August 20, 2019

Economics ― not science, not ideology, just useful idiocy

Comment on Simon Wren-Lewis on ‘How should academic economics cope with ideological bias’


A closer look at the history of economic thought reveals that there are TWO economixes: political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.

The historical fact is that theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years: Walrasianism, Keynesianism, Marxianism, Austrianism, MMT are mutually contradictory, axiomatically false, and materially/formally inconsistent. This pluralism of provably false theories is NOT science.

However, from Adam Smith/Karl Marx onward to the faux ‘Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel’ academic economists claim to do science. As Simon Wren-Lewis asserts: “Economics can only be called a science because it embraces the scientific method. The moment evidence is routinely ignored by academics because it does not help some political project economics stops being the science it undoubtedly is.”

It is NOT. Fact is that economists continuously violate scientific standards which are well-defined since antiquity: “Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)

The scientific method implies the elimination of falsified approaches/hypotheses/theories. This does NOT happen in economics as Morgenstern criticized back in 1941: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” Or as Hands put it: “... suppose they did reject all theories that were empirically falsified ... Nothing would be left standing; there would be no economics.”

Economists never managed to produce more than proto-scientific garbage or to rise above the level of what Feynman called 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.”

What is missing to this day is the materially/formally consistent theory of how the monetary economy works. Economists do NOT strive for clear-cut true/false answers but instead, keep everything in the swamp between true false where “nothing is clear and everything is possible.” (Keynes)#1 Vagueness is a tried and tested survival strategy because “… you cannot prove a vague theory wrong.” (Feynman)

The historical fact is that economists are too stupid for the elementary math that underlies macroeconomics. To this day, Keynesians, Post-Keynesians, and MMTers use the sectoral balances equation (I−S)+(G−T)+(X−M)=0 which is provably false because it lacks the balance of the business sector, i.e. macroeconomic profit.#2 This is not a minor mistake but invalidates the whole of macroeconomics and microeconomics. Because economic theory is false, economic policy guidance NEVER has had sound scientific foundations.

The heap of inconsistent economic approaches has no truth-value, however, this does not matter much in the political realm where all that counts is propagandistic use-value. This is why proto-scientific garbage is still around. Economics has always been a well-stocked rummage table for arguments that help to secure the status quo. More has not been expected by the founders and funders of economics departments, chairs, and institutions. And this has always been delivered. Rockefeller called the university ‘the best investment’ he ever made.

This is the built-in bias of economics since J. S. Mill, who was 35 years on the payroll of the East India Company and defined economics as “inexact and separate science”. Economics is NOT a science and NOT an ideology.#3 Economics is agenda-pushing in the cloak of science. To this day, economics lacks valid scientific foundations. This holds for both orthodox and heterodox economics and Simon Wren-Lewis is no exception.#4-#7

Egmont Kakarot-Handtke

#1 And the answer is NCND ― economics after 200+ years of Glomarization
#2 The axiomatically correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0. See also: Wikipedia and the promotion of economists’ idiotism (II)
#3 An ideology is a manufactured ensemble of ideas/beliefs/norms/symbols as a means of creating/upholding/mobilizing group identity, i.e. a more or less sharp distinction between We (inclusion) and the Rest (exclusion). See also Wikipedia.
#4 Macro ignorance: Why Simon Wren-Lewis does not come to grips with the plain MMT-fraud
#5 Economic policy and the skirmishes of failed/fake scientists
#6 Are economics professors really that incompetent? Yes!
#7 The retirement of a fake scientist and real agenda pusher

Related 'Links on the Economics Nobel' and 'The end of political economics (I) and 'The end of political economics (II)'. For details of the big picture see cross-references Political Economics/Stupidity/Corruption'.