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Economics is a failed science and because of this the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is an absurdity ― or worse.#1 The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, and materially/formally inconsistent.
Today’s economics is nothing but the pluralism of provably false theories or, in Feynman’s words, cargo cult science: “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.”#2
What economists have not realized to this day is that economics is NOT a science of behavior.#3, #4 Behavioral Economics from Adam Smith’s Theory of Moral Sentiment to homo oeconomicus to bounded rationality to game theory to rational expectations to Richard Thaler’s nudge is not economics at all but the very subject matter of Sociology, Psychology, Anthropology, Political Science, History, etcetera.#5 The subject matter of economics is the economic system.
The lethal defect of economics is that it is microfounded, i.e. based on behavioral axioms. Now it holds that (i) there is NO such thing as an invariant of human behavior, and (ii), NO way leads from the second-guessing of Human Nature/motives/behavior/action to the explanation of how the economic system works.
After 200+ years of behavioral economics, economists still have no idea of how the market economy works. It is common knowledge that all profit theories are defective: “A satisfactory theory of profits is still elusive.”#6
This means, to this day, neither the Walrasian, nor the Keynesian, nor the Marxian, nor the Austrian cargo cultic sect can tell what macroeconomic profit is.#7 Hence, they all fail to capture the essence of the market economy. This is not exactly a noteworthy scientific achievement of the economics profession.#8
Does the world expect from economists to find out how people behave? No, this is the very job of Psychology, Sociology, Anthropology, etcetera. Does the world expect from economists to figure out what profit is? Yes, of course, no philosopher, psychologist, biologist, or sociologist will ever try to figure this out.
Have economists done their proper job? No. Do economists know what profit is? No. Does behavioral economics help to find out what profit is? No.
It is not the task of economists to dabble in the so-called social sciences. The subject matter of economics is the economy. Economics is a systems science and has to be based on macrofoundations. Economists are still caught in a cargo cultic paradigm. They do not deserve any prizes but to be thrown out of science.
#1 Economics: 200+ years of scientific incompetence and fraud
#2 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#3 Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.
#4 For details see cross-references Not a Science of Behavior
#5 PsySoc — the scourge of economics
#6 Desai, M. (2008). Profit and Profit Theory. In S. N. Durlauf, and L. E. Blume (Eds.), The New Palgrave Dictionary of Economics Online
#7 You are fired!
#8 The real problem with the economics Nobel
Related 'A social science is NOT a science but a sitcom' and 'Economic policy guidance NEVER had sound scientific foundations'
You are way behind the curve. For a quick Hudík-check see my 2013 post Economics is NOT a science of behavior.
REPLY to Barkley Rosser on Oct 16
Economics is NOT about human behavior but about the behavior of the economic system. The lethal blunder of economics is methodological individualism which comes in many psycho-sociological flavors and constitutes as the axiom of constrained optimization the core of Orthodoxy.
Science is well-defined since 2000+ years but economists somehow did not get it: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)
Only certain knowledge (= materially/formally consistent) can be admitted to the corpus of science. And here is the crux of the so-called social sciences: “By having a vague theory it is possible to get either result. … It is usually said when this is pointed out, ‘When you are dealing with psychological matters things can’t be defined so precisely’. Yes, but then you cannot claim to know anything about it.” (Feynman)
So, to begin with, economics cannot be built upon a behavioral axiom like constrained optimization or any other psycho-sociological premise.
This is the current state of economics: PsySoc-economists do NOT know how the economy works. Economists have not realized to this day that they are in a research program that has already been dead in the cradle: “Indeed, Alexander Rosenberg maintains that there has been no progress in developing laws of human behavior for the last twenty-five hundred years.” (Hausman)
What have economists contributed to the trash heap of the so-called social sciences? Utility maximization, bounded rationality, game theory, rational expectations, and so on to Behavioral Economics.
What the blathering dilettantes of PsySoc and soapbox economics cannot and do not grasp is: If it isn’t macro-axiomatized, it isn’t economics. And because of this proven incompetence, they have to be expelled from the sciences.