October 12, 2015

The proto-scientific state of economics

Comment on ‘The fragile state of the world economy’


Financial fragility is real but in the last instance only a surface phenomenon. Even if the financial sector's institutional setup were perfect economic crises would occur. The fact is that the eventual breakdown is built into the monetary economy (2014).

This insight is beyond the horizon of the representative economist. Standard economics is built upon the concept of equilibrium which is a NONENTITY. Because theoretical economics is built upon false premises it has nothing to offer in the way of scientifically valid policy guidance.

“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)

Both Orthodoxy and Heterodoxy are caught in the proto-scientific state (2015). For the actual situation, this means that QE is not much more than clueless hand-waving.

Egmont Kakarot-Handtke

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
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge: MIT Press.

Related 'Time to make economics a science' and 'How to be a good scientist'.