Occasional Tweets: Is the US-Oligarchy suicidal? (VIII)

 

The US political system is an #Oligarchy with Congress/Treasury/Fed/BigBusiness as integral parts. The #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. So, the growth of #PublicDebt generates macro #Profit Q i.e. secures the Oligarchy's self-alimentation. pic.twitter.com/NvoTl8RRap

— E.K-H (@AXECorg) May 31, 2023

Occasional Tweets: Scrap the EconNobel (III)

 

#Econ#FailedFakeScience#Walrasianism, #Keynesianism, #Marxianism, #Austrianism et al. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. #Economics is scientifically worthless. Economic policy guidance has never had sound scientific foundations pic.twitter.com/bm1w0CeBxK

— E.K-H (@AXECorg) May 31, 2023

For more about the EconNobel see AXECorg. 

Occasional Tweets: The futile attempt to recycle MMT (XXVIII)

 

#LearnEcon

The 3-sector #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. So, the #MMT policy of #DeficitSpendingMoneyCreation is a #FreeLunch for the #Oligarchy. #PrivateFinancialWealth grows with #PublicDebt that becomes an eternal #Interest #CashCow. pic.twitter.com/MmrxHtzFM6

— E.K-H (@AXECorg) May 31, 2023

Occasional Tweets: Is the US-Oligarchy suicidal? (VII)

 

The US political system is an #Oligarchy with Congress/Treasury/Fed/BigBusiness as integral parts. The #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. So, the growth of #PublicDebt generates macro #Profit Q i.e. secures the Oligarchy's self-alimentation. pic.twitter.com/ynsl8lD6b8

— E.K-H (@AXECorg) May 30, 2023

For more about the Oligarchy see AXECquery. 

Occasional Tweets: Is the US-Oligarchy suicidal? (VI)

 

The US political system is an #Oligarchy with Congress/Treasury/Fed/BigBusiness as integral parts. The #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. So, the growth of #PublicDebt generates macro #Profit Q i.e. secures the Oligarchy's self-alimentation. pic.twitter.com/jpMPZeQiyr

— E.K-H (@AXECorg) May 30, 2023

Occasional Tweets: Is the US-Oligarchy suicidal? (V)

 

The US political system is an #Oligarchy with Congress/Treasury/Fed/BigBusiness as integral parts. The #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. So, the growth of #PublicDebt generates macro #Profit Q i.e. secures the Oligarchy's self-alimentation. pic.twitter.com/pJxuZAU1xX

— E.K-H (@AXECorg) May 29, 2023

Occasional Tweets: Most economists are not scientists but political agenda pushers (XII)

 

#Walrasianism, #Keynesianism, #Marxianism, #Austrianism et al. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. Economic policy guidance has NEVER had sound scientific foundations. #Economists are only #Clowns in the political #CircusMaximus. pic.twitter.com/mQ5A3gACPA

— E.K-H (@AXECorg) May 28, 2023

Occasional Tweets: Economics is not science but disinfotainment (XIV)

 

#Economics#Rhetoric

The history of economic thought is the history of scientific failure. #Economics is #FakeScience. The representative #Economist is NOT a #Scientist but an #AgendaPusher / #UsefulIdiot / #Clown in the political #CircusMaximus. pic.twitter.com/oQwXaMALYr

— E.K-H (@AXECorg) May 28, 2023

For details of the big picture see cross-references Political Economics/Stupidity/Corruption. 

Occasional Tweets: Is the US-Oligarchy suicidal? (IV)

 

The US political system is an #Oligarchy with Congress/Treasury/Fed/BigBusiness as integral parts. The #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. So, the growth of #PublicDebt generates macro #Profit Q i.e. secures the Oligarchy's self-alimentation. pic.twitter.com/2n0HmeZVjk

— E.K-H (@AXECorg) May 28, 2023

Occasional Tweets: Economics is not science but disinfotainment (XIII)

 

#Economics#FailedFakeScience

Ibn Khaldun is not the forerunner of economics as a science. The history of economic thought is the history of scientific failure.

The long genealogical tree of economic storytellinghttps://t.co/NMo4watBPu

— E.K-H (@AXECorg) May 27, 2023

Occasional Tweets: Economics is at odds with scientific ethics (III)

 

#FailedFakeScience#Walrasianism, #Keynesianism, #Marxianism, #Austrianism et al. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. Academic economics is a rigged institution & #PeerReview is the selection mechanism for its self-preservation. pic.twitter.com/bSH16T7obT

— E.K-H (@AXECorg) May 26, 2023

Occasional Tweets: Is the US-Oligarchy suicidal? (III)

 

The US political system is an #Oligarchy with Congress/Treasury/Fed/BigBusiness as integral parts. The #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. The growth of #PublicDebt generates macro #Profit Q: Will the O-folks commit suicide with the #DebtLimit? pic.twitter.com/g4wWo6EZgp

