Comment on Noah Smith on ‘Republic of Science or Empire of Ideology?’
Blog-Reference
You complain about the influence of Koch money on economics and conclude: “The end result could be two econ professions — a dispassionate, truth-seeking one occupying the upper levels of the ivory tower, at MIT and Princeton and Stanford, doing hard math things and careful honest data work that slowly trickles out through traditional media channels ... and a second econ profession in the lower-ranked schools, doing a slightly fancier version of the kind of political advocacy now done by conservative think tanks.”
The fault in your argument is that it suggests that what goes on at the upper level of the ivory tower is science. It is not. Economics has never risen above the level of a proto-science. This is the core problem. Compared to this, the fact that the greater part of the scientific garbage produced by economists has been sponsored by millionaires/billionaires is a minor point.
First of all, it is of the utmost importance to distinguish between political and theoretical economics. The main differences are: (i) The goal of political economics is to push an agenda, and the goal of theoretical economics is to explain how the actual economy works. (ii) In political economics, anything goes; in theoretical economics, scientific standards are observed.
Theoretical economics has to be judged according to the criteria true/false and nothing else. The history of political economics, on the other hand, can be summarized as the perpetual violation of well-defined scientific standards.
The fact of the matter is that theoretical economics has, from the very beginning, been captured by the agenda pushers of political economics. Smith and Mill fought for Liberalism, Ricardo, Marx, and Keynes were agenda pushers, so were Hayek and Friedman, and so are Krugman and Varoufakis. Not one of the political economists and agenda pushers from Smith onward will, in the final assessment, be accepted as a scientist.
Political economists of all stripes are characterized by four common traits
(i) They are mainly occupied with sociology, psychology, anthropology, political science, history, law/institutions, evolution theory, social philosophy, etcetera. That is, they miss the essentials of economics proper. #1
(ii) They use theoretical economics as a means/support for their agenda. By this, they abuse science unknowingly or knowingly.
(iii) As far as they have tried to underpin their agenda theoretically, it can be rigorously demonstrated in each case that their approaches lack formal and material consistency. #2
(iv) They have no idea about how the actual economy works. #3
It is not decisive what the political agenda is: ALL of the political economics is cargo cult science (Feynman’s term). Political economics has not produced anything of real scientific value since Adam Smith. After more than 200 years of dilettantism and failure, there is no place for the political economists of Walrasianism, Keynesianism, Marxianism, and Austrianism among the sciences. #4
The rules of conduct of the scientific community demand that the actual state of economics is at all times unambiguously communicated to the general public. This implies, as the VERY FIRST step, that the word sciences is deleted from the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.
Egmont Kakarot-Handtke
#1 Economists’ three-layered scientific incompetence
#2 On economists’ stupidity
#3 How the intelligent non-economist can refute every economist hands down
#4 For details of the big picture, see cross-references Political Economics/Stupidity/Corruption
June 11, 2016
June 10, 2016
Fatal defects of profit and market theory
Comment on Menzie Chinn on ‘Thinking about Wages, Inflation and Productivity… and Capital’s Share’
Blog-Reference and Blog-Reference
Economists are groping in the dark with regard to the two most important features of the market economy: (1) the profit mechanism, and (2) the price mechanism. The fault lies in the fact that economists argue from the micro-level upwards to the economy as a whole. And here the Fallacy of Composition regularly slips in. To get out of failed standard economic theory requires moving from microfoundations to macrofoundations. In other words, the faulty axiomatic foundations of standard economics have to be fully replaced.
In the following, a sketch of the formally and empirically correct price, employment, and profit theory is given. The most elementary version of the objective structural Employment Law is shown on Graphic AXEC62a
From this equation follows:
(i) An increase in the expenditure ratio ρE leads to higher employment (the letter ρ stands for ratio). An expenditure ratio ρE>1 indicates credit expansion, a ratio ρE<1 indicates credit contraction.
(ii) Increasing investment expenditures I exert a positive influence on employment; a slowdown of growth does the opposite.
(iii) An increase in the factor cost ratio ρF≡W/PR leads to higher employment.
The complete and testable Employment Law is a bit longer and contains, in addition, profit distribution, public deficit spending, and import/export.
Items (i) and (ii) cover Keynes’ arguments about aggregate demand. Here, the focus is on the factor cost ratio ρF as defined in (iii). This variable embodies the price mechanism, which, however, does NOT work as the representative economist hallucinates. As a matter of fact, overall employment INCREASES if the average wage rate W INCREASES relative to the average price P and productivity R.
For the relationship between real wage, productivity, profit, and real shares, see (2015, Sec. 10)
The correct macroeconomic Profit Law reads Qm≡Yd+I−Sm (2014, p. 8, eq. (18)).#1 Legend: Qm monetary profit, Yd distributed profit, Sm monetary saving, I investment expenditure
The Profit Law gets a bit longer when foreign trade and government are included. The equation says:
(iv) Strong growth = high investment I is good for the overall monetary profit of the business sector as a whole.
(v) Strong consumption expenditures = low saving Sm or even dissaving −Sm = growing consumer debt is good for profit.
(vi) By implication, high government deficit spending = growing public debt is good for profit.
(vii) Profit distribution Yd is good for profit if spent on consumption goods.
Profit and profit distribution constitute a self-reinforcing feedback loop. The same holds for profit and investment. The crucial point is that the market economy is inherently unstable.
Note that the OVERALL profit and, by consequence, the income distribution have nothing to do with productivity or low wages, or market power. These and other factors affect only the DISTRIBUTION of overall profit BETWEEN firms. What holds on the firms’ level does NOT hold for the economy as a WHOLE. Not to realize this is the fatal standard error of standard thinking about wages, distribution, inflation, productivity, and employment.
