December 21, 2017

Economics ― defending the indefensible

Comment on Lars Syll on Paul Johnson/Prospect on ‘Dismal ignorance of the “dismal science” ― a response to Larry Elliot’


Mainstream economics/Orthodoxy is assaulted by Heterodoxy for a variety of reasons. Most of the arguments are rather silly and easy to refute by Orthodoxy. This fact has already been noticed by Hahn in the 1980s: “The enemies, on the other hand, have proved curiously ineffective and they have very often aimed their arrows at the wrong targets.” As a consequence, the discussion about ‘Economics is broken’ does not rise above the level of absurd blather and the outcome is in any case inconclusive. It is impossible to say whether orthodox or heterodox economists are more incompetent. So, all remains stuck in the swamp where “nothing is clear and everything is possible” (Keynes).#1

For 200+ years, economists do not really understand what science is all about: “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) Because of this incurable lack of understanding, 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.”

Economists lack the true theory, with scientific truth well-defined since the ancient Greeks as material/formal consistency.

The “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is, therefore, a plain fraud. And both Orthodoxy and Heterodoxy are guilty of the continuing violation of scientific standards.#2 Economics needs a Paradigm Shift because the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept of profit wrong.#3

The brain-dead arguments against Orthodoxy are:
• cannot predict the future,#4
• too much mathematics,#5
• the assumptions/models are unrealistic,#6
• not pluralistic.#7

The lethal arguments against Orthodoxy ― and traditional Heterodoxy ― are:
• since Adam Smith/Karl Marx economics is political agenda pushing in the bluff package of science,#8
• the subject matter of economics is the economic system as a whole, economics is a systems science and NOT a behavioral science,#9
• orthodox microfoundations, as well as Keynesian macrofoundations, are provably false,#10
• economics has no sound axiomatic foundations, because of this, the whole analytical superstructure is false, and because of this, economic policy guidance NEVER has had sound scientific foundations,
• economists are scientifically incompetent and the proof is in the ineffective heterodox attacks on Orthodoxy and the ludicrous orthodox self-defense.

The current pluralism of false theories is indefensible. Reformation does not help, nothing less than a Paradigm Shift will do.

Egmont Kakarot-Handtke

#1 The stupidity of Heterodoxy is the life insurance of Orthodoxy
#2 Throw them out! Orthodox and heterodox economists are unfit for science
#3 Why does Heterodoxy not abolish the fake Nobel?
#4 Scientists do NOT predict the future
#5 Mathiness is NOT the problem — scientific incompetence is
#6 Lacking the Midas touch of science
#7 Economics: The pluralism of false theories is over
#8 The end of political economics
#9 Economics is NOT a social science
#10 From false microfoundations to true macrofoundations