Blog-Reference and Blog-Reference and Blog-Reference on Jun 30 adapted to context and Blog-Reference
Many people think that economics is part of science. This is a superficial impression. Fact is that economics is part of the entertainment industry. One of the performances that feature regularly in the Circus Maximus is ‘The mysterious death of economics: formalism murdered realism ― or was it just the other way round?’
Of course, the question is not answered. The purpose of Circus Maximus is NOT to settle controversies, the purpose is to keep the show running. This is the main task of the impresario: “Paul Krugman, … is the impresario of this new age, a strident but pathologically clear headed critic of the way in which the macroeconomics of the business cycle actually retrogressed after the 1980s.”#1
Circus Maximus, of course, needs more than one impresario. Krugman introduces himself as orthodox loudspeaker: “… most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point ...”. One of the loudspeakers of Heterodoxy is Lars Syll.
The formalization debate is a joint production of Orthodoxy and Heterodoxy that runs since the time of Jevons/Walras/Menger.#2, #3, #4, #5
Lars Syll delivers an almost lethal blow with the realism argument: “So when Krugman and other ‘modern’ mainstream economists use their models — standardly assuming rational expectations, Walrasian market clearing, unique equilibria, time invariance, linear separability and homogeneity of both inputs/outputs and technology, infinitely lived intertemporally optimizing representative agents with homothetic and identical preferences, etc. — and standardly ignoring complexity, diversity, uncertainty, coordination problems, non-market clearing prices, real aggregation problems, emergence, expectations formation, etc. — we are supposed to believe that this somehow helps them ‘to avoid motivated reasoning that validates what you want to hear’ and provide ‘legitimacy’.”
Indeed, nobody can take the foundational assumptions of Orthodoxy seriously.
Lars Syll, though, as an adherent of the Marshall/Keynes tradition of loose verbal reasoning never had much more to offer than common sense blather and storytelling.#6
Paul Krugman does not fail to put the finger on Heterodoxy’s irreparable defect: “I’ve seen quite a lot of what economics without math and models looks like — and it’s not good.”
And that’s it. Heterodoxy easily knocks down Orthodoxy and Orthodoxy easily knocks down Heterodoxy.
It is pretty obvious that this bunch of cargo cult scientists never understood what methodology is all about. Aristotle put it thusly: “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.”
The fact of the matter is that both Walrasian microfoundations and Keynesian macrofoundations are NOT “certain, true, and primary”. Methodology tells us that if the premises are false the whole analytical superstructure is false.
Formalization is just another word for what Aristotle described as the scientific method or what is called the axiomatic-deductive method: “I mean by this that formalization eliminates provincial and inessential features of the way in which a scientific theory has been thought about. … Formalization is a way of setting off from the forest of implicit assumptions and the surrounding thickness of confusion, the ground that is required for the theory being considered. … In areas of science where great controversy exists about even the most elementary concepts, the value of such formalization can be substantial.” (Suppes)
Fact is that both Orthodoxy and Heterodoxy got the most elementary concepts of economics, i.e. income and profit, badly wrong.#7, #8 This is like medieval physics before the concept of energy was clearly defined and fully understood. Faulty conceptualization, not formalization, is the ultimate cause of failure.#9
Premises have to be clearly stated and conclusions have to be derived in a logically unbroken chain. This minimum requirement applies to all branches of science. But economics is NOT a science but a clown show of confused orthodox and heterodox agenda pushers.
Both Orthodoxy and Heterodoxy got formalization wrong. Both Paul Krugman and Lars Syll are incompetent scientists. Time for the final curtain, time for the impresarios to get out of economics, time to make economics a science.
#1 Gruen A lucky boy from a golden age of economics
#2 Coming to terms with formalization
#3 Mathiness and the Ur-Blunder
#4 Putting the production function back on its feet
#5 For details of the big picture see cross-references Math/Mathiness
#6 Marshall and the Cambridge school of plain economic gibberish
#7 Profit: after 200+ years, economists are still in the woods
#8 Do first your macroeconomic homework!
#9 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
Related 'Beware of the moralizing economist' and 'Why is economics such a scientific embarrassment?' and 'The stupidity of Heterodoxy is the life insurance of Orthodoxy' and 'Economics: 200+ years of scientific incompetence and fraud' and 'Enough! Economists, retire now!' and 'Truth by definition? The Profit Theory is axiomatically false for 200+ years'. For details of the big picture see cross-references Failed/Fake Scientists.'