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“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)
The goal of science is the true theory. The true theory is the humanly best mental representation of reality. Science is for 2300+ 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.
According to the criteria of material/formal consistency, economics is a failed science. Economists do not possess a true theory. The fact of the matter is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal concept of the subject matter ― profit ― wrong.
Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). This corresponds approximately to Noah Smith’s mistaken idea of science: “What it [orthodox macroeconomics] is, is science. Not the clean, idealized lab science of physics or chemistry, or the simple, convincing studies of microeconomics. But as messy and limited as it is, empirical macro represents a real, honest, ongoing attempt by dedicated researchers to explore the ins and outs of a hideously complex and hard-to-measure system. Someday, thanks to their modest, diligent efforts, we will probably understand the phenomena of booms and busts much better than we do now.”
Noah Smith thinks that Orthodoxy has a communication problem: “But elected politicians looking for a bold policy program and asset managers looking for a bold investment thesis are frequently tempted by heterodox economic theories claiming to have simple, sweeping solutions. Two examples are Austrian economics and modern monetary theory.” And: “The boldness and confidence of these predictions — and the comparative lack of math — makes these theories much more attractive to politicians and investors compared to the turgid scribblings of professors.”
No, communication is neither the problem of Orthodoxy nor of Heterodoxy. Scientific content is the problem. Both Orthodoxy and Heterodoxy is proto-scientific garbage. Both, orthodox and heterodox economists are scientifically incompetent. As a consequence, Noah Smith’s conclusion misses the point: “In other words, both policy makers and politicians should be reluctant to embrace the sweeping claims of unconventional theorists. Instead, a cautious approach, relying on judgment, data, and an eclectic mix of theories, seems best.”
There is no way around it: economics does NOT need an “eclectic mix” of provably false theories but the true theory. After 200+ years, economics has to get out of the swamp of what Feynman called cargo cult science. In methodological parlance, economics has to abandon false Walrasian microfoundations#1 and false Keynesian macrofoundations#2 and move to true macrofoundations.#3 Economics needs a Paradigm Shift. The materially/ formally inconsistent orthodox and heterodox models have to be buried at the Flat-Earth Cemetery. All orthodox and heterodox economists have to be expelled from the scientific community.
To this day, the axiomatic foundations of economics are provably false. This holds for Walrasianism, Keynesianism, Marxianism, Austrianism, and also for MMT.#4 MMT has the methodological advantage that it is based on a clearly defined sectoral balances equation. This enables the straightforward application of the scientific method. Accordingly, the question is 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 equation (I−S)+(G−T)+(X−M)−(Q−Yd)=0.
Both equations consist of measurable variables and are testable with the precision of two decimal places. This is a clear-cut true/false question that can be unambiguously decided according to well-established scientific criteria.
The MMT equation is logically/mathematically false. Economists are too stupid for the elementary mathematics that underlies macroeconomics.#5 Because of this, the whole analytical superstructure of MMT is false. Because the theory is false MMT policy guidance has NO sound scientific foundations ― just like Walrasianism, Keynesianism, Marxianism, and Austrianism.
Right policy depends on true theory. To this day, economists do NOT have the true theory. There is no escape: false theory becomes political fraud#6 and incompetent scientists become useful political idiots. This is the state of present-day economics.
#1 Microfoundations are given with this axiom set: “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) Accepting these axioms has always been a reliable indicator of idiocy.
#2 How Keynes got macro wrong and Allais got it right
#3 True macrofoundations are given with this axiom set: (A0) The most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
#4 Hooray! The formalization issue is finally settled
#5 Wikipedia and the promotion of economists’ idiotism (II)
#6 MMT: How mathematical incompetence helps the Kelton-Fraud
Related 'Economists: too stupid for counting' and 'Knowledge is attainable ― even in economics' and 'How economists murdered the economy and got away with it' and 'Economics is locked in idiocy: How could this happen?' and 'Dani Rodrik, fake scientist' and 'Still beyond the reach of economists: The Holy Grail of Science' and 'Are economists natural born scientific failures?' and 'Confused Orthodoxy vs. confused Heterodoxy' and 'Eclecticism, anything goes, and the pluralism of false theories' and 'The creative destruction of Wren-Lewis' and 'The biggest scientific mistake of the last centuries, and it has much to do with academic economists' and 'Why is economics a total scientific failure?' and 'Economists: Either stupid or corrupt or both' and 'From Keynes’ fatal blunder to the true economic model' and 'Mad but true: 200+ years after Adam Smith economists still have no idea what profit is' and 'Smart young empirically-minded economists: another vain hope' and 'Media-fake-farce-fraud-storytelling-macro' and 'Economists: Either stupid or corrupt or both' and 'Proving Bill Mitchell wrong ― burying MMT for good' and 'The canonical macroeconomic model' and 'There is NO such thing as “smart, honest, honorable economists”' and 'Profit' and 'Your economics is refuted on all counts: here is the real thing'.