Blog-Reference and Blog-Reference on Jul 27 adapted to context and Blog-Reference
The common methodological blunder of orthodox and heterodox economists and the ultimate reason why economics is one of the worst scientific failures of all times consists of defining economics as a social science.
While it is trivially true that human behavior plays an important role in how an economy develops, this is NOT the subject matter of economics but of psychology, sociology, anthropology, history, political science, social philosophy, biology/evolution theory etcetera.
Imagine a passenger plane flying at high speed at high altitudes. Now, one can ask two entirely different questions about this phenomenon, i.e. (i) behavioral, or (ii), physical.
• Behavioral questions relate to the motives of travel, social status e.g. 1st/2nd class, feelings/fear of flying/claustrophobia/euphoria, satisfaction with comfort/service/ entertainment, trust in pilots/crew/airline, uncertainty about value-for-money, etcetera.
• Physical questions relate to the laws of aerodynamics, thermodynamics, material stability of the craft, weather conditions, navigation, remaining fuel supply, etcetera.
The theory of flight abstracts from the concrete human beings and leaves all Human Nature issues to so-called social scientists, that is, to people who can endlessly waffle about utility/happiness but will NEVER get a plane or anything else off the ground.
Analogous for the subject matter of economics. Economics has to focus on the systemic aspects of the economy, in other words, economics is NOT a social science but a systems science.
Unfortunately, economics took the wrong turn at the very beginning because it defined itself as Political Economy. Politics, though, is the very antithesis of science.#1
The most important scientific contribution an economist can make is to reveal how the actual economy works. This contribution takes the form of the true theory with truth well-defined as material and formal consistency.
The crucial step on the way to the true theory is to move from the naive description of reality to abstraction: “Since, therefore, it is vain to hope that truth can be arrived at, either in Political Economy or in any other department of the social science, while we look at the facts in the concrete, clothed in all the complexity with which nature has surrounded them, and endeavour to elicit a general law by a process of induction from a comparison of details; there remains no other method than the à priori one, or that of ‘abstract speculation’.” (J. S. Mill)
Needless to emphasize that abstraction can go badly wrong. By getting stuck with Human Nature/motives/behavior/action economists committed the Fallacy of Insufficient Abstraction. And this is why economics is a failed science.#2
Economists got lost in the woods with folk-psychological and folk-sociological blather about utility/happiness and can to this very day NOT tell what profit is and how the price- and profit mechanism works. Walrasianism, Keynesianism, Marxianism, Austrianism is proto-scientific garbage but the former editor of the Review of Behavioral Economics, the Cargo Cult Scientist Barkley Rosser, has not got it and will never get it.
Happiness is a new bluff package for economists to sell their proto-scientific garbage. After all, nobody can argue against happiness.
#1 Yes, orthodox economics is poor science, but can Heterodoxy raise hope?
#2 Economics: 200+ years of scientific incompetence and fraud
Related 'Economists: Jacks-of-all-trades ― except economics' and 'The Science-of-Man fallacy' and 'How incompetent are economic methodologists? Very!' and 'The problem with economics as a discipline' and 'Economics ― the science that never was' and 'MMTers are false Progressives and false Friends-of-the-People'. For details of the big picture see cross-references NOT a Science of Behavior.