December 30, 2014

Think faster

Comment on Lars Syll on 'Mainstream macroeconomics distorts our understanding of economic reality'

You write: “Polanyi and Keynes both read the real world first and then used explanatory descriptive terms that had tangible (asset based) terms.”

Being social scientists, Polanyi and Keynes looked at the world and then gave a description. This is what most people understand as realism: it is commonsensical and convincing. Unfortunately, this kind of realism leads straight to Flat-earth theories.

J. S. Mill, still the greatest methodologist among economists, said about the real-world-readers: “People fancied they saw the sun rise and set, the stars revolve in circles round the pole. We now know that they saw no such thing; what they really saw was a set of appearances, equally reconcileable with the theory they held and with a totally different one. It seems strange that such an instance as this, ..., should not have opened the eyes of the bigots of common sense, and inspired them with a more modest distrust of the competency of mere ignorance to judge the conclusions of cultivated thought.” (Mill, 2006, p. 783)

Marx, too, looked at the world and then gave a description. His description of the dynamics of the capitalist system is far superior to General Equilibrium Theory. However, Marx was quite explicit that science goes beyond description: “That in their appearances things are often presented in an inverted way is something fairly familiar in every science, apart from political economy.” (Marx, 1990, p. 677)

Mill and Marx knew what science was all about seeing through appearances. Keynes, too, tried but did not succeed.

Bruce E. Woych as an outspoken 'bigot of common sense' has some way to go until he can contribute something useful to a discussion about the “greater universal question of what “ECONOMY” substantively and universally entails over and above the business model?”

The greater universal question entails in any case that the representative economist can tell the difference between profit and income. Economists are late by more than two hundred years.

Egmont Kakarot-Handtke

Marx, K. (1990). Capital, Vol. I. London: Penguin Classics.
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.