Comment on David Ruccio on ‘A gathering storm?’
Blog-Reference
You say “Marxist and other radical economists often remind people of the inherent instability of capitalism — unlike their mainstream counterparts, who tend to focus on equilibrium and the invisible hand of free markets.” (See intro)
Not only Marxists are in the doomsday business but the gold bugs, too, and the producers of survival kits, and the Armageddon-Christians, and the fiat money abolitionists, etcetera (see zerohedge or YouTube for the daily doom menu).
Fear-mongering is good business, but it is not the economist’s business. What is missing is a theoretically sound account of the famous ‘long run’. Note well that the classics and Marx based their projections on the law of the falling profit rate. This is something quite different from the current bubble/crash panic talk. Until this very day, the representative economist does not know what profit is, much less how it develops in the long run (2014; 2015). Hence, all crisis projections are not much more than journalistic extrapolations of surface phenomena.
You sum up: “That’s the gathering storm they [policymakers, central bankers] — and we — should be worried about.”
Yes, but in a quite different sense. Economic crises are, in the last instance, the result of a total lack of understanding of how the economy works, that is, of the manifest failure of economics as a science. This holds first and foremost for employment theory. It was Keynes who addressed the problem during the Great Depression but could not solve it satisfactorily, and neither could the Post-Keynesians (2011), not to speak of New Keynesians and New Classics.
Amidst the theoretical mess, what economists should be worried about is that they bear the intellectual responsibility for the next occurrence of mass unemployment and the accompanying societal devastation.* Indeed, the future is bleak — for economists in particular.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Kakarot-Handtke, E. (2014). Mathematical Proof of the Breakdown of Capitalism. SSRN Working Paper Series, 2375578: 1–21. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
* Unemployment is avoidable, see 'Back to science' and cross-references Employment.
October 16, 2015
October 15, 2015
The Science-of-Man Fallacy
Comment on Merijn Knibbe on ‘Don’t throw away Angus Deaton with the bathwater of the Riksbank prize — he’s good!’
Blog-Reference and Blog-Reference
What Angus Deaton is practicing is essentially sociology. Sociology belongs to the so-called social sciences. Strictly speaking, the social sciences are what Feynman called cargo cult science.
The program of the social sciences has been defined by Hume: “It is evident, that all the sciences have a relation, greater or less, to human nature: and that however wide any of them may seem to run from it, they still return back by one passage or another. Even. Mathematics, Natural Philosophy, and Natural Religion, are in some measure dependent on the science of MAN; since they lie under the cognizance of men, and are judged of by their powers and faculties.” (Hume, 2012, Introduction)
Hume’s program has been explicitly taken over by Pareto: “The foundation of political economy and, in general, of every social science, is evidently psychology. A day will come when we shall be able to deduce the laws of social science from the principles of psychology ...” (Pareto, 2014, p. 20)
Pareto gives us the Science-of-Man Fallacy in a nutshell. As a matter of fact, NO way leads from the understanding of human behavior or the ‘principles of psychology’ to the understanding of how the actual economy works.
The crucial point is that economics deals — in the first place — not with individual human behavior or society at large (Hudík, 2011). This is the realm of psychology, sociology, anthropology, history, political science, etcetera. Insofar as economics deals with behavioral assumptions like utility maximization, greed, power-grabbing, etcetera, it is a dilettantish variant of Psycho-Sociology or PsySoc.
What is the real subject matter of economics? As a first approximation, one can agree on the general characteristic that the economy is a complex system. However, with the term system, one usually associates a structure with components that are non-human. In order to stress the obvious fact that humans are an essential component of the economic system, the market economy should be characterized more precisely as a complex hybrid human/system entity or SysHum.
The scientific method is straightforwardly applicable to the sys-component but not to the hum-component. While it is clear that the economy always has to be treated as an indivisible whole, for good methodological reasons, the analysis has to start with the objective system component (2014).
Methodologically, the economic system is in the foreground. Common sense wrongly insists that the hum-component must always be in the foreground. This is the Science-of-Man Fallacy, which compares to geo-centrism. The economic system has its own logic, which is different from the behavioral logic of humans. The systemic logic is what Adam Smith called the Invisible Hand.
Economic analysis has to make the Invisible Hand visible, that is, it has first of all to uncover the systemic laws of the monetary economy.
