Blog-Reference*
There is NO such thing as Islamic, Christian, Buddhist, etcetera economics. Economics defines itself as a science and is therefore fundamentally different from religious beliefs/political ideologies. Science deals with knowledge. Non-scientists know NOTHING. Political/religious economists are NOT scientists but stupid/corrupt storytellers.
“There are always many different opinions and conventions concerning any one problem or subject-matter (such as the gods). 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)
To this day, though, economics is NOT a science but political/religious agenda pushing in a scientific/social bluff package. Economics claims to be a science but has not yet managed to live up to the ideal. Strictly speaking, economics is a fraud.
For details see:
► The Supreme Being handed over these Twelve Economics Commandments
► If religion is opium of the people, economics is crack of the people
► Economics is not science, not religion, but proto-scientific garbage
► Confounding Is and Ought: the economist as moralist
► Beware of the moralizing economist
► Knowledge vs. Belief
► What is so great about cargo cult science? or, How economists learned to stop worrying about failure
► Fake religion, fake science, fake news, and false complaints
► Scientists and science actors
► Throw them out! Orthodox and heterodox economists are unfit for science
Egmont Kakarot-Handtke
* An Islamic WorldView
Related 'Economics a science? Surely you're joking, Mr. Cochrane' and 'Economics ― nothing but claptrap, twaddle, drivel, slip-slop, wish-wash, waffle, and proto-scientific garbage' and 'Economics: Science or cheap talk?' and 'Pre-truth and post-truth in economics' and 'Refutation of Asad Zaman’s heterodox methodology: all arguments you ever need' and 'Zamanomics' and 'Economics: The greatest scientific fraud in modern times' and 'The inexorable Paradigm Shift in economics'. For details of the big picture see cross-references Political Economics/Stupidity/Corruption.
May 13, 2019
May 10, 2019
Economics a science? Surely you're joking, Mr. Cochrane
Comment on John Cochrane on ‘Smith, MMT, and science in economics’
Blog-Reference and Blog-Reference
MMTers assert that mainstream economics is defective. MMTers are right. Mainstreamers, in turn, assert that MMT is defective. Mainstreamers are right.
The fact of the matter is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and that all get the foundational concept of the subject matter ― profit ― wrong. Economics is a failed science. As a consequence, discussions between mainstream and MMT never get above the talk-show level.#1, #2, #3
John Cochrane freely admits that he did not “read about things [MMT] in some detail, ideally from original sources, before reviewing them, which I have not done. Life is short.” Yes, but fortunately it is long enough to waste it on brain-dead blather.
John Cochrane has not realized that orthodox economics, which he represents, is proto-scientific garbage. Neither does he refute MMT in a scientifically correct way by proving material/formal inconsistency.#4 He simply echoes Noah Smith’s slander of MMT as a Guru-based theory.
After having himself exposed as an incompetent scientist, John Cochrane goes fully off-topic by extensively waffling about the “sociology of science”. This “sociology” is essentially a description of how contemporary academic economics works. It confirms what Feynman has described long ago as cargo cult science: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... 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.”
What is still missing in economics after 200+ years is the true theory. Economics is a failed science. This is the common denominator of mainstream economics and MMT. Both are refuted on all counts.#5
Life is short ― trivially true ― so, in no case waste it with the fake science of economics, not with the proto-scientific garbage of mainstream and MMT, and not with the confused blatherers who call themselves scientists but have never been anything else than clowns in the political Circus Maximus.
Egmont Kakarot-Handtke
#1 MMT vs Mainstream: examining proto-scientific garbage in detail
#2 The not so funny MMT vs Neoliberalism slapstick
#3 Economics ― nothing but claptrap, twaddle, drivel, slip-slop, wish-wash, waffle, and proto-scientific garbage
#4 For the full-spectrum refutation of MMT see cross-references MMT
#5 Economics: The greatest scientific fraud in modern times
Related 'Economics is a science? You must be joking!' and 'What is so great about cargo cult science? or, How economists learned to stop worrying about failure' and 'MMT is better than mainstream economics but still not good enough' and 'Macroeconomics: Economists are too stupid for science' and 'From Keynes’ fatal blunder to the true economic model' and 'Links on capital-T Truth, stupidity, corruption'.
Blog-Reference and Blog-Reference
MMTers assert that mainstream economics is defective. MMTers are right. Mainstreamers, in turn, assert that MMT is defective. Mainstreamers are right.
The fact of the matter is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and that all get the foundational concept of the subject matter ― profit ― wrong. Economics is a failed science. As a consequence, discussions between mainstream and MMT never get above the talk-show level.#1, #2, #3
John Cochrane freely admits that he did not “read about things [MMT] in some detail, ideally from original sources, before reviewing them, which I have not done. Life is short.” Yes, but fortunately it is long enough to waste it on brain-dead blather.
John Cochrane has not realized that orthodox economics, which he represents, is proto-scientific garbage. Neither does he refute MMT in a scientifically correct way by proving material/formal inconsistency.#4 He simply echoes Noah Smith’s slander of MMT as a Guru-based theory.
After having himself exposed as an incompetent scientist, John Cochrane goes fully off-topic by extensively waffling about the “sociology of science”. This “sociology” is essentially a description of how contemporary academic economics works. It confirms what Feynman has described long ago as cargo cult science: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... 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.”
What is still missing in economics after 200+ years is the true theory. Economics is a failed science. This is the common denominator of mainstream economics and MMT. Both are refuted on all counts.#5
Life is short ― trivially true ― so, in no case waste it with the fake science of economics, not with the proto-scientific garbage of mainstream and MMT, and not with the confused blatherers who call themselves scientists but have never been anything else than clowns in the political Circus Maximus.
Egmont Kakarot-Handtke
#1 MMT vs Mainstream: examining proto-scientific garbage in detail
#2 The not so funny MMT vs Neoliberalism slapstick
#3 Economics ― nothing but claptrap, twaddle, drivel, slip-slop, wish-wash, waffle, and proto-scientific garbage
#4 For the full-spectrum refutation of MMT see cross-references MMT
#5 Economics: The greatest scientific fraud in modern times
Related 'Economics is a science? You must be joking!' and 'What is so great about cargo cult science? or, How economists learned to stop worrying about failure' and 'MMT is better than mainstream economics but still not good enough' and 'Macroeconomics: Economists are too stupid for science' and 'From Keynes’ fatal blunder to the true economic model' and 'Links on capital-T Truth, stupidity, corruption'.
May 8, 2019
Settling the MMT―Inflation issue for good
Comment on Bill Mitchell on ‘US Congress hypocrites lose the plot’
Blog-Reference and Blog-Reference on May 9
Bill Mitchell quotes five Republican Senators in the US Congress as proclaiming it is: “the duty of the Senate to condemn Modern Monetary Theory and recognizing that the implementation of Modern Monetary Theory would lead to higher deficits and higher inflation”.
Science is something quite different from politics, and senators have NOTHING AT ALL to say in the realm of science. People forget this because they have come to think that political blather, talk shows, and scientific debates are essentially the same thing. This is partially the fault of economists themselves, who for the greater part lack a proper understanding of what science is all about.
Economic discussions suffer from the fact that both microfoundations and macrofoundations are provably false. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are materially/formally inconsistent and mutually contradictory. This is why all economic discussions end in the bottomless swamp of cross-talk, interpretation, exegesis, second-guessing, and “what x REALLY meant” but for some mysterious reason could not clearly express.
To get out of the proto-scientific swamp requires a Paradigm Shift, i.e., the move from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations.#1
From the true macrofoundations follows the macroeconomic Law of Supply and Demand as shown here. #2 It says in the elementary case:
(i) An increase in the expenditure ratio ρE≡EC/Yw leads to a higher market-clearing price (the Greek letter ρ stands for ratio). An expenditure ratio ρE > 1 indicates deficit-spending/dissaving/credit-expansion, a ratio ρE less than 1 indicates saving/credit-contraction. Dissaving/saving, in turn, affects the average amount of transaction money M.
(ii) Deficit spending, i.e., the move from ρE=1 to ρE >1, causes a one-off price hike but NOT inflation† if the deficit spending is exactly repeated period after period. #3, #4, #5, #6 A steadily rising public debt is compatible with price stability after the first hike. Only successively INCREASING budget deficits produce continuous price increases.