The ultimate cause of unemployment is the proven scientific incompetence of economists for more than 200 years.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
#1 Graphic AXEC09 or Graphic AXEC08 or Graphic AXEC42.
Blog-Reference and Blog-Reference
Economists are groping in the dark with regard to the two most important features of the market economy: (1) the profit mechanism, and (2) the price mechanism. The fault lies in the fact that economists argue from the micro-level upwards to the economy as a whole. And here the Fallacy of Composition regularly slips in. To get out of failed standard economic theory requires moving from microfoundations to macrofoundations. In other words, the faulty axiomatic foundations of standard economics have to be fully replaced.
In the following, a sketch of the formally and empirically correct price, employment, and profit theory is given. The most elementary version of the objective structural Employment Law is shown on Graphic AXEC62a
From this equation follows:
(i) An increase in the expenditure ratio ρE leads to higher employment (the letter ρ stands for ratio). An expenditure ratio ρE>1 indicates credit expansion, a ratio ρE<1 indicates credit contraction.
(ii) Increasing investment expenditures I exert a positive influence on employment; a slowdown of growth does the opposite.
(iii) An increase in the factor cost ratio ρF≡W/PR leads to higher employment.
The complete and testable Employment Law is a bit longer and contains, in addition, profit distribution, public deficit spending, and import/export.
Items (i) and (ii) cover Keynes’ arguments about aggregate demand. Here, the focus is on the factor cost ratio ρF as defined in (iii). This variable embodies the price mechanism, which, however, does NOT work as the representative economist hallucinates. As a matter of fact, overall employment INCREASES if the average wage rate W INCREASES relative to the average price P and productivity R.
For the relationship between real wage, productivity, profit, and real shares, see (2015, Sec. 10)
The correct macroeconomic Profit Law reads Qm≡Yd+I−Sm (2014, p. 8, eq. (18)).#1 Legend: Qm monetary profit, Yd distributed profit, Sm monetary saving, I investment expenditure
The Profit Law gets a bit longer when foreign trade and government are included. The equation says:
(iv) Strong growth = high investment I is good for the overall monetary profit of the business sector as a whole.
(v) Strong consumption expenditures = low saving Sm or even dissaving −Sm = growing consumer debt is good for profit.
(vi) By implication, high government deficit spending = growing public debt is good for profit.
(vii) Profit distribution Yd is good for profit if spent on consumption goods.
Profit and profit distribution constitute a self-reinforcing feedback loop. The same holds for profit and investment. The crucial point is that the market economy is inherently unstable.
Note that the OVERALL profit and, by consequence, the income distribution have nothing to do with productivity or low wages, or market power. These and other factors affect only the DISTRIBUTION of overall profit BETWEEN firms. What holds on the firms’ level does NOT hold for the economy as a WHOLE. Not to realize this is the fatal standard error of standard thinking about wages, distribution, inflation, productivity, and employment.
The ultimate cause of unemployment is the proven scientific incompetence of economists for more than 200 years.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
#1 Graphic AXEC09 or Graphic AXEC08 or Graphic AXEC42.
June 9, 2016
Forget Chicago, and also Cambridge
Comment on Paul Davidson and Ken Zimmerman on ‘Chicago economics — only for people unlucky when trying to think’
Blog-Reference
Every heterodox economist knows that the Walrasian approach is based on methodologically unacceptable axiomatic foundations (Arnsperger et al., 2006). The ergodic axiom is only one among others. Constrained optimization and equilibrium are even worse if something like a hierarchy of faultiness exists.
The crucial question is forward-looking: What takes the place of the obsolete axioms of standard economics? The correct answer is that the unacceptable microfoundations have to be replaced by macrofoundations. This is achieved as follows.
(A0) The objectively given and most elementary configuration of the (world-) economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm.
(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.
This OBJECTIVE structural axiom set is, in Zimmerman’s words, simple, direct, and easily testable, or in Aristotle’s words, certain, true, and primary (2014).
These, indeed, are the criteria that axioms must satisfy. This is NOT the case with the familiar Walrasian and Keynesian axioms, yet this is obviously the case with the ABSOLUTE MINIMUM SET A1 to A3.
Neither the Chicago nor the Cambridge approach complies with the indispensable absolute formal minimum and therefore both are scientifically worthless. The same holds for Marxianism and Austrianism.
Egmont Kakarot-Handtke
References
Arnsperger, C., and Varoufakis, Y. (2006). What Is Neoclassical Economics? The Three Axioms Responsible for its Theoretical Oeuvre, Practical Irrelevance and, thus, Discursive Power. Paneconomicus, 1: 5–18. URL
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL
You propose four monetary axioms and ask: “One simple question? True or False?”
The answer is False because with purely monetary axioms you cover only a part of the subject matter of economics. This mistake is complementary to those who argue with ‘real’ (= money is a veil) constructs (e.g. Ricardo, Sraffa, RBC, etc).
Keynes had a great methodological insight: “In 1933, Keynes wrote a short contribution to a Festschrift for the German economist Arthur Spiethoff. He there attacked classical economists for not providing an adequate monetary theory. He then embarked upon the development of what he termed a monetary theory of production, a theory in which the interdependence of money and uncertainty, and their effects on economic behavior, could be properly investigated.” (Fontana, 2000, p. 40)
Keynes’s insight has been that the proper subject matter of economics is the ‘monetary theory of production’. Obviously, your four axioms say nothing at all about production.
