October 18, 2016

Go, Heterodoxy, move on!

Comment on Peter Radford on ‘Can we move on?’


Peter Radford summarizes the current state of economics: “Economics has failed.” What we have is: “An attic full of cobwebs, old ideas, outdated tools, incoherent junk that we have forgotten how to use, and faded memories of long ago issues that have little of no relevance to today.”

He concludes with a call to arms: “We move on.”

How? By reiterating the superficial but popular critique of unrealism and mathiness? By propagating history books like Polanyi’s Great Transformation? By advocating pluralism, i.e. the mutual acknowledgment of false theories? By producing alternative “incoherent junk” like Post Keynesianism?

Economics is a bit complicated because there is (i) political economics vs. theoretical economics, and (ii), orthodox economics vs. heterodox economics (see the 2x2 map on Wikimedia#1)

The situation is this: political economics (= agenda pushing) dominates theoretical economics (= science) since the founding fathers and has not produced much, if anything, of scientific value in the last 200 years.

Heterodoxy has always argued that something might be wrong with Orthodoxy. To be sure, Heterodoxy’s rejection of Orthodoxy is right. In 2016 no thinking being can defend orthodox economics any longer. The problem with traditional Heterodoxy is that it has not produced much, if anything, of scientific value either.

Economics is what Feynman famously called a cargo cult science because BOTH Orthodoxy and traditional Heterodoxy does NOT satisfy the scientific criteria of material and formal consistency.

When Peter Radford states “Economics has failed.” he somehow forgets to mention the involvement of traditional Heterodoxy: “... we may say that ... the omnipresence of a certain point of view is not a sign of excellence or an indication that the truth or part of the truth has at last been found. It is, rather, the indication of a failure of reason to find suitable alternatives which might be used to transcend an accidental intermediate stage of our knowledge.” (Feyerabend, 2004)

The COMMON failure of Orthodoxy and Heterodoxy is encapsulated in this devastating summary: “A satisfactory theory of profits is still elusive.” (Palgrave Dictionary, Desai, 2008)

After more than 200 years neither orthodox nor heterodox economists know what profit is or what the difference between profit and income is.#2 Because they have NO idea of the foundational concepts of their subject matter economists cannot explain how the actual economy works which means that their economic policy guidance NEVER has had sound scientific foundations. Scientifically incompetent economists bear the ultimate responsibility for unemployment/depression/deflation/stagnation.

Current economics is not much more than political blather and the difference between Orthodoxy and traditional Heterodoxy is that the former is more rightist and the latter is more leftist.#3 This is a political distinction that tells NOTHING about the scientific value of an approach, which is ZERO in both cases.

From the standpoint of science follows: yes, failed economists, move on, get out of the way! And, most important of all, stop telling the general public that what you are doing is science.

Egmont Kakarot-Handtke

#1 Map of current economics
#2 The Profit Theory is False Since Adam Smith
#3 For the new paradigm see cross-references