The Science-of-Man approach has abysmally failed in economics. Heterodoxy better gets out of PsySoc before the so-called social sciences — and this is overdue — are for cogent methodological reasons expelled from the sciences.
Egmont Kakarot-Handtke
References
Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.
Hume, D. (2012). A Treatise of Human Nature. Project Gutenberg EBook. URL
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL
Pareto, V. (2014). Manual of Political Economy. Oxford: Oxford University Press. URL
ICYMI (comment on anne of October 15, on October 16)
Cargo cult is a well-defined description of the actual state of economics: “Suffice it to say that, in my opinion, what we presently possess by way of so-called pure economic theory is objectively indistinguishable from what the physicist Richard Feynman, in an unflattering sketch of nonsense ‘science,’ called ‘cargo cult science’.” (Clower, 1994, p. 809)
The precise meaning is: “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, ...”#1
What is missing is an understanding of what science is all about. Feynman had this understanding; the representative economist never came even close to it, see ‘The Farce That Is Economics: Richard Feynman On The Social Sciences.’ (Tavares, 2014)
As a simple rule of thumb, it holds: the student who accepts supply-demand-equilibrium as an explanation of how the market system works disqualifies himself irrevocably as a scientist. The actual state of economics is that the representative economist cannot even tell the difference between profit and income (2015). Economists have no idea of the most important phenomenon of their universe and hallucinate that economics is a science.
References
Clower, R. W. (1994). Economics as an Inductive Science. Southern Economic Journal, 60(4): 805–814.
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Tavares, E. (2014). The Farce That Is Economics: Richard Feynman On The Social Sciences. ZeroHedge blog post. URL
#1 Wikipedia Cargo Cult Science
Related 'The real problem with the economics Nobel'. For details of the big picture, see cross-references Not a Science of Behavior and cross-references Failed/Fake Scientists and cross-references Paradigm Shift.
Blog-Reference and Blog-Reference
What Angus Deaton is practicing is essentially sociology. Sociology belongs to the so-called social sciences. Strictly speaking, the social sciences are what Feynman called cargo cult science.
The program of the social sciences has been defined by Hume: “It is evident, that all the sciences have a relation, greater or less, to human nature: and that however wide any of them may seem to run from it, they still return back by one passage or another. Even. Mathematics, Natural Philosophy, and Natural Religion, are in some measure dependent on the science of MAN; since they lie under the cognizance of men, and are judged of by their powers and faculties.” (Hume, 2012, Introduction)
Hume’s program has been explicitly taken over by Pareto: “The foundation of political economy and, in general, of every social science, is evidently psychology. A day will come when we shall be able to deduce the laws of social science from the principles of psychology ...” (Pareto, 2014, p. 20)
Pareto gives us the Science-of-Man Fallacy in a nutshell. As a matter of fact, NO way leads from the understanding of human behavior or the ‘principles of psychology’ to the understanding of how the actual economy works.
The crucial point is that economics deals — in the first place — not with individual human behavior or society at large (Hudík, 2011). This is the realm of psychology, sociology, anthropology, history, political science, etcetera. Insofar as economics deals with behavioral assumptions like utility maximization, greed, power-grabbing, etcetera, it is a dilettantish variant of Psycho-Sociology or PsySoc.
What is the real subject matter of economics? As a first approximation, one can agree on the general characteristic that the economy is a complex system. However, with the term system, one usually associates a structure with components that are non-human. In order to stress the obvious fact that humans are an essential component of the economic system, the market economy should be characterized more precisely as a complex hybrid human/system entity or SysHum.
The scientific method is straightforwardly applicable to the sys-component but not to the hum-component. While it is clear that the economy always has to be treated as an indivisible whole, for good methodological reasons, the analysis has to start with the objective system component (2014).
Methodologically, the economic system is in the foreground. Common sense wrongly insists that the hum-component must always be in the foreground. This is the Science-of-Man Fallacy, which compares to geo-centrism. The economic system has its own logic, which is different from the behavioral logic of humans. The systemic logic is what Adam Smith called the Invisible Hand.
Economic analysis has to make the Invisible Hand visible, that is, it has first of all to uncover the systemic laws of the monetary economy.
