It is pretty obvious that economics is a failed science, and the main reason is the scientific incompetence of economists. After 200+ years economists still do not understand what science is all about. The holy grail of science is the true theory: “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)
Scientific truth is well-defined as material and formal consistency. Progress is methodologically driven by the minimum principle, otherwise known as the economic principle. This was already perfectly clear to the great economist and methodologist J. S. Mill: “They [Einstein and Dirac] agreed that science was fundamentally about explaining more and more phenomena in terms of fewer and fewer theories, a view they had read in Mill’s A System of Logic.” (Farmelo)
Or, in Einstein’s words: “A theory is the more impressive the greater the simplicity of its premises, the more different kinds of things it relates, and the more extended is its area of applicability.”
Clueless economists run exactly in the OPPOSITE direction: “If you read Dani Rodrik’s book Economics Rules … you will see that economists have a large number of distinct models, and the problem that many economists spend their time solving is which model is most applicable to the problem they have been asked to solve.” (Simon Wren-Lewis)
The ‘large number of distinct models’ is NOT a virtue but the result of confused ad-hocism. The methodological degeneration of present-day economists finds its expression in Olivier Blanchard’s advocacy for at least five classes of macro models.
The first thing to notice is that current economics consists of microeconomics and macroeconomics and both are based on inconsistent and incompatible foundations.#2 In methodological terms, economics lacks the consistent axiomatic core.
Walrasian microfoundations are given with: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub, 1985)
Keynesian macrofoundations are given with: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63)
Walrasian microfoundations and Keynesian macrofoundations are forever unacceptable and have to be replaced by true macrofoundations.#3 For one, Blanchard is right, what is needed is an “alternative core from which to start”. In methodology this is called a Paradigm Shift: “There is another alternative: to formulate a completely new research program and conceptual approach. As we have seen, this is often spoken of, but there is still no indication of what it might mean.” (Ingrao et al.)
In more detail, this means that methodological individualism, behavioral axioms, equilibrium, DSGE, RBC, IS-LM, New Keynesian models, and all the rest have to be thrown on the heap of proto-scientific garbage because the iron methodological rule says: If it isn’t macro-axiomatized, it isn’t economics.
#1 See PIIE
#2 The futile synthesis of neoclassical rubbish and Keynesian garbage
#3 How to restart economics and From false micro to true macro: the new economic Paradigm
Related 'Economics: The pluralism of false theories is over' and 'Does Asad Zaman fly with POL or SCI Airlines?' and '10 steps to leave cargo cult economics behind for good' and 'Wikipedia, economics, scientific knowledge, or political agenda pushing?'. For details of the big picture see cross-references Pluralism and cross-references Paradigm Shift and cross-references New Curriculum.