The real-world economy manifests itself in the INTERACTION of real and nominal variables. From this interaction, money emerges as a means of transaction and a store of value (2011). Because of this, all ‘real’ and ‘monetary’ approaches are one-sided=incomplete=false.
References
Fontana, G. (2000). Post Keynesians and Circuitists on Money and Uncertainty: An Attempt at Generality. Journal of Post Keynesian Economics, 23(1): 27–48. URL
Kakarot-Handtke, E. (2011). Reconstructing the Quantity Theory (I). SSRN Working Paper Series, 1895268: 1–28. URL
Blog-Reference
Every heterodox economist knows that the Walrasian approach is based on methodologically unacceptable axiomatic foundations (Arnsperger et al., 2006). The ergodic axiom is only one among others. Constrained optimization and equilibrium are even worse if something like a hierarchy of faultiness exists.
The crucial question is forward-looking: What takes the place of the obsolete axioms of standard economics? The correct answer is that the unacceptable microfoundations have to be replaced by macrofoundations. This is achieved as follows.
(A0) The objectively given and most elementary configuration of the (world-) economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm.
(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.
This OBJECTIVE structural axiom set is, in Zimmerman’s words, simple, direct, and easily testable, or in Aristotle’s words, certain, true, and primary (2014).
These, indeed, are the criteria that axioms must satisfy. This is NOT the case with the familiar Walrasian and Keynesian axioms, yet this is obviously the case with the ABSOLUTE MINIMUM SET A1 to A3.
Neither the Chicago nor the Cambridge approach complies with the indispensable absolute formal minimum and therefore both are scientifically worthless. The same holds for Marxianism and Austrianism.
Egmont Kakarot-Handtke
References
Arnsperger, C., and Varoufakis, Y. (2006). What Is Neoclassical Economics? The Three Axioms Responsible for its Theoretical Oeuvre, Practical Irrelevance and, thus, Discursive Power. Paneconomicus, 1: 5–18. URL
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL
***
REPLY to Carmen Basilovecchi on Jun 11You propose four monetary axioms and ask: “One simple question? True or False?”
The answer is False because with purely monetary axioms you cover only a part of the subject matter of economics. This mistake is complementary to those who argue with ‘real’ (= money is a veil) constructs (e.g. Ricardo, Sraffa, RBC, etc).
Keynes had a great methodological insight: “In 1933, Keynes wrote a short contribution to a Festschrift for the German economist Arthur Spiethoff. He there attacked classical economists for not providing an adequate monetary theory. He then embarked upon the development of what he termed a monetary theory of production, a theory in which the interdependence of money and uncertainty, and their effects on economic behavior, could be properly investigated.” (Fontana, 2000, p. 40)
Keynes’s insight has been that the proper subject matter of economics is the ‘monetary theory of production’. Obviously, your four axioms say nothing at all about production.
The real-world economy manifests itself in the INTERACTION of real and nominal variables. From this interaction, money emerges as a means of transaction and a store of value (2011). Because of this, all ‘real’ and ‘monetary’ approaches are one-sided=incomplete=false.
References
Fontana, G. (2000). Post Keynesians and Circuitists on Money and Uncertainty: An Attempt at Generality. Journal of Post Keynesian Economics, 23(1): 27–48. URL
Kakarot-Handtke, E. (2011). Reconstructing the Quantity Theory (I). SSRN Working Paper Series, 1895268: 1–28. URL
Politics is national, science is not
Comment on Peter Bofinger on ‘German macroeconomics: The long shadow of Walter Eucken’
Blog-Reference
Strictly speaking, there can be no German, UK, or US macroeconomics as there can be no German, UK, or US physics or mathematics. Because science has no nationality, there can only be true or false macroeconomics. The fact of the matter is that both Keynes and Eucken got macro wrong.
Keynes characterized the situation of theoretical economics as follows: “Though we all started out in the same direction, we soon parted company into two main groups. What made the cleavage that thus divided us?” The key question that divides economists is, in Keynes’s words: “... is the existing economic system in any significant sense self-adjusting.”
Economics has not settled the question in a scientifically acceptable way to this day. So all that we have is opinion, educated common sense, and agenda-pushing in different national flavors.
The correct elementary structural Employment Law (2012) is given as shown on Graphic AXEC62
Blog-Reference
Strictly speaking, there can be no German, UK, or US macroeconomics as there can be no German, UK, or US physics or mathematics. Because science has no nationality, there can only be true or false macroeconomics. The fact of the matter is that both Keynes and Eucken got macro wrong.
Keynes characterized the situation of theoretical economics as follows: “Though we all started out in the same direction, we soon parted company into two main groups. What made the cleavage that thus divided us?” The key question that divides economists is, in Keynes’s words: “... is the existing economic system in any significant sense self-adjusting.”
Economics has not settled the question in a scientifically acceptable way to this day. So all that we have is opinion, educated common sense, and agenda-pushing in different national flavors.
The correct elementary structural Employment Law (2012) is given as shown on Graphic AXEC62
From this equation follows:
(i) An increase in the expenditure ratio ρE leads to higher employment L (the letter rho ρ stands for ratio).
(i) An increase in the expenditure ratio ρE leads to higher employment L (the letter rho ρ stands for ratio).
(ii) Increasing investment expenditures I exert a positive influence on employment; a slowdown of growth does the opposite.
(iii) An increase in the factor cost ratio ρF≡W/PR leads to higher employment.
The complete Employment Law is a bit longer and contains, in addition, profit distribution, public deficit spending, and import/export.