The Science-of-Man approach has abysmally failed in economics. Heterodoxy better gets out of PsySoc before the so-called social sciences — and this is overdue — are for cogent methodological reasons expelled from the sciences.
Egmont Kakarot-Handtke
References
Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.
Hume, D. (2012). A Treatise of Human Nature. Project Gutenberg EBook. URL
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL
Pareto, V. (2014). Manual of Political Economy. Oxford: Oxford University Press. URL
***
ICYMI (comment on anne of October 15, on October 16)
Cargo cult is a well-defined description of the actual state of economics: “Suffice it to say that, in my opinion, what we presently possess by way of so-called pure economic theory is objectively indistinguishable from what the physicist Richard Feynman, in an unflattering sketch of nonsense ‘science,’ called ‘cargo cult science’.” (Clower, 1994, p. 809)
The precise meaning is: “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, ...”#1
What is missing is an understanding of what science is all about. Feynman had this understanding; the representative economist never came even close to it, see ‘The Farce That Is Economics: Richard Feynman On The Social Sciences.’ (Tavares, 2014)
As a simple rule of thumb, it holds: the student who accepts supply-demand-equilibrium as an explanation of how the market system works disqualifies himself irrevocably as a scientist. The actual state of economics is that the representative economist cannot even tell the difference between profit and income (2015). Economists have no idea of the most important phenomenon of their universe and hallucinate that economics is a science.
References
Clower, R. W. (1994). Economics as an Inductive Science. Southern Economic Journal, 60(4): 805–814.
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Tavares, E. (2014). The Farce That Is Economics: Richard Feynman On The Social Sciences. ZeroHedge blog post. URL
#1 Wikipedia Cargo Cult Science
Related 'The real problem with the economics Nobel'. For details of the big picture, see cross-references Not a Science of Behavior and cross-references Failed/Fake Scientists and cross-references Paradigm Shift.
***
Graphic AXEC121i
October 14, 2015
The irrelevance of economics
Comment on Lars Syll ‘On the irrelevance of formal logic in economics’
Blog-Reference and Blog-Reference
See also the almost identical post ‘Scientifically incompetent’ Comment on ‘In Search of the Science in Economics’
Blog-Reference
(i) Since the ancient Greeks, it is known that science is about knowledge and that politics is about opinion/belief/second-guessing/filibustering. “There are always many different opinions and conventions concerning any one problem or subject-matter ... This shows that they are not all true. For if they conflict, then at best only one of them can be true. Thus it appears that Parmenides ... was the first to distinguish clearly between truth or reality on the one hand, and convention or conventional opinion (hearsay, plausible myth) on the other ...” (Popper, 1994, 39-40). Accordingly, there is political economics and theoretical economics. The political economist cranks out opinions; the theoretical economist contributes to knowledge.
(ii) The goal of political economics is to push an agenda, and the goal of theoretical economics is to explain how the actual economy works. In political economics, anything goes; in theoretical economics, scientific standards are observed.
(iii) Scientific standards are well-defined: “Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant, 1994, 31)
(iv) Most economists are political economists: “However much economists may evoke their purity, they want to change the world. They want to contribute to the solution of urgent practical problems. ... Of course, they also pursue the consistency of the theories they make, for he who contradicts himself proves nothing.” (Klant, 1988, 112-113)
(v) As Klant makes it clear, being a political economist does not involve a license to suspend the rules of logic. Toulmin is utterly wrong when he speaks of the irrelevance of formal logic. He is right only insofar as formal logic is vacuous if the basic/primitive/elementary concepts have no empirical content. Formal logic is necessary, but not sufficient.
(vi) It is important to distinguish between method and actual application. Spinoza, for example, used the axiomatic-deductive method to rigorously prove the existence of God. This, obviously, is a misapplication. In general terms, the methodological blunder consists of applying formal logic to NONENTITIES.
