September 8, 2018

Both mainstream economics and MMT are axiomatically false

Comment on Arjun Jayadev/J. W. Mason on ‘Mainstream Macroeconomics and Modern Monetary Theory: What Really Divides Them?’

Blog-References and Blog-Reference on Sep 10

Jayadev/Mason argue: “Despite disparate policy beliefs, MMT and orthodox macro rely on many of the same theoretical foundations.” and “While MMT’s policy proposals are unorthodox, the analysis underlying them is entirely orthodox. …The difference between MMT and orthodox policy can be thought of as a different assignment of the two instruments of fiscal position and interest rate to the two targets of price stability and debt stability. As such, the debate between them hinges not on any fundamental difference of analysis, but rather on different practical judgements…”

Nothing could be further from the truth. Mainstream economics is based on Walrasian microfoundations, MMT is based on Keynesian macrofoundations. The unfortunate fact of the matter is that both mainstream economics and MMT are axiomatically false. Now, methodology tells us that if the axiomatic foundations are false the whole analytical superstructure is false. This means, in turn, that economic policy guidance has no sound scientific foundations.

“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) Neither mainstreamer nor MMTers have the true theory.#1

Jayadev/Mason argue: “Recent incarnations of MMT pool several distinct elements ― a theory of money …, a discussion of current monetary operations, a political program (typically a job guarantee), an exercise in national income accounting (sectoral balances) and a program for macroeconomic policy.”

It has been proved that the MMT sectoral balances equation is false.#2, #3

Jayadev/Mason argue: “Both orthodox policy macroeconomics and functional finance start from the same key assumptions: “… 3. There is a level of output such that the behavior of both inflation and unemployment is acceptable. … This assumption can be represented as a Phillips curve, the same general form of which is used by MMT as in conventional textbook presentations.”

It has been proved that the commonplace Phillips curve is false.#4, #5, #6

The fact is that economists do NOT have the true theory. What all of the main approaches ― Walrasianism, Keynesianism/MMT, Marxianism, Austrianism ― have indeed in common is that they are axiomatically false, materially/formally inconsistent, and ALL got profit ― the foundational concept of the subject matter ― wrong.#7

Egmont Kakarot-Handtke

#1 From false micro to true macro: the new economic paradigm
#2 MMT and the single most stupid physicist
#3 For the full-spectrum refutation of MMT see cross-references MMT
#4 Employment theory as an example of proto-scientific soapbubbling
#5 Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster
#6 For details of the big picture see cross-references Employment/Phillips Curve
#7 If it isn’t macro-axiomatized, it isn’t economics


REPLY to Tom Hickey, Matt Franko, André, Konrad on Sep 11

Before things get even deeper into the dark woods a reminder: both mainstream economics and MMT are axiomatically false and materially/formally inconsistent. The proofs are open before all eyes. So, there is no use to discuss this cargo cult science stuff any longer.

The right thing to do is to bury orthodox and heterodox economics at the Flat-Earth-Cemetery and to forget it. As Joan Robinson said: “Scrap the lot and start again.”

MMTers and other incompetent scientists can do something useful for a better world and a brighter future by giving up blogging but instead taking part in an MMT Job Guarantee Program.

REPLY to ejhr on Sep 14

The T in MMT stands for theory. A theory has to be materially and formally consistent. Descriptively convincing is not enough because the ‘sun goes up’ is also descriptively convincing but scientifically unacceptable.#1

Take notice that MMT is materially/formally inconsistent and therefore refuted on all counts.

#1 Richard Murphy: the MMT fraudster dressed up as realist

REPLY to ejhr on Sep 16

For the full-spectrum refutation of MMT see cross-references MMT.

REPLY to ejhr on Sep 17

Politically, MMT is money-making for the one-percenters and scientifically it is proto-scientific garbage. The MMT sectoral balances equation (I−S)+(G−T)+(X−M)=0 is provably false.

MMT is scientifically worthless and you are way behind the curve.

REPLY to ejhr on Sep 18

Economics is NOT about the Constitution, the Law, or the institutional specifics of the Federal Reserve System. This is the stuff of other disciplines. Economics is about how the monetary economy works and about the economic laws, for example, the Profit Law or the Employment Law.

MMTers do NOT know the Profit Law because they are scientifically incompetent. How ridiculous is this ― economists who do not even know what profit is! #1

MMT policy guidance has NO sound scientific foundations. It is brain-dead propaganda and agenda-pushing for the one-percenters. #2, #3

Take notice that the MMT sales personnel is NOT qualified to take part in a scientific debate. This does not only apply to intellectual low-fliers like Warren Mosler, Stephanie Kelton, Bill Mitchell but a fortiori to garbage posters like you.

#1 Both Mainstreamer and MMTer are either stupid or corrupt or both
#2 MMT: The one deadly error/fraud of Warren Mosler
#3 Smart! How to make people fund their brain-washing

REPLY to ejhr on Sep 19

You say: “Fancy thinking Economics could be a science. It’s nothing but an assembly of opinions.”

You are obviously deep in the woods: “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)

Neither mainstreamers nor MMTers have the true theory. But economists claim for 200+ years that economics is a science. Obviously, you never heard of the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.

So, not only MMTers are fake scientists but economics as a whole is a proto-scientific fraud since the founding fathers.

Science is about knowledge. Opinions are worthless. This is known since the ancient Greeks introduced the distinction between episteme and doxa more than 2000 years ago. MMTers have no valid scientific knowledge but are clowns and useful idiots in the political Circus Maximus. They are not different from the rest of the profession.

#1 What is so great about cargo cult science? or, How economists learned to stop worrying about failure

REPLY to ejhr on Sep 20

You said above: “MMT cannot be rebutted as it is not a theory. [The fed reserve of Chicago described it as Modern Monetary Mechanics] but a description of existing structures in economics. We already live in an MMT world.”

In his latest post#1, Bill Mitchell says: “… a Tweet the other day reminded me that there was still major misunderstandings of what Modern Monetary Theory (MMT) represents and that it was time to clarify some of those errors in comprehension. Specifically, there is a current out there that considers MMT to be incorrectly labelled because according to the argument there is no theory involved. It’s hard to imagine why anyone would think that but the fact that they do tells me that I should write this blog post. As I noted yesterday, our Macroeconomics textbook to be published by Macmillan Palgrave in February 2019 is full of theory. It has a lot of description, taxonomy, accounting, history, and philosophy, but also a lot of theory that ties some of those other components together in a meaningful way. The T in MMT is not a misnomer.”

It is pretty obvious that you do not understand anything about science in general and MMT, in particular. This defect you share with the rest of the MMT sales personnel.#2

I said, MMT is proto-scientific garbage and ― to use Stephanie Kelton’s words ― “one of the greatest cons ever perpetrated on the American people”#3

#1 Bill Mitchell, Understanding what the T in MMT involves
#2 Richard Murphy: the MMT fraudster dressed up as realist
#3 Smart! How to make people fund their brain-washing