AXEC: New Foundations of Economics: The Supreme Being handed over these Twelve Economics Commandments

March 31, 2018

The Supreme Being handed over these Twelve Economics Commandments

Comment on Barkley Rosser on 'Anniversary of Yeshua bin Yusuf dying on a cross'

Blog-Reference

The Supreme Being ― which is by logical necessity absolutely indifferent with regard to galaxy, planet, gender, age, race, nation, religion, party, social status, income/wealth ― spoke out of the clouds and handed over these Twelve Economics Commandments:

1. Never cite the Bible or other religious texts in an economic argument.

2. Maintain the strict separation of science and religion under all circumstances.

3. Maintain the strict separation of science and politics under all circumstances.#1

4. Do not dabble in psychology, sociology, anthropology, history, political science, philosophy, theology, social philosophy, or any other of the so-called social sciences. Economics is a systems science.

5. Do not believe: prove. The number of followers on social media does NOT count as scientific proof.

6. Figure out how the actual economic system works and communicate your results in the format of a materially/formally consistent theory.

7. Absolutely refrain from storytelling, metaphors, analogies, narratives, gossip, insinuation, filibuster, sermonizing, propaganda, disinformation, foretelling/ prophecies/predictions, and other rhetorical means.

8. Do not apply methodological individualism/microfoundations/partial analysis.#2

9. Do not moralize, the subject matter of economics is IS not OUGHT. How the Good Society can be realized has to be determined in the political sphere by the Legitimate Sovereign. See 3.

10. Be, first of all, aware that there are knowledge and opinion, science and non-science, scientific standards/ethics and anything-goes, true and false with nothing in-between. The ethics of science is objectivity, i.e. material and formal consistency. The goal of economics is the true theory.

11. Rest assured that those who violate scientific standards/ethics go to hell and will be tortured in all eternity with the senseless blather of Walrasianism, Keynesianism, Marxianism, Austrianism, and Pluralism.#3

12. Make no mistake: alone scientists will go to heaven. As everyone can easily imagine, the Supreme Being will NOT share eternity with morons, imbeciles, political agenda pushers, blatherers, trolls, believers, impostors, journalists, the bigots of common sense, and failed/fake scientists.

Egmont Kakarot-Handtke

#1 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.” For details see
Throw them out! Orthodox and heterodox economists are unfit for science
#2 If it isn’t macro-axiomatized, it isn’t economics
#3 Economics is not a science, not a religion, but proto-scientific garbage

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REPLY to Barkley Rosser on Mar 1

Economics claims since Adam Smith/Karl Marx to be a science. Yet, everybody who has a rough idea of what science is all about and looks closer into the matter comes to the conclusion that economics is a failed science. Economics consists of four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― which are mutually contradictory, axiomatically false, and materially/formally inconsistent.

Economics has to this day produced NOTHING of scientific value. This is the track record: provably false

• profit theory, for 200+ years,

• Walrasian microfoundations (including equilibrium), for 150+ years,

• Keynesian macrofoundations (including I=S/IS-LM), for 80+ years.

Economics needs a Paradigm Shift because the pluralism of false theories is untenable. Heterodoxy is provably false, just as Orthodoxy.#1 Economists do not know to this day how the price- and profit mechanism works. Economic policy guidance has had no sound scientific foundation for 200+ years.

Economics is what Feynman called a cargo cult science, economists are failed/fake scientists, the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel is a deception of the public. Economics is one of the worst cases of failure/fraud in the history of modern science.

Gresham’s Law says that bad money crowds good money out of circulation. Something similar holds for economics which has become over the years the venue of incompetent scientists, agenda pushers, cranks, scammers, and useful political idiots.

Two typical exemplars of this species are Barkley Rosser and Andres. Barkley Rosser does to this day not understand the difference between the foundational concepts of profit and income, has busily produced peer-reviewed papers but contributed nothing to the advancement of science, and now spreads idiocy/disinformation on economics blogs.#2 His Yusuf post is a case in point. This self-disqualifying post is a good indicator of the vast proportions the accumulated bullshit has grown into in the last 200+ years of “economic sciences”.

#1 The stupidity of Heterodoxy is the life insurance of Orthodoxy

#For details of the big picture see cross-references Failed/Fake Scientists

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REPLY to Andres on Mar 2

You say: “6. Human beings are irritating creatures. If you make an argument for why they should behave consistently under a given system, they will find some situation to make their behavior inconsistent, if for no other reason than to annoy the economist.”

