August 13, 2016

A heap of proto-scientific garbage

Comment on J. W. Mason on ‘There Isn’t Really a ‘Mainstream’ at All’


Since Smith and Marx, economics claims to be a science. And this claim is officially enshrined in the title: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.

In fact, Walrasianism, Keynesianism, Marxianism, and Austrianism are provably false, i.e. materially/formally inconsistent. When this is pointed out economics simply turns into an optical illusion: “Economics is not the study of the economy. Economics is just what economists do.” (See intro)

Economists know that what they do is NOT science: “Economics is a strange sort of discipline. The booby traps I mentioned often make it sound as it is all just a matter of opinion. That is not so. Economics is not a Science with a capital S. It lacks the experimental method as a way of testing hypotheses. . . . There are always differences of opinion at the cutting edge of a science, . . . . But they last longer in economics . . . and there are reasons for that. As already mentioned, rival theories cannot be put to an experimental test. All there is to observe is history, and history does not conduct experiments: too many things are always happening at once. . . . Excuses, excuses. But the point is not to provide excuses.” (Solow, 1998, pp. x-xi)

Note well, that none of these arguments holds water, except for “Economics is not a Science with a capital S” which translates into the correct short variant “Economics is not a science” which in turn contradicts all claims from Adam Smith onward.

More than 2300 years ago science had been defined as episteme = knowledge in contradistinction to doxa = opinion and it was well-understood that opinion is worthless: “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)

Economists do not have the true theory. Their economic policy advice never has had sound scientific foundations. Worse, economists feel quite comfortable behind their heap of scientific rubbish: “I think there is a mix of common-sense opinions, political prejudices, conventional business practice, and pragmatic rules of thumb, supported in an ad hoc, opportunistic way by bits and pieces of economic theory. It’s not possible to knock over the whole tottering pile by pulling out a few foundational texts.”

This, though, is a gross error. All variants of Orthodoxy are built upon this set of hardcore propositions, a.k.a. axioms: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub, 1985, p. 147)

Methodologically, this axiom set is false, and therefore the whole analytical superstructure is false, yet the representative economist has always swallowed this garbage with a straight face. It should be obvious that economics cannot be built upon green cheese behavioral assumptions and NONENTITIES like constrained optimization and equilibrium. All models that contain these concepts are a priori false.

The failure of the microfoundations approach is indisputable. Keynes’ macrofoundations approach suffers from other inconsistencies. The same holds for Marxianism and Austrianism.

After more than 200 years there is proof enough that economists are incompetent scientists. From Smith, Ricardo, Marx, Keynes, Hayek, Samuelson to the present economists have not figured out how the monetary economy works. We know this for sure because the profit theory is provably false until this day, and without the correct profit theory, the economist has no clue of how the market economy works (2014).

Economics is a failed science or, in Mason’s words: there isn’t really a ‘mainstream’. What we have instead is a heap of proto-scientific garbage and a bunch of scientifically retarded blatherers.

Egmont Kakarot-Handtke

Kakarot-Handtke, E. (2014). The Profit Theory is False Since Adam Smith. What About the True Distribution Theory? SSRN Working Paper Series, 2511741: 1–23. URL
Solow, R. M. (1998). Foreword, volume William Breit and Roger L. Ranson: The Academic Scribblers. Princeton, NJ: Princeton University Press, 3rd edition.
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge: MIT Press.
Weintraub, E. R. (1985). Joan Robinson’s Critique of Equilibrium: An Appraisal. American Economic Review, Papers and Proceedings, 75(2): 146–149. URL

Related 'Failed economics: The losers’ long list of lame excuses' and 'Economics and Project Augean Stable' and 'Economists’ full-scale retreat' and  'Economics: The chief demerit is inconsistency' and 'Feeble minds, shaky assumptions, and the inevitable failure of economics' and 'Enough! Economists, retire now!' and 'New Economic Thinking: the 10 crucial points'. For details of the big picture see cross-references Failed/Fake Scientists and cross-references The Representative Economist.