There are TWO economixes: 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.
It is important to realize that theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years.
Orthodox economics is clearly defined: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.” (Arrow)
Since the soapbox economists and agenda pushers Adam Smith and Karl Marx, economics is what Feynman called a cargo cult science. In the genuine sciences, peer review is institutionalized as quality control, in economics it has been perverted to an instrument of selection and career promotion of suitable spokespersons and representatives of the prevailing view.
The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL got the foundational concept of the subject matter ― profit ― wrong. What we actually have is the pluralism of provably false theories.
This pluralism is not an indicator of academic freedom and creativity but the very proof of scientific degeneration, incompetence, and confusion. Pluralism is a political concept and relates to matters of belief. Science is about knowledge and the sole criterion is true/false with truth clearly defined as material/formal consistency.
Theoretical economics is scientifically unacceptable from Jevons/Walras/Menger onward to DSGE. So, what remains is political economics.#1 And that is exactly what can be observed from Krugman’s liberal soapbox blather to Keen’s leftist agenda pushing. Not to forget Barkley Rosser, the expert for political unrest in Catalonia, Saudi Arabia, and China who, disqualifying for an economist, does still not know what profit is.#2
Economists have never understood the overriding importance of the separation of science and politics and simply ignore that they have NO political mandate. Strictly speaking, there is no place for political economics in academia. Because of this, the question of whether there is more academic freedom in the USA or in China is pointless. In the last 200+ years, economists have never been more than useful political idiots. Time to make economics a science.
#1 For details see cross-references Political Economics/Stupidity/Corruption
#2 You are fired!
For details of the big picture see cross-references Science.
You say “As for me not knowing what profit is, well, I know that you think the most important thing about profit is to distinguish between retained and distributed earnings, which is an utter accounting triviality.”
In the last instance, it is not an accounting triviality but one of elementary mathematics. And the fact of the matter is that economists are too stupid for simple math.#1 You still don’t get it.#2
All this, though, does not matter much because academic economics is, to begin with, NOT about scientific excellence but about political agenda pushing.
Traditionally, there are two methods of governance: carrot and stick. In entrenched/ affluent societies the carrot is preferred (= an offer you cannot refuse), while vulnerable post-regime-change societies rely more on the stick (= a threat you cannot ignore). Neither method has much to do with the Humboldtian ideal of unconditional academic freedom.
#1 National Accounting: scientific incompetence or political fraud?
#2 How the intelligent non-economist can refute every economist hands down
You say: “Every accountant and the vast majority of economists are fully aware that retained earnings and distributed earnings are not the same thing, yes, this is trivial arithmetic we all know, even the dumbest of us, …”
No, you simply don’t get it.
Macroeconomics is false since Keynes. Here is the corpus delicti from the General Theory: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
This two-liner is conceptually and logically defective because Keynes did not come to grips with profit: “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Because macroeconomic profit is ill-defined
(i) the whole theoretical superstructure of Keynesianism is provably false,#1
(ii) all I=S and IS-LM models are provably false,#2
(iii) Post-Keynesianism is provably false,#3
(iv) MMT is provably false,#4
(v) all microfounded approaches are a priori false.
Macroeconomic profit is in the Keynesian case given with Qm≡I−Sm. The Profit Law says that the monetary profit of the business sector Qm is equal to the difference between investment expenditures of the business sector I and monetary saving of the household sector Sm (or dissaving −Sm as the case may be).
The correct macroeconomic Profit Law Qm=I−Sm REPLACES the untenable Keynesian I=S.
The scientific incompetence of the representative economist consists of not having realized in 80+ years the foundational error in Keynesian and After-Keynesian macro. No more proof of utter scientific incompetence is needed.
All this elementary stuff comes well before the distinction between profit and distributed profit is introduced as even the dumbest member of orthodox and heterodox academic economics has to admit.
When distributed profit Yd is taken into the picture the Profit Law expands to Qm≡Yd+I−Sm. Only Allais got this equation right,#5 the rest of econ academia is still lost in the proto-scientific woods.