— E.K-H (@AXECorg) May 26, 2023

Occasional Tweets: Economics is at odds with scientific ethics (II)

 

#FailedFakeScience#Walrasianism, #Keynesianism, #Marxianism, #Austrianism et al. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. Academic economics is a rigged institution & #PeerReview is the selection mechanism for its self-preservation. pic.twitter.com/ElubzvAT3H

— E.K-H (@AXECorg) May 26, 2023

Occasional Tweets: Economics is at odds with scientific ethics (I)

 

#Econ#FailedFakeScience#Walrasianism, #Keynesianism, #Marxianism, #Austrianism et al. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. Economic policy guidance has NEVER had sound scientific foundations. pic.twitter.com/69N5fqlDKZ

— E.K-H (@AXECorg) May 25, 2023

Related 'The GDP death blow for the economics profession' and  'The ethics of science is consistency ― economics is inconsistent'

Occasional Tweets: Economics is not science but disinfotainment (XII)

 

#Econ#Walrasianism, #Keynesianism, #Marxianism, #Austrianism et al. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. #Economics is #FailedFakeScience. The self-hype of #Economists as champions of human decency are just #DisInfoTainment. pic.twitter.com/MvczilklUv

— E.K-H (@AXECorg) May 25, 2023

Occasional Tweets: The marketing of economics as a science is gradually coming to the end

 

#Econ

“ChatGPT as marketing triumph … Maybe they like it, especially if they are sick of more and more of the economy being run by marketers.”

Reminder: The promotion of #Economics as a #Science has been one of the greatest marketing triumphs ever. ⇒https://t.co/1CegKFEo3k

— E.K-H (@AXECorg) May 24, 2023

Occasional Tweets: No false-hero memorials (XV)

 

#Economics#FailedFakeScience#MacroFoundations#Keynes got macroeconomic #Profit wrong because he was too stupid for elementary #Algebra. Because of this, #MacroEconomics is scientifically worthless to this day. After-Keynesians never got it. Robert Lucas was one of them. pic.twitter.com/8eovTVrUEd

— E.K-H (@AXECorg) May 23, 2023

Occasional Tweets: Is the US-Oligarchy suicidal? (II)

 

The US political system is an #Oligarchy with Congress/Treasury/Fed/BigBusiness as integral parts. The #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. So, the growth of #PublicDebt generates #Profit. Q: Will they commit suicide with the #DebtLimit? Hardly. pic.twitter.com/UatOU0nsHP

— E.K-H (@AXECorg) May 22, 2023

Occasional Tweets: As failed/fake scientists economists are in no position to make the world a better place (II)

 

#Econ#Incompetence#Walrasianism, #Keynesianism, #Marxianism, #Austrianism et al. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. Bc of this, #Economics is scientifically worthless, & economic policy guidance has NEVER had sound foundations. pic.twitter.com/eA7rNwh843

— E.K-H (@AXECorg) May 22, 2023

Occasional Tweets: Who rides the debt tiger cannot dismount

 

The 3-sector #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. So, #DeficitSpendingMoneyCreation is a #FreeLunch for the #Oligarchy which is the #LifeFormula of #Capitalism. Adherence to the #DebtCeiling would be #Suicide for the so-called #FreeMarketEconomy. pic.twitter.com/WxO6fiWr8U

— E.K-H (@AXECorg) May 20, 2023

Occasional Tweets: Most economists are not scientists but political agenda pushers (XI)

 

#Walrasianism, #Keynesianism, #Marxianism, #Austrianism et al. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. Economic policy guidance has NO scientific foundations. The representative #Economist is a #Clown in the political #CircusMaximus. pic.twitter.com/gIYDRwKQJY

— E.K-H (@AXECorg) May 20, 2023

Key Issues: Nature and causes of profit

The individual firm is blind to the structural relationships as defined by the macroeconomic axiom set. On the firm’s level, profit is therefore subjectively interpreted as a reward for innovation or superior management skills or higher efficiency or toughness on wages or for risk taking or capitalizing on market imperfections or as the result of monopolistic practices or whatever else. These factors can play a role when it comes to the distribution of profits between firms, and these phenomena become visible when similar firms of an industry are compared. Firms do not create profit; they redistribute it.

The enterprise which has better management, better luck, superior resources, a better product, no competitors, and so on, is likely to make more profit than the enterprise without these advantages. Not much more can be said about the sources of particular profit without elaborating the obvious. (Murad, 1953, pp. 6-7)

All this is true of particular profit but irrelevant for overall profit. The explanation of particular profit is indeed utterly trivial, hence its popularity.