(iii) An increase in the ratio of wage rate to productivity W/R leads to a higher market-clearing price P. If this is repeated period after period, one gets inflation depending on the rates of change of W and R in each successive period.
Roughly speaking, the macroeconomic Law of Supply and Demand explains the price level in the elementary production-consumption economy and its development over time. The equation contains but measurable variables and is therefore testable in principle.
The relationship between the average amount of fiat money M and the expenditure ratio ρE, the wage rate W, and employment L is shown here. #7
Because M is the dependent variable, it does NOT cause inflation. This puts the commonplace Quantity Theory to rest.
Conclusion: The MMT policy of deficit-spending/money-creation causes a one-off price hike but NOT inflation. The lethal effect of MMT policy is on distribution.#8, #9, #10 The Weimar/Zimbabwe/Inflation shouters suffer from incurable idiocy and cannot be admitted to a serious economic discussion. The fact is that MMT policy does NOT produce inflation, but, according to the macroeconomic Profit Law, Public Deficit = Private Profit, the Oligarchy’s financial wealth (currently about $22 trillion and counting). This public debt is the own handiwork of nobody else than the US Congress, and all worked just fine without inflation.
Egmont Kakarot-Handtke
† "In economics, inflation refers to a general progressive increase in prices of goods and services in an economy." (Wikipedia) A price hike refers to one period; inflation means successive price hikes over two or more periods, with the rates of price changes being equal or increasing. Strictly speaking, the minimum length of inflation is two periods. The standard period length is the calendar year.
Blog-Reference and Blog-Reference on May 9
Bill Mitchell quotes five Republican Senators in the US Congress as proclaiming it is: “the duty of the Senate to condemn Modern Monetary Theory and recognizing that the implementation of Modern Monetary Theory would lead to higher deficits and higher inflation”.
Science is something quite different from politics, and senators have NOTHING AT ALL to say in the realm of science. People forget this because they have come to think that political blather, talk shows, and scientific debates are essentially the same thing. This is partially the fault of economists themselves, who for the greater part lack a proper understanding of what science is all about.
Economic discussions suffer from the fact that both microfoundations and macrofoundations are provably false. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are materially/formally inconsistent and mutually contradictory. This is why all economic discussions end in the bottomless swamp of cross-talk, interpretation, exegesis, second-guessing, and “what x REALLY meant” but for some mysterious reason could not clearly express.
To get out of the proto-scientific swamp requires a Paradigm Shift, i.e., the move from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations.#1
From the true macrofoundations follows the macroeconomic Law of Supply and Demand as shown here. #2 It says in the elementary case:
(ii) Deficit spending, i.e., the move from ρE=1 to ρE >1, causes a one-off price hike but NOT inflation† if the deficit spending is exactly repeated period after period. #3, #4, #5, #6 A steadily rising public debt is compatible with price stability after the first hike. Only successively INCREASING budget deficits produce continuous price increases.
(iii) An increase in the ratio of wage rate to productivity W/R leads to a higher market-clearing price P. If this is repeated period after period, one gets inflation depending on the rates of change of W and R in each successive period.
Roughly speaking, the macroeconomic Law of Supply and Demand explains the price level in the elementary production-consumption economy and its development over time. The equation contains but measurable variables and is therefore testable in principle.
The relationship between the average amount of fiat money M and the expenditure ratio ρE, the wage rate W, and employment L is shown here. #7
Conclusion: The MMT policy of deficit-spending/money-creation causes a one-off price hike but NOT inflation. The lethal effect of MMT policy is on distribution.#8, #9, #10 The Weimar/Zimbabwe/Inflation shouters suffer from incurable idiocy and cannot be admitted to a serious economic discussion. The fact is that MMT policy does NOT produce inflation, but, according to the macroeconomic Profit Law, Public Deficit = Private Profit, the Oligarchy’s financial wealth (currently about $22 trillion and counting). This public debt is the own handiwork of nobody else than the US Congress, and all worked just fine without inflation.
Egmont Kakarot-Handtke
† "In economics, inflation refers to a general progressive increase in prices of goods and services in an economy." (Wikipedia) A price hike refers to one period; inflation means successive price hikes over two or more periods, with the rates of price changes being equal or increasing. Strictly speaking, the minimum length of inflation is two periods. The standard period length is the calendar year.
#1 This is the correct core of macroeconomic axioms: (A0) The objectively given and most elementary systemic 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) EC=PX consumption expenditure EC is equal to price P times quantity bought/sold X.
For a start X=O, i.e., market-clearing holds. The ratio ρE≡EC/Yw is called the expenditure ratio; ρE=1 indicates budget-balancing of the household sector.
#2 Graphic AXEC101 Law of Supply and Demand, elementary production-consumption economy with market-clearing and zero distributed profits.
#3 Gov-Deficits do NOT cause inflation
#4 How some MMTers got inflation wrong
#5 MMT and the inflation-red-herring
#6 Economics as tireless production of proto-scientific garbage: inflation theory as an example
#7 Graphic AXEC111b Average quantity of transaction money
#8 Deficits matter for distribution
#9 MMT: Distribution is the drawback NOT Inflation
#10 Dear idiots, government deficits do NOT cause inflation
Related 'What Keynes really meant but could not really prove' and 'Quixotic Keynes exegesis' and 'Inflation: back to basics' and 'A la recherche de l'inflation perdue' and 'The unintended consequences of deficit spending' and 'MMT: fundamentally false' and 'MMT: A free lunch for the Oligarchy' and 'Links on Inflation'.
Twitter May 29 Michael R. Strain
For a start X=O, i.e., market-clearing holds. The ratio ρE≡EC/Yw is called the expenditure ratio; ρE=1 indicates budget-balancing of the household sector.
#2 Graphic AXEC101 Law of Supply and Demand, elementary production-consumption economy with market-clearing and zero distributed profits.
#3 Gov-Deficits do NOT cause inflation
#4 How some MMTers got inflation wrong
#5 MMT and the inflation-red-herring
#6 Economics as tireless production of proto-scientific garbage: inflation theory as an example
#7 Graphic AXEC111b Average quantity of transaction money
#8 Deficits matter for distribution
#9 MMT: Distribution is the drawback NOT Inflation
#10 Dear idiots, government deficits do NOT cause inflation
Related 'What Keynes really meant but could not really prove' and 'Quixotic Keynes exegesis' and 'Inflation: back to basics' and 'A la recherche de l'inflation perdue' and 'The unintended consequences of deficit spending' and 'MMT: fundamentally false' and 'MMT: A free lunch for the Oligarchy' and 'Links on Inflation'.
***
AXEC182a Macroeconomic price P and profit Qm as a function of the expenditure ratio ρE (and the other variables), with ρE >1 meaning deficit spending.
***
May 6, 2019
Economics ― nothing but claptrap, twaddle, drivel, slip-slop, wish-wash, waffle, and proto-scientific garbage
Comment on Peter Cooper on ‘Currency Value in Terms of Socially Necessary Labor’
Blog-Reference
There is NOT ONE concept in economics that is clearly defined and consistently adhered to. #1 Because of this, every economic debate ends with karmic necessity in the swamp of cross-talk, interpretation, and second-guessing of “what Keynes [or anybody else, for that matter] REALLY meant.” #2 One of the worst examples is the double-whopper Value of Money. In 200+ years, economists have not made up their minds about what value and what money are and how both are related.
Peter Cooper, according to the preeminent philosopher Tom Hickey, “the preeminent authority on the relationship of Marx and MMT”, has no scruples to again display his lamentable incompetence: “An economy’s minimum wage equates a unit of the currency to an amount of labor time. For instance, in Marxist terms, a minimum wage of $15/hour sets a dollar equal to 4 minutes of simple labor power. At a macro level, this enables currency value to be defined in terms of simple labor. There are, however, at least two ways in which this connection between currency value and labor could be drawn. One way would be to adopt a labor command theory of currency value. In effect, modern monetary theory (MMT) takes this approach. A second way would be to link the value of the currency to the commodity labor power. Adopting the second approach leads to a definition of currency value that is distinct from the MMT definition but closely (and simply) related to it.”
Let us forget the blather and settle the matter here and now ― once and for all.
The elementary production-consumption economy is defined with this set of macroeconomic axioms: (A0) 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.