The fact is that economists have not gotten the Profit Law right in the last 200+ years. Academic freedom has been perverted into the privilege to produce cargo cultic trash for the political Circus Maximus and to violate the scientific standards of material and formal consistency with impunity.
#1 Keynesians ― terminally stupid or worse?
#2 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#3 Why Post Keynesianism Is Not Yet a Science
#4 Where MMT got macro wrong
#5 How Keynes got macro wrong and Allais got it right
Related Macroeconomics without Keynes
Behind the facade of academic freedom, peer review has long ago been corrupted to gatekeeping. See James Heckman’s Summary Chart on Twitter.
|Source: Twitter, James Heckman
Accordingly, the scientific content of AER and the rest of economic journals has been zero for generations.
This is the track record of economics:
- profit theory, false for 200+ years,
- Walrasian microfoundations (including equilibrium), false for 150+ years,
- Keynesian macrofoundations (including I=S, IS-LM), false for 80+ years,
- Walrasianism, Keynesianism, Marxianism, Austrianism = mutually contradictory, axiomatically false, materially/formally inconsistent,#1
- unresolved pluralism of provably false theories,#2
- scientific content of economic journals = zero,
- scientific content of economic textbooks = zero,#3
- economics is what Feynman called a 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.”,#4
- what is entirely missing among economists is scientific competence,#5
- economics never rose above the proto-scientific level.#6
#2 “There are always many different opinions and conventions concerning any one problem or subject-matter …. This shows that they are not all true. For if they conflict, then at best only one of them can be true.” (Popper)
#3 The father of modern economics and his imbecile kids
#4 Yes, economics is a bogus science
#5 For details of the big picture see cross-references Science and cross-references Failed/Fake scientists
#6 The real problem with the economics Nobel
With regard to economics, academic freedom has been clearly defined: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.” (Arrow)
In economics, peer review ensures that only papers that conform to methodological individualism ≈ Walrasianism ≈ Neoclassics ≈ Orthodoxy are accepted. It is plain that the AER as flagship journal has executed these methodological guidelines faithfully for generations and the rest has followed suit. Unfortunately, methodological individualism is proto-scientific garbage for 150+ years.
What more proof does anybody need that, with regard to economics, academic freedom has been perverted to a license for morons to crowd out scientists.
Your comparison of academic freedom in the USA and China is simply absurd and a deflection of the plain fact that economics is a cargo cult science and that the representative orthodox/heterodox economist is either stupid or corrupt or both.
Over the past weeks, Barkley Rosser, the alleged economist, identified a “Poland Problem” in the USA, Germany, Iran, and Poland. These are obviously journalistic exercises in political economics. Political economics, though, lacks sound scientific foundations since Adam Smith/Karl Marx. For this simple reason, political economics is vacuous blather or fake news for 200+ years.#1
While the alleged economist Barkley Rosser has been occupied with newspaper reading, the formal impeccable proof has been given that MMT rests on macroeconomic foundations that are false since Keynes’ General Theory.#2 The fact that Keynesianism is axiomatically false obviously escaped Barkley Rosser over the last 50 or so years. So, while he was distracted by the “Poland Problem” he entirely missed that just under his nose developed an MMT problem.#3
#1 The end of political economics(I)
#2 MMT = proto-scientific garbage + deception of the 99-percenters
#3 For the full-spectrum refutation of MMT see cross-references MMT
The mission of economics is to figure out how the economy works. The mission of sociology is to figure out how society works. The objective of science is the true theory with truth defined for 2300+ years as material and formal consistency.
Obviously, economics is a failed science. Obviously, economists are incompetent scientists. What they have done in the last 200+ years is folk sociology, folk psychology, and political agenda pushing.
Worse, economists are not only incompetent scientists but in direct opposition to plain evidence claim that what they are doing is science: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.
Barkley Rosser, that much is clear, is doing neither economics nor science. Neither does Peter T, Bruce Wilder, and the rest of the self-styled political experts at EconoSpeak.#1
The institutional choice of current economics is to speedily clean the Augean stable or to drown in shit.#2
#1 For details see cross-references The Representative Economist
#2 Time to retire political economists