 

The case is perfectly clear when there is only one firm in the elementary production-consumption economy. It is a matter of indifference whether the firm’s management thinks that it needs profit to cover risks or to finance growth, or whether it realizes the profit maximum or not. If consumption expenditures are, in the most elementary case, equal to wage income, monetary profit Qm≡C−WL will invariably be zero, no matter what agents want or plan or optimize or expect. Hence, there is no need to second-guess much about it. Profit for the business sector as a whole is a systemic property. Psychologism, as ever, explains nothing. Whether profit-making is considered good or bad does not matter either. Moralizing, as ever, explains nothing. Profit is not determined by folk psychology but by the structural axiomatic Profit Law.

 

From the analysis of the elementary production-consumption economy follows:

• The business sector's revenues can only be greater than costs if, in the simplest of all possible cases, consumption expenditures are greater than wage income.
• So that profit comes into existence for the first time in the elementary consumption economy, the household sector must run a deficit at least in one period.
• Profit is, in the simplest case, determined by the increase and decrease of the household sector's debt.
• Wage income is the factor remuneration of labor input L. Profit is not a factor income, nor is loss. Since capital is nonexistent in the elementary production-consumption economy, profit is not functionally attributable to capital.
• Profit has no real counterpart in the form of a piece of the output cake. Profit has a monetary counterpart.
• The existence and magnitude of overall profit do not depend on profit-maximizing behavior of the business sector but solely on the relation of consumption expenditure to wage income.
• The value of output is, in the general case, different from the sum of factor incomes. This is the defining property of the monetary economy.

The fundamental error of value theory is to start from the premise that the value of the output of goods and services is always equal to the sum of factor incomes. This error can be traced back to Adam Smith (2008, pp. 50, 155).

Under the condition C=Y, profit Qm≡C−Y+DN is numerically equal to the distributed profit DN. The fundamental difference between the two variables does not catch the eye in this limiting case. The equality of profit and distributed profit is an implicit feature of equilibrium models. These have no counterpart in reality. In the real world holds C ≠ Y, hence profit and distributed profit are never equal.

All models that are based on the common-sense definition of total income ≡ wages+profits are flawed because profit and distributed profit are not the same thing.

None of the foregoing conclusions could ever be derived from the behavioral assumptions of utility or profit maximization. These assumptions are the wrong starting point of economic analysis, even if they were true.

Objective/structural/systemic axiomatization is palpably superior. The Profit Law is testable with an accuracy of two decimal places and is evidently of immediate practical relevance. Serious alternatives are not available. Conventional economics fails already at the first axiom. This is an immutable logical fact.


References

Murad, A. (1953). Questions for Profit Theory. American Journal of Economics and Sociology, 13(1): 1–14. URL
Smith, A. (2008). An Inquiry into the Nature and Causes of the Wealth of Nations. Oxford: Oxford University Press.

 

Related 'Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist, Sec. 3 URL' and 'Profit for Marxists URL'. For the graphical representation, see Debunking squared.


© 2013 EKH, except original quotes, original notation adapted to HTML code here

***

AXEC186b

Occasional Tweets: True macrofoundations (IV)

 

#Econ#Economics is #FailedFakeScience. The various #MicroFoundations approaches are axiomatically false. So are Keynesian #MacroFoundations. For the inescapable #ParadigmShift to the true set of macroeconomic #Axioms see cross-referenceshttps://t.co/rf8n0xkhRA pic.twitter.com/dO979SVp1W

— E.K-H (@AXECorg) May 19, 2023

Key issues: Debunking squared

What enabled me to break away from that delusional analysis was what the Australians call ‘a good bullshit detector.’ (Keen, 2011, p. 268)

Steve Keen has, with the help of his fabulous detector, divined a lot of analytical blunders and debunked a good part of standard economics. Rightly so, because to clear the heads is the indispensable preparatory task of heterodox economics. However, Keen has left standing the theory of profit. This is unfortunate because the theory of profit is the pivot of all of theoretical economics. What deserves the first and foremost attention is, in any case, the factual relation of profit and income.

Steve Keen has stated the definition of income in two prominent places as: “Total income = Wages plus Profits” (2011, p. 366) and “... national income resolves
itself into wages and profits” (2010, p. 12). This, of course, is what we have heard often from middle-of-the-road economists but also from Keynes (1973, p. 23).

This definition seems to be plain common sense, yet, like most common sense since Aristotle, it is demonstrably false (2012). Therefore, what is required for the advancement of Heterodoxy is to debunk the naive definition of total income.

This is done in the following with a straightforward graphical demonstration. For the rigorous formal underpinning and the full implications see (2013b, 2011). Figure 1 shows the simplest possible configuration of the elementary production-consumption economy.

Figure 1: The price in period t=1 is objectively determined by the conditions of market clearing and budget balancing. Legend: P price, L employment, W wage rate, YW wage income, C consumption expenditure, R productivity, O output, X quantity bought

At any given level of employment L, the wage income YW that is generated in the consolidated business sector follows by multiplication with the wage rate W. On the real side, output follows by multiplication with the productivity. Finally, the price follows as the dependent variable under the conditions of budget balancing, i.e., C=YW, and market clearing, i.e., X=O. Note that the ray in the southeastern quadrant is not a linear production function; the ray tracks any underlying production function. The same holds for the distribution of wage incomes in the southwestern quadrant. All these details are not needed at the moment.

