Economists owe the world the true economic theory, that is, a theory that satisfies the scientific standards of material and formal consistency and that explains how the economy works.
Economists have not delivered. But they have delivered a lot of reasons why they have not delivered. Complexity is number one. Hypotheses-testing-is-not-possible is number two. Duhem-Quine comes next. Very popular is also the solidarity of ignorance: “There is no objective truth in economics,” “Nobody understands the whole picture. Everybody gets a piece of it.” (Roosevelt)
Here is the mother of all excuses: “Economics is a strange sort of discipline. The booby traps I mentioned often make it sound as if it is all just a matter of opinion. That is not so. Economics is not a Science with a capital S. It lacks the experimental method as a way of testing hypotheses. . . . There are always differences of opinion at the cutting edge of a science, . . . . But they last longer in economics . . . and there are reasons for that. As already mentioned, rival theories cannot be put to an experimental test. All there is to observe is history, and history does not conduct experiments: too many things are always happening at once. The inferences that can be made from history are always uncertain, always disputable, . . . You can’t even count on a long and undisturbed run of history, because the “laws” of behavior change and evolve. Excuses, excuses. But the point is not to provide excuses.” (Solow, 1998, pp. x-xi)
When we turn to Heterodoxy things seem to get better at first, but then they become abysmal.
Tony Lawson has properly identified the methodological blunder of green cheese assumptionism. In short, it is inadmissible to put assumptions like optimization, equilibrium, decreasing returns, perfect competition etcetera into the premises. This mistake is known as petitio principii and J. S. Mill, the founder of economic methodology, dealt with it at length in his System of Logic (see also 2014).
The crucial point is that standard economics is based on behavioral axioms (McKenzie, 2008) and this is not a solid enough foundation: “. . . if we wish to place economic science upon a solid basis, we must make it completely independent of psychological assumptions and philosophical hypotheses.” (Slutzky, cited in Mirowski, 1995, p. 362)
Axel Leijonhufvud sees this quite clearly: “Our axioms are, after all, a good deal shakier than Euclid’s.” Indeed, but then comes the Great Heterodox Methodological Horror.
Instead of replacing the shaky behavioral axioms with something objective and solid, Heterodoxy rejects the axiomatic-deductive method (2012). Does it really come as a surprise that since Lawson has written about open systems Heterodoxy has not produced much scientific value? Instead, it has become the most outspoken proponent of the pluralism of wish-wash.
Note that the profit theory of Keynes, Kalecki, or Keen, for example, is as far away from reality as any mainstream profit theory, “... surely, therefore, they fail to capture the essence of a capitalist market economy.” (Obrinsky, 1981, p. 495)
Each paradigm stands or falls with its premises. For the scientific beginners among economists it is all in Wikipedia: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.” (Aristotle, Analytica)
For the correct axiomatic foundations of the open market system see (2014). Seventeen years of methodological distortion are over for Lars Syll ― thank Heaven and Euclid.
Kakarot-Handtke, E. (2012). Crisis and Methodology: Some Heterodox Misunderstandings. SSRN Working Paper Series, 2083519: 1–22. URL
Kakarot-Handtke, E. (2014a). Economics for Economists. SSRN Working Paper Series, 2517242: 1–29. URL
Kakarot-Handtke, E. (2014b). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL
McKenzie, L. W. (2008). General Equilibrium. In S. N. Durlauf, and L. E. Blume (Eds.), The New Palgrave Dictionary of Economics Online, 1–18. Palgrave Macmillan, 2nd edition. URL
Mirowski, P. (1995). More Heat than Light. Cambridge: Cambridge University Press.
Obrinsky, M. (1981). The Profit Prophets. Journal of Post Keynesian Economics, 3(4): 491–502. URL
Solow, R. M. (1998). Foreword, volume William Breit and Roger L. Ranson: The Academic Scribblers. Princeton: Princeton University Press, 3rd edition.