April 27, 2016

Heterodox schizo

Comment on Asad Zaman on ‘The Veil of Money’


In his post, The Education of an Economist Asad Zaman argues: “I don't support having a ‘science’ of economics — I have argued in my paper on Deification of Science that scientific methods cannot be applied to study of human societies because we have free will, agency, can choose our destinies, and our actions are not subject to mathematical laws.”

Now he accuses standard economics of NOT being a science: “Many leading economists have come to agree with Nobel Laureate Stiglitz that modern economic theory represents the triumph of ideology over science.”

This is manifest methodological schizo. The actual fact of the matter is that NEITHER Orthodoxy NOR Heterodoxy satisfies the well-defined criteria of science, i.e. formal and material consistency.

So, we have the following situation with regard to the Quantity Theory:
• Keynes’ critique of the QTM, the neutrality of money, in particular, is valid.
• Keynes’ own theory of money is provably false (2011).

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, and 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.

Neither orthodox nor heterodox monetary theory satisfies scientific standards. BOTH Friedman and Keynes were political economists, that is, agenda pushers but NOT scientists. The same holds for Stiglitz and, of course, for the outspoken opponent of the ‘Deification of Science’ Asad Zaman.

Economics is a science without scientists. Something has gone badly wrong.

Egmont Kakarot-Handtke

Kakarot-Handtke, E. (2011). Reconstructing the Quantity Theory (I). SSRN Working Paper Series, 1895268: 1–28. URL

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