(vii) This is the correct understanding of the scientific method: “When we assemble the facts of a definite, more-or-less comprehensive field of knowledge, we soon notice that these facts are capable of being ordered. This ordering always comes about with the help of a certain framework of concepts ... The framework of concepts is nothing other than the theory of the field of knowledge. ... If we consider a particular theory more closely, we always see that a few distinguished propositions of the field of knowledge underlie the construction of the framework of concepts, and these propositions then suffice by themselves for the construction, in accordance with logical principles, of the entire framework. ... The procedure of the axiomatic method, as it is expressed here, amounts to a deepening of the foundations of the individual domains of knowledge — a deepening that is necessary for every edifice that one wishes to expand and to build higher while preserving its stability. (Hilbert, 2005, 1107-1109)
(viii) Neither Orthodoxy nor Heterodoxy has hitherto produced an economic theory that fits Hilbert’s description. Economics is a failed science. We are left with political economics, which is scientifically worthless.
(ix) The first step of the student of economics is to realize that all theories/models are false that are built upon the following concepts: utility, expected utility, rationality/ bounded rationality/animal spirits, equilibrium, constrained optimization, well-behaved production functions/fixation on decreasing returns, supply-demand functions, simultaneous adaptation, rational expectation, total income=value of output/I=S, real-number quantities/prices, and ergodicity. All these items are economic NONENTITIES. The second step is to replace NONENTITIES with concepts that have a counterpart in reality (2014).
(x) Economics is not even a plausible myth; the fundamental defect is that it deals with NONENTITIES. Because of this, all formalization has hitherto been without effect. This is not the fault of formalization, but of the scientific incompetence of the representative economist ― orthodox or heterodox does not matter.
Egmont Kakarot-Handtke
References
Hilbert, D. (2005). Axiomatic Thought. In W. Ewald (Ed.), From Kant to Hilbert. A Source Book in the Foundations of Mathematics, Vol II, pages 1107–1115. Oxford, New York: Oxford University Press.
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL
Klant, J. J. (1988). The Natural Order. In N. de Marchi (Ed.), The Popperian Legacy in Economics, 87–117. Cambridge: Cambridge University Press.
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield: Edward Elgar.
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality. London, New York: Routledge.
For details of the big picture, see cross-references Incompetence
ICYMI (comment on Sandwichman of October 14, on October 15)
Georgescu-Roegen is one of the few economists who grasped what science is all about, and he settled the ridiculous mathiness filibuster before it even occurred. “Lest this position is misinterpreted again by some casual reader, let me repeat that my point is not that arithmetization of science is undesirable. Whenever arithmetization can be worked out, its merits are above all words of praise. My point is that wholesale arithmetization is impossible, that there is valid knowledge even without arithmetization, and that mock arithmetization is dangerous if peddled as genuine.” (1971, 15)
Long before DSGE, he arrived at the conclusion that economists are scientifically incompetent. “Knight lamented that there are many members of the economics profession who are "mathematicians first and economists afterwards." The situation since Knights time has become much worse. There are endeavors that now pass for the most desirable kind of economic contributions although they are just plain mathematical exercises, not only without any economic substance but also without mathematical value. Their authors are not something first and something else afterwards; they are neither mathematicians nor economists.” (1979, 317)
The same holds for Schumpeter. “At all times, including the present, in judging from the standpoint of the requirements of each period ... the performance of economic theory has been below reasonable expectation and open to valid criticism.” (Schumpeter, 1994, 19)
Time to make economics a science. #1
References
Georgescu-Roegen, N. (1971). The Entropy Law and the Economic Process. Cambridge: Cambridge University Press
Georgescu-Roegen, N. (1979). Methods in Economic Science. Journal of Economic Issues, 13(2): 317–328. URL
Schumpeter, J. A. (1994). History of Economic Analysis. New York: Oxford University Press.
#1 More details in Time to make economics a science.
Blog-Reference and Blog-Reference
See also the almost identical post ‘Scientifically incompetent’ Comment on ‘In Search of the Science in Economics’
Blog-Reference
(i) Since the ancient Greeks, it is known that science is about knowledge and that politics is about opinion/belief/second-guessing/filibustering. “There are always many different opinions and conventions concerning any one problem or subject-matter ... This shows that they are not all true. For if they conflict, then at best only one of them can be true. Thus it appears that Parmenides ... was the first to distinguish clearly between truth or reality on the one hand, and convention or conventional opinion (hearsay, plausible myth) on the other ...” (Popper, 1994, 39-40). Accordingly, there is political economics and theoretical economics. The political economist cranks out opinions; the theoretical economist contributes to knowledge.
