November 29, 2016

Economics and corruption

Comment on Paul Krugman on ‘Why Corruption Matters’


A country’s order is defined by the interplay of its institutions. Lucky the country that has a well-designed architecture of public/private institutions that individually function as intended and codified in their mission statement.

One of the fundamental principles of institution-building is strict separation, for instance: separation of state and church, party and state, executive and legislative, state and economy, politics and science, etcetera.

When Krugman criticizes the lack of separation between Mr. Trump’s presidency and his private business he is in a rather awkward position. Krugman has been and still is a major participant in the deconstruction of the firewall between politics and science, or more specifically, between politics and economics.#1, #2

What the general public does not realize is that there is political economics and theoretical economics. The founding fathers called themselves political economists, that is, they left no doubt that their main business was agenda pushing. Economists never really got out of political economics. In other words, theoretical economics (= science) ultimately could not emancipate itself from political economics (= agenda-pushing).

Economics consists of the major approaches Walrasianism, Keynesianism, Marxianism, Austrianism which are mutually contradictory and axiomatically false. Economics is NOT a science and because of this the claim as expressed in the title ‘Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel’ is false.

The Bank of Sweden is, of course, entitled to award prizes but is in NO position to upgrade a cargo cult science to a science. Actually, the Bank is misleading the general public about the dismal state of economics. Whether unintentionally or intentionally is a matter of indifference. What counts is the effect on the general public.

Political economics has produced nothing of scientific value in the last 200+ years. This carries over to politics: “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)

Economists do NOT have the true theory. Because of this, economic policy guidance NEVER had sound scientific foundations. And it does not matter at all whether this guidance has been more rightist or more leftist, more conservative or liberal, more Rep or Dem. ALL political economists are fake scientists.

Let’s face it, Krugman has violated and still violates the separation of science and politics, which is vital for the integrity of science, that is, he practices illegitimately in economics what he legitimately criticizes in politics.#3

Egmont Kakarot-Handtke

#1 Scientific suicide in the revolving door
#2 Krugman is not an economist
#3 Economists: the Trumps of science

Related 'FakeNews, FakeScience: economics in the information age' and 'Economics: a science without scientists' and 'Turning the bananatization of economics around' and 'It's about institution-building, stupid' and 'Economics is not post-truth but pre-truth'.


Institute for New Economic Thinking, Oct 1, 2020