August 7, 2015

Worthwhile Canadian filibuster?

Comment on Nick Rowe on ‘On defining "recession"’


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, real science is about true/false and not about multiple senses or anything-goes. Economists as would-be scientists are known to be sloppy: “The truth is, most persons, not excepting professional economists, are satisfied with very hazy notions.” (Fisher, quoted in Mirowski, 1995, p. 86)

This goes some way to explain the failure of economics. “I think it is the lack of quite sharply defined concepts that the main difficulty lies, and not in any intrinsic difference between the fields of economics and other sciences.” (von Neumann, quoted in Mirowski, 2002, p. 146 fn. 49)

Of course, in most everyday situations there is not much use to quarrel over exact definitions. It is a bit different in the scientific context. In economics, in particular, haziness has two tangible merits. First: “By having a vague theory it is possible to get either result.” (Feynman, 1992, p. 159) and second: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman, 1992, p. 158)

Because it brings one on the safe side, vagueness, inconclusiveness, wish-wash are all elements of a conscious/unconscious survival strategy. “With enough fog emitted, almost anything becomes possible.” (Mirowski, 2013, p. 344)

This is why all half-wits, dilettantes, and shell game players applaud the silly Post-Keynesian slogan: “It is better to be roughly right than precisely wrong” while scientists subscribe to “It is best to be precisely right than roughly wrong.”

In economics, habitual intellectual sloppiness had disastrous consequences. Neither orthodox nor heterodox economists understand the two most important phenomena in the economic universe: profit and income (2014b; 2014a). This is like medieval physics before the elementary concepts force and mass was clearly defined and understood.

There seems to be complete ignorance among economists that they have nothing to offer in the way of a scientifically founded advice.

“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum, 1991, p. 30)

Of opinion, there has been always more than enough in economics. Because they cannot tell the difference between profit and income neither the proponents of the Walrasian nor of the Keynesian approach have the true theory that could help to fix a crisis or recession. In view of humongous intellectual messiness, whether economists can define recession makes no difference at all.

Egmont Kakarot-Handtke

Feynman, R. P. (1992). The Character of Physical Law. London: Penguin.
Hicks, J. R. (1939). Value and Capital. Oxford: Clarendon Press, 2nd edition.
Kakarot-Handtke, E. (2014a). Economics for Economists. SSRN Working Paper Series, 2517242: 1–29. URL
Kakarot-Handtke, E. (2014b). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Mirowski, P. (1995). More Heat than Light. Cambridge: Cambridge University Press.
Mirowski, P. (2002). Machine Dreams. Cambridge: Cambridge University Press.
Mirowski, P. (2013). Never Let a Serious Crisis Go to Waste. London, New York, NY: Verso.
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge, MA: MIT Press.