Blog-Reference and Blog-Reference
Forget the Holy Grail of Science, economists are too stupid for the elementary mathematics that underlies macroeconomics.
“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)
Economists lack the true theory to this day. Take Keynes as an example.
“Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63)
“His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Keynes, like his academic colleagues, NEVER understood what profit is and thus ended with I=S ― one of the worst blunders in the history of modern science. After-Keynesians, though, have NOT realized anything in the last 80+ years.#1, #2
Just for the record: the axiomatically correct macroeconomic relations are given by Q≡−S for the elementary production-consumption economy and Q≡I−S for the elementary investment economy with Q business sector’s monetary profit, S household sector’s monetary saving, business sector’s I investment expenditures. From this follows that all I=S/IS-LM models and their derivatives are scientifically worthless.
Economists are still in the proto-scientific gutter#3 with the Holy Grail of Science, i.e. material/formal consistency, far beyond their reach. However, from the fact that neither orthodox nor heterodox economists could reach the Grail does not follow that it does not exist. It follows only that economists are scientifically incompetent.
Egmont Kakarot-Handtke
#1 How Keynes got macro wrong and Allais got it right
#2 Krugman vs MMT ― like the blind talking about colors
#3 Opinion, conversation, interpretation, blather: the economist’s major immunizing stratagems
Related 'Krugman vs MMT ― like the blind talking about colors' and 'MMT and the single most stupid physicist' and 'What it takes to become a great economist'.
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Short proof that you, like Lars Syll and the rest of Heterodoxy, are too stupid to put 2 and 2 together.
(i) The elementary production-consumption economy is given by three macroeconomic axioms: (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
(ii) The focus is here on the nominal/monetary balances. For the time being, real balances are excluded, i.e. X=O.
(iii) The monetary profit of the business sector is defined as Q≡C−Yw,
(iv) The monetary saving of the household sector is defined as S≡Yw−C.
(v) Ergo Q≡−S.
The balances add up to zero. The counterpart of household sector saving S is business sector loss −Q. The counterpart of household sector dissaving -S is business sector profit Q. Both Q and S are measurable with the precision of two decimal places.
From (v) follows that saving is NEVER equal to investment, that is, Keynes’ I=S is false.#1 By consequence, the rest of Keynesianism, Post-Keynesianism, New Keynesianism etcetera is false.
End of proof.
You, like Lars Syll and the rest of Heterodoxy, are too stupid for the elementary mathematics that underlies macroeconomics. This is why the Holy Grail of Science is forever beyond your reach.
#1 “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63). The blunder is in the premise Income = value of output. Loss/profit is NOT income.