October 20, 2016

New Economic Thinking ― false promises and hopes

Comment on Haynes Goddard on ‘David Sloan Wilson’s econ critique’


You say: “For years I debated with a close relative, a prominent political scientist at a major university, whether the economist’s utility maximization hypothesis was empty or not ― specifically, a tautology. Tautology because economists take as axiomatic that we seek to maximize utility. The framework readily yields downward sloping demand curves or an inverse relationship between price and quantity, a relationship widely confirmed empirically.”

Take notice that the statement: “The framework readily yields downward sloping demand curves ...” is provably false. You could know this from Mas-Colell et al., 1995, Sec. 4C or from Wikipedia#1.

The first section of your post is proto-scientific garbage and this continues until the end. Proof:
(i) You refer to the axioms of Orthodoxy. They are given with this set: “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)

These premises are forever unacceptable. It should be pretty obvious that the neo-Walrasian axiom set contains three NONENTITIES: (i) constrained optimization (HC2), (ii) rational expectations (HC4), (iii) equilibrium (HC5).

Every model that contains a NONENTITY is a priori false. In practical terms: as soon as the word equilibrium/disequilibrium appears in an economic paper it can be thrown into the wastebasket. The same holds for utility maximization and all other nonentities.

Take note that economics from Jevons/Walras/Menger to DSGE contains HC1/HC5 and therefore is proto-scientific garbage.

(ii) You refer to the “mathematical economist Roy Weintraub”. Take notice that mathematical economists misapplied mathematics because of a lack of real understanding.#2 By implication, the arguments of mathematical economists in defense of the orthodox research program are worthless. (Make no mistake, from this MISapplication does NOT follow that mathematics is inapplicable or useless in economics. The mathiness critique is beside the point.)

(iii) You argue: “Further, this utility assessing capability is an evolutionary result, and it would seem to fit squarely into Prof. Wilson’s favorite framework.”

Take note that from the fact that BOTH neoclassical microeconomics and evolutionary economics are degenerate research programs follows that it means NOTHING that they fit together and that neuroscience “confirms” utility maximization.

Neither neuroeconomics, behavioral economics, biology, complexity theory, chaos theory, common sense, nor more empirical work can save economics. All this is lipstick on the dead pig. Walrasianism, Keynesianism, Marxianism, and Austrianism are axiomatically false, that is, beyond repair. Nothing less than a Paradigm Shift will do.

Egmont Kakarot-Handtke

#1 Wikipedia Aggregate consumer demand curve
#2 For proof see Barzilai

Preceding The bigots of common sense and Evolutionary economics: Just another degenerate research program.