Blog-Reference and Blog-Reference
Economics is a failed science. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the foundational economic concept profit wrong. This raises the question where the methodologists were all the time? Did they not see what went wrong? Did they not spot the methodological blunders? And did they never have any idea how to fix matters?
No, economic methodologists are an integral part of the failure. What holds for the representative economist holds also for the representative methodologist: both have no idea what science is all about. From the Classicals onward, both the first tier economists and the second tier methodologists simply tried to emulate the triumphant sciences: “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
Accordingly, the failure of economics and the triumph of science was always explained with the unfair advantages of the latter. Basically, the same argument is repeated for 200+ years now.
• “There is a property common to almost all the moral sciences, and by which they are distinguished from many of the physical; this is, that it is seldom in our power to make experiments in them. In chemistry and natural philosophy, we can not only observe what happens under all the combinations of circumstances which nature brings together, but we may also try an indefinite number of new combinations. This we can seldom do in ethical, and scarcely ever in political science. … We therefore study nature under circumstances of great disadvantage in these sciences; being confined to the limited number of experiments which take place (if we may so speak) of their own accord, without any preparation or management of ours; in circumstances, moreover, of great complexity, and never perfectly known to us; and with the far greater part of the processes concealed from our observation.” (J. S. Mill, 1874)
• “Years ago I heard Mr. Cobden say at a League Meeting that ‘Political Economy was the highest study of the human mind, for that the physical sciences required by no means so hard an effort’.” (Bagehot)
• “Human psychology is not available for inductive study, because of the differences between individual minds, the immense multitude of the influencing circumstances, the practical difficulty of experiment upon human beings.” (Viner)
• Economists have taken physics as the model for science. Physicists use two basic tools: laboratory experiments and mathematics. But as laboratory experiments have a very limited application in economics, this leaves mathematics as the main tool for economists to try to mimic physics. So, economists hugely borrowed the mathematical instruments used by physicists. They did it to such an extent that, for instance, for the philosopher of science Alexander Rosenberg, economics is not an empirical science at all; for him, it is a branch of applied mathematics.” (Beker)
• “Direct empirical evidence on individual behavior is difficult ― some would say impossible ― to come by. But what little we know from experiments by psychologists like Daniel Kahneman and Amos Tversky and others does not suggest that homo sapiens behaves like homo economicus ... It is remarkable how little impact this evidence has had on modern economics.” (Blinder)
• “Economics is a strange sort of discipline. The booby traps I mentioned often make it sound as it is all just a matter of opinion. That is not so. Economics is not a Science with a capital S. It lacks the experimental method as a way of testing hypotheses. . . . There are always differences of opinion at the cutting edge of a science, . . . . But they last longer in economics . . . and there are reasons for that. As already mentioned, rival theories cannot be put to an experimental test.” (Solow)
• “One of the limitations with economics is the restricted possibility to perform experiments, forcing it to mainly rely on observational studies for knowledge of real-world economies. But still ― the idea of performing laboratory experiments holds a firm grip of our wish to discover (causal) relationships between economic ‘variables.’ If we only could isolate and manipulate variables in controlled environments, we would probably find ourselves in a situation where we with greater ‘rigour’ and ‘precision’ could describe, predict, or explain economic happenings in terms of ‘structural’ causes, ‘parameter’ values of relevant variables, and economic ‘laws’.” (Nancy Cartwright)
All these excuses are trivially true, of course, and good enough for not-so-smart economics students but do not hold methodological water. The fact is that the failure of economics is due to the scientific incompetence of economists. Here is the proof that economists AND methodologists like Nancy Cartwright are too stupid for the elementary mathematics that underlies macroeconomics.
Keynes famously stated in the General Theory: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
This syllogism is conceptually and logically defective because Keynes NEVER came to grips with profit: “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Let this sink in, the economist Keynes NEVER understood profit, i.e. the fundamental concept of economics. So, Keynes’ I=S is false and by consequence the multiplier and all I=S/IS-LM models. Instead, Q≡I−S is true with Q as macroeconomic profit.#4, #5, #6
So, Keynes got it wrong 80+ years ago, yet neither Keynesians nor Post-Keynesians nor New Keynesians nor Anti-Keynesians nor methodologists nor Nany Cartwright nor Lars Syll spotted the logical inconsistency in Keynes’ macrofoundations to this day.#7
The complete macroeconomic Profit Law is given as Q≡Yd+(I−S)+(G−T)+(X−M). It consists of variables that are measurable with the precision of two decimal places and it is testable at any time.
What Nancy Cartwright and Lars Syll tell their academic and non-academic audiences about methodology is provably false. The problem of economics is NOT that the subject matter is of insurmountable difficulty but that economists are either scientifically incompetent or politically corrupt or both.
#1 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#2 Social science is NOT a science but a sitcom
#3 Economics: The chief demerit is inconsistency
#4 Are economics professors really that incompetent? Yes!
#5 Controlled demolition of MMT ― an exercise in elementary logic
#6 The canonical macroeconomic model
#7 Macroeconomics: Economists are too stupid for science
Related 'Economists and their silly excuses' and 'Axiomatized NONENTITIES and the failure of methodologists' and 'Shocking: methodology is a tricky business' and 'Methodology 101, economic filibuster, and the mother of all excuses' and 'Economic recommendations out of the swamp between true and false' and 'Failed economics: The losers’ long list of lame excuses' and 'Did economics fail? No! Yes, and everybody knows it!' and 'Heterodoxy’s scientific self-burial' and 'When substandard thinkers dabble in science it is called economics' and 'Economics, methodology, morals ― a creepy freak-show' and 'The inexorable Paradigm Shift in economics'. For details of the big picture see cross-references Methodology.