating mainstream economics ― it is long dead
#2 Reference to Arjun Jayadev/J. W. Mason Mainstream Macroeconomics and Modern Monetary Theory: What Really Divides Them?
#3 The biggest scientific mistake of the last centuries, and it has much to do with academic economists
#4 Both, mainstream economics and MMT are axiomatically false
#5 For the full-spectrum refutation of MMT see cross-references MMT
#6 From false micro to true macro: the new economic Paradigm
Preceding Both, mainstream economics and MMT are axiomatically false.