June 5, 2015


Comment on Lars Syll on ‘Ditch ‘ceteris paribus’!’


Lars Syll writes: “When applying deductivist thinking to economics, neoclassical economists usually set up “as if” models based on a set of tight axiomatic assumptions from which consistent and precise inferences are made. The beauty of this procedure is of course that if the axiomatic premises are true, the conclusions necessarily follow.” (See intro)

Exactly so.  Now, it is not breaking news that the neoclassical premises are green-cheese assumptions. The neo-Walrasian approach takes, among other nonentities, constrained optimization and equilibrium into the premises (Weintraub, 1985, p. 147). Only for the representative economist, it comes as a surprise that the logical conclusions from these premises have never found a correspondence in reality. Yet, as we all know since J. S. Mill, this, and nothing else, is the point of the whole exercise.

“The ground of confidence in any concrete deductive science is not the à priori reasoning itself, but the accordance between its results and those of observation à posteriori.” (Mill, 2006, p. 896)

Reality is the final arbiter of the deductive method. Absolutely nothing has changed between the classical economist Mill and the modern physicist Feynman.

“It does not matter that moos and goos cannot appear in the guess. You can have as much junk in the guess as you like, provided that the consequences can be compared with experiment.” (Feynman, 1992, p. 164)

What the representative economist never understood is that his green-cheese assumptions have no testable consequences and therefore are inadmissible in the first place.

Alternatively, if it turns out that there is no accordance between ‘results and observation’ modus tollens applies, that is, one can be sure that at least one of the premises is false. This is the built-in error-correction mechanism that guarantees progress. The wrong premise has to be found and eliminated.

Having dealt long enough with the neoclassical approach it is obvious that all premises are false. Therefore, there remains but one consequence: all neoclassical premises have to be replaced. Debunking Orthodoxy is the easy part, to spell out the heterodox axiom set is the real task.

Let us face the facts: since Veblen's fundamental critique of Orthodoxy Heterodoxy has failed at this task. What is worse, many heterodox economists simply have no clue how to use the axiomatic-deductive method to their advantage.#1

The methiness of economics consists of two interlocked mistakes: (i) to spoil the deductive method with green-cheese assumptionism (= Orthodoxy) and (ii), not to apply it at all (= Heterodoxy).

Egmont Kakarot-Handtke

Feynman, R. P. (1992). The Character of Physical Law. London: Penguin.
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.
Weintraub, E. R. (1985). Joan Robinson’s Critique of Equilibrium: An Appraisal. American Economic Review, Papers and Proceedings, 75(2): 146–149. URL

#1 See the references to the discussions on this blog