December 14, 2017

Throw them out! Orthodox and heterodox economists are unfit for science

Comment on Rethink Economics on ‘33 Theses for an economics reformation’

Blog-Reference and Blog-Reference Dec 25 adapted to context

“Economics is broken.” The first three words of the heterodox Declaration are absolutely right. The fact to note is, though, that ‘economics’ includes BOTH orthodox AND heterodox economics. So, more to the point, both orthodox and heterodox economics is broken, and both orthodox and heterodox economists have to be speedily expelled from the sciences because of proven incompetence. There is nothing to reform in economics but all to replace. The call for a Reformation itself is proof of a hallucinatory mindset. In economics, nothing less than a Scientific Revolution will do.#1

The state of economics

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.

Economics claims to be a science but is NOT. 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.#2

From Adam Smith/Karl Marx onward, economists claim that their economic policy guidance has scientific foundations. This claim is untenable because economists lack the true theory: “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) Scientific truth is well-defined for 2300+ years by material and formal consistency. There is NO such thing as a materially/ formally consistent economic theory.

Only one way out: the Paradigm Shift

The fact is that there is NO greater embarrassment in the history of modern science than economics. The four main 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. What is needed is the true economic theory. In methodological terms, this means that economics needs a Paradigm Shift. Both, failed orthodox and failed heterodox economics have to be buried in the wastebasket, and both incompetent orthodox and heterodox economists have to be expelled from the sciences.

Heterodoxy’s failure consists in being content with critique and trivial suggestions for improvement and in being unable to develop the true economic theory. Traditional Heterodoxy is a futile dog and pony act: “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)

Pluralism of false theories = the great coalition of scientific failures

The fact is that economics has by now degenerated to pure political agenda pushing. Both, Orthodoxy and traditional Heterodoxy violate the principle of the separation of science and politics. A short glance at the 33 Theses suffices to realize that the aim of Heterodoxy is NOT to fully replace the already debunked Orthodoxy with the true theory but to get more academic sales space for the already debunked self-made proto-scientific stuff.

Scientific ethics and political corruption

The strict separation of the scientific realm and the political realm is necessary because politics always and everywhere corrupts science. This point has been made abundantly clear by J. S. Mill: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.”

Retarded busybodies and political agenda pushers, of course, have done just the opposite and that is why economics is proto-scientific garbage over the whole spectrum from DSGE to MMT. Economics is what Feynman called a cargo cult science.#3

The subject matter of economics

The mission of economists is (i) to figure out how the economic system works, and (ii), to figure out how the goals that have been set in the political realm by the legitimate sovereign can be achieved. The agenda-pushing economist has to be expelled from the sciences. Agenda-pushing has to take place in the political realm. Economics has to get rid of political economics. Political economics in all variants from right-wing to left-wing is scientifically unacceptable. Economics is a systems science.#4

The 33 Theses do not advance science

(i) Heterodoxy’s main complaint is the “unhealthy intellectual monopoly of mainstream economics.” This is true, of course, but besides the point. The point is that mainstream economics is provably false, i.e. materially and formally inconsistent, i.e scientifically forever unacceptable. Mainstream economics has to be fully replaced because it is axiomatically false.

(ii) Heterodoxy maintains that a “more pluralist approach can help economics to become both more effective and more democratic.” No, the goal of economics is the true theory and not the pluralism of false theories.#5

(iii) The subject matter of economics is the economic system as a whole. Psychology, Sociology, Behaviorism, Political Science, Geopolitics, History, Anthropology, Biology/Darwinism, Institutionalism, Law, Ethics, Philosophy are NOT economics. The valid results of these independent disciplines are taken into economics by way of multidisciplinary cooperation if needed. For 200+ years, economists have dabbled in almost all disciplines but have until this very day not figured out what profit is. Thus, both orthodox and heterodox dilettantes have become a scientific laughingstock.#6

(iv) Economics is NOT about Human Nature/motives/behavior/action. NO way leads from the second-guessing of individual/social behavior to the understanding of how the economic system works. The microfoundations approach had been doomed to failure from the very beginning. Heterodoxy has never supplied a valid alternative to Walrasian microfoundations. Keynesian macrofoundations, too, are provably false.