Obviously, you have not realized that economics is a systems science and that there are objective systemic laws. It is long known that there is NO such thing as behavioral laws. Exactly for this reason it is sheer madness to build economics on the behavioral assumption of constrained optimization.

The morons of economics do not know what the scientists in all ages knew: “The bifurcation of motion into two fundamentally different types, one for natural motions of non-living objects and another for acts of human volition ... is obviously related to the issue of free will, and demonstrates the strong tendency of scientists in all ages to exempt human behavior from the natural laws of physics, and to regard motions resulting from human actions as original, in the sense that they need not be attributed to other motions.” (Brown)

For details see:

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REPLY to Andres on Mar 2

It is always a grand spectacle to observe a goldfish brain starting to work and getting into high gear. You just re-discovered behavioral uncertainty: “… we might say that the human factor is the ultimately uncertain and wayward element in social life and in all social institutions.” (Popper, 1960), and change: “Important revolutions have occurred before our time, and since the days of Heraclitus change has been discovered over and over again.” (Popper, 1960)#1

I wonder how long it takes you to discover that the story of “one hapless dude who was nailed to a cross” is fake news for 2000+ years.#2

The true mystery is why the alleged economist Barkley Rosser recycles scientifically long-refuted storytelling on an alleged economics blog. Even goldfishes know by now that the subject matter of economics is the economy and NOTHING else.

#1 The Synthesis of Economic Law, Evolution, and History

#2 YouTube Richard Carrier

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REPLY to Barkley Rosser, Andres, ANC Driver on Mar 3

SURGEON GENERAL'S GAGANOMICS WARNING

The continued production of verbal soap bubbles may result in a hazardous lack of oxygen in the brain and in para-scientific hallucinations which inevitably lead via the Yusuf-Syndrome to a total mental collapse and, in addition, cause incurable cognitive disturbances among unsuspecting economics students and explosive vomiting in the scientific community.

Knowledge only — no opinion

Science does not explain everything, but non-science explains nothing.

Neither orthodox nor heterodox economics satisfies the scientific criteria of material and formal consistency.

Economists cannot explain how the economy works. The Profit Theory is false since Adam Smith. There is much opinion and little knowledge.

Opinion is the realm of political economics, knowledge is the realm of theoretical economics.

Political economics is scientifically worthless.

Theoretical economics is built upon clearly stated premises, i.e., upon a set of axioms.

Orthodoxy got the axiomatic foundations wrong and Heterodoxy has none at all.

Economics is a failed science. Economists are incompetent scientists.

Profit

Neither Classicals, nor Walrasians, nor Marshallians, nor Marxians, nor Keynesians, nor Institutionialists, nor Monetary Economists, nor MMTers, nor Austrians, nor Sraffaians, nor Evolutionists, nor Game theorists, nor EconoPhysicists, nor RBCers, nor New Keynesians, nor New Classicals ever came to grips with profit. Hence, they all fail to capture the essence of the market economy.

Because of this, economists have nothing to offer in the way of a scientifically founded economic policy guidance.

The hybrid science

As a first approximation, one can agree on the general characteristic that the economy is a complex system.

However, with the term system one usually associates a structure with components that are non-human. In order to stress the obvious fact that humans are an essential component of the economic system the market economy should be characterized more precisely as a complex hybrid human/system entity.

The scientific method is straightforwardly applicable to the sys-component but not to the hum-component. While it is clear that the economy always has to be treated as an indivisible whole, for good methodological reasons the analysis has to start with the objective system-component.

In gestalt-psychological terms the economic system is the foreground, individual behavior the background. Common sense wrongly insists that the hum-component must always be in the foreground. This fallacy compares to geo-centrism. The economic system has its own logic which is different from the behavioral logic of humans. The systemic logic is what Adam Smith called the Invisible Hand.

There are systemic laws but no behavioral laws. Systemic laws have the same methodological status as physical laws.

Neither Orthodoxy nor Heterodoxy can tell what the systemic laws of the actual monetary economy are.

Whether the outcome of the human/system-interaction is good or bad is a politcal question that lies outside of theoretical economics. Theoretical economics explains how the actual economy works - no less, no more.