Under the conditions of market-clearing X=O and budget-balancing C=Yw in each period, the price as the dependent variable is given by P=W/R (1a). The price is determined by the wage rate W, which takes the role of the nominal numéraire, and the productivity R. The elementary production-consumption economy is shown under the label of Graphic. #3
What is needed for a start are two things: (i) a central bank which creates money on its balance sheet in the form of deposits, and (ii) a legal system which declares the central bank’s deposits as legal tender.
Deposit money is needed by the business sector to pay the workers who receive the wage income Yw per period. The need is only temporary because the business sector gets the money back if the workers fully spend their income, i.e., if C=Yw. Overdrafts are needed by the household sector for consumption expenditures if the households want to spend before they get their income.
For the case of a balanced budget C=Yw, the idealized transaction pattern of deposits/ overdrafts of the household sector at the Central Bank over the course of one period is shown under the label Graphic. #4
The household sector’s deposits/overdrafts are ZERO at the beginning and end of the period. Money is continually created and destroyed during the period under consideration. There is NO such thing as a fixed quantity of money. The central bank plays an accommodative role and supports the autonomous market transactions between the household and the business sector. From this follows the average amount of transaction money (commonly referred to as stock) as M=κYw, with κ determined by the transaction pattern. If employment L is doubled, the average amount of transaction money M doubles. In a well-designed fiat money economy, growth is not hampered by a lack of a transaction medium. Money is endogenous and neutral.
The macroeconomic Law of Supply and Demand (1a) implies W/P=R (1b), i.e., the real wage is always equal to the productivity, no matter how the wage rate W is set. In other words, the real value of money in the elementary production-consumption economy is equal to the productivity R and has NOTHING to do with “socially necessary labor”.
Ramifications: (i) The State is needed for the institutional setup of the monetary order, (ii) the State is NOT needed for injecting money into the economy, (iii) what is needed is an accommodative Central Bank, (iv) neither the State nor the Central Bank interferes with the autonomous transactions of the household and business sector, (v) money is a generalized IOU, (vi) money is created and destroyed by the transactions between the household and the business sector, (vii) the value of money is given by W/P=R (1b), i.e. is equal to the productivity, (viii) the value of money does NOT depend on the (average) amount of money M, (ix) the functionality of monetary institutions and the value of money does NOT depend on the taxing power of the State.
Bottom line: both Marx and MMT got the Value of Money wrong. Unfortunately, “the preeminent authority on the relationship of Marx and MMT” and the rest of the MMT crowd #5 lack the brain-power to grasp it. Fortunately, they still have enough blather-power available to pollute the econblogosphere with proto-scientific garbage.
Egmont Kakarot-Handtke
#1 Mad but true: 200+ years after Adam Smith economists still have no idea what profit is
#2 Marshall and the Cambridge School of plain economic gibberish
#3 Graphic AXEC31 Elementary production-consumption economy
#4 Graphic AXEC98 Idealized transaction pattern
#5 Refuting MMT’s Macroeconomics Textbook
Related 'Value — the Bermuda Triangle for economic theories' and 'The creation and value of money and near-monies' and 'The Theory of Value and the worthlessness of economics' and 'How to get out of psychology/sociology/wish-wash' and 'Basics of Value Theory' and 'Here is the long-overdue scientific death certificate for Marx and Marxists' and 'The objective value of money' and 'MMT and Marxism: A debate between proto-scientific zombies' and 'Neoclassics and MMT ― much like pest and cholera' and 'Rethinking the Profit Law' and 'How to end the Punch and Judy Show about profit' and 'The thing with profit and exploitation' and 'The Logic of Value and the Value of Logic' and 'The Value of Water and Diamonds: Back to Square One'.
You say: “Interesting discussion, Calcagus and Andre. Thanks.”
Not so. The value of money is given by W/P=R as derived above for the most elementary case. The rest is uninteresting troll-talk, claptrap, twaddle, drivel, slip-slop, wish-wash, waffle, and proto-scientific garbage.
Both MMT and Marxianism are refuted on all counts. #1
#1 For the detailed refutation of specific points, go to the AXEC blog and search for ‘Peter Cooper’ (the preeminent authority on the relationship of Marx and MMT according to the preeminent philosopher Tom Hickey).
You say: “Basically, I think everyone agrees with the labor theory of value. … I think empirical work shows that prices are explained by labor with correlation of 95% or something. Joan Robinson said something like- what other choice is there? The problem is formulating the labor theory of value, just right.”
Indeed, that’s the problem of any theory.
The elementary production-consumption economy is, for a star,t defined by three macro axioms (Yw=WL, O=RL, C=PX) and two conditions (X=O, C=Yw). This yields the macroeconomic Law of Supply and Demand as P=W/R.
Now imagine two countries that are equal in all real respects except for productivity. Clearly, the market-clearing price is lower in the country with higher productivity. So, the purchasing power of the wage, a.k.a. the value of money is higher, it holds W/P=R.
Note that in both countries, the labor input L is exactly the same. But this does not matter because the value of money does not depend on “Socially Necessary Labor” or other figments of the poor imagination of socially unnecessary economists.
Blog-Reference
There is NOT ONE concept in economics that is clearly defined and consistently adhered to. #1 Because of this, every economic debate ends with karmic necessity in the swamp of cross-talk, interpretation, and second-guessing of “what Keynes [or anybody else, for that matter] REALLY meant.” #2 One of the worst examples is the double-whopper Value of Money. In 200+ years, economists have not made up their minds about what value and what money are and how both are related.
Peter Cooper, according to the preeminent philosopher Tom Hickey, “the preeminent authority on the relationship of Marx and MMT”, has no scruples to again display his lamentable incompetence: “An economy’s minimum wage equates a unit of the currency to an amount of labor time. For instance, in Marxist terms, a minimum wage of $15/hour sets a dollar equal to 4 minutes of simple labor power. At a macro level, this enables currency value to be defined in terms of simple labor. There are, however, at least two ways in which this connection between currency value and labor could be drawn. One way would be to adopt a labor command theory of currency value. In effect, modern monetary theory (MMT) takes this approach. A second way would be to link the value of the currency to the commodity labor power. Adopting the second approach leads to a definition of currency value that is distinct from the MMT definition but closely (and simply) related to it.”
Let us forget the blather and settle the matter here and now ― once and for all.
The elementary production-consumption economy is defined with this set of macroeconomic axioms: (A0) 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.
Under the conditions of market-clearing X=O and budget-balancing C=Yw in each period, the price as the dependent variable is given by P=W/R (1a). The price is determined by the wage rate W, which takes the role of the nominal numéraire, and the productivity R. The elementary production-consumption economy is shown under the label of Graphic. #3
What is needed for a start are two things: (i) a central bank which creates money on its balance sheet in the form of deposits, and (ii) a legal system which declares the central bank’s deposits as legal tender.
Deposit money is needed by the business sector to pay the workers who receive the wage income Yw per period. The need is only temporary because the business sector gets the money back if the workers fully spend their income, i.e., if C=Yw. Overdrafts are needed by the household sector for consumption expenditures if the households want to spend before they get their income.
For the case of a balanced budget C=Yw, the idealized transaction pattern of deposits/ overdrafts of the household sector at the Central Bank over the course of one period is shown under the label Graphic. #4
The household sector’s deposits/overdrafts are ZERO at the beginning and end of the period. Money is continually created and destroyed during the period under consideration. There is NO such thing as a fixed quantity of money. The central bank plays an accommodative role and supports the autonomous market transactions between the household and the business sector. From this follows the average amount of transaction money (commonly referred to as stock) as M=κYw, with κ determined by the transaction pattern. If employment L is doubled, the average amount of transaction money M doubles. In a well-designed fiat money economy, growth is not hampered by a lack of a transaction medium. Money is endogenous and neutral.
The macroeconomic Law of Supply and Demand (1a) implies W/P=R (1b), i.e., the real wage is always equal to the productivity, no matter how the wage rate W is set. In other words, the real value of money in the elementary production-consumption economy is equal to the productivity R and has NOTHING to do with “socially necessary labor”.