(ii) The goal of political economics is to push an agenda, and the goal of theoretical economics is to explain how the actual economy works. In political economics, anything goes; in theoretical economics, scientific standards are observed.
(iii) Scientific standards are well-defined: “Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant, 1994, 31)
(iv) Most economists are political economists: “However much economists may evoke their purity, they want to change the world. They want to contribute to the solution of urgent practical problems. ... Of course, they also pursue the consistency of the theories they make, for he who contradicts himself proves nothing.” (Klant, 1988, 112-113)
(v) As Klant makes it clear, being a political economist does not involve a license to suspend the rules of logic. Toulmin is utterly wrong when he speaks of the irrelevance of formal logic. He is right only insofar as formal logic is vacuous if the basic/primitive/elementary concepts have no empirical content. Formal logic is necessary, but not sufficient.
(vi) It is important to distinguish between method and actual application. Spinoza, for example, used the axiomatic-deductive method to rigorously prove the existence of God. This, obviously, is a misapplication. In general terms, the methodological blunder consists of applying formal logic to NONENTITIES.
(vii) This is the correct understanding of the scientific method: “When we assemble the facts of a definite, more-or-less comprehensive field of knowledge, we soon notice that these facts are capable of being ordered. This ordering always comes about with the help of a certain framework of concepts ... The framework of concepts is nothing other than the theory of the field of knowledge. ... If we consider a particular theory more closely, we always see that a few distinguished propositions of the field of knowledge underlie the construction of the framework of concepts, and these propositions then suffice by themselves for the construction, in accordance with logical principles, of the entire framework. ... The procedure of the axiomatic method, as it is expressed here, amounts to a deepening of the foundations of the individual domains of knowledge — a deepening that is necessary for every edifice that one wishes to expand and to build higher while preserving its stability. (Hilbert, 2005, 1107-1109)
(viii) Neither Orthodoxy nor Heterodoxy has hitherto produced an economic theory that fits Hilbert’s description. Economics is a failed science. We are left with political economics, which is scientifically worthless.
(ix) The first step of the student of economics is to realize that all theories/models are false that are built upon the following concepts: utility, expected utility, rationality/ bounded rationality/animal spirits, equilibrium, constrained optimization, well-behaved production functions/fixation on decreasing returns, supply-demand functions, simultaneous adaptation, rational expectation, total income=value of output/I=S, real-number quantities/prices, and ergodicity. All these items are economic NONENTITIES. The second step is to replace NONENTITIES with concepts that have a counterpart in reality (2014).
(x) Economics is not even a plausible myth; the fundamental defect is that it deals with NONENTITIES. Because of this, all formalization has hitherto been without effect. This is not the fault of formalization, but of the scientific incompetence of the representative economist ― orthodox or heterodox does not matter.
Egmont Kakarot-Handtke
References
Hilbert, D. (2005). Axiomatic Thought. In W. Ewald (Ed.), From Kant to Hilbert. A Source Book in the Foundations of Mathematics, Vol II, pages 1107–1115. Oxford, New York: Oxford University Press.
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL
Klant, J. J. (1988). The Natural Order. In N. de Marchi (Ed.), The Popperian Legacy in Economics, 87–117. Cambridge: Cambridge University Press.
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield: Edward Elgar.
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality. London, New York: Routledge.
For details of the big picture, see cross-references Incompetence
***
ICYMI (comment on Sandwichman of October 14, on October 15)
Georgescu-Roegen is one of the few economists who grasped what science is all about, and he settled the ridiculous mathiness filibuster before it even occurred. “Lest this position is misinterpreted again by some casual reader, let me repeat that my point is not that arithmetization of science is undesirable. Whenever arithmetization can be worked out, its merits are above all words of praise. My point is that wholesale arithmetization is impossible, that there is valid knowledge even without arithmetization, and that mock arithmetization is dangerous if peddled as genuine.” (1971, 15)
Long before DSGE, he arrived at the conclusion that economists are scientifically incompetent. “Knight lamented that there are many members of the economics profession who are "mathematicians first and economists afterwards." The situation since Knights time has become much worse. There are endeavors that now pass for the most desirable kind of economic contributions although they are just plain mathematical exercises, not only without any economic substance but also without mathematical value. Their authors are not something first and something else afterwards; they are neither mathematicians nor economists.” (1979, 317)
The same holds for Schumpeter. “At all times, including the present, in judging from the standpoint of the requirements of each period ... the performance of economic theory has been below reasonable expectation and open to valid criticism.” (Schumpeter, 1994, 19)
Time to make economics a science. #1
References
Georgescu-Roegen, N. (1971). The Entropy Law and the Economic Process. Cambridge: Cambridge University Press
Georgescu-Roegen, N. (1979). Methods in Economic Science. Journal of Economic Issues, 13(2): 317–328. URL
Schumpeter, J. A. (1994). History of Economic Analysis. New York: Oxford University Press.