It can be directly read off from the 4-quadrant scheme that the real wage W/P is always equal to the productivity R, that is, labor gets the whole product, no matter what. If the wage rate is lowered, the market-clearing price falls. If the number of working hours is increased, the price remains constant, provided productivity does not change. If productivity decreases, the price rises. In any case, labor gets the whole product and profit is zero, or in Walras’s terms, there is ‘ni bénéfice ni perte’, neither profit nor loss. So far, all agree:

The consensus to date has been that it is mathematically impossible for capitalists in the aggregate to make profits. (Keen, 2010, p. 2)

There is also explicit assent from economics methodology.

... since it is impossible to have an economy where everyone is making profits. Aggregate profit for an entire (closed) economy must be zero, hence if any firm is making profits, some other firm must be making losses. (Boland, 1992, p. 80)

The weak spot in the otherwise impeccable zero-profit argument is that aggregate profit has been greater than zero for most of the time in most of the known market economies up to the present. Hence, Figure 1 is the first but not the last word in the theory of profit.

The crucial point is this: there exists no such thing as an immutable law of budget balancing in the same period. Just the contrary. Logically, we have three possible cases in the next period: C2<YW2, C2=YW2, C2>YW2. The first case means loss, the second zero profit, and the third profit. Figure 2 shows an example of the third case, which has, compared to the others, the best evolutionary prospects in the real world.

Figure 2: Monetary profit in period t=2 is objectively determined by the difference between consumption expenditure and wage income under the condition of market clearing, irrespective of what the agents optimize

In the elementary production-consumption economy, profit can at first only be greater than zero if consumption expenditures are greater than wage income. This configuration has historically been realized in various ways; the ordinary way is that the household sector takes up credit from the banking industry (for details, see 2013, Sec. 18). One pertinent example is the purchase of long-lived consumption goods like cars or homes on credit. The relation between credit expansion of the household sector as a whole and profit for the business sector as a whole is measurable in principle (Keen, 2011, pp. 337-353). The only open question is how long can Figure 2 be reproduced? After all, credit has to be redeemed someday. This eventuality is not at issue here (see 2013a).

In the case of Figure 2, monetary profit is given as Q2≡C2−YW2 in the northeastern quadrant. Profit takes the form of money in the bank and remains in the business sector in the period under consideration, i.e. profit is retained (this incidentally answers the old chestnut M―C―M' or M―C―M+, see Keen, 2011, p. 217). Due to the higher market-clearing price, the real wage is now lower than the productivity.

In the next period, profit is distributed and the household sector’s total income is accordingly: Y3=YW3+YD3. If profit is fully distributed, we have YD3=Q2, i.e., distributed profit in period t=3 is equal to profit in period t=2. Profit in period t=3 is in the general case: Q3≡C3−YW3+YD3. This solves the long-standing profit puzzle. The Profit Law is the first of the far-reaching implications of Figure 2. Note that profit and distributed profit are not the same thing, and that both are never equal in reality. Note also that the Profit Law, when augmented with investment, foreign trade, and government, is directly testable.

Resume: Total income is the sum of wage income and distributed profit and not of wage income and profit. This distinction makes all the difference between good or bad economics. Steve Keen has debunked a large part of Orthodoxy, yet with regard to the foundational concepts income and profit Heterodoxy still subscribes to the conventional error.


References
Boland, L. A. (1992). The Principles of Economics. Some Lies My Teacher Told Me. London, New York: Routledge.
Kakarot-Handtke, E. (2011). The Emergence of Profit and Interest in the Monetary Circuit. SSRN Working Paper Series, 1973952: 1–23. URL
Kakarot-Handtke, E. (2012). The Common Error of Common Sense: An Essential Rectification of the Accounting Approach. SSRN Working Paper Series, 2124415:
1–23. URL
Kakarot-Handtke, E. (2013a). Redemption and Depression. SSRN Working Paper Series, 2343561: 1–28. URL
Kakarot-Handtke, E. (2013b). Understanding Profit and the Markets: The Canonical Model. SSRN Working Paper Series, 2298974: 1–55. URL
Keen, S. (2010). Solving the Paradox of Monetary Profits. Economics E-Journal, 4(2010-31). URL
Keen, S. (2011). Debunking Economics. London, New York: Zed Books, rev. edition.
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. The Collected Writings of John Maynard Keynes Vol. VII. London: Macmillan.


Related 'Objective Principles of Economics'.


