February 20, 2017

Walras, Keynes, Samuelson, DSGE, IS-LM ― R.I.P.

Comment on Roger Farmer on ‘Let’s All Be Keynesians Now’ and on ‘Animal Spirits in a Monetary Model’

Blog-Reference and Blog-Reference

Keynes formulated the formal core of the General Theory as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

This elementary syllogism is inconsistent because Keynes never came to grips with profit (Tómasson et al.). As a result, all I=S models and all IS-LM models are false.#1,#2

Because Keynesian macroeconomics is inconsistent any synthesis with inconsistent Walrasian micro is inconsistency squared since Samuelson.#3

The common denominator of Keynes, Walras, Samuelson, Farmer, and Platonov is that they have NO idea of the pivotal concept of the subject matter, that is, of profit. That is disqualifying for an economist.

In methodological terms, axiomatically false is the death sentence for a paradigm, because when the foundational premises are inconsistent the whole analytical superstructure falls apart.

The representative economist has not realized until this very day that there is NO such thing as fresh thinking about analytical monstrosities that were already dead in the cradle 150+ and 80+ years ago.

Egmont Kakarot-Handtke

#1 How Keynes got macro wrong and Allais got it right
#2 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
and cross-references Refutation of I=S
#3 The father of modern economics and his imbecile kids