#1 More details in Time to make economics a science.
October 13, 2015
New thinking, new teaching
Comment on Maria Alejandra Madi on ‘Real world economists and the economics curriculum’
Blog-Reference
Keynes' great merit was to speak out clearly that something was deeply wrong with economics. In this, he was far ahead of his fellow economists. However, he did not succeed in developing a satisfactory alternative. “But Keynes, too, sometimes gave the impression of not having fully grasped the logic of his own system.” (Laidler, 1999, p. 281)
The deeper reason is that Keynes — just like his predecessors and fellows — did not come to grips with profit (2014). What is worse, neither did the Post Keynesians (2011) nor Heterodoxy (including Minsky) until this very day.#1
Because neither Keynes nor his followers nor his opponents understood that deficit spending has a one-to-one positive side-effect on the overall profit of the business sector Keynesian policy is ultimately responsible for the extreme distortion of income and wealth distribution that we see today.#2
Because they lack the correct economic theory, economists in effect produce the problems they are supposed to solve.
The most important tasks of Heterodoxy are (i) to develop the materially and formally consistent economic theory, (ii) to develop the appropriate curriculum,#3 (iii) to fully replace Orthodoxy in academic and non-academic teaching.
At the moment, scientifically incompetent orthodox and heterodox economists are probably the greatest menace to their fellow men.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Laidler, D. (1999). Fabricating the Keynesian Revolution. Cambridge: Cambridge University Press.
#1 Heterodoxy, too, is proto-scientific garbage
#2 Keynesianism as ultimate profit machine
#3 For a start see cross-references New Curriculum
Blog-Reference
Keynes' great merit was to speak out clearly that something was deeply wrong with economics. In this, he was far ahead of his fellow economists. However, he did not succeed in developing a satisfactory alternative. “But Keynes, too, sometimes gave the impression of not having fully grasped the logic of his own system.” (Laidler, 1999, p. 281)
The deeper reason is that Keynes — just like his predecessors and fellows — did not come to grips with profit (2014). What is worse, neither did the Post Keynesians (2011) nor Heterodoxy (including Minsky) until this very day.#1
Because neither Keynes nor his followers nor his opponents understood that deficit spending has a one-to-one positive side-effect on the overall profit of the business sector Keynesian policy is ultimately responsible for the extreme distortion of income and wealth distribution that we see today.#2
Because they lack the correct economic theory, economists in effect produce the problems they are supposed to solve.
The most important tasks of Heterodoxy are (i) to develop the materially and formally consistent economic theory, (ii) to develop the appropriate curriculum,#3 (iii) to fully replace Orthodoxy in academic and non-academic teaching.
At the moment, scientifically incompetent orthodox and heterodox economists are probably the greatest menace to their fellow men.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Laidler, D. (1999). Fabricating the Keynesian Revolution. Cambridge: Cambridge University Press.
#1 Heterodoxy, too, is proto-scientific garbage
#2 Keynesianism as ultimate profit machine
#3 For a start see cross-references New Curriculum
***
AXEC117
October 12, 2015
Knowledge only — no opinion
Comment on Diane Coyle on ‘How to be a good economist’
Blog-Reference
Your answer in the post of 12 October: “Well that’s all a matter of opinion.” It is pretty obvious that you never got the salient point of science, which is to get out of the anything-goes-opinion-wish-wash.
