December 23, 2017

Mr. Corbyn and the perils of political economics

Comment on Simon Wren-Lewis on ‘Voting Labour isn’t going to turn the UK into Venezuela’


“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

After 200+ years, economists still do not have the true theory. 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.#1

It holds: “If economics cannot aspire to any substantive knowledge of economic relationships, it cannot speak with authority about questions of economic policy.” (Blaug) Without valid scientific foundations, economics reduces to something between educated common sense and brain-dead political blather.

The situation is as follows: “The understandable wish of many heterodox economists to have an influence on Labour policy does mean there is a potential competition for influence. Will Labour policy be based on policies derived from mainstream analysis, or those favoured by some heterodox economists?” (Wren-Lewis)

Because both Orthodoxy and Heterodoxy are proto-scientific garbage there is no real choice. Economics across the full spectrum from DSGE to MMT is provably false.

There is no need to speculate about why it is important for “… economists not to arrive late to these battlefields, …” Since Adam Smith/Karl Marx, economics is political agenda pushing in the bluff package of science.

Granted that economists are subjectively convinced that they help to bring about the Good Society, but due to their scientific incompetence their economic policy guidance, more often than not, makes matters worse.#2

Granted that MMTers are subjectively convinced that they help the ninety-nine percenters, but due to their scientific incompetence they are objectively promoting the cause of the one-percenters.#3

The non-separation of politics and science is the original sin of economics and the ultimate cause of its failure. What the general public needs to realize is that economics is cargo cult science and that political economists are fake scientists.

From Labour’s Economic Advisory Council, Mr. Corbyn gets advice that is backed either by DSGE ≈ Walrasian economics or by MMT ≈ Keynesian economics. Both approaches are axiomatically false and therefore scientifically worthless.

Egmont Kakarot-Handtke

#1 Throw them out! Orthodox and heterodox economists are unfit for science
#2 How economists murdered the economy and got away with it
#3 Keynes, Lerner, MMT, Trump and exploding profit

Related 'The end of political economics' and 'Economists cannot do the simple math of profit — better keep them out of politics' and 'There is NO such thing as an economic expert' and 'Economics, methodology, morals ― a creepy freak-show' and 'This is New Economic Thinking? Give me a break!'. For details of the big picture see cross-references Political economics and cross-references Incompetence.