© 2013_11 EKH, except original quotes

Occasional Tweets: Economics is not science but disinfotainment (XI)

 

#Econ

“Economics is the study of the economy, not the study of economists.” (R. Reis)

The major approaches are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. #Economics is proto-scientific garbage. The representative #Economist is a #PolitClown.

— E.K-H (@AXECorg) May 19, 2023

Occasional Tweets: Economics is not science but disinfotainment (X)

 

#Econ#FailedFakeScience

“…the little extra stories you can tell in the classroom that will hopefully make students laugh & be more interested.” This is what #Economics has become: a hodgepodge of #DisInfoTainment.#DefundEconomics#FireEconomists pic.twitter.com/gazrxDHxSU

— E.K-H (@AXECorg) May 19, 2023

Occasional Tweets: The history of economic thought is the history of scientific failure (X)

 

#FailedFakeScience

What determines the level of #AggregateProfit? #Keynes got macroeconomic #Profit wrong because he was too stupid for elementary #Algebra. Bc of this, #Economics is scientifically worthless to this day. #Monetarism is NO exception. ⇒https://t.co/ABFUc41eMs pic.twitter.com/4F88h3JBTw

— E.K-H (@AXECorg) May 19, 2023

Related 'The GDP death blow for the economics profession' 

Key Issues: Methodology ― from anything-goes to rien-ne-va-plus

Economics is a perplexing subject. Though I have spent the better part of my academic career thinking about its aims and methods, I have never been confident that I or anyone else for that matter really understand its cognitive status. ... Without assurance about the cognitive status of the theory, there is no basis of confidence in it. (Rosenberg, 1994, pp. 216-217)

***

Now, the doubts about the explanatory relevance of general equilibrium theory suggest that it cannot explain choice within constraints. That is, so to speak, how the problem of justifying general equilibrium theory starts. (Rosenberg, 1994, p. 221)

The great contradiction revealed is as follows: one of the theory's greatest strength – its claim to deduce significant results from very general hypotheses about the behavior of economic agents – turns out to be its greatest weakness. (Ingrao and Israel, 1990, p. 364)

To the extent that they [alternative theories] trade in the preferences and expectations of individuals, they will do no better than neoclassical economics. (Rosenberg, 1994, p. 233)

By having a vague theory it is possible to get either result. ... It is usually said when this is pointed out, ‘When you are dealing with psychological matters things can't be defined so precisely’. Yes, but then you cannot claim to know anything about it. (Feynman, 1992, p. 159)

If we ask, ‘What is the most adequate model of behaviour for economics?’ we implicitly assume that economics actually needs a model of behaviour; hence, we already assume psychologism of a kind. (Hudík, 2011, p. 147)

***

In fact, it has not been such a good idea to organize economic theory around a model of behavior.

 The scientific method has rather narrow limits, especially in dealing with human behavior and social phenomena. (Knight, 1921, p. 144)

...  there has been no progress in developing laws of human behavior for the last twenty-five hundred years. (Hausman, 1992, p. 320), (Rosenberg, 1980, pp. 2-3)

... theorists all over the world have become aware that anything based on this mock-up [GET] is unlikely to fly, ...  (Hahn, 1981, p. 1036)

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, 1998, p. 703)

***

What particular reality is described by a given theory can be ascertained only from that theory's axiomatic foundation. (Georgescu-Roegen, 1966, p. 361)

The process of axiomatic thought is then a method both for accreting and warranting knowledge claims, for those claims, if developed from independent and consistent axioms, themselves make strong claims on our attention and reason. (Weintraub, 2002, p. 87)

Axiomatization is indispensable because the methodological anything-goes mentality among economists is the proximate reason for the proto-scientific condition of conventional economics. Because of conceptual sloppiness, neither Orthodoxy nor Heterodoxy has a clear idea of the fundamental economic concepts of income and profit. Doing economics without a clear idea of income and profit is like doing physics without a clear idea of force and mass — it cannot possibly yield practical results, it has not, and it will not.

I think it is the lack of quite sharply defined concepts that the main difficulty lies, and not in any intrinsic difference between the fields of economics and other sciences. (von Neumann, quoted in Mirowski, 2002, p. 146 fn. 49)

***

Since, therefore, it is vain to hope that truth can be arrived at, either in Political Economy or in any other department of the social science, while we look at the facts in the concrete, clothed in all the complexity with which nature has surrounded them, and endeavour to elicit a general law by a process of induction from a comparison of details; there remains no other method than the à priori one, or that of “abstract speculation.” (Mill, 2004, pp. 113-114)

Abstract speculation starts with clearly stated foundational propositions.

What are the propositions which may reasonably be received without proof? That there must be some such propositions all are agreed, since there cannot be an infinite series of proof, a chain suspended from nothing. (Mill, 2006, p. 746)

These propositions must relate to economic facts and not to human behavior.