“There are always many different opinions and conventions concerning any one problem or subject-matter... This shows that they are not all true. For if they conflict, then at best only one of them can be true. Thus it appears that Parmenides ... was the first to distinguish clearly between truth or reality on the one hand, and convention or conventional opinion (hearsay, plausible myth) on the other ...” (Popper, 1994, pp. 39-40)
For more than 2700 years it is known that science is about knowledge and that politics is about opinion/belief/second-guessing/filibustering. In sum: the bad economist cranks out opinions, and the good economist contributes to knowledge.
Egmont Kakarot-Handtke
References
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality. London, New York: Routledge.
Preceding How to be a good scientist and Time to make economics a science.
Blog-Reference
Your answer in the post of 12 October: “Well that’s all a matter of opinion.” It is pretty obvious that you never got the salient point of science, which is to get out of the anything-goes-opinion-wish-wash.
“There are always many different opinions and conventions concerning any one problem or subject-matter... This shows that they are not all true. For if they conflict, then at best only one of them can be true. Thus it appears that Parmenides ... was the first to distinguish clearly between truth or reality on the one hand, and convention or conventional opinion (hearsay, plausible myth) on the other ...” (Popper, 1994, pp. 39-40)
For more than 2700 years it is known that science is about knowledge and that politics is about opinion/belief/second-guessing/filibustering. In sum: the bad economist cranks out opinions, and the good economist contributes to knowledge.
Egmont Kakarot-Handtke
References
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality. London, New York: Routledge.
Preceding How to be a good scientist and Time to make economics a science.
The proto-scientific state of economics
Comment on ‘The fragile state of the world economy’
Blog-Reference
Financial fragility is real but in the last instance only a surface phenomenon. Even if the financial sector's institutional setup were perfect economic crises would occur. The fact is that the eventual breakdown is built into the monetary economy (2014).
This insight is beyond the horizon of the representative economist. Standard economics is built upon the concept of equilibrium which is a NONENTITY. Because theoretical economics is built upon false premises it has nothing to offer in the way of scientifically valid policy guidance.
“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, 1991, p. 30)
Both Orthodoxy and Heterodoxy are caught in the proto-scientific state (2015). For the actual situation, this means that QE is not much more than clueless hand-waving.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014). Mathematical Proof of the Breakdown of Capitalism. SSRN Working Paper Series, 2375578: 1–21. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge: MIT Press.
Related 'Time to make economics a science' and 'How to be a good scientist'.
Blog-Reference
Financial fragility is real but in the last instance only a surface phenomenon. Even if the financial sector's institutional setup were perfect economic crises would occur. The fact is that the eventual breakdown is built into the monetary economy (2014).
This insight is beyond the horizon of the representative economist. Standard economics is built upon the concept of equilibrium which is a NONENTITY. Because theoretical economics is built upon false premises it has nothing to offer in the way of scientifically valid policy guidance.
“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, 1991, p. 30)
Both Orthodoxy and Heterodoxy are caught in the proto-scientific state (2015). For the actual situation, this means that QE is not much more than clueless hand-waving.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014). Mathematical Proof of the Breakdown of Capitalism. SSRN Working Paper Series, 2375578: 1–21. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge: MIT Press.
Related 'Time to make economics a science' and 'How to be a good scientist'.
Time to make economics a science
Comment on Edward Fullbrook on ‘Key member of Swedish Academy of Sciences calls for immediate suspension of the “Nobel Prize for Economics”’
Blog-Reference and Blog-Reference and Blog-Reference and Blog-Reference
Egmont Kakarot-Handtke
#1 For a new start see cross-references Paradigm Shift
Related 'Redefining economics' and 'How to be a good scientist'
Blog-Reference and Blog-Reference and Blog-Reference and Blog-Reference
- Science does not explain everything, but non-science explains nothing.
- Neither orthodox nor heterodox economics satisfies the scientific criteria of material and formal consistency.
- Economists cannot explain how the economy works. The profit theory is false since Adam Smith. There is much opinion and little knowledge.
- Opinion is the realm of political economics, knowledge is the realm of theoretical economics.
- Political economics is scientifically worthless.
- Theoretical economics is built upon clearly stated premises, i.e., upon a set of axioms.
- Orthodoxy got the axiomatic foundations wrong and traditional Heterodoxy has none at all.
- Economics is a failed science.#1
#1 For a new start see cross-references Paradigm Shift
Related 'Redefining economics' and 'How to be a good scientist'
Subscribe to:
Posts (Atom)