Blog-Reference and Blog-Reference
“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. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the pivotal concept of the subject matter ― profit ― wrong. So, what we actually have is the pluralism of provably false theories.
Because of this, the economic policy proposals of the “top-five American economics departments ― Chicago, MIT, Harvard, Princeton, Yale ―” all lack sound scientific foundations. Economists have ‘not much more to offer than educated common sense or personal opinion.’
Brad DeLong asserts: “’Basic macro’ did fine. But basic macro was not the really existing macro that mattered.”
This is an optical illusion. Knowledge (= episteme) comes in the singular, opinion (= doxa) comes in the plural. Because opinions contradict each other, in retrospect there is always one that ‘did fine’. This proves NOTHING.
Brad DeLong asserts that Keynes’ macro did fine. The fact of the matter is that Keynesianism and IS-LM is inconsistent and scientifically worthless for 80+ years but After-Keynesians have not realized it.#1
Fortunately, all this does not matter much. The sobering reality of Romulus’s Sewer is that politicians do NOT listen to self-proclaimed economic experts but look at the power vectors and make their decision. Subsequently, they look for an economist in order to do the PR and to provide some scientific prestige. And ― lo and behold ― they ALWAYS find one because the community of economists ALWAYS holds one opinion and the exact opposite of it.#2 The truth-value of a theory/model does not matter, what matters is political use-value.
This is why BOTH right-wing and left-wing proto-scientific garbage survived since the founding fathers engaged in Political Economy. Soapbox economics, by its very nature, NEVER results in the scientific consensus. So, for the general public, the question is NOT how to make sense of nonsense but how to get rid of what Joan Robinson aptly called the throng of superfluous economists.
#1 How Keynes got macro wrong and Allais got it right
#2 Austerity and the idiocy of political economists