July 3, 2013

The moral of the story (I)

Comment on Edward Fullbrook on 'Dr. X'


ad #31

Here is the acknowledgment: “... theorists all over the world have become aware that anything based on this mock-up is unlikely to fly since it neglects some crucial aspects of the world, the recognition of which will force some drastic re-designing.” (Hahn, 1981, p. 1036)

This acknowledgment, however, does not help much: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug, 1998, p. 703)

There is no way around it, what is needed is a convincing alternative.

Heterodoxy makes a good and indispensable job at debunking. However, there are two forms of debunking:
(a) debunking a theory
(b) debunking a person or a group.

We certainly agree that (b) is inadmissible in scientific discourse. With conspiracy theories and moralizing (post #33, #35 and others) Heterodoxy debunks itself. In addition, economics is not mainly about the job problems of economists.

ad # 30

Theory entails the ambition to explain how the economy works including all phenomena like price, real wage, distribution, full employment, growth, depression, inflation/deflation, financial meltdown, etc. In this sense, we speak of Classical, Marxian, Walrasian, or Keynesian theory. To explain correctly why the consumer buys strawberry yogurt instead of raspberry yogurt is certainly desirable but no alternative to neoclassical theory. A heap of correct partial models is not a theory.

“The most intellectually exciting question of our subject remains: is it true that the pursuit of private interest produces not chaos but coherence, and if so, how is it done?” (Hahn, 1984, p. 102)

“Even if we cannot prove a theory or model is true, at the very minimum to be true it must be logically consistent.” (Boland, 2003, p. 24)

Egmont Kakarot-Handtke

Blaug, M. (1998). Economic Theory in Retrospect. Cambridge: Cambridge University Press, 5th edition.
Hahn, F. H. (1981). Review: A Neoclassical Analysis of Macroeconomic Policy. Economic Journal, 91(364): 1036–1039. URL
Hahn, F. H. (1984). Equilibrium and Macroeconomics. Cambridge: MIT Press.