September 9, 2017

MMT: scientific incompetence or political fraud?

Comment on Peter Cooper on ‘Unfulfilled Potential’

Blog-Reference and Blog-Reference

There is the political realm where, in principle, everyone is admitted. The currency in the political realm is opinion. Opinion is different from knowledge and the fact of the matter is that it is most of the time false or merely superficially plausible.

Accordingly, there are political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.

Theoretical economics (= science) has been body-snatched by political economists (= agenda pushers). For the general public, science clones are virtually indistinguishable from scientists: “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 in political economics is the true theory of how the actual economic system works.#1 The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit wrong. There is no such thing as a scientifically true economic theory, merely the pluralism of provably false theories.

Political economics is easy to recognize. Political economists do not talk about how the economy works but about freedom, liberty, democracy, overall welfare, justice, ethics, the conscience of a liberal/conservative, folk psychology/sociology, nationalism/globalism, and the bad elite versus the good little guy. Political economics ― right-wing, left-wing does not matter ― has produced NOTHING of scientific value in the last 200+ years.#2

MMT is no exception. MMTers stand for a series of political priorities, first and foremost sovereignty: “… a government’s monetary sovereignty creates a potential for meaningful social progress. But it is only a potential, and can only be fulfilled through genuine democracy conducted by an informed citizenry.” (Cooper)

There is nothing to say against the political program of MMT except that it is backed by an economic theory and that this theory is provably false. The problem with MMT is this:
• it is based on inconsistent accounting identities,#3
• it is scientifically worthless,
• it amounts to a wellness program for the one-percenters,#4
• it falsely claims to benefit the little guy.#5

Either MMTers are in a state of scientific self-delusion or they are just another political fraud like Walrasianism, Keynesianism, Marxianism, Austrianism, and Pluralism.

Egmont Kakarot-Handtke

#1 The economist as stand-up comedian
#2 Economics: 200+ years of scientific incompetence and fraud
#3 Rectification of MMT macro accounting
#4 MMT and the magical profit disappearance
#5 MMT is NOT an alternative to neoliberalism and Why Bernie Sanders is unintentionally a godsend for the one-percenters

Related 'MMT: for the record'. For the full-spectrum refutation of MMT see cross-references MMT.