(v) Heterodoxy has not the capacity/ambition for developing the true economic theory but seeks ― for whatever reason ― to uphold the existing plurality of false theories: “A good economics education must offer a plurality of theoretical approaches to its students. This should include not only the history and philosophy of economic thought, but also a wide range of current perspectives – such as institutional, Austrian, Marxian, post-Keynesian, feminist, ecological, and complexity.” Good economics education has to offer true economic theory and NOTHING else.

Traditional Heterodoxy is a scientific failure just like Orthodoxy. The much-hyped New Economic Thinking of Walrasians, Keynesians, Marxians, Austrians is nothing but the old proto-scientific garbage in a new fancy format which is supposed to be more to the taste of the next generation of scientifically unfit economists.

The inevitable Paradigm Shift in economics consists of the replacement of false Walrasian microfoundations and false Keynesian macrofoundations by true macrofoundations.#7 Both orthodox and heterodox economists have to start a new full-time career as propagandists/ storytellers/trolls in the econblogosphere or clowns in the political Circus Maximus.#8

Egmont Kakarot-Handtke

#1 Why is economics such a scientific embarrassment?
#2 For details see cross-references Political Economics
#3 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#4 Economics is NOT a social science
#5 For details see cross-references Pluralism
#6 For details see cross-references Scientific incompetence
#7 From false microfoundations to true macrofoundations
#8 For details see cross-references The Representative Economist

Related 'Economists, stupid or corrupt or both?' and 'How to restart economics' and 'A brief history of soapbox economics' and 'How the representative economist gets it wrong big-time' and 'New Economic Thinking, or, let’s put lipstick on the dead pig' and 'New Economic Thinking: the 10 crucial points' and 'First Lecture in New Economic Thinking'.

Wikimedia AXEC123e

COMMENT on Tom Hickey on Dec 15

You say: “I see the issue (problem and challenge) as being chiefly ideological but also technical in part.”

You see it wrong. The point is that economics claims to be a science but is NOT. All explanations of failure are lame excuses.#1 Obviously, the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a case of intended/unintended deception/fraud.

The general public has to be informed that economic policy guidance has no sound scientific foundations ― and never had since Adam Smith/Karl Marx.

The problem is that Heterodoxy is not a real alternative to long falsified Orthodoxy. With their yearning for pluralism, heterodox economists are de facto the junior partners of intended/unintended deception/fraud.#2

This also holds for MMT. As a propagandist of MMT, you are a de facto accomplice of intended/unintended deception/fraud.#3

“Economics is broken” yes, this applies to DSGE and MMT and everything in between. Now the time has come to expel all the incompetent scientists and brain-dead agenda pushers from economics and to move ― after 200+ years of confused blather and silly propaganda ― from cargo cult science to science.

#1 Failed economics: The losers’ long list of lame excuses
#2 Why does Heterodoxy not abolish the fake Nobel?
#3 MMT: Money-making for the one-percenters

REPLY to Noah Way on Dec 17

Economics each year officially celebrates the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.

You say “'Economics is not science. It is a system of competing ideologies. … Economics has never been a science ― and it is even less now than a few years ago. ― Paul Samuelson, Nobel Prize winner, Economic Sciences”

You are right, economics is the biggest blunder/fraud in the history of the sciences, and Walrasianism, Keynesianism, Marxianism, Austrianism, Pluralism are part of it ― not to forget MMT.#1, #2, #3

#1 The real problem with the economics Nobel
#2 The father of modern economics and his imbecile kids
#3 MMT: The one deadly error/fraud of Warren Mosler