Items (i) and (ii) cover Keynes’s arguments about aggregate demand. However, the Keynesian Employment Law and the multiplier are provably false. What is missing is the ratio ρF as defined in (iii). This variable embodies the price mechanism. It works such that overall employment INCREASES if the average wage rate W INCREASES relative to the average price P and productivity R, and vice versa.
And here Eucken comes in. Every supply-demand-equilibrium economist fancies that the remedy for excess supply in any market is a reduction in price. From whence the claim comes that wage reductions will — in principle — restore full employment. This is the essence of the self-adjustment claim. The structural Employment Law says that wage reductions INCREASE unemployment, which means that the market system is — in principle — self-destabilizing. Eucken did not grasp this crucial point.
What Post Keynesians have overlooked is that there are TWO ratios in the multiplier, the expenditure ratio ρE and the factor cost ratio ρF. For economic policy, this means: an increase in the expenditure ratio can be counteracted at any time by a decrease in the factor cost ratio, that is, by a falling average wage rate or by a rising average price. The hitherto missing variable explains why Keynesian demand policies are sometimes effective and sometimes ineffective.
The key point is that the price mechanism does NOT stabilize the market system, neither in the short nor in the long run. This has NOTHING to do with stickiness, and this systemic feature cannot be cured by Keynesian demand management. In this respect, Eucken was right. But both Keynes and Eucken got the price mechanism wrong (2015). Ultimately, there is not much to choose between German and Anglo macroeconomics.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2012). Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster. SSRN Working Paper Series, 2130421: 1–19. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
(iii) An increase in the factor cost ratio ρF≡W/PR leads to higher employment.
The complete Employment Law is a bit longer and contains, in addition, profit distribution, public deficit spending, and import/export.
Items (i) and (ii) cover Keynes’s arguments about aggregate demand. However, the Keynesian Employment Law and the multiplier are provably false. What is missing is the ratio ρF as defined in (iii). This variable embodies the price mechanism. It works such that overall employment INCREASES if the average wage rate W INCREASES relative to the average price P and productivity R, and vice versa.
And here Eucken comes in. Every supply-demand-equilibrium economist fancies that the remedy for excess supply in any market is a reduction in price. From whence the claim comes that wage reductions will — in principle — restore full employment. This is the essence of the self-adjustment claim. The structural Employment Law says that wage reductions INCREASE unemployment, which means that the market system is — in principle — self-destabilizing. Eucken did not grasp this crucial point.
What Post Keynesians have overlooked is that there are TWO ratios in the multiplier, the expenditure ratio ρE and the factor cost ratio ρF. For economic policy, this means: an increase in the expenditure ratio can be counteracted at any time by a decrease in the factor cost ratio, that is, by a falling average wage rate or by a rising average price. The hitherto missing variable explains why Keynesian demand policies are sometimes effective and sometimes ineffective.
The key point is that the price mechanism does NOT stabilize the market system, neither in the short nor in the long run. This has NOTHING to do with stickiness, and this systemic feature cannot be cured by Keynesian demand management. In this respect, Eucken was right. But both Keynes and Eucken got the price mechanism wrong (2015). Ultimately, there is not much to choose between German and Anglo macroeconomics.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2012). Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster. SSRN Working Paper Series, 2130421: 1–19. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
June 7, 2016
Politics or Science? Decide and act accordingly
Comment on Asad Zaman on ‘The Keynesian Revolution and the Monetarist Counter-Revolution’
Blog-Reference
Economics consists since Adam Smith of political and theoretical economics. It is, though, pretty obvious that the political sphere is ontologically different from the scientific sphere, and because of this, it is of utmost importance to separate the two. Yet, it is an outstanding characteristic of the representative economist to persistently flip-flop between them.
This lack of focus guarantees all-around confusion in both the scientific and the political spheres. Because of this, the representative economist has become the very epitome of the confused confuser (2013). This mental state materializes in four sects: Walrasians, Keynesians, Marxians, Austrians. So, every student of economics is faced with the scientific Ur-question: “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.” (Popper, 1994, p. 39)
The fact of the matter is that none is true. As a consequence, economic policy advice since Adam Smith has no sound scientific foundation. Yet: “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)
Walrasianism, Keynesianism, Marxianism, Austrianism are PROVABLY false and consist of nothing more than educated common sense and personal opinion. Economics is a scientific failure, there is no valid theoretical economics but only political economics, which is agenda-pushing and propaganda.
This point gets entirely lost in actual political discussions because the criterion for political economics is whether or not it fits an agenda and NOT whether the underlying theory is true or false. As soon as political economics dominates the very task of the theoretical economist — to explain how the monetary economy works — is forgotten and the well-defined scientific standards of material and formal consistency are ignored.
This happened to Asad Zaman. His focus is not on whether a theory is true (= materially and formally consistent) or false but on propaganda strategies: “We must study the strategies used by the Monetarists to shut up their opponents since they have proven eminently successful. These strategies are the subject matter of the Alkire-Ritchie paper on WINNING IDEAS, cited in the post.” (See post of Jun 7)
Both, orthodox and heterodox economists have to be reminded of what science implies and why politics and science have to be strictly separated: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.” (Mill, 2006, p. 950)
The history of political economics can be summarized as a perpetual violation of scientific standards and as an abject failure. Not one of the political economists and agenda pushers from Smith, Ricardo, Marx to Keynes, Hayek, Friedman, Krugman, or Varoufakis will in the final assessment be accepted as scientists.