Ramifications: (i) The State is needed for the institutional setup of the monetary order, (ii) the State is NOT needed for injecting money into the economy, (iii) what is needed is an accommodative Central Bank, (iv) neither the State nor the Central Bank interferes with the autonomous transactions of the household and business sector, (v) money is a generalized IOU, (vi) money is created and destroyed by the transactions between the household and the business sector, (vii) the value of money is given by W/P=R (1b), i.e. is equal to the productivity, (viii) the value of money does NOT depend on the (average) amount of money M, (ix) the functionality of monetary institutions and the value of money does NOT depend on the taxing power of the State.
Bottom line: both Marx and MMT got the Value of Money wrong. Unfortunately, “the preeminent authority on the relationship of Marx and MMT” and the rest of the MMT crowd #5 lack the brain-power to grasp it. Fortunately, they still have enough blather-power available to pollute the econblogosphere with proto-scientific garbage.
Egmont Kakarot-Handtke
#1 Mad but true: 200+ years after Adam Smith economists still have no idea what profit is
#2 Marshall and the Cambridge School of plain economic gibberish
#3 Graphic AXEC31 Elementary production-consumption economy
#4 Graphic AXEC98 Idealized transaction pattern
#5 Refuting MMT’s Macroeconomics Textbook
Related 'Value — the Bermuda Triangle for economic theories' and 'The creation and value of money and near-monies' and 'The Theory of Value and the worthlessness of economics' and 'How to get out of psychology/sociology/wish-wash' and 'Basics of Value Theory' and 'Here is the long-overdue scientific death certificate for Marx and Marxists' and 'The objective value of money' and 'MMT and Marxism: A debate between proto-scientific zombies' and 'Neoclassics and MMT ― much like pest and cholera' and 'Rethinking the Profit Law' and 'How to end the Punch and Judy Show about profit' and 'The thing with profit and exploitation' and 'The Logic of Value and the Value of Logic' and 'The Value of Water and Diamonds: Back to Square One'.
***
REPLY to Detroit Dan on May 8You say: “Interesting discussion, Calcagus and Andre. Thanks.”
Not so. The value of money is given by W/P=R as derived above for the most elementary case. The rest is uninteresting troll-talk, claptrap, twaddle, drivel, slip-slop, wish-wash, waffle, and proto-scientific garbage.
Both MMT and Marxianism are refuted on all counts. #1
#1 For the detailed refutation of specific points, go to the AXEC blog and search for ‘Peter Cooper’ (the preeminent authority on the relationship of Marx and MMT according to the preeminent philosopher Tom Hickey).
***
REPLY to Calgacus on May 11You say: “Basically, I think everyone agrees with the labor theory of value. … I think empirical work shows that prices are explained by labor with correlation of 95% or something. Joan Robinson said something like- what other choice is there? The problem is formulating the labor theory of value, just right.”
Indeed, that’s the problem of any theory.
The elementary production-consumption economy is, for a star,t defined by three macro axioms (Yw=WL, O=RL, C=PX) and two conditions (X=O, C=Yw). This yields the macroeconomic Law of Supply and Demand as P=W/R.
Now imagine two countries that are equal in all real respects except for productivity. Clearly, the market-clearing price is lower in the country with higher productivity. So, the purchasing power of the wage, a.k.a. the value of money is higher, it holds W/P=R.
Note that in both countries, the labor input L is exactly the same. But this does not matter because the value of money does not depend on “Socially Necessary Labor” or other figments of the poor imagination of socially unnecessary economists.
May 3, 2019
Economics: The greatest scientific fraud in modern times
Comment on Ikonoclast on ‘Mathematics and the constructions and emergent outcomes of socioeconomic phenomena’
Blog-Reference and Blog-Reference and Blog-Reference
Taking Isaac Newton and Adam Smith as roughly simultaneous reference points, no one can fail to notice that economics has, in the last 200+ years, not risen above the proto-scientific level.
Needless to emphasize that economists do not run out of arguments to explain their obvious scientific failure. This is the classic excuse: “Years ago I heard Mr. Cobden say at a League Meeting that ‘Political Economy was the highest study of the human mind, for that the physical sciences required by no means so hard an effort.’” (Bagehot, 1885) #1 In other words, physics and the natural sciences are kids’ stuff but economics is the real challenge. Taking this into account, economists are second to none.
Ikonoclast reiterates the old refrain of economics as “separate and inexact science” (J. S. Mill): “When we are dealing with physical phenomena, the fundamental laws of the cosmos are independent of human understanding or modelling of them. No matter what you or I or any human thinks of the Laws of Thermodynamics or even whether we are ignorant of them, the fundamental phenomena follow a course which can be well modeled by those laws when those laws are mathematicized to permit accurate descriptions and empirically verifiable predictions. However, when it comes to socioeconomic phenomena, what we think and believe enter into the constructions and emergent outcomes of socioeconomic phenomena themselves (along with fundamental law effects also entering into the constructions and outcomes). At this level, any theory of the system enters into the system as a compounding or complicating element. Thence meta-theory (theory of the impact of theories on the system) will also enter into the system.”
In short, complexity, reflexivity, emergence/novelty, and ontological uncertainty are the ultimate reasons why economists have not produced much, if anything, of scientific value.
This, of course, is plain methodological nonsense. The simple fact of the matter is that economists are scientifically incompetent. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the foundational concept of the subject matter ― profit ― wrong. Economics is a mutual acceptance and stubborn repetition of provably false theories. #2, #3, #4 Economic policy guidance NEVER has had sound scientific foundations. Fiddling with false theories in the public space, economists are a hazard to their fellow citizens.
Let us just pick macroeconomics as a pertinent example.#5 Keynes stated the formal foundations in the General Theory as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
This mathematically simple syllogism (Y=C+I, S=Y−C) is conceptually and logically defective because Keynes never came to grips with profit. “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Let this sink in: the economist Keynes NEVER understood the foundational concepts of his subject matter, i.e., profit and income. #6, #7
But it is worse: neither Keynesians nor Post-Keynesians nor New Keynesians nor Anti-Keynesians nor orthodox economists nor heterodox economists spotted Keynes’ blunder to this day.#8 Economists are simply too stupid for the elementary mathematics that underlies macroeconomics. Because the foundations are false, the whole analytical superstructure of economics is proto-scientific garbage.
What economists do not understand to this day is that economics is NOT a social science and that they have to change the definition of their subject matter:
• Old definition, subjective-behavioral: Economics is the science that studies human behavior as a relationship between ends and scarce means that have alternative uses.
• New definition, objective-systemic: Economics is the science that studies how the monetary economy works.
Since the founding fathers, economics has claimed to be a science. It is NOT, it is what Feynman called a cargo cult science. #9 Economists are NOT scientists but merely useful political idiots. #10 The fact is that there is NO greater fraud in the history of modern science than economics.
Egmont Kakarot-Handtke
#1 Failed economics: The losers’ long list of lame excuses
#2 How the representative economist gets it wrong big-time
#3 Economic recommendations out of the swamp between true and false
#4 There is no soft science only soft brains
#5 Macroeconomics: Economists are too stupid for science
#6 The correct relationship reads in the elementary case Qm≡I−Sm with Qm as monetary profit.
#7 Except Allais see How Keynes got macro wrong and Allais got it right
#8 Marshall and the Cambridge School of plain economic gibberish
#9 The economics Cargo Cult Prize
#10 Throw them out! Orthodox and heterodox economists are unfit for science
Related 'Mad but true: 200+ years after Adam Smith economists still have no idea what profit is' and 'Just for the record: Economics is dead' and 'And the answer is NCND ― economics after 200+ years of Glomarization' and 'Economics: 200+ years of scientific incompetence and fraud' and 'From obscurity to enlightenment' and 'The zombie wars are over' and 'Crisis, cranks, and scientists' and 'Scientists do not predict' and 'Causality in economics' and 'Why economists have not been effective in economics' and 'Lacking the Midas touch of science' and 'Economists: just too stupid for counting' and 'When substandard thinkers dabble in science it is called economics' and 'A political stench is in the air' and 'Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist' and 'New economic thinking = old political fake' and 'The general theory of scientific incompetence' and 'A new curriculum for swampies?' and 'Real-World Economics: The sanctuary of stupidity and corruption' and 'Trust in economics as a science?' and 'Economists: scientists or political clowns?' and 'Knowledge is attainable ― even in economics' and 'Did economics fail? No! Yes, and everybody knows it!' and 'Econogenics in action' and 'How to make economics a science' and 'The inexorable Paradigm Shift in economics'. For details of the big picture, see cross-references Failed/Fake Scientists and cross-references Paradigm Shift and cross-references Axiomatization.
