December 29, 2015

Economics is NOT a science of behavior (III)

Comment on Hoff/Stiglitz on ‘Striving for Balance in Economics: Towards a Theory of the Social Determination of Behavior’


Karla Hoff and Joe Stiglitz have not yet realized that economics is not a science of behavior (Hudík, 2011). What they are talking about belongs entirely to the realm of sociology, psychology, anthropology, political science, history, etcetera, and what they are advertising is a new version of psycho-sociological dilettantism.

This is remarkable because after more than 200 years of PsySoc economists still have no idea of how the market economy works. It is common knowledge that all profit theories are defective. As the Palgrave Dictionary sums up “A satisfactory theory of profits is still elusive.” (Desai, 2008, p. 10)

This means, to this day neither the Walrasian, nor the Keynesian, nor the Marxian, nor the Austrian sect can tell the difference between income and profit. Hence, they fail to capture the essence of the market economy. This is not exactly a noteworthy scientific achievement of the economics profession.

Does the world expect economists to find out how people behave? No, this is the proper job of psychology, sociology, anthropology, etcetera. Does the world expect economists to figure out what profit is? Yes, of course, no philosopher, psychologist, biologist, or sociologist will ever try to figure this out.

Have economists done their proper job? No. Do Hoff/Stiglitz know what profit is? No. Does a ‘Theory of the Social Determinants of Behavior’ help to find out what profit is? No.

It is not the task of economists to dabble in the so-called social sciences. The subject matter of economics is the economy. Economics is a systems science and Hoff/Stiglitz have not realized that they are still caught in the wrong paradigm.

Egmont Kakarot-Handtke

Desai, M. (2008). Profit and Profit Theory. In S. N. Durlauf, and L. E. Blume (Eds.), The New Palgrave Dictionary of Economics Online, 1–11. Palgrave Macmillan, 2nd edition. URL
Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.

Immediately following Still on the wrong track

Related 'The existence of economic laws and the nonexistence of behavioral laws' and 'The happy end of the social science delusion' and 'From PsySoc to SysHum' and 'The Science-of-Man fallacy' and 'PsySoc — the scourge of economics' and 'Methodological retards'.

For details of the big picture see cross-references Not a Science of Behavior.