The attempt is made to collect all the assumptions, which are needed, but no more, to form the apex of the system. They are usually called the ‘axioms’ (or ‘postulates’, or ‘primitive propositions’; no claim of truth is implied in the term ‘axiom’ as here used). The axioms are chosen in such a way that all the other statements belonging to the theoretical system can be derived from the axioms by purely logical or mathematical transformations. (Popper, 1980, p. 71)

***

His [Adam Smith’s] method is always the method of Newton, which we have already seen applied to psychology and morals: to attain, by generalization, certain simple truths, from which it will be possible to reconstruct, synthetically, the world of experience. (Halévy, 1960, p. 100)

By sketchily copying Newton and by applying the axiomatic method to psychology and morals, Adam Smith set economics on the wrong track. There is nothing wrong with Newton or the axiomatic method, only with Smith's shallow scientific understanding, which still prevails among economists.

If one takes seriously what Popper says about falsifiability and the critical attitude, then the methodological practice of economics is not only mistaken, it is stupid and intellectually reprehensible. (Hausman, 1992, p. 275)

One hopes that the economics profession will not spend the whole twenty-first century waiting for a new Newton or Einstein of formal economics to emerge to shed a more powerful light in the current darkness. (Nelson, 2006, p. 227)

As a matter of fact, it is not a question of hope and waiting: As long as the darkness persists, economists have no mandate to speak in the name of science. At present, economic policy advice is, at bottom, the personal opinion of someone who cannot tell the difference between income and profit.

References

Blaug, M. (1998). Economic Theory in Retrospect. Cambridge: Cambridge University Press, 5th edition.

Feynman, R. P. (1992). The Character of Physical Law. London: Penguin.

Georgescu-Roegen, N. (1966). Analytical Economics, chapter Economic Theory and Agrarian Economics, 359–397. Cambridge: Harvard University Press.

Hahn, F. H. (1981). Review: A Neoclassical Analysis of Macroeconomic Policy. Economic Journal, 91(364): 1036–1039.

Halévy, E. (1960). The Growth of Philosophic Radicalism. Boston: Beacon Press.

Hausman, D. M. (1992). The Inexact and Separate Science of Economics. Cambridge: Cambridge University Press.

Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.

Ingrao, B., and Israel, G. (1990). The Invisible Hand. Economic Equilibrium in the History of Science. Cambridge, London: MIT Press.

Knight, F. H. (1921). Traditional Economic Theory ― Discussion. American Economic Review, Papers and Proceedings, 11(1): 143–147.

Mill, J. S. (2004). Essays on Some Unsettled Questions of Political Economy, chapter On the Definition of Political Economy; and the Method of Investigation Proper to It., 93–125. Electronic Classic Series PA 18202: Pennsylvania State University.

Mill, J. S. (2006). Principles of Political Economy With Some of Their Applications to Social Philosophy, volume 3, Books III-V of Collected Works of John Stuart Mill. Indianapolis: Liberty Fund.

Mirowski, P. (2002). Machine Dreams. Cambridge: Cambridge University Press.

Nelson, R. H. (2006). Economics as Religion: From Samuelson to Chicago and Beyond. Pennsylvania: Pennsylvania State University Press.

Popper, K. R. (1980). The Logic of Scientific Discovery. London, Melbourne, Sydney: Hutchison, 10th edition.

Rosenberg, A. (1980). Sociobiology and the Preemption of Social Science. Oxford: Blackwell.

Rosenberg, A. (1994). What is the Cognitive Status of Economic Theory? In R. E. Backhouse (Ed.), New Directions in Economic Methodology, pages 216–235. London, New York: Routledge.

Weintraub, E. R. (2002). How Economics Became a Mathematical Science. Durham, London: Duke University Press.

Related to Newton and Euclid

© 2013 EKH, except original quotes 

Occasional Tweets: No false-hero memorials (XIV)

 

#Economics#FailedFakeScience#MacroFoundations#Keynes got macroeconomic #Profit wrong because he was too stupid for elementary #Algebra. Because of this, #MacroEconomics is scientifically worthless to this day. After-Keynesians never got it. Robert Lucas was one of them. pic.twitter.com/aAjY0Rmf5h

— E.K-H (@AXECorg) May 18, 2023

Occasional Tweets: Zero-growth means breakdown

 

#LearnEconomics

The 3-sector #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. So, #DeficitSpendingMoneyCreation is a #FreeLunch for the #Oligarchy i.e. growing #PublicDebt is the existential prerequisite for #LateCapitalism i.e. #ZeroGrowth means #BreakDown.

