You say: “The libertarian worldview thus infects economics thoroughly. And it also means that much of economics is not scientific in the sense that it tries to understand aspects of reality, but is rather ideological in that it tries to advocate a particular way of organizing society.” (See intro)
Indeed, it is of utmost importance to distinguish between political and theoretical economics. The main differences are:
(i) The goal of political economics is to push an agenda, the goal of theoretical economics is to explain how the actual economy works.
(ii) In political economics anything goes; in theoretical economics, scientific standards are observed.
Theoretical economics has to be judged according to the criteria true/false and nothing else. The history of political economics, on the other hand, can be summarized as the perpetual violation of well-defined and crystal-clear scientific standards.
The fact of the matter is that theoretical economics has from the very beginning been dominated by the agenda pushers of political economics. Smith and Mill defined themselves as political and fought against the feudal order, Marx and Keynes were agenda pushers, so were Hayek and Friedman, and so are Krugman and Keen.
Political economists of all stripes are characterized by three common traits:
(i) They are mainly occupied with sociology, psychology, anthropology, political science, history, that is, with explaining reality by second-guessing the motives of agents. By consequence, they miss the essentials of economics proper, i.e. the objective systemic relations.
(ii) They use theoretical economics as a means/support for their agenda. By this, they abuse science.
(iii) As far as they have tried to underpin their agenda theoretically it can be rigorously demonstrated in each case that their approaches lack formal and material consistency.
It is not decisive what the political agenda is: all of political economics is worthless cargo cult science (Feynman).
Ask yourself: when Krugman supports the Democrats, when Wren-Lewis and Keen support Corbyn, when Varoufakis fights for democratizing the Eurozone, has this anything to do with scientific research? Just the contrary, as Marx well knew.
“In the domain of Political Economy, free scientific enquiry meets not merely the same enemies as in all other domains. The peculiar nature of the material it deals with, summons as foes into the field of battle the most violent, mean and malignant passions of the human breast, the Furies of private interest.” (1906, M.10)
In economics, it is even more important than in other disciplines to realize that politics and science do not go together. Heterodoxy has this choice: to fight Orthodoxy politically, i.e. to become/join/support a party, or to refute and replace Orthodoxy by the true economic theory.
There is nothing to choose between the ‘Libertarian’ Hayek and the ‘Statist’ Keynes: both were incompetent scientists and this holds for their followers until this very day.
Marx, K. (1906). Capital: A Critique of Political Economy, Vol. I. The Process of Capitalist Production. Library of Economics and Liberty. URL
If you want to go to Mars the precondition is that you get your physics right first. If you want to solve the problem of unemployment or poverty the precondition is that you get your economics right. It is as simple as that.
Economics is a laughing stock because it claims to know how overall welfare can be achieved while it is pretty obvious that already supply-demand-equilibrium is a logically defective construct.
Because the theory of the interaction of markets (known as general equilibrium theory) is false, the labor market theory is false by implication. That is, economists bear the intellectual responsibility for the socially devastating unemployment during the Great Depression and for the currently worsening unemployment/deflation situation.
Economics is a failed science and because of this, the best contribution to human welfare economists can make at the moment is to get out of political blather and to do proper science. They are late by more than 200 years.
See also The case for pure economics.