Comment on Lars Syll on ‘An interview with Tom Sargent’
Blog-Reference
Walrasian economics, the flagship of the profession, is based on these hardcore propositions: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub)
Methodologically, microfoundations are unacceptable. Economics has to be based on macrofoundations. Mainstream economics is false at the most fundamental level.#1 In addition, the Walrasian axiom set is false because it contains multiple NONENTITIES. Equilibrium is one, the other relates to knowledge and expectations.
All this was noticed early on by genuine scientists: “Walras approached Poincaré for his approval. ... But Poincaré was devoutly committed to applied mathematics and did not fail to notice that utility is a nonmeasurable magnitude. ... He also wondered about the premises of Walras’s mathematics: It might be reasonable, as a first approximation, to regard men as completely self-interested, but the assumption of perfect foreknowledge ‘perhaps requires a certain reserve’.” (Porter)
Every economics student who accepts Walrasianism ― and supply-demand-equilibrium (S-D-E) as its core piece ― as a scientifically valid approach flunks the intelligence test.
Thomas Sargent not only failed to notice that mainstream economics is what Feynman called a cargo cult science but actively participated in the greatest scientific hoax of modern times. He promoted the Rational Expectation Hypothesis that bears the sign of idiocy on its forehead: “REH basically says that people on the average hold expectations that will be fulfilled. This makes the economist’s analysis enormously simplistic since it means that the model used by the economist is the same as the one people use to make decisions and forecasts of the future.”
Scientific truth has two inseparable methodological components: material and formal consistency. This, of, course, holds also for economics: “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)
To this day, economists do not have the true theory. Economics is fake science. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit ― the foundational concept of the subject matter ― wrong. With the pluralism of provably false theories economics sits squarely at the proto-scientific level.#2
So, since Adam Smith/Karl Marx, economic policy guidance never had sound scientific foundations. Economics is one of the most embarrassing scientific failures of all time and the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is plain fraud.
Economists are NOT scientists and economics is NOT science. Economics ― both Orthodoxy and Heterodoxy ― needs a Paradigm Shift from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations.#3
What Thomas Sargent did over his whole academic career was to produce proto-scientific garbage.
Egmont Kakarot-Handtke
#1 “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.” (Aristotle)
#2 For details of the big picture see cross-references Failed/Fake Scientists
#3 How to restart economics