June 11, 2016

Economics: A cargo cult science from the very beginning

Comment on Noah Smith on ‘Republic of Science or Empire of Ideology?’


You complain about the influence of Koch money on economics and conclude: “The end result could be two econ professions — a dispassionate, truth-seeking one occupying the upper levels of the ivory tower, at MIT and Princeton and Stanford, doing hard math things and careful honest data work that slowly trickles out through traditional media channels ... and a second econ profession in the lower-ranked schools, doing a slightly fancier version of the kind of political advocacy now done by conservative think tanks.”

The fault in your argument is that it suggests that what goes on at the upper level of the ivory tower is science. It is not. Economics has never risen above the level of a proto-science. This is the core problem. Compared to this, the fact that part of the scientific garbage produced by economists has been sponsored by millionaires and billionaires is a minor point.

First of all, it is of the 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.

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 scientific standards.

The fact of the matter is that theoretical economics has from the very beginning been captured by the agenda pushers of political economics. Smith and Mill fought for Liberalism, Ricardo, Marx, and Keynes were agenda pushers, so were Hayek and Friedman, and so are Krugman and Varoufakis. Not one of the political economists and agenda pushers from Smith onward will in the final assessment be accepted as a scientist.

Political economists of all stripes are characterized by four common traits
(i) They are mainly occupied with sociology, psychology, anthropology, political science, history, law/institutions, evolution theory, social philosophy, etcetera. That is, they miss the essentials of economics proper.#1
(ii) They use theoretical economics as a means/support for their agenda. By this, they abuse science unknowingly or knowingly.
(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.#2
(iv) They have no idea about how the actual economy works.#3

It is not decisive what the political agenda is: ALL of the political economics is cargo cult science (Feynman’s term). Political economics has not produced anything of real scientific value since Adam Smith. After more than 200 years of dilettantism and failure, there is no place for the political economists of Walrasianism, Keynesianism, Marxianism, and Austrianism among the sciences.#4

The rules of conduct of the scientific community demand that the actual state of economics is at all times unambiguously communicated to the general public. This implies, as the VERY FIRST step, that the word sciences is deleted from the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.

Egmont Kakarot-Handtke

#1 Economists’ three-layered scientific incompetence
#2 On economists’ stupidity
#3 How the intelligent non-economist can refute every economist hands down
#4 For details of the big picture see cross-references Political Economics/Stupidity/Corruption