February 3, 2019

MMT vs The Rest of Economics ― a Punch and Judy show

Comment on Brian Romanchuk on ‘Why Are MMT Critiques Generally Terrible?’

Blog-Reference and Blog-Reference

There is the political sphere where, in principle, everybody is admitted. The currency in the political sphere is opinion. Opinion is different from knowledge and the fact of the matter is that it is most of the time false or merely commonsensically true.

“There are always many different opinions and conventions concerning any one problem or subject-matter... This shows that they are not all true. For if they conflict, then at best only one of them can be true. Thus it appears that Parmenides ... was the first to distinguish clearly between truth or reality on the one hand, and convention or conventional opinion (hearsay, plausible myth) on the other ...” (Popper)

The discourse in the political sphere has not much to do with truth or reality but with myth, storytelling, gossip, second-guessing, propaganda, belief, paranoia, disinformation, and entertainment.

The very opposite of opinion is knowledge. Science is about knowledge. Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). The distinction between science and non-science corresponds to the ancient Greek’s distinction between episteme (= knowledge) and doxa (= opinion).

Science is for 2000+ years defined by material and formal consistency. Logical consistency is secured by applying the axiomatic-deductive method and empirical consistency is secured by applying state-of-art testing.

“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)

What the general public cannot see is that economists do not have the true theory. The fact of the matter is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal concept of the subject matter ― profit ― wrong. MMT is NO exception.

The lethal critique of MMT is that its macroeconomic foundations are provably false. So, the gigantic opinion/critique/polemic/disinformation bubble about MMT’s deficit-spending/money-creation, inflation, taxation, the debt burden, the Job Guarantee, etcetera boils scientifically down to the question of which of the two foundational macroeconomic equations is true, i.e. materially and formally consistent:
• the MMT sectoral balances equation: (I−S)+(G−T)+(X−M)=0 or
• the axiom-based balances equation: (I−S)+(G−T)+(X−M)−(Qm−Yd)=0.#2

Note that this is NOT a question about opinion or political preferences but a clear-cut true/false question that can be unambiguously decided according to well-established scientific criteria.

The answer is that the MMT equation is logically/mathematically false. Because of this, the whole analytical superstructure of MMT is false.#3, #4, #5, #6, #7 This settles the matter. MMT is dead and buried at the Flat-Earth-Cemetery just like Walrasianism, Keynesianism, Marxianism, and Austrianism.

This, though, does not stop Brian Romanchuk, MMTers, and the rest of economists from blathering as if there were no tomorrow. In order to understand this phenomenon, one has to drop the presumption that economics has anything to do with science or that economists are scientists. For 200+ years now, economics is a fake science and economists are either clowns or fraudsters in the political Circus Maximus.

Egmont Kakarot-Handtke

#1 The economist as stand-up comedian
#2 Wikipedia and the promotion of economists’ idiotism (II)
#3 MMT: How to get out of the infinite meta-communication loop
#4 Brian Romanchuk’s Post-Keynesian idiocy
#5 Economics as tireless production of proto-scientific garbage: inflation theory as an example
#6 Truth by definition? The Profit Theory is axiomatically false for 200+ years
#7 MMT: How mathematical incompetence helps the Kelton-Fraud