Blog-Reference and Blog-Reference and Blog-Reference on Jan 12
Every economist can know from the Palgrave Dictionary that the profit theory is false (Desai, 2008). Or, as Mirowski put it, “... one of the most convoluted and muddled areas in economic theory: the theory of profit.” In other words: the confused confusers of economics have NO idea what the pivot of their subject matter is.
It is pretty obvious that without the true profit theory there is no true distribution theory.#1 So everybody can know for sure, without bothering much about the insane behavioral assumptions of utility and profit maximization, that the standard marginal theory of income distribution must be dead wrong. More, because neither Walrasianism, Keynesianism, Marxianism, nor Austrianism gets profit right all other distribution theories are false, too. This includes the theory of rent-seeking which stood in the center at this year’s ASSA discussions.
The trouble with distribution theory started with Ricardo who got the distinction between wage, profit, and rent wrong.#2 Then Marx got the class theory of profit wrong.#3 Neoclassical marginal distribution theory, of course, is unsurpassable idiocy, but Keynesianism did not perform much better, and Heterodoxy has actually multiple profit theories that do not fit together.#4
Distribution theory has always been the deepest point in the swamp of economics. Do not expect that orthodox or heterodox economists who spent their clueless lives there will find a way out any time soon. The profit theory is false since Adam Smith#5 and the folks at the ASSA are lost in a parallel universe. Let this sink in: NOT ONE of the participants has an idea about the pivotal concept of economics.
Economics has produced NOTHING of scientific value in the last 200+ years. The current state of economics is that of a cargo cult or fake science.#6 The proof is in the distribution theory.
#1 Essentials of Constructive Heterodoxy: Profit
#2 When Ricardo Saw Profit, He Called It Rent: On the Vice of Parochial Realism
#3 Proﬁt for Marxists
#4 Heterodoxy, too, is proto-scientific garbage
#5 The Profit Theory is False Since Adam Smith. What About the True Distribution Theory?
#6 The real problem with the economics Nobel
Related 'Economists’ real job problem' and 'The GDP-death-blow for the economics profession'. For details of the big picture see cross-references Profit/Distribution.
After more than 200 years, economists cannot tell the difference between the foundational concepts of profit and income. This is comparable to medieval physics before the concepts of energy, mass, force, etcetera were clearly defined and properly understood.
For details see The false foundations of economics.