Blog-Reference and Blog-Reference on Sep 18 adapted to context and Blog-Reference on Sep 19
This is the track record of economics: provably false
• profit theory, for 200+ years,
• Walrasian microfoundations (including equilibrium), for 150+ years,
• Keynesian macrofoundations (including I=S, IS-LM), for 80+ years.
The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concepts profit and income wrong.
In science, a "distinct set of concepts or thought patterns, including theories, research methods, postulates, and standards for what constitutes legitimate contributions to a field is called a paradigm."#1 Because the four main approaches are provably false, that is, materially or/and formally inconsistent, a Paradigm Shift is an absolute necessity.
Keynes put it thus 80 years ago: “The [neo-]classical theorists resemble Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight ― as the only remedy for the unfortunate collisions which are occurring. Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. Something similar is required to-day in economics.”
In methodological terms, a Paradigm Shift is “a fundamental change in the basic concepts and experimental practices of a scientific discipline.” The Keynesian Paradigm Shift, though, failed because Keynes messed up the move from microfoundations to macro- foundations.#2 As a result, economics fell back on the Jevons/Walras/Menger paradigm. As Krugman so nicely put it “most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point”.
The Neoclassical paradigm is defined by methodological individualism = microfoundations, which translates into the neo-Walrasian axiom set: “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)
These axioms (or slight variations thereof) define the orthodox paradigm. These microfoundations are false in multiple dimensions. This is a methodological fact. By consequence, the necessary Paradigm Shift consists of fully replacing ALL variants of behavioral microfoundations by systemic macrofoundations.
As an answer to both fundamental and superficial refutation economists talk much about New Economic Thinking and a new paradigm and more social commitment.#3 The members of the CORE project are no exception.#4
The fact is, the new CORE textbook does NOT present the urgently needed new paradigm but the maximization-and-equilibrium world in a redesigned user-friendly format that has been worked out by the marketing and PR folks in order to satisfy the demands of the new generation of dull economics students. These students do not want economics as objective scientific truth but as an easy way to understand the narrative. The new target group does not care about the material and formal consistency of theoretical economics but about the political message of political economics.
Economics had the bad luck to start as Political Economy. This means that the political agenda had been given and the argumentation had to support the agenda. Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers).
From this false start economics never recovered and it developed into what Feynman called cargo cult science, which he defined as: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... So I call these things cargo cult science because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”
What is missing is the true theory, with scientific truth well-defined as material and formal consistency. Economics is a failed science. The claim as expressed in the title “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a false claim. Both orthodox and heterodox economists are cargo cult scientists.#5
Economics does not need a new marketing thinking of opportunistic orthodox and heterodox proto-scientific losers#6 but a Paradigm Shift from false Walrasian microfoundations and false Keynesian macrofoundations to the true macrofoundations.#7 Nothing less will do. The first rule of the Paradigm Shift says: If it isn’t macro-axiomatized, it isn’t economics.
The CORE textbook is NOT economics, it is cargo cult economics in a new Zeitgeist outfit. The overdue replacement of the proto-scientific textbook garbage from Samuelson to Mankiw#8 lies still in the future.
#1 Wikipedia Paradigm, Paradigm shift
#2 Post Keynesianism, too, is indefensible
#3 New Economic Thinking, or, let’s put lipstick on the dead pig
#4 Samuel Bowles, Wendy Carlin A new paradigm for the introductory course in economics
#5 Fact of life: your econ prof is scientifically incompetent
#6 In search of new economists
#7 First Lecture in New Economic Thinking
#8 The father of modern economics and his imbecile kids
Related 'Economics: the emancipation of science from politics' and 'What makes economics a failed science?' and 'MMT: scientific incompetence or political fraud?' and 'The flat-earth realism of economists' and 'Why economists don’t know what profit is' and 'A bitter pill for political economists' and 'You are fired!' and 'To this day, economists have produced NOT ONE textbook that satisfies scientific standards'
Comment on A New Way to Learn Economics ― The New Yorker. See
CORE: more lipstick on the dead economics pig