Blog-Reference and Blog-Reference and Blog-Reference
Taking Isaac Newton and Adam Smith as roughly simultaneous reference points, no one can fail to notice that economics has, in the last 200+ years, not risen above the proto-scientific level.
Needless to emphasize that economists do not run out of arguments to explain their obvious scientific failure. This is the classic excuse: “Years ago I heard Mr. Cobden say at a League Meeting that ‘Political Economy was the highest study of the human mind, for that the physical sciences required by no means so hard an effort.’” (Bagehot, 1885) #1 In other words, physics and the natural sciences are kids’ stuff but economics is the real challenge. Taking this into account, economists are second to none.
Ikonoclast reiterates the old refrain of economics as “separate and inexact science” (J. S. Mill): “When we are dealing with physical phenomena, the fundamental laws of the cosmos are independent of human understanding or modelling of them. No matter what you or I or any human thinks of the Laws of Thermodynamics or even whether we are ignorant of them, the fundamental phenomena follow a course which can be well modeled by those laws when those laws are mathematicized to permit accurate descriptions and empirically verifiable predictions. However, when it comes to socioeconomic phenomena, what we think and believe enter into the constructions and emergent outcomes of socioeconomic phenomena themselves (along with fundamental law effects also entering into the constructions and outcomes). At this level, any theory of the system enters into the system as a compounding or complicating element. Thence meta-theory (theory of the impact of theories on the system) will also enter into the system.”
In short, complexity, reflexivity, emergence/novelty, and ontological uncertainty are the ultimate reasons why economists have not produced much, if anything, of scientific value.
This, of course, is plain methodological nonsense. The simple fact of the matter is that economists are scientifically incompetent. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the foundational concept of the subject matter ― profit ― wrong. Economics is a mutual acceptance and stubborn repetition of provably false theories. #2, #3, #4 Economic policy guidance NEVER has had sound scientific foundations. Fiddling with false theories in the public space, economists are a hazard to their fellow citizens.
Let us just pick macroeconomics as a pertinent example.#5 Keynes stated the formal foundations in the General Theory as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
This mathematically simple syllogism (Y=C+I, S=Y−C) is conceptually and logically defective because Keynes never came to grips with profit. “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Let this sink in: the economist Keynes NEVER understood the foundational concepts of his subject matter, i.e., profit and income. #6, #7
But it is worse: neither Keynesians nor Post-Keynesians nor New Keynesians nor Anti-Keynesians nor orthodox economists nor heterodox economists spotted Keynes’ blunder to this day.#8 Economists are simply too stupid for the elementary mathematics that underlies macroeconomics. Because the foundations are false, the whole analytical superstructure of economics is proto-scientific garbage.
What economists do not understand to this day is that economics is NOT a social science and that they have to change the definition of their subject matter:
• Old definition, subjective-behavioral: Economics is the science that studies human behavior as a relationship between ends and scarce means that have alternative uses.
• New definition, objective-systemic: Economics is the science that studies how the monetary economy works.
Since the founding fathers, economics has claimed to be a science. It is NOT, it is what Feynman called a cargo cult science. #9 Economists are NOT scientists but merely useful political idiots. #10 The fact is that there is NO greater fraud in the history of modern science than economics.
Egmont Kakarot-Handtke
#1 Failed economics: The losers’ long list of lame excuses
#2 How the representative economist gets it wrong big-time
#3 Economic recommendations out of the swamp between true and false
#4 There is no soft science only soft brains
#5 Macroeconomics: Economists are too stupid for science
#6 The correct relationship reads in the elementary case Qm≡I−Sm with Qm as monetary profit.
#7 Except Allais see How Keynes got macro wrong and Allais got it right
#8 Marshall and the Cambridge School of plain economic gibberish
#9 The economics Cargo Cult Prize
#10 Throw them out! Orthodox and heterodox economists are unfit for science
Related 'Mad but true: 200+ years after Adam Smith economists still have no idea what profit is' and 'Just for the record: Economics is dead' and 'And the answer is NCND ― economics after 200+ years of Glomarization' and 'Economics: 200+ years of scientific incompetence and fraud' and 'From obscurity to enlightenment' and 'The zombie wars are over' and 'Crisis, cranks, and scientists' and 'Scientists do not predict' and 'Causality in economics' and 'Why economists have not been effective in economics' and 'Lacking the Midas touch of science' and 'Economists: just too stupid for counting' and 'When substandard thinkers dabble in science it is called economics' and 'A political stench is in the air' and 'Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist' and 'New economic thinking = old political fake' and 'The general theory of scientific incompetence' and 'A new curriculum for swampies?' and 'Real-World Economics: The sanctuary of stupidity and corruption' and 'Trust in economics as a science?' and 'Economists: scientists or political clowns?' and 'Knowledge is attainable ― even in economics' and 'Did economics fail? No! Yes, and everybody knows it!' and 'Econogenics in action' and 'How to make economics a science' and 'The inexorable Paradigm Shift in economics'. For details of the big picture, see cross-references Failed/Fake Scientists and cross-references Paradigm Shift and cross-references Axiomatization.
***
#PointOfProof
May 4
after
***
***
REPLY to Anonymous on May 4
You ask me to make myself understandable: “I carefully read through the work and all that makes sense is the anger. At least try to be simple enough to be understandable apart from the anger.”
Here we go:
Here we go:
(i) Economics, i.e., Walrasianism, Keynesianism, Marxianism, and Austrianism, is refuted on all counts.
(ii) Economists either do not realize the material/formal inconsistency of their approaches. In this case, they are stupid.
(iii) Or, economists know quite well that their approaches are scientifically worthless but promote them nonetheless for ulterior reasons. In this case, they are corrupt.
(iv) In either case, the claim that economics is a science and that economists are doing science is provably false.
(v) By consequence, the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel or the John Bates Clark Award does not reward genuine scientific achievements but attempts to deceive the general public about the dismal state of economics.
(vi) Barkley Rosser either has not realized the dismal state of economics or he is part of the False-Hero-Memorial scam.
(vii) Your attempt to nudge the point at issue from the scientific sphere of consistency/ proof/test to the psychological sphere of emotion/resentment proves that you are an incompetent scientist or, in simple psychological terms, an imbecile asshole.
(viii) You obviously do not know the difference between anger and militancy: “Truth on these subjects is militant, and can only establish itself by means of conflict.” (J. S. Mill, A System of Logic, Ratiocinative and Inductive, Kindle, Pos 71)
You say: “I am sorry, but I am not gong to bother ‘intepreting’ Egmont. He does seem to have lost it calling you an ‘asshole.’ He is not usually that offensive.”
Indeed, but you are:
.........................................................................................................
rosserjb@jmu.edu said...
Anonymous Asshole,
Maybe you did not get it. If you start using a name, even if it is one that is made up, I shall stop "using profance language" in regard to you. As it is, I have already made it clear that I have nothing but utter contempt for people who lecture me on anything while identifying themselves as "Anonymous." Get it, asshole?
Oh, and few of my atudents come here, but those that do will probably accept how I am treating you. I do not speak this way in classes, where I do not deal with people lecturing me while hiding behind a veil of anonymity.
So now you can go and repeately fuck yourself until your bottom falls off. Have a nice day!
October 7, 2018 at 5:42 PM
.........................................................................................................
You say: “Right, I am surely too foolish and ignorant to understand your writing, other than the uncontrollable anger, so I will never bother to try again. (You are scary.) Bye, bye.”
What do you not understand?
(i) Barkley Rosser is a stupid/corrupt academic economist.
(ii) Barkley Rosser is not some unique lone nut exception, but as representative economist, part of a tight-knit institutional network of political economics (= agenda-pushing) that has overgrown and stifled theoretical economics (= science).
(iii) All this is common knowledge: “Veblen’s first job was at the University of Chicago, the university bought and paid for by John D. Rockefeller the classic robber baron, and leader of the leisure class. Rockefeller called the university ‘the best investment’ he ever made, since he intended to use it to advance the interests of his class and suppress opposition.”#1
(iv) What holds for Chicago can, with some degree of confidence, be generalized for the majority of Faculties of Business and Economics and the institutional superstructure from the ASSA Annual Meetings to the publishing houses.
