Blog-Reference and Blog-Reference
Mainstream economics is a failed/fake science, that much is obvious. Only a moron can take DSGE seriously. The problem is that there are still so many of them around. Why this is so is a deep sociological question. Even deeper is the question of why Heterodoxy never developed a real alternative to mainstream economics.
Lars Syll noticed the obvious, that is, alleged new economic thinking has never been more than putting lipstick on the dead Walrasian pig: “Despite all their radical rhetoric, Krugman and Stiglitz are — where it really counts — nothing but die-hard mainstream neoclassical economists. Just like Milton Friedman, Robert Lucas or Greg Mankiw.” This, however, is not a sensational new insight. After all, Krugman tells anybody on any occasion that “most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point.”
Anyone who expects that an orthodox economist honors the scientific protocol and retires quietly after he has been refuted has not studied the history of economic thought. Economists violate scientific standards for 200+ years “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern)
Not only Orthodoxy violates scientific standards and blathers on as if nothing had happened but Heterodoxy, too. What we actually have is the pluralism of false theories. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept profit wrong. Neither Orthodoxy nor Heterodoxy satisfies well-established and well-known scientific standards. Neither Orthodoxy nor Heterodoxy has achieved anything of scientific value.#1
Take Adam Smith and Issac Newton as reference points. How much knowledge did science produce and how much did the cargo cult science economics produce in roughly 200 years? Economists live either in the maximization-and-equilibrium world or in the Keynesian world or in the pluralistic world of anything-goes. All three worlds are hallucinatory.
Lars Syll buries Orthodoxy for good: “No matter how many thousands of technical working papers or models mainstream economists come up with, as long as they are just ‘wildly inconsistent’ axiomatic variations of the same old mathematical-deductive ilk, they will not take us one single inch closer to giving us relevant and usable means to further our understanding and possible explanations of real economies.”
True, but to repeat this in thousands of posts on Heterodox blogs does not help much either: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug)
This is the enigma of economics: why does Heterodoxy “not take us one single inch closer to giving us relevant and usable means to further our understanding and possible explanations of real economies?”#2 Fact is that Heterodoxy is not part of the solution but part of the problem.
In order to get out of the proto-scientific mess, economics needs a Paradigm Shift.#3 Nothing less will do. Both Orthodoxy AND Heterodoxy are proto-scientific garbage.
#1 Yes, economics is a bogus science
#2 For details of the big picture see cross-references Heterodoxy
#3 From false microfoundations to true macrofoundations
Related 'Not big news: political economics is a failure' and 'Economics is NOT a science of behavior' and 'Where modern macroeconomics went wrong' and 'Heterodox schizo' and 'Economists simply don’t get it'.