September 2, 2018

Go! ― test the Profit and Employment Law

Comment on Lars Syll on ‘When did you last hear an economist say something like this?’

Blog-Reference and Blog-Reference

Lars Syll quotes Einstein: “If the observations of the red shift in the spectra of massive stars don’t come out quantitatively in accordance with the principles of general relativity, then my theory will be dust and ashes.” (1920)

The problem with Lars Syll is that he suffers from ADHD (Attention Deficit Hyperblathering Disorder). Check-back question: When did Lars Syll as the heterodox chief proponent of ontological-uncertainty/anything-goes last formulate a testable proposition?

Here are the test challenges for the fake scientist Lars Syll:

Profit Law “… the macroeconomic Profit Law for the open economy with a government is given as Q=Qm+Qn with Qm≡Yd+(I−Sm)+(G−T)+(X−M). Legend: Q total profit, Qm monetary profit/loss, Qn nonmonetary profit/loss, Yd distributed profit, Sm monetary saving/ dissaving, I investment expenditures, G government spending, T taxes, X export, M import. Because all variables are measurable, the axiomatically correct Profit Law is testable.” #1, #2, #3, #4

Employment Law “There is no need, though, to discuss much about contradicting assertions because the Employment Law is testable. Therefore, an experimentum crucis that settles the matter is possible in principle.” #5, #6, #7

Needless to emphasize that the scientifically incompetent representative economist habitually ignores all test challenges.#8 Lars Syll is NO exception. He knows very well that testing would turn his ramshackle Post-Keynesianism to dust and ashes.

Egmont Kakarot-Handtke

#1 Economists and their silly excuses
#2 The key to macro and Keen's debt-employment model
#3 Profit: after 200+ years, economists are still in the woods
#4 First Lecture in New Economic Thinking
#5 You have the data, here is the Employment Law
#6 Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster
#7 Essentials of Constructive Heterodoxy: Employment
#8 Profit and the Private-Property-Irrelevance Theorem

Related 'Economists’ proto-scientific methodology' and 'Ricardo, too, got profit theory wrong' and 'MMTers make capitalism work' and 'National Accounting: scientific incompetence or political fraud?' and 'Economists simply don’t get it'. For details of the big picture see cross-references Profit and cross-references Employment/Phillips Curve.

Wikimedia AXEC121i


REPLY to Barkley Rosser on Sep 3 Economists simply don’t get it


REPLY to Barkley Rosser, Sandwichman on Sep 3

You say: “OTOH, some of us have made empirical hypothese and then actually tested them. I have done so myself, but do not feel like spending time and space laying those out. Rathwr I remind you of experimental economics where empirical testing of hypotheses goes on all the time and is done in a seriously sceintific manner, …”

Yes, this is exactly the definition of cargo cult science: “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) #1, #2, #3

What is missing is scientific competence. Science is committed to the growth of knowledge, and scientific knowledge is well-defined by material and formal consistency. Formal consistency is established by the axiomatic-deductive method, material consistency by state-of-art testing.

OTOH, anti-science is the promotion of confusion in the form of storytelling, senseless blather, gossip, disinformation, meta-communication, attention management, false-applause/real-suppression, trivial distraction, delirious prophecy, fake news, deceit, fraud, feeble jokes, etcetera.#4

Your contributions to economics perfectly fit the definition of cargo cult science.

REPLY to Barkley Rosser on Sep 4

You report: “Reinhard Selten suggested to Werner Guth that he should run experiments on what is known as the ultimatum game. This has now been verified by massive follow-up experiments as a deeply robust result about human behavior that goes against standard economics assumptions about ‘rationality,’ namely that most people are willing to give up money in order to punish others whom they see as behaving in unfair activities.”

Very interesting, indeed. It seems to escape you, though, that the whole issue of punishing and other games people play is the subject matter of psychology/sociology. The subject matter of economics ― get it ― is NOT how people behave but how the economy behaves. Economics is NOT a so-called social science but a systems science.#1

The scientific incompetence of economists consists of not even realizing what their subject matter is. And this is why they have not figured out to this day what profit is. This is absolutely disqualifying for economists from Adam Smith onward to Barkley Rosser.

Your examples of the empirical work of V. Smith, Selten, Guth, Kahneman, Tversky, Thaler, Schelling tells everybody four essential things about economics: (i) that these so-called economists never understood what economics is all about, (ii) what the pivotal concept of their subject matter is, (iii), that the representative economist is a cargo cult scientist, and (iv), that the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a fraud.

As long as economists have not tested the macroeconomic (= systemic) Profit Law and the Employment Law, economics remains what it is for 200+ years, i.e. a cargo cult science.

The fact is that there is NO greater embarrassment in the history of modern science than economics. And you are part of it.#2

Twitter Aug 4

"No idea is true just because someone says so. Test ideas by the evidence gained from observation and experiment. If a favorite idea fails a well-designed test, it's wrong." (Feynman)