(v) Accordingly, the purpose of economic journals and the peer-review process is not the promotion and dissemination of scientific knowledge as it is in the genuine sciences, but attention/perception management, gatekeeping, and selection/promotion/positioning of future opinion leaders.
(vi) Prizes like the economics Nobel or the John Bates Clark Award are part and parcel of establishing scientific reputation and authority. These are tried and tested instruments of public relations/propaganda and have no scientific significance whatsoever.
(vii) Economics is a fake science beginning with economic textbooks#2 and ending with the faux Nobel.#3
(viii) Academic economics ― orthodox and heterodox, that is ― is beyond repair or reform or hope or rejuvenation; it can only be burnt to the ground like a termite-infested shack.
(ix) Needless to emphasize that (viii) is a metaphor for perplexed and clueless non-economists who have no chance of figuring out the actual state of economics and what the methodological term Paradigm Shift means in practice.
(x) Needless to emphasize that the current inhabitants of the rotten shack with the pretty scientific facade ― the retarded heirs of Adam Smith/Karl Marx ― are retired in a timely manner with all the academic honors.
There is nothing to fear for Barkley Rosser and trolls like you except perhaps that you will eventually be buried at the Flat-Earth-Cemetery in the section for political clowns.
#1 Veblen’s insights come back to haunt us
#2 To this day, economists have produced NOT ONE textbook that satisfies scientific standards
#3 The real problem with the economics Nobel
Just answer the simple scientific question, which of the two macroeconomic sectoral balances equations is true, i.e., materially/formally consistent?
(a) (I−S)+(G−T)+(X−M)=0
(b) (I−S)+(G−T)+(X−M)−(Q−Yd)=0
You answer: “Depends on how you define and measure the variables, Egmont, obviously. And these variables have been defined and measured differently at different times by different entrities. So, they can both be true or not true depending.”
This is the Humpty Dumpty Fallacy,#1 the Pavlovian reflex of all swampies.#2 Popper called it an immunizing stratagem. #3
Science is binary true/false with NOTHING in between. Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). #4 The swamp is the habitat of what Feynman called cargo cult scientists.#5
The correct answer to the question, which of the two macroeconomic sectoral balances equations, i.e., (a) (I−S)+(G−T)+(X−M)=0 or (b) (I−S)+(G−T)+(X−M)−(Q−Yd)=0, is true is unequivocal, and demonstrably (b). All variables in (a) and (b) are identical except for Q = macroeconomic profit and Yd = distributed profit. Eq. (a) lacks these two variables altogether, and because of this, it is FALSE. This means, in turn, that both orthodox and heterodox macroeconomics are FALSE. So, economics is refuted on all counts.
As a professional economist at the age limit you have never known and still do not know the scientifically correct answer. It is pretty obvious that you have always been a fake scientist. This, though, was not a disadvantage, rather the opposite, because economics has always been a fake science.#6
Because economics is a fake science, the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel is a fraud. Same for the John Bates Clark Award. Time to drain the swamp.#7
#1 Humpty Dumpty is back again
#2 And the answer is NCND ― economics after 200+ years of Glomarization
#3 Opinion, conversation, interpretation, blather: the economist’s major immunizing stratagems
#4 Lousy scientists
#5 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#6 Economics: The greatest scientific fraud in modern times
#7 Enough! Economists, retire now!
You say: “Yes, Egmont, we have seen you previously declare that taking account of retained earnings, what your petty equation does, is the most supremely important thing in economics. It is not remotely. It is an utterly trivial item that gets taken account of in current accounting practices.”
Yes, Barkley Rosser, distributed profits appear in National Accounting.#1 This, though, is NOT the point. So let us take distributed profits Yd out of the picture for a moment, i.e. Yd=0. Then, the all-decisive question reduces to:
Which of the two macroeconomic sectoral balances equations is true, i.e. materially/formally consistent?
(a) (I−S)+(G−T)+(X−M)=0
(b) (I−S)+(G−T)+(X−M)−Q=0
Let us go one step further and simplify by taking government and foreign trade out of the picture, i.e. G, T, X, M = 0.
Then we have
(a) (I−S)=0 or I=S,
(b) (I−S)−Q=0 or I−S=Q.
I=S is provably false since Keynes. So, all I=S/IS-LM models are false from Hicks onward to Krugman and beyond.#2, #3, #4
Economists have not realized this to this day. Neither the Nobel laureate Paul Krugman, nor the John Bates Clark Award winner Emi Nakamura, nor Lord Meghnad Desai, nor Professor Barkley Rosser, nor the rest of the fake heroes.
Economics is proto-scientific garbage to this day because economists are too stupid for the elementary mathematics that underlies macroeconomics.
Time to give these scientifically incompetent folks a dishonorable discharge and to make economics, after 200+ years of capture by stupid/corrupt agenda pushers a.k.a. useful political idiots, a science worthy of the title.
#1 The Common Error of Common Sense: An Essential Rectification of the Accounting Approach
#2 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#3 Wikipedia and the promotion of economists’ idiotism (II)
#4 Rectification of MMT macro accounting
***
REPLY to Barkley Rosser on May 5You say: “I am sorry, but I am not gong to bother ‘intepreting’ Egmont. He does seem to have lost it calling you an ‘asshole.’ He is not usually that offensive.”
Indeed, but you are:
.........................................................................................................
rosserjb@jmu.edu said...
Anonymous Asshole,
Maybe you did not get it. If you start using a name, even if it is one that is made up, I shall stop "using profance language" in regard to you. As it is, I have already made it clear that I have nothing but utter contempt for people who lecture me on anything while identifying themselves as "Anonymous." Get it, asshole?
Oh, and few of my atudents come here, but those that do will probably accept how I am treating you. I do not speak this way in classes, where I do not deal with people lecturing me while hiding behind a veil of anonymity.
So now you can go and repeately fuck yourself until your bottom falls off. Have a nice day!
October 7, 2018 at 5:42 PM
.........................................................................................................
***
REPLY to Anonymous on May 5You say: “Right, I am surely too foolish and ignorant to understand your writing, other than the uncontrollable anger, so I will never bother to try again. (You are scary.) Bye, bye.”
What do you not understand?
(i) Barkley Rosser is a stupid/corrupt academic economist.
(ii) Barkley Rosser is not some unique lone nut exception, but as representative economist, part of a tight-knit institutional network of political economics (= agenda-pushing) that has overgrown and stifled theoretical economics (= science).
(iii) All this is common knowledge: “Veblen’s first job was at the University of Chicago, the university bought and paid for by John D. Rockefeller the classic robber baron, and leader of the leisure class. Rockefeller called the university ‘the best investment’ he ever made, since he intended to use it to advance the interests of his class and suppress opposition.”#1
(iv) What holds for Chicago can, with some degree of confidence, be generalized for the majority of Faculties of Business and Economics and the institutional superstructure from the ASSA Annual Meetings to the publishing houses.
(v) Accordingly, the purpose of economic journals and the peer-review process is not the promotion and dissemination of scientific knowledge as it is in the genuine sciences, but attention/perception management, gatekeeping, and selection/promotion/positioning of future opinion leaders.
(vi) Prizes like the economics Nobel or the John Bates Clark Award are part and parcel of establishing scientific reputation and authority. These are tried and tested instruments of public relations/propaganda and have no scientific significance whatsoever.
(vii) Economics is a fake science beginning with economic textbooks#2 and ending with the faux Nobel.#3
(viii) Academic economics ― orthodox and heterodox, that is ― is beyond repair or reform or hope or rejuvenation; it can only be burnt to the ground like a termite-infested shack.
(ix) Needless to emphasize that (viii) is a metaphor for perplexed and clueless non-economists who have no chance of figuring out the actual state of economics and what the methodological term Paradigm Shift means in practice.
(x) Needless to emphasize that the current inhabitants of the rotten shack with the pretty scientific facade ― the retarded heirs of Adam Smith/Karl Marx ― are retired in a timely manner with all the academic honors.
There is nothing to fear for Barkley Rosser and trolls like you except perhaps that you will eventually be buried at the Flat-Earth-Cemetery in the section for political clowns.