Politics and science are ontologically different. Because of this, an analog to the Pauli Exclusion Principle* strictly applies, that is, one person cannot be both a politician and a scientist. The economist who sees and uses economic theory as a means to promote an agenda is outside of science. This is the very first principle of methodology and it holds since the ancient Greeks in the genuine sciences. However, it has yet to take root in the so-called social sciences, first and foremost in economics.
Both, the Keynesian Revolution and the Monetarist Counter-Revolution were scientific non-events.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2013). Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist. SSRN Working Paper Series, 2207598: 1–16. URL
Mill, J. S. (2006). A System of Logic Ratiocinative and Inductive. Being a Connected View of the Principles of Evidence and the Methods of Scientific Investigation, Vol. 8 of Collected Works of John Stuart Mill. Indianapolis: Liberty Fund.
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality. London, New York: Routledge.
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge: MIT Press.
* Wikipedia
Blog-Reference
Economics consists since Adam Smith of political and theoretical economics. It is, though, pretty obvious that the political sphere is ontologically different from the scientific sphere, and because of this, it is of utmost importance to separate the two. Yet, it is an outstanding characteristic of the representative economist to persistently flip-flop between them.
This lack of focus guarantees all-around confusion in both the scientific and the political spheres. Because of this, the representative economist has become the very epitome of the confused confuser (2013). This mental state materializes in four sects: Walrasians, Keynesians, Marxians, Austrians. So, every student of economics is faced with the scientific Ur-question: “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.” (Popper, 1994, p. 39)
The fact of the matter is that none is true. As a consequence, economic policy advice since Adam Smith has no sound scientific foundation. Yet: “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)
Walrasianism, Keynesianism, Marxianism, Austrianism are PROVABLY false and consist of nothing more than educated common sense and personal opinion. Economics is a scientific failure, there is no valid theoretical economics but only political economics, which is agenda-pushing and propaganda.
This point gets entirely lost in actual political discussions because the criterion for political economics is whether or not it fits an agenda and NOT whether the underlying theory is true or false. As soon as political economics dominates the very task of the theoretical economist — to explain how the monetary economy works — is forgotten and the well-defined scientific standards of material and formal consistency are ignored.
This happened to Asad Zaman. His focus is not on whether a theory is true (= materially and formally consistent) or false but on propaganda strategies: “We must study the strategies used by the Monetarists to shut up their opponents since they have proven eminently successful. These strategies are the subject matter of the Alkire-Ritchie paper on WINNING IDEAS, cited in the post.” (See post of Jun 7)
Both, orthodox and heterodox economists have to be reminded of what science implies and why politics and science have to be strictly separated: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.” (Mill, 2006, p. 950)
The history of political economics can be summarized as a perpetual violation of scientific standards and as an abject failure. Not one of the political economists and agenda pushers from Smith, Ricardo, Marx to Keynes, Hayek, Friedman, Krugman, or Varoufakis will in the final assessment be accepted as scientists.
Politics and science are ontologically different. Because of this, an analog to the Pauli Exclusion Principle* strictly applies, that is, one person cannot be both a politician and a scientist. The economist who sees and uses economic theory as a means to promote an agenda is outside of science. This is the very first principle of methodology and it holds since the ancient Greeks in the genuine sciences. However, it has yet to take root in the so-called social sciences, first and foremost in economics.
Both, the Keynesian Revolution and the Monetarist Counter-Revolution were scientific non-events.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2013). Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist. SSRN Working Paper Series, 2207598: 1–16. URL
Mill, J. S. (2006). A System of Logic Ratiocinative and Inductive. Being a Connected View of the Principles of Evidence and the Methods of Scientific Investigation, Vol. 8 of Collected Works of John Stuart Mill. Indianapolis: Liberty Fund.
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality. London, New York: Routledge.
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge: MIT Press.
* Wikipedia
June 6, 2016
Getting out of IS-LM = Getting out of despair
Comment on Nick Rowe on ‘On Olivier Blanchard on IS-LM and Teaching Intermediate Macro. And my despair.’ and on Oliver Blanchard on ‘How to Teach Intermediate Macroeconomics after the Crisis?’
Blog-Reference and Blog-Reference on Jun 7 and Blog-Reference on Jun 13 adapted to context, and Blog-Reference adapted to context
Blanchard concludes his article:#1 “Macroeconomics is a tremendously exciting subject. Most of what we taught before the crisis remains highly relevant. But it needs some dusting and updating. My hope is that a model along the lines above can contribute to it.”
Not so. IS-LM has always been methodologically unacceptable, and its proper place is the Flat-Earth Cemetery. The attempts of Blanchard and Rowe to save it with “some dusting and updating” are purely ceremonial.
This elementary syllogism is conceptually defective because Keynes never came to grips with profit (Tómasson et al., 2010, p. 12). As a result, all I=S models and the Keynesian multiplier are false (2011).
A0. The objectively given and most elementary configuration of the economy consists of the household and the business sector, which in turn consists initially of one giant fully integrated firm.
(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.
For the graphical representation of this ABSOLUTE formal MINIMUM, see the 4-Quadrant chart under the label Graphic AXEC31.
(A1) to (A3) asserts: At any given level of employment L, the wage income Yw that is generated in the consolidated business sector is obtained by multiplying the wage rate W. On the real side, output O is followed by multiplication with the productivity R. Finally, the price P follows as the dependent variable under the conditions of (i) budget balancing, i.e., C=Yw, and (ii) market clearing, i.e., X=O.
Under the conditions (i)|(ii), the price is derived in each period as P=W/R, i.e., the market-clearing price is, in the most elementary case, equal to unit wage costs which vary over successive periods.
