May 22, 2018

Both orthodox and heterodox economists are cargo cult scientists

Comment on Lars Syll on ‘People having bad luck when trying to think’


Andrew Lilico wrote in The Telegraph: “But rationality is not an assumption of orthodox economic theory in that sense. Instead, it is what is called an ‘axiom’. No behaviour can prove that people aren’t, in fact, rational, because for an orthodox economist the only kind of explanation of any behaviour that counts as an economic explanation is an explanation that makes sense of that behaviour ― that shows why the behaviour is rational.”

Lars Syll comments on this: “Wooh! Who would have thought anything like that? Build your science on whatever foolish axioms you like ― and since they are axioms no one can really criticize them and show that you are wrong.”

Lars Syll clearly suffers from the methodological delusion that ‘axiom’ means ‘beyond critique’. This is sheer nonsense and every scientist worth his salt knows this.

Every scientific analysis needs a well-defined starting point: “The attempt is made to collect all the assumptions, which are needed, but no more, to form the apex of the system. They are usually called the ‘axioms’ (or ‘postulates’, or ‘primitive propositions’; no claim of truth is implied in the term ‘axiom’ as here used). The axioms are chosen in such a way that all the other statements belonging to the theoretical system can be derived from the axioms by purely logical or mathematical transformations. (Popper)

Or, as Aristotle put it 2300+ years ago: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.”

Or, as J. S. Mill put it: “What are the propositions which may reasonably be received without proof? That there must be some such propositions all are agreed, since there cannot be an infinite series of proof, a chain suspended from nothing. But to determine what these propositions are, is the opus magnum of the more recondite mental philosophy.”

No methodologist ever claimed that axioms cannot be criticized or changed. As a matter of fact, the move from one set of axioms to a new one is known as Paradigm Shift. Keynes famously advocated such a shift: “Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. Something similar is required to-day in economics.”#1

Newton put his PHYSICAL axioms on the first pages of Principia. In methodological analogy ECONOMIC axioms have been laid down by economists. The core of orthodox economics is given with this verbalized set of axioms: “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)

It is pretty obvious that the neo-Walrasian axiom set contains three NONENTITIES: (i) constrained optimization HC2, (ii) rational expectations HC4, (iii) equilibrium HC5. Every theory/model that contains just one NONENTITY is a priori false. And when the axioms are false the whole analytical superstructure is false.

The axioms of orthodox economics are NOT “certain, true, and primary” and because of this, the whole analytical superstructure is scientifically worthless.

Economists never grasped what science is all about: “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.” (Feynman)#2,

What economics is missing to this day is the formally and materially consistent set of axioms. Heterodox economists like Lars Syll are methodologically just as incompetent as orthodox economists.#3

Egmont Kakarot-Handtke

#1 Show first your economic axioms or get out of the discussion
#2 Why is economics a total scientific failure?
#3 True macrofoundations: the reset of economics

For details of the big picture see cross-references Scientific Incompetence and cross-references Failed/Fake Scientists.