December 12, 2016

Heterodoxy and the re-invention of science

Comment on Asad Zaman on ‘Historical context for Keynes’


The scientific method is well-defined: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant, 1994)

Logical consistency is secured by applying the axiomatic-deductive method and empirical consistency is secured by applying state-of-the-art testing.

NOBODY is obliged to do science. In fact, 99 percent of humanity live and die without the slightest idea of what science is all about. Everybody can use a knife or a shovel or a paddle without ever having heard of the Law of the Lever.

Science goes well beyond practical use and an intuitive understanding and tries to capture the invariant features of reality with utmost precision.#1 Archimedes wrote down the Law of the Lever more than 2200 years ago and it had not to be changed since. Science is above the ever-changing mess of history.

Certainty, precision, and reliability are essential for cumulative progress because nothing can be built on swampy ground. This is why science insists on the proof of material and formal consistency.

As Hilbert put it: “If we consider a particular theory more closely, we always see that a few distinguished propositions of the field of knowledge underlie the construction of the framework of concepts, and these propositions then suffice by themselves for the construction, in accordance with logical principles, of the entire framework. ... The procedure of the axiomatic method, as it is expressed here, amounts to a deepening of the foundations of the individual domains of knowledge — a deepening that is necessary for every edifice that one wishes to expand and to build higher while preserving its stability.”

While the sciences built their edifices higher and higher in the past 200+ years, economists still bum around in their flat swamp huts which are organized in four intellectual slums called Walrasianism, Keynesianism, Marxianism, Austrianism.

This is NOT such a great problem because everybody can choose (at least in principle) to intellectually settle down where they want. The problem starts as soon as somebody claims to do science but does not satisfy the criteria of material and formal consistency. This happened with economics. Economists claim to do science since Adam Smith/Karl Marx. What they in fact have done is cargo cult science or, more specifically, political economics. Political economics is agenda pushing and fundamentally different from theoretical economics (= science). The very signature of political economics is to give a shit about scientific standards: “As some one has said, it would seem that even the theorems of Euclid would be challenged and doubted if they should be appealed to by one political party as against another.” (Fisher, 1911)

Needless to emphasize that political economics has NOT produced anything of scientific value in the last 200+ years. This holds for Orthodoxy AND Heterodoxy. Asad Zaman maintains that the failure of economics is “due to the adoption of axiomatic-deductive methodology by economists.” Nothing could be farther from the truth. Political economists have ― without exception ― either misapplied the axiomatic-deductive method or not applied it at all. It is a provable fact that both Walrasian microfoundations and Keynesian macrofoundations are false.#2

Because of this, the indispensable Paradigm Shift consists of replacing the false axioms of Orthodoxy and Heterodoxy with entirely new axioms and getting out of the swamp of political economics as fast as possible.

There is NO need to re-invent the scientific method, but there is an urgent need to re-invent economics. Asad Zaman and the rest of the deplorables of traditional Heterodoxy have to get their heads around the fact that economics is NOT about psychology, sociology, history, or politics but about how the economic system works.#3

Egmont Kakarot-Handtke

#1 See Nozick: Invariances; The Structure of the Objective World.
#2 Economics: The chief demerit is inconsistency
#3 For details of the big picture see cross-references Heterodoxy.

Related 'Methodology 101, economic filibuster, and the mother of all excuses' and 'Econ 101 is dead ― and now?' and 'The prime primer on equilibrium'