August 6, 2015

The Hicks drive

Comment on Chris Dillow on ‘The Sad Death of Free Market Pessimism’


Let us call the economist's bad habit to nudge any question to the point of inconclusiveness, overload, nausea, or inconsequential pluralism of manifest contradictions the Hicks drive: “As far as I can make out, there are relevant and important senses in which all these statements are each of them right and each of them wrong.” (Hicks, 1939, p. 184)

To recall, science is about true/false and not about multi-senseism or anything-goes. Yet, economists are not single-mindedly focused on clear-cut answers, they are more like the Oxford dons of old: “... those ... Oxford dons ... whom any discovery that brought quietus to a vexed question would inevitably vex because it would end the fun of arguing around it and about it and over it.” (Peirce, 1931, 5.520)

So, the question was about the future of the market economy. What is the economist's answer? Yes, there have been optimists and pessimists in the history of economic thought, but now pessimism seems to have faded. Can one expect more than an opinion poll from economists?

The fact of the matter is that the profit theory is false since Adam Smith. This means that economists have no idea about how the market economy works (2015). If they had they would know for sure that the economy starts to break down as soon as private/public households start to redeem their debt (2014). It is the profit mechanism that determines the future of the market economy.

After more than 200 years, the representative economist cannot tell the difference between profit and income. Non-economists have some reason to worry about the brain death of economics.

Egmont Kakarot-Handtke

Hicks, J. R. (1939). Value and Capital. Oxford: Clarendon Press, 2nd edition.
Kakarot-Handtke, E. (2014). Mathematical Proof of the Breakdown of Capitalism. SSRN Working Paper Series, 2375578: 1–21. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Peirce, C. S. (1931). Collected Papers of Charles Sanders Peirce, Vol. I. Cambridge: Harvard University Press. URL

Relates to 'Yeah, it makes sense' and 'Corroboration and falsification' and 'Flight of ideas and the dead end of all econtalk' and 'From true/false to hardcore wrestling and back'