In the next period, the households save, i.e., condition (i) is now lifted. The result is shown under the label AXEC33.
Consumption expenditures C fall below Yw, and with it the market-clearing price P. The product market is cleared due to (ii), and there is no such thing as inventory investment, i.e., I=0. Monetary saving of the household sector is given by Sm≡Yw−C.
The business sector makes a monetary loss which is equal to the household sector’s saving, i.e., Qm≡−Sm. Therefore, loss is the exact counterpart of saving; by consequence, profit is the exact counterpart of dissaving. This is the most elementary form of the macroeconomic Profit Law. It follows directly from the profit definition Qm≡C−Yw and the definition of household sector saving.
The sector balances always add up to zero, i.e., Qm+Sm=0, and this is the correct accounting identity. Saving and investment are NEVER equal, neither ex-ante nor ex-post. Therefore, NO IS-curve ever existed. The elaborate interpretation of the IS-LM-nonentity over more than 80 years is on the same level as haruspicy, i.e., old Roman poultry entrails reading.
The DIFFERENCE between investment and saving I−Sm plus distributed profit Yd determines monetary profit Qm, which is measurable with two decimal places.
From this equation, which is complementary to the structural Phillips Curve (2012), follows: (i) An increase in the expenditure ratio ρE leads to higher employment L (the Greek letter ρ stands for ratio). (ii) Increasing investment expenditures I exert a positive influence on employment; a slowdown in growth does the opposite. (iii) An increase in the factor cost ratio ρF≡W/PR leads to higher employment.
Items (i) and (ii) cover Keynes’s arguments about aggregate demand. What is missing in the Keynesian employment multiplier, though, is the ratio ρF as defined in (iii). This variable embodies the price mechanism. It works such that overall employment INCREASES if the average wage rate W INCREASES relative to the average price P and productivity R, and vice versa.
The complete Employment Law is a bit longer and contains, in addition, profit distribution, public deficit spending, and import/export. Investment and the interest rate for business loans Jb are connected via the elasticity Eb, and the household sector’s expenditure ratio and the interest rate for loans/deposits are connected via the elasticity Eh. Hence, the structural Employment Law fully replaces what Blanchard advertises as his updated IS-LM-Phillips-Curve model.
(ii) The investment multiplier is formally defective since Keynes.
(iii) The classical and Keynesian profit theories are false.
(iv) The representative economist has NOT gotten (i) to (iii) to this day because of incurable scientific incompetence.
Egmont Kakarot-Handtke
#1 How to Teach Intermediate Macroeconomics after the Crisis?
References
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Kakarot-Handtke, E. (2012). Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster. SSRN Working Paper Series, 2130421: 1–19. URL
Kakarot-Handtke, E. (2014). Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It. SSRN Working Paper Series, 2392856: 1–19. URL
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. London, Basingstoke: Macmillan.
Tómasson, G., and Bezemer, D. J. (2010). What is the Source of Profit and Interest? A Classical Conundrum Reconsidered. MPRA Paper, 20557: 1–34. URL
Blog-Reference and Blog-Reference on Jun 7 and Blog-Reference on Jun 13 adapted to context, and Blog-Reference adapted to context
Blanchard concludes his article:#1 “Macroeconomics is a tremendously exciting subject. Most of what we taught before the crisis remains highly relevant. But it needs some dusting and updating. My hope is that a model along the lines above can contribute to it.”
Not so. IS-LM has always been methodologically unacceptable, and its proper place is the Flat-Earth Cemetery. The attempts of Blanchard and Rowe to save it with “some dusting and updating” are purely ceremonial.
1. How Keynes got it wrong
Keynes formulated the formal core of the General Theory as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (1973, p. 63)This elementary syllogism is conceptually defective because Keynes never came to grips with profit (Tómasson et al., 2010, p. 12). As a result, all I=S models and the Keynesian multiplier are false (2011).
2. Rectification
The Keynesian premises have to be replaced by the correct macrofoundations. This is achieved as followsA0. The objectively given and most elementary configuration of the economy consists of the household and the business sector, which in turn consists initially of one giant fully integrated firm.
(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.
For the graphical representation of this ABSOLUTE formal MINIMUM, see the 4-Quadrant chart under the label Graphic AXEC31.
(A1) to (A3) asserts: At any given level of employment L, the wage income Yw that is generated in the consolidated business sector is obtained by multiplying the wage rate W. On the real side, output O is followed by multiplication with the productivity R. Finally, the price P follows as the dependent variable under the conditions of (i) budget balancing, i.e., C=Yw, and (ii) market clearing, i.e., X=O.
Under the conditions (i)|(ii), the price is derived in each period as P=W/R, i.e., the market-clearing price is, in the most elementary case, equal to unit wage costs which vary over successive periods.
In the next period, the households save, i.e., condition (i) is now lifted. The result is shown under the label AXEC33.
Consumption expenditures C fall below Yw, and with it the market-clearing price P. The product market is cleared due to (ii), and there is no such thing as inventory investment, i.e., I=0. Monetary saving of the household sector is given by Sm≡Yw−C.
The business sector makes a monetary loss which is equal to the household sector’s saving, i.e., Qm≡−Sm. Therefore, loss is the exact counterpart of saving; by consequence, profit is the exact counterpart of dissaving. This is the most elementary form of the macroeconomic Profit Law. It follows directly from the profit definition Qm≡C−Yw and the definition of household sector saving.