— E.K-H (@AXECorg) May 18, 2023

Occasional Tweets: Economics ― just disinfotainment and self-hype (IV)

 

The major approaches are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. Bc of this, #Economics is scientifically worthless, & economic policy guidance has NEVER had sound foundations. #WhatEconomistsReallyDo is vacuous #SelfHype.#DefundEconomics

— E.K-H (@AXECorg) May 17, 2023

Occasional Tweets: Nobel-hype does not help ― economics is failed/fake science

 

#Economics#FailedFakeScience#EconNobel#Walrasianism, #Keynesianism, #Marxianism, #Austrianism et al. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. #Economics is scientifically worthless. Links ⇒https://t.co/ExJf3VErgZ pic.twitter.com/luBChneqoS

— E.K-H (@AXECorg) May 15, 2023

Occasional Tweets: Most economists are not scientists but political agenda pushers (X)

 

#Walrasianism, #Keynesianism, #Marxianism, #Austrianism are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. #Economics is scientifically worthless. The representative #Economists is NOT a #Scientist but a #Clown in the political #CircusMaximus. pic.twitter.com/R47qTwr8DL

— E.K-H (@AXECorg) May 15, 2023

Dear Psycho-Economists, inflation is not determined by expectations but by the macroeconomic Law of Supply and Demand

 

#LearnEconomics#Inflation is a #MacroEconomic phenomenon. Attached is the axiomatically correct elementary #LawOfSupplyAndDemand. It tells one that neither #Employment nor #Expectations nor the #QuantityOfMoney is among the #PriceDeterminants. pic.twitter.com/TKHF3LfCMJ

— E.K-H (@AXECorg) May 15, 2023

Occasional Tweets: The futile attempt to recycle MMT (XXVII)

 

#LearnEcon

The 3-sector #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. So, the policy of #DeficitSpendingMoneyCreation is a #FreeLunch for the #Oligarchy.

Down with idiocy!https://t.co/hqVhuAXz8l pic.twitter.com/PwZQtq8NkG

— E.K-H (@AXECorg) May 15, 2023

Occasional Tweets: No false-hero memorials (XIII)

 

#Econ#FailedFakeScience#Walrasianism, #Keynesianism, #Marxianism, #Austrianism et al. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. #Economics is scientifically worthless. Economic policy guidance never has had sound scientific foundations pic.twitter.com/CA1kagkuip

— E.K-H (@AXECorg) May 14, 2023

Occasional Tweets: Most economists are not scientists but political agenda pushers (XI)

 

The history of economic thought is the history of scientific failure. The major approaches are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. #Econ is scientifically worthless. The representative #Economist is not a #Scientist but a #PolitClown. pic.twitter.com/uDhhY0VLla

— E.K-H (@AXECorg) May 14, 2023

Occasional Tweets: Chicago is still a leading producer of proto-scientific garbage

 

#Economics is #FailedFakeScience. The representative #Economist is NOT a #Scientist but a #Clown in the political #CircusMaximus. Friedman is a case in point.⇒https://t.co/b3edQjNEXv
After some rebranding, Chicago is still a leader in the production of proto-scientific garbage. pic.twitter.com/zXXewCfg7t

— E.K-H (@AXECorg) May 14, 2023

Occasional Tweets: Economics is not science but disinfotainment (IX)

 

#Economics

The history of economic thought is the history of scientific failure. The representative #Economist is NOT a #Scientist but an #AgendaPusher / #UsefulIdiot / #Clown in the political #CircusMaximus. The Friedman/Tobin #Inflation #TalkShow is just another example. pic.twitter.com/4mzZtduN4f

— E.K-H (@AXECorg) May 14, 2023

Occasional Tweets: Control of the fiat money system ― the exact spot where the fraud happens

 

#Economics#FailedFakeScience#Money

The problem is NOT centrally produced fiat money. The point is whether it is injected at the supply side/wage bill (→ right) or on the demand side via #DeficitSpending (→ wrong).

Criminals and the monetary orderhttps://t.co/Iq1lVxePy1

— E.K-H (@AXECorg) May 14, 2023

For more about money see AXECquery.  

Occasional Tweets: Adam Smith ― the founding father of feelie-goodie blather

 

#Econ#FailedFakeScience#AdamSmith

This virtue stuff is NOT #Economomics, NOT #Science, NOT #Philosophy but tautological feelie-goodie blather.#NoFalseHeroMemorials pic.twitter.com/1UdwXS349N

— E.K-H (@AXECorg) May 13, 2023

Occasional Tweets: Dear Psycho-Economists, profit does not come from greed but from deficit-spending / money-creation

 

#LearnEcon

The 3-sector #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. So, #DeficitSpendingMoneyCreation is a #FreeLunch for the #Oligarchy. #Profit in the so-called #FreeMarketEconomy does NOT come from #Greed but from the #State i.e. #Treasury / #CB. pic.twitter.com/dHuqfRfobt

— E.K-H (@AXECorg) May 13, 2023

Occasional Tweets: The history of economic thought is the history of scientific failure (IX)

 

The history of economic thought is the history of scientific failure. The “fantastic event @GoldsmithsUoL on Vicky Chick and Geoff C. Harcourt’s works and legacy” is just another proof. The representative #Economist is an #AgendaPusher / #Clown in the political #CircusMaximus. pic.twitter.com/mGUwCubub0

— E.K-H (@AXECorg) May 13, 2023

Occasional Tweets: The economics of media / journalism

 

#Economics#Media

The economic reality for 100+ yrs is that #Media / #Journalists are owned by the Oligarchy and their function is #DisInfoTainment. The stories of heroic #Journalists who fight for #Truth / #Humanity are just journalistic #SelfHype.