#1 Veblen’s insights come back to haunt us
#2 To this day, economists have produced NOT ONE textbook that satisfies scientific standards
#3 The real problem with the economics Nobel
***
REPLY to Barkley Rosser on May 6Just answer the simple scientific question, which of the two macroeconomic sectoral balances equations is true, i.e., materially/formally consistent?
(a) (I−S)+(G−T)+(X−M)=0
(b) (I−S)+(G−T)+(X−M)−(Q−Yd)=0
***
REPLY to Barkley Rosser on May 7You answer: “Depends on how you define and measure the variables, Egmont, obviously. And these variables have been defined and measured differently at different times by different entrities. So, they can both be true or not true depending.”
This is the Humpty Dumpty Fallacy,#1 the Pavlovian reflex of all swampies.#2 Popper called it an immunizing stratagem. #3
Science is binary true/false with NOTHING in between. Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). #4 The swamp is the habitat of what Feynman called cargo cult scientists.#5
The correct answer to the question, which of the two macroeconomic sectoral balances equations, i.e., (a) (I−S)+(G−T)+(X−M)=0 or (b) (I−S)+(G−T)+(X−M)−(Q−Yd)=0, is true is unequivocal, and demonstrably (b). All variables in (a) and (b) are identical except for Q = macroeconomic profit and Yd = distributed profit. Eq. (a) lacks these two variables altogether, and because of this, it is FALSE. This means, in turn, that both orthodox and heterodox macroeconomics are FALSE. So, economics is refuted on all counts.
As a professional economist at the age limit you have never known and still do not know the scientifically correct answer. It is pretty obvious that you have always been a fake scientist. This, though, was not a disadvantage, rather the opposite, because economics has always been a fake science.#6
Because economics is a fake science, the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel is a fraud. Same for the John Bates Clark Award. Time to drain the swamp.#7
#1 Humpty Dumpty is back again
#2 And the answer is NCND ― economics after 200+ years of Glomarization
#3 Opinion, conversation, interpretation, blather: the economist’s major immunizing stratagems
#4 Lousy scientists
#5 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#6 Economics: The greatest scientific fraud in modern times
#7 Enough! Economists, retire now!
***
REPLY to Barkley Rosser on May 8You say: “Yes, Egmont, we have seen you previously declare that taking account of retained earnings, what your petty equation does, is the most supremely important thing in economics. It is not remotely. It is an utterly trivial item that gets taken account of in current accounting practices.”
Yes, Barkley Rosser, distributed profits appear in National Accounting.#1 This, though, is NOT the point. So let us take distributed profits Yd out of the picture for a moment, i.e. Yd=0. Then, the all-decisive question reduces to:
Which of the two macroeconomic sectoral balances equations is true, i.e. materially/formally consistent?
(a) (I−S)+(G−T)+(X−M)=0
(b) (I−S)+(G−T)+(X−M)−Q=0
Let us go one step further and simplify by taking government and foreign trade out of the picture, i.e. G, T, X, M = 0.
Then we have
(a) (I−S)=0 or I=S,
(b) (I−S)−Q=0 or I−S=Q.
I=S is provably false since Keynes. So, all I=S/IS-LM models are false from Hicks onward to Krugman and beyond.#2, #3, #4
Economists have not realized this to this day. Neither the Nobel laureate Paul Krugman, nor the John Bates Clark Award winner Emi Nakamura, nor Lord Meghnad Desai, nor Professor Barkley Rosser, nor the rest of the fake heroes.
Economics is proto-scientific garbage to this day because economists are too stupid for the elementary mathematics that underlies macroeconomics.
Time to give these scientifically incompetent folks a dishonorable discharge and to make economics, after 200+ years of capture by stupid/corrupt agenda pushers a.k.a. useful political idiots, a science worthy of the title.
#1 The Common Error of Common Sense: An Essential Rectification of the Accounting Approach
#2 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#3 Wikipedia and the promotion of economists’ idiotism (II)
#4 Rectification of MMT macro accounting
***
AXEC172
May 2, 2019
The not so funny MMT vs Neoliberalism slapstick
Comment on Edward Harrison/Tom Hickey on ‘Hippie punching the MMT crowd’
Blog-Reference
Tom Hickey summarizes: “This is key to neoliberalism, which is a political theory based on economics that seeks both to enable rent extraction and to justify rent-seeking behavior, since economic rent is the primary way that capitalism transfers wealth from the productive classes to the ownership class that produces nothing of real value.”
Tom Hickey correctly observes that neoliberalism “is a political theory based on economics”. He forgets to mention that the underlying economic theory is provably false, i.e. materially/formally inconsistent. So neoliberalism never has been anything else than political agenda pushing in the cloak of science. The problem with neoliberalism is not so much that it is a fraud but that it abuses and corrupts science. To this day, economics is not a science because economists are too stupid/corrupt for science.#1, #2
Tom Hickey is wrong by maintaining that “economic rent is the primary way that capitalism transfers wealth from the productive classes to the ownership class”. First of all, he does not know what profit/rent is.#3 Accordingly, he does not realize that MMT actually promotes the biggest transfer of financial wealth in all of history.
The macroeconomic Profit Law implicates for the relationship between the business sector and the government sector Public Deficit = Private Profit. So, roughly speaking, the Oligarchy’s financial wealth and public debt grow in lockstep. In the final analysis, the Oligarchy’s financial wealth is roughly equal to accumulated Public Debt with WeThePeople as ultimate bag holders (currently $22 trillion).
So, what Tom Hickey accuses neoliberalism of is exactly what MMTers are doing on an even larger scale. The whole MMT vs Neoliberalism debate is a bad joke of stupid/corrupt economists at the expense of WeThePeople.#4
Egmont Kakarot-Handtke
#1 Macroeconomics: Economists are too stupid for science
#2 Still beyond the reach of economists: The Holy Grail of Science
#3 When Ricardo Saw Profit, He Called It Rent: On the Vice of Parochial Realism
#4 For the big picture see cross-references Political Economics/Stupidity/Corruption
Blog-Reference
Tom Hickey summarizes: “This is key to neoliberalism, which is a political theory based on economics that seeks both to enable rent extraction and to justify rent-seeking behavior, since economic rent is the primary way that capitalism transfers wealth from the productive classes to the ownership class that produces nothing of real value.”
Tom Hickey correctly observes that neoliberalism “is a political theory based on economics”. He forgets to mention that the underlying economic theory is provably false, i.e. materially/formally inconsistent. So neoliberalism never has been anything else than political agenda pushing in the cloak of science. The problem with neoliberalism is not so much that it is a fraud but that it abuses and corrupts science. To this day, economics is not a science because economists are too stupid/corrupt for science.#1, #2
Tom Hickey is wrong by maintaining that “economic rent is the primary way that capitalism transfers wealth from the productive classes to the ownership class”. First of all, he does not know what profit/rent is.#3 Accordingly, he does not realize that MMT actually promotes the biggest transfer of financial wealth in all of history.
The macroeconomic Profit Law implicates for the relationship between the business sector and the government sector Public Deficit = Private Profit. So, roughly speaking, the Oligarchy’s financial wealth and public debt grow in lockstep. In the final analysis, the Oligarchy’s financial wealth is roughly equal to accumulated Public Debt with WeThePeople as ultimate bag holders (currently $22 trillion).
So, what Tom Hickey accuses neoliberalism of is exactly what MMTers are doing on an even larger scale. The whole MMT vs Neoliberalism debate is a bad joke of stupid/corrupt economists at the expense of WeThePeople.#4
Egmont Kakarot-Handtke
#1 Macroeconomics: Economists are too stupid for science
#2 Still beyond the reach of economists: The Holy Grail of Science
#3 When Ricardo Saw Profit, He Called It Rent: On the Vice of Parochial Realism
#4 For the big picture see cross-references Political Economics/Stupidity/Corruption
May 1, 2019
Mad but true: 200+ years after Adam Smith economists still have no idea what profit is
Comment on Bill Mitchell on ‘Marxists getting all tied up’
Blog-Reference and Blog-Reference and Blog-Reference on May 2
Bill Mitchell derides neoclassical economists: “I was attracted to the writing of Karl Marx was because I considered his brilliant discussion of the differences between the superficial relationships we see in the market (so-called ‘exchange relations’) and the essential relationships that tie worker to the capitalist and create the conditions for surplus value production. A student studying neoclassical economics stays forever at the exchange relations level and can never appreciate the origins of profit. They think that somehow profit is created in the market via exchange of goods and services.”