The sector balances always add up to zero, i.e., Qm+Sm=0, and this is the correct accounting identity. Saving and investment are NEVER equal, neither ex-ante nor ex-post. Therefore, NO IS-curve ever existed. The elaborate interpretation of the IS-LM-nonentity over more than 80 years is on the same level as haruspicy, i.e., old Roman poultry entrails reading.
3. Generalization
The Profit Law for the investment economy reads Qm≡Yd+I−Sm. Legend: Qm monetary profit, Yd distributed profit, Sm monetary saving, I investment expenditures.The DIFFERENCE between investment and saving I−Sm plus distributed profit Yd determines monetary profit Qm, which is measurable with two decimal places.
4. The Employment Law/Phillips Curve
From the differentiated axiom set (A1) to (A3) follows the structural Employment Law, which is shown with Graphic AXEC62
Items (i) and (ii) cover Keynes’s arguments about aggregate demand. What is missing in the Keynesian employment multiplier, though, is the ratio ρF as defined in (iii). This variable embodies the price mechanism. It works such that overall employment INCREASES if the average wage rate W INCREASES relative to the average price P and productivity R, and vice versa.
The complete Employment Law is a bit longer and contains, in addition, profit distribution, public deficit spending, and import/export. Investment and the interest rate for business loans Jb are connected via the elasticity Eb, and the household sector’s expenditure ratio and the interest rate for loans/deposits are connected via the elasticity Eh. Hence, the structural Employment Law fully replaces what Blanchard advertises as his updated IS-LM-Phillips-Curve model.
5. Conclusions
(i) All I=S/IS-LM models from Keynes/Hicks to Blanchard/Krugman/Rowe are provably false (2014).(ii) The investment multiplier is formally defective since Keynes.
(iii) The classical and Keynesian profit theories are false.
(iv) The representative economist has NOT gotten (i) to (iii) to this day because of incurable scientific incompetence.
Egmont Kakarot-Handtke
#1 How to Teach Intermediate Macroeconomics after the Crisis?
References
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Kakarot-Handtke, E. (2012). Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster. SSRN Working Paper Series, 2130421: 1–19. URL
Kakarot-Handtke, E. (2014). Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It. SSRN Working Paper Series, 2392856: 1–19. URL
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. London, Basingstoke: Macmillan.
Tómasson, G., and Bezemer, D. J. (2010). What is the Source of Profit and Interest? A Classical Conundrum Reconsidered. MPRA Paper, 20557: 1–34. URL
Related 'Keynes’s Missing Axioms' and 'I is never equal S and even Nick Rowe will eventually grasp it' and 'Causa finita: the end of I=S/IS-LM' and 'The IS-LM macro imbeciles' and 'Just revealed: IS-LM is dead for 80+ years' and 'I=S: Mark of the Incompetent' and 'Are economics professors really that incompetent? Yes!' For details of the big picture, see cross-references Refutation of I=S.
You asked yourself: “OK Nick, but if you don’t like teaching IS-LM, what would you teach instead? Which is a perfectly reasonable question. Which is why I despair. Because what could I teach instead?”
The answer is in my post ‘Getting out of IS-LM = Getting out of despair’. With the structural axiom set (A1) to (A3), you get the CORRECT FORMAL MINIMUM. These macrofoundations fully replace both the obsolete Walrasian microfoundations and your apples-bananas-mangoes equilibrium model.
It seems that you cannot see the solution for your self-inflicted despair when it is right before your eyes. While it is perfectly understandable that you deleted my post in your analytical agony, it would have been perhaps helpful for others if you had at least left a link standing, e.g., this.
After all, other desperate IS-LMers should also have a fair chance to make up their minds. It is of utmost importance to terminate IS-LM teaching once and for all.
***
REPLY to Nick RoweYou asked yourself: “OK Nick, but if you don’t like teaching IS-LM, what would you teach instead? Which is a perfectly reasonable question. Which is why I despair. Because what could I teach instead?”
The answer is in my post ‘Getting out of IS-LM = Getting out of despair’. With the structural axiom set (A1) to (A3), you get the CORRECT FORMAL MINIMUM. These macrofoundations fully replace both the obsolete Walrasian microfoundations and your apples-bananas-mangoes equilibrium model.
It seems that you cannot see the solution for your self-inflicted despair when it is right before your eyes. While it is perfectly understandable that you deleted my post in your analytical agony, it would have been perhaps helpful for others if you had at least left a link standing, e.g., this.
After all, other desperate IS-LMers should also have a fair chance to make up their minds. It is of utmost importance to terminate IS-LM teaching once and for all.
Keynes, the methodologist
Comment on Asad Zaman on ‘The Keynesian Revolution and the Monetarist Counter-Revolution’
Blog-Reference
Keynes’ lasting scientific contribution relates to methodology. He spoke it out loud, so that every fellow economist could hear it: Throw over the classical axioms and put economics on new foundations: “For if orthodox economics is at fault, the error is to be found not in the superstructure, which has been erected with great care for logical consistency, but in a lack of clearness and of generality in the premises.” (1973, p. xxi)
With the revolutionary shift in mathematics and physics from Euclidean to non-Euclidean axiomatics (Hilbert, Einstein) right before his eyes, Keynes called his fellow economists to arms. “The classical theorists resemble Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight — as the only remedy for the unfortunate collisions which are occurring. Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. Something similar is required to-day in economics.” (1973, p. 16)
As Asad Zaman puts it: “Keynes followed scientific methodology to create a new theory which rejected all three axioms of CET [Classical Economic Theory], so that Keynesian theory would match the experienced realities of the Great Depression. This is the distinguishing feature of science, that theories are devised and changed in light of experience.” (See intro)
To change a theory means to change the axiomatic foundations. This is what a paradigm shift is all about. Consequently, Keynes formulated the foundational syllogism of the General Theory as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (1973, p. 63)
This elementary two-liner, though, is conceptually and logically defective because Keynes did not come to grips with profit and therefore “discarded the draft chapter dealing with it.” (Tómasson et al., 2010, p. 12). As a result, the whole Post-Keynesian theoretical superstructure is false (2011; 2014).