Narrative vs.Theory

Psychological, sociological or behavioral assumptionism cannot yield anything other than a gossip model of the world. Second-guessing the agents is not economic analysis.

Science deals exclusively with propositions that can in principle be decided by objective means. The rest is opinion, faith, phantasy, motive speculation, allegation, hallucination, myth, paranoia, ink-blot association, psychology, philosophy, in one word: storytelling.

Storytelling is the original mode of communication in the social realm — except science.

Political economics is storytelling and, by default, the natural habitat of confused confusers. Walrasianism, Keynesianism, Marxianism, Austrianism are social narratives and not scientifically valid representations of reality.

"The truth is, most persons, not excepting professional economists, are satisfied with very hazy notions." (Fisher)

In marked contrast, theoretical economics lives up to the standards of material and formal consistency. A scientific theory is the best mental representation of reality that is humanly possible.

Theory starts with a set of objective and consistent axioms.

Paradigm Shift

"The problem is not just to say that something might be wrong, but to replace it by something — and that is not so easy." (Feynman)

"As will become evident, there is more agreement on the defects of orthodox theory than there is on what theory is to replace it: but all agreed that the point of the criticism is to clear the ground for construction." (Nell)

"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)

"Is it not a fact, which stares at us from the histories of all sciences, that it is much more difficult for the human mind to forge the most elementary conceptual schemes than it is to elaborate the most complicated superstructure when those elements are well in hand?" (Schumpeter)

"The task of producing knowledge against the grain requires imagination." (Mirowski)

"A new idea is extremely difficult to think of. It takes a fantastic imagination." (Feynman)

"The scientific imagination dreams of explanations and laws." (Peirce)

"It is brilliance of imagination which makes the glory of science." (Evans)

"... we know little more now about ‘how the economy works,’ ... than we knew in 1790, after Adam Smith completed the last revision of The Wealth of Nations." (Clower)

Selftest and to watch for

You apply one of these items

• supply-demand-equilibrium,

• general equilibrium,

• marginal utility,

• well-behaved production functions,

• total income = value of output,

• total income = wages + profits,

• I=S,

• wage rate down - employment up,

• behavioral axioms?

Then you are out of science because of unnoticed material or formal inconsistency.

Every economist who uses the concept of equilibrium is scientifically incompetent because she/he failed to notice that equilibrium is an economic nonentity.

Practically this means: as soon as the word equilibrium appears in an economic text it can be thrown into the waste basket. The same holds for all other nonentities.

The vast majority of economists deals mainly with nonentities. This is why Walrasianism, Keynesianism, Marxianism, Austrianism is scientifically worthless.

Since Adam Smith, economic policy guidance has no sound scientific foundations.

To be replaced (1)

The core premises of Orthodoxy are uncertain and false and this fully explains the failure of the research program.

“As with any Lakatosian research program, the neo-Walrasian program is characterized by its hard core, heuristics, and protective belts. Without asserting that the following characterization is definitive, I have argued that the program is organized around the following propositions: HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub)

The inescapable Paradigm Shift consists of the move from this obsolete hard core to the superior set of structural axioms.

To be replaced (2)

The fundamental equations of macroeconomics have been formulated by Keynes in two lines.

"Income = value of output = consumption + investment. Saving = income - consumption. Therefore saving = investment."

This elementary syllogism is demonstrably false. The demonstration consists in the proof that Keynes could not solve the Profit Puzzle. Neither did Post-Neo-New-Keynesians.

In the most general terms, the economics Paradigm Shift consists in switching from the behavior-centric bottom-up approach to the structure-centric top-down approach. This is comparable to the Copernican turn from geo-centrism to helio-centrism.

Consensus

Economics is a science without scientists. Because they are ignorant of the elementary difference between profit and income, the present generation of economists has not made and cannot make a significant contribution to the discussion about how the actual economy works.

Every orthodox or heterodox economist can convince himself/herself that their profit theory is defective.

Every non-economist can — by applying elementary logic — convince himself that conventional profit theories are false. See 'How the intelligent non-economist can refute every economist hands down'.

Because the profit theory is false the whole of conventional economic theory has to be rejected.

"What is now taught as standard economic theory will eventually disappear, no trace of it will remain in the universities or boardrooms because it simply doesn’t work: were it engineering, the bridge would collapse." (McCauley)

No scientist will ever accept Walrasianism, Keynesianism, Marxianism, or Austrianism. These approaches are logically and/or empirically refuted. This is the actual methodological state-of-art. Walrasians, Keynesians, Marxians, or Austrians are still at the proto-scientific stage. These approaches cannot be improved, only abandoned.