— E.K-H (@AXECorg) May 13, 2023

Occasional Tweets: The futile attempt to recycle Keynesianism (XIX)

 

#Econ#FailedFakeScience#ScientificIncompetence#Economics is NOT a #MoralScience but #FailedFakeScience. #Keynes got macroeconomic #Profit wrong bc he was too stupid for elementary #Algebra. The whole of #Economics i.e. micro/macro is scientifically worthless to this day. pic.twitter.com/Udn3vo1jEW

— E.K-H (@AXECorg) May 13, 2023

Occasional Tweets: The futile attempt to recycle Keynesianism (XVIII)

 

#Economics#FailedFakeScience#Keynes got macroeconomic #Profit wrong because he was too stupid for elementary #Algebra. #Keynesians don't get it to this day.

Why Post Keynesianism Is Not Yet a Sciencehttps://t.co/Enj3OnlOWK pic.twitter.com/gAGPXkeiJM

— E.K-H (@AXECorg) May 12, 2023

For details of the big picture see cross-references Keynesianism. 

Occasional Tweets: Inspired by Marx and Keynes? ― how economists expose themselves as incompetent scientists

 

#FailedFakeScience#Walrasianism, #Keynesianism, #Marxianism, #Austrianism are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. #Economists are NOT #Scientists but #AgendaPushers / #Clowns in the political #CircusMaximus. ⇒https://t.co/ps2MeC9d4M

— E.K-H (@AXECorg) May 12, 2023

For more about Marx see AXECquery.

For more about Keynes see AXECquery. 

Occasional Tweets: The common cause of macroeconomic price and profit increases

 

#LearnEconomics

The macroeconomic #LawOfSupplyAndDemand and the #ProfitLaw tell one exactly how avg #Price P & total #Profit Qm move as a function of avg #WageRate W, avg Productivity R & overall #DeficitSpendingMoneyCreation ρE ― which is the common cause. pic.twitter.com/sIJLCaQUPC

— E.K-H (@AXECorg) May 12, 2023

Occasional Tweets: Economic policy guidance has never had sound scientific foundations (XV)

 

#Economics is #FailedFakeScience. The representative #Economist is NOT a #Scientist but an #AgendaPusher / #UsefulIdiot / #Clown in the political #CircusMaximus.

Economics: The greatest scientific fraud in modern timeshttps://t.co/S3ErelutCa pic.twitter.com/jvwa57ztly

— E.K-H (@AXECorg) May 12, 2023

Occasional Tweets: Economic policy guidance has never had sound scientific foundations (XIV)

 

#Walrasianism, #Keynesianism, #Marxianism, #Austrianism are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. Economic policy guidance has NO sound scientific foundations. #Economists are just #AgendaPushers / #Clowns in the political #CircusMaximus. pic.twitter.com/ZFVLozCqFt

— E.K-H (@AXECorg) May 12, 2023

For details of the big picture see cross-references Political Economics/Stupidity/Corruption. 

Occasional Tweets: The futile attempt to recycle MMT (XXVI)

 

#LearnEcon

The 3-sector #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit. If gov spending G increases and taxes T decreases macroeconomic #Profit Q goes to #Maximum. #DeficitSpendingMoneyCreation i.e. growing #PublicDebt is a #FreeLunch for the #Oligarchy. pic.twitter.com/SIL422uUil

— E.K-H (@AXECorg) May 11, 2023

Occasional Tweets: The futile attempt to recycle MMT (XXV)

 

#FailedFakeScience#MMT

The representative #Economist is NOT a #Scientist but an #AgendaPusher / #UsefulIdiot / #Clown in the political #CircusMaximus. Many #MMTers are also still #EconBlockers.

The page where Stephanie Kelton gets macroeconomics wrong https://t.co/CNFDkXM1Ki pic.twitter.com/tF1lvaa6Ks

— E.K-H (@AXECorg) May 10, 2023

For details of the big picture see cross-references MMT. 

Occasional Tweets: The futile attempt to recycle Keynesianism (XVII)

 

#Economics#FailedFakeScience#MacroFoundations#NoFalseHeroMemorials#Keynes got macroeconomic #Profit wrong bc he was too stupid for elementary #Algebra. After-Keynesians don't get it to this day. Cross-ref ⇒https://t.co/TGTkAwX778 pic.twitter.com/fG6mM94ceZ

— E.K-H (@AXECorg) May 10, 2023