Because Keynes did not get the macrofoundations right the Keynesian Revolution ultimately failed. Just like the Walrasians, Keynes had no idea of the fundamental concepts of economics, viz. profit and income.
In the neoclassical synthesis of Samuelson, Keynes’ new ‘non-Euclidean axioms’ and the old ‘Euclidean axioms’ of marginalism were cobbled together. Textbooks consisted of two well-balanced halves: micro and macro. Needless to emphasize that both halves did not fit together. Economic textbooks are blatantly inconsistent since 1948.
Gradually, the majority of economists fell entirely back to the pre-Keynesian formal foundations of marginalism. As Krugman put it “most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point.”
It is pretty obvious to anyone with a modicum of scientific instinct that the axiomatic starting point of the neoclassical paradigm is methodologically unacceptable (2013). By sticking to the obsolete microfoundations Orthodoxy violates scientific standards that hold since the ancient Greeks introduced the axiomatic-deductive methodology.
As Morgenstern reminded economists already back in 1941: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (1941, pp. 369-370)
Orthodox economists will burn in scientific hell because they stick to microfoundations that are false since Jevons/Walras/Menger. Post-Keynesian economists will burn in scientific hell because they stick to macrofoundations that are false since Keynes.
The axiomatic foundations of economics are provably false for more than 140 years. Because of this, economic policy advice of BOTH Walrasians AND Keynesians has no sound scientific foundation (2015).
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. (2013). Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist. SSRN Working Paper Series, 2207598: 1–16. URL
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. Basingstoke: Macmillan.
Morgenstern, O. (1941). Professor Hicks on Value and Capital. Journal of Political Economy, 49(3): 361–393. URL
Tómasson, G., and Bezemer, D. J. (2010). What is the Source of Profit and Interest? A Classical Conundrum Reconsidered. MPRA Paper, 20557: 1–34. URL
Blog-Reference
Keynes’ lasting scientific contribution relates to methodology. He spoke it out loud, so that every fellow economist could hear it: Throw over the classical axioms and put economics on new foundations: “For if orthodox economics is at fault, the error is to be found not in the superstructure, which has been erected with great care for logical consistency, but in a lack of clearness and of generality in the premises.” (1973, p. xxi)
With the revolutionary shift in mathematics and physics from Euclidean to non-Euclidean axiomatics (Hilbert, Einstein) right before his eyes, Keynes called his fellow economists to arms. “The classical theorists resemble Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight — as the only remedy for the unfortunate collisions which are occurring. Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. Something similar is required to-day in economics.” (1973, p. 16)
As Asad Zaman puts it: “Keynes followed scientific methodology to create a new theory which rejected all three axioms of CET [Classical Economic Theory], so that Keynesian theory would match the experienced realities of the Great Depression. This is the distinguishing feature of science, that theories are devised and changed in light of experience.” (See intro)
To change a theory means to change the axiomatic foundations. This is what a paradigm shift is all about. Consequently, Keynes formulated the foundational syllogism of the General Theory as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (1973, p. 63)
This elementary two-liner, though, is conceptually and logically defective because Keynes did not come to grips with profit and therefore “discarded the draft chapter dealing with it.” (Tómasson et al., 2010, p. 12). As a result, the whole Post-Keynesian theoretical superstructure is false (2011; 2014).
Because Keynes did not get the macrofoundations right the Keynesian Revolution ultimately failed. Just like the Walrasians, Keynes had no idea of the fundamental concepts of economics, viz. profit and income.
In the neoclassical synthesis of Samuelson, Keynes’ new ‘non-Euclidean axioms’ and the old ‘Euclidean axioms’ of marginalism were cobbled together. Textbooks consisted of two well-balanced halves: micro and macro. Needless to emphasize that both halves did not fit together. Economic textbooks are blatantly inconsistent since 1948.
Gradually, the majority of economists fell entirely back to the pre-Keynesian formal foundations of marginalism. As Krugman put it “most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point.”
It is pretty obvious to anyone with a modicum of scientific instinct that the axiomatic starting point of the neoclassical paradigm is methodologically unacceptable (2013). By sticking to the obsolete microfoundations Orthodoxy violates scientific standards that hold since the ancient Greeks introduced the axiomatic-deductive methodology.
As Morgenstern reminded economists already back in 1941: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (1941, pp. 369-370)
Orthodox economists will burn in scientific hell because they stick to microfoundations that are false since Jevons/Walras/Menger. Post-Keynesian economists will burn in scientific hell because they stick to macrofoundations that are false since Keynes.
The axiomatic foundations of economics are provably false for more than 140 years. Because of this, economic policy advice of BOTH Walrasians AND Keynesians has no sound scientific foundation (2015).
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. (2013). Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist. SSRN Working Paper Series, 2207598: 1–16. URL
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. Basingstoke: Macmillan.
Morgenstern, O. (1941). Professor Hicks on Value and Capital. Journal of Political Economy, 49(3): 361–393. URL
Tómasson, G., and Bezemer, D. J. (2010). What is the Source of Profit and Interest? A Classical Conundrum Reconsidered. MPRA Paper, 20557: 1–34. URL
Subscribe to:
Comments (Atom)