April 26, 2016

The economist as storyteller (I)

Comment on Chris Dillow on ‘Why not full employment?’

Blog-Reference and Blog-Reference on Apr 26 and Blog-Reference on Apr 28 adapted to context

The average person dislikes an objective explanation (e.g. the thunderbolt is an electromagnetic phenomenon subject to physical laws) and likes a subjective explanation (e.g. Zeus threw the thunderbolt because he was angry/vengeful/authoritarian). The scientific explanation takes the form of a theory, the non-scientific explanation takes the form of a narrative. Almost all societal communication consists of storytelling/blather/ wish-wash/truisms, only a tiny part has scientific content.

Economics claims to be a science, yet has never risen above the level of storytelling. Accordingly, the SUBJECTIVE explanation of unemployment (UE) takes the following forms.

Psychologism: the unemployed actually enjoy UE, are indifferent, have resigned, suffer. Darwinism: UE’s are unfit, unqualified, lack motivation, are beyond help. Moral hazard: UE is the result of a wrong incentive structure or of perverted rewards/punishments, UE’s game the system. Mind reading: leisure is rationally preferred by UE’s over work at the given wage. Moralizing: the UE’s deserve their fate. Blaming: UE is a self-inflicted blow-back of irrational behavior, i.e. of sticky wages, strikes, shirking. Historicism: today’s unemployment is the result of known adverse external shocks and identifiable wrongheaded measures of DEMs/REPs/FED/GOV since WWII. Sociologism: the UE’s have not enough leverage for changes in their favor; they are brainwashed into acceptance of everything. UE is deliberately created by capitalists/oligarchs/one-percenters/government as a means of social control. UE’s are the losers in a rigged power-play.

Within this tiny intellectual box of folk psychology, folk sociology, folk history, and folk politics economic storytelling has taken place since Adam Smith: “He ... disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along.” (Schumpeter)

The time travel fantasies about Harlem, Haight-Ashbury, Paris, or Surbiton above show that economics stagnates since A. Smith. Clearly, from retarded storytellers, no solution to any economic problem is ever to be expected.

While dabbling in the so-called social sciences, economists overlooked that economics is a systems science and that it is their very task to explain how the actual monetary economy works. To this day, economists do not even understand what profit is. And it should be obvious that they will never find it out by second-guessing and interpreting and understanding human behavior. This is NOT how science works. What is currently discussed among economists as employment theory is sitcom garbage.

Storytelling is not prohibited, of course, neither is the pluralism of any number of false theories, but there is no place for storytellers in the sciences. So, economists have to leave them for good now because of proven scientific incompetence for more than 200 years.

Egmont Kakarot-Handtke

Immediately preceding Why do workers not tar and feather economists?

For details about the axiomatically correct employment theory see cross-references Employment.