Bill Mitchell claims that he knows how capitalism works: “A defining feature of capitalism is that the capitalist owns the productive means and the worker, while free to choose which capitalist to work for, has to work to survive. Survival requires the worker to agree to work for, say 8 hours to get the wage which might be equivalent to 2 hours of production. This is the wage form. It was a brilliant exegesis by Marx that provides a penetrating insight into the dynamics of our systems and continues to resonate. It is why class (in Marx’s terms) has to be at the forefront of the analysis. Nothing in MMT denies that status!”
Bill Mitchell is right, neoclassical economists have no idea about the origins of profit. However, neither do Marxists nor MMTers nor Bill Mitchell himself. As the Palgrave Dictionary has it: “A satisfactory theory of profits is still elusive.” (Desai, 2008)#1, #2, #3
The present generation of economists (Walrasians, Keynesians, Marxians, Austrians, MMTers) is lost and has to be written off. The following explanation of profit serves as a starting point for a more competent new generation. #4, #5
The elementary production-consumption economy is defined with this set of macroeconomic axioms: (A0) 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) Ec=PX consumption expenditure Ec is equal to price P times quantity bought/sold X.
Under the conditions of market-clearing X=O and budget-balancing Ec=Yw in each period, the price as the dependent variable is given by P=W/R (1a). The price is determined by the wage rate W, which takes the role of the nominal numéraire, and the productivity R.
The macroeconomic Law of Supply and Demand (1a) implies W/P=R (1b), i.e., the real wage is always equal to the productivity, no matter how the wage rate W is set or how long the individual or aggregate working time L is. The workers get the whole product O.
The focus is here on the nominal/monetary balances. For the time being, real balances are excluded, i.e., it holds X=O. The condition of budget balancing, i.e., Ec=Yw, is now skipped. The monetary saving/dissaving of the household sector is defined as S≡Yw−Ec. The monetary profit/loss of the business sector is defined as Q≡Ec−Yw. Ergo Q≡−S.
The balances add up to zero. The mirror image of household sector saving S is business sector loss −Q. The mirror image of household sector dissaving (-S) is business sector profit Q. Q≡−S is the elementary version of the macroeconomic Profit Law.
The Profit Law becomes progressively more complex#6 and summarizes the interactions between household, business, and government sectors at some intermediary point as Q=(I−S)+(G−T), which reduces to Q≡(G−T), i.e., Public Deficit = Private Profit.
Conclusions: In the most elementary case of a production-consumption economy, macroeconomic profit does NOT depend on labor time or the wage rate or on exploitation or on market power or on innovation, or risk-taking but alone on the deficit-spending of the household sector. The MMT policy of government deficit-spending/money-creation pushes overall profit and benefits the Oligarchy.#7
Because Bill Mitchell and the rest of the MMT crowd do not understand what profit is, the MMT approach as a whole, including the personage consisting of scientifically incompetent academics, stupid social media trolls, corrupt political promoters, journalistic propagandists, Marxist fellow travelers, and open/hidden oligarchic sponsors, has to be expelled from the sciences.
Egmont Kakarot-Handtke
#1 Profit for Marxists
#2 Profit and the collective failure of economists
#3 For details of the big picture, see cross-references Profit
#4 True macrofoundations: the reset of economics
#5 The canonical macroeconomic model
#6 AXEC143d Profit Law (with increasing complexity) and Balances Equation
Blog-Reference and Blog-Reference and Blog-Reference on May 2
Bill Mitchell derides neoclassical economists: “I was attracted to the writing of Karl Marx was because I considered his brilliant discussion of the differences between the superficial relationships we see in the market (so-called ‘exchange relations’) and the essential relationships that tie worker to the capitalist and create the conditions for surplus value production. A student studying neoclassical economics stays forever at the exchange relations level and can never appreciate the origins of profit. They think that somehow profit is created in the market via exchange of goods and services.”
Bill Mitchell claims that he knows how capitalism works: “A defining feature of capitalism is that the capitalist owns the productive means and the worker, while free to choose which capitalist to work for, has to work to survive. Survival requires the worker to agree to work for, say 8 hours to get the wage which might be equivalent to 2 hours of production. This is the wage form. It was a brilliant exegesis by Marx that provides a penetrating insight into the dynamics of our systems and continues to resonate. It is why class (in Marx’s terms) has to be at the forefront of the analysis. Nothing in MMT denies that status!”
Bill Mitchell is right, neoclassical economists have no idea about the origins of profit. However, neither do Marxists nor MMTers nor Bill Mitchell himself. As the Palgrave Dictionary has it: “A satisfactory theory of profits is still elusive.” (Desai, 2008)#1, #2, #3
The present generation of economists (Walrasians, Keynesians, Marxians, Austrians, MMTers) is lost and has to be written off. The following explanation of profit serves as a starting point for a more competent new generation. #4, #5
The elementary production-consumption economy is defined with this set of macroeconomic axioms: (A0) 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) Ec=PX consumption expenditure Ec is equal to price P times quantity bought/sold X.
Under the conditions of market-clearing X=O and budget-balancing Ec=Yw in each period, the price as the dependent variable is given by P=W/R (1a). The price is determined by the wage rate W, which takes the role of the nominal numéraire, and the productivity R.
The macroeconomic Law of Supply and Demand (1a) implies W/P=R (1b), i.e., the real wage is always equal to the productivity, no matter how the wage rate W is set or how long the individual or aggregate working time L is. The workers get the whole product O.
The focus is here on the nominal/monetary balances. For the time being, real balances are excluded, i.e., it holds X=O. The condition of budget balancing, i.e., Ec=Yw, is now skipped. The monetary saving/dissaving of the household sector is defined as S≡Yw−Ec. The monetary profit/loss of the business sector is defined as Q≡Ec−Yw. Ergo Q≡−S.
The balances add up to zero. The mirror image of household sector saving S is business sector loss −Q. The mirror image of household sector dissaving (-S) is business sector profit Q. Q≡−S is the elementary version of the macroeconomic Profit Law.
The Profit Law becomes progressively more complex#6 and summarizes the interactions between household, business, and government sectors at some intermediary point as Q=(I−S)+(G−T), which reduces to Q≡(G−T), i.e., Public Deficit = Private Profit.
Conclusions: In the most elementary case of a production-consumption economy, macroeconomic profit does NOT depend on labor time or the wage rate or on exploitation or on market power or on innovation, or risk-taking but alone on the deficit-spending of the household sector. The MMT policy of government deficit-spending/money-creation pushes overall profit and benefits the Oligarchy.#7
Because Bill Mitchell and the rest of the MMT crowd do not understand what profit is, the MMT approach as a whole, including the personage consisting of scientifically incompetent academics, stupid social media trolls, corrupt political promoters, journalistic propagandists, Marxist fellow travelers, and open/hidden oligarchic sponsors, has to be expelled from the sciences.
Egmont Kakarot-Handtke
#1 Profit for Marxists
#2 Profit and the collective failure of economists
#3 For details of the big picture, see cross-references Profit
#4 True macrofoundations: the reset of economics
#5 The canonical macroeconomic model
#6 AXEC143d Profit Law (with increasing complexity) and Balances Equation
#7 Dear idiots, it is deficit spending that creates the distribution people complain about
Related 'Socialism and scientific incompetence' and 'If we only had classes' and 'Profit: after 200+ years still elusive' and 'Capitalism, poverty, exploitation, and cross-over exploitation' and 'No exploitation, no classes' and 'Ricardo and the invention of class war' and 'Wikipedia, economics, scientific knowledge, or political agenda pushing?' and Ch. 13, The indelible scientific disgrace of economics, in Sovereign Economics.
Related 'Socialism and scientific incompetence' and 'If we only had classes' and 'Profit: after 200+ years still elusive' and 'Capitalism, poverty, exploitation, and cross-over exploitation' and 'No exploitation, no classes' and 'Ricardo and the invention of class war' and 'Wikipedia, economics, scientific knowledge, or political agenda pushing?' and Ch. 13, The indelible scientific disgrace of economics, in Sovereign Economics.
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