Economists are a public nuisance because they have an opinion on everything but knowledge of nothing.

About me

“Bottom line is that your profit law is just a definition you made up nobody else agrees with, nobody. You are all alone with your precious tautology.” Barkley Rosser

“In any event, your entire theory is based on you doing macro accounting in wacky fashion that nobody agrees with.” Brian Romanchuk

"Your stuff is at least original: it's quite cool after a couple of decades at this to see a fresh Economics. But real promises are not advanced: they were around for millennia until the Greeks obscured them with Metaphysics." Chris Cook

"No mate, they're you-blockers. You have all the personality traits of a crank, and the rest of them have tired of you. You could be 100% right, and you'd still die as your only follower." Steve Keen

"What you are doing fills is all with joy, your constructive critique is most welcome!"

Achim Truger,

German Council of Economic Experts,

in a failed attempt to be ironic

"200+ years of thought and yet you are the only one who gets it—or even understands your argument. Thank god we have you, pseudonymous Twitter user. Otherwise no one would know."

William Luther

Assistant Professor of Economics

in a failed attempt to be funny

"Egmonts profit law is the perfect equation that demonstrates this in action. Put the equation into a spreadsheet and then add government spending and watch how it flows into profits. Enter in some debt (-Sm) and watch too how that flows into profits. It can't go anywhere else."

Dean

About the rest of economics

Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, Pluralism are mutually contradictory, axiomatically false, materially/ formally inconsistent. Economics is a failed science.

“There are three classes of people: those who see. Those who see when they are shown. Those who do not see.” Leonardo da Vinci

In economics, the overwhelming majority belongs to Class III. This explains why economics is after 200+ years still at the proto-scientific level.

The obvious task for every economist is to advance from cargo cult science and political agenda-pushing to science. This is absolutely beyond the means of Class III people.

For 200+ years now, economists are not scientists but agenda pushers, useful idiots, clowns in the political Circus Maximus.

Nopopop

This blog does not add to any popular/un- popular opinion.

This blog does not hand out advice about how to avoid taxes, to get rich on the stock market, to be successful in business, to increase the wealth of nations, to run an economy, to maximize welfare, to prevent national/global bankruptcy, to improve the institutional setup of society, to get out of national/global depression, nor about how to save humankind or any subgroup thereof.

This blog is about the true theory of the actual monetary economy.

"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)

Focus

Science is of primary interest and importance. Scientists are of secondary interest.

With regard to science, most people lose focus easily because of a natural preference for anecdotes and gossip over facts or subjectivity over objectivity.

Hence, Schumpeter once considered it necessary to remind his habitually disoriented fellow economists: “Remember: occasionally, it may be an interesting question to ask why a man says what he says; but whatever the answer, it does not tell us anything about whether what he says is true or false.”

Science is about true/false and nothing else.

Disclaimer

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Caution: Do not expect a corroboration of your political view. Neither a refutation. Political economics has been scientifically worthless since Adam Smith. Politics has to be separated from economics because it is categorically different from science. The best science can do and has always done is to prove beyond reasonable doubt that you have been objectively wrong or ignorant until now. Science goes beyond the naive common sense of today and becomes the sophisticated common sense of tomorrow.

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Outlook

To recall, while political economics is storytelling, theoretical economics adheres to scientific standards.

The first task of theoretical economics is to get the axiomatic foundations right. This is what J. S. Mill called the opus magnum. Neither Orthodoxy nor Heterodoxy came up with a reasonable solution to this day. This explains the secular stagnation of economics.

There is no serious alternative to structural axiomatic economics. This is not a matter of opinion but of proof. The sole criteria are material and formal consistency.

All of economics has to be reconstructed from the ground up.

Major economic policy implication

The price mechanism does not work as standard economics hypothesizes. The axiom-based Employment Law states that overall employment increases if the average wage rate increases relative to average price and productivity. This gives one the lever to improve the employment situation all over the world and to fend off deflation without rising debt and without artificial capacity growth. To increase the average price relative to the average wage rate and productivity increases unemployment.

Right policy depends on 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)

Lacking the true theory, economists promote for more than 200 years opinion instead of knowledge.