Geoff Davies summarizes: “The need for a new start in economics arises regularly on this blog site.” and “Many of the ideas presented here have been around for some time but the subject has been in some confusion, with a tendency still, among dissenting economists, to think of ‘schools’ of thought and to promote a ‘pluralist’ approach. Whereas it is laudable to consider a wide range of ideas, rather than the sterile monoculture of mainstream neoclassical economics, the result has still lacked coherence. For example, the recently issued book Rethinking Economics has chapters on Post-Keynesian, Marxist, Austrian, Institutional, Feminist, Behavioural, Complexity, Co-operative and Ecological Economics but little about how the various conceptions might relate to each other.”
Indeed, economics is a heap of proto-scientific garbage. The major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism, MMT — are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept of profit wrong. Economics is a failed science. It has not even gotten its foundational concepts profit/income/saving etcetera right and therefore stands where physics stood in the Middle Ages before the foundational concept of energy was properly defined and clearly understood. What we actually have after 200+ years is the pluralism of provably false theories.
Scientific standards are well-defined for 2300+ years: “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)
Both Orthodoxy and traditional Heterodoxy are outside of science. Because of this, economics needs a Paradigm Shift. This is long known: “There is another alternative: to formulate a completely new research program and conceptual approach. As we have seen, this is often spoken of, but there is still no indication of what it might mean.” (Ingrao et al., 1990, p. 362)
Economists know quite well that they are outside of science. However, they have no scruples to award themselves the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”. Because there is no such thing as scientifically valid economics, the EconNobel is a fraud.
Worse, because economists do not have the true theory but only a heap of proto-scientific garbage, economic policy guidance is on one level with the poultry entrails-reading of the ancient Roman haruspex.#1
Economists are not smart enough to realize that, in science, pluralism is a sign of failure: “For if they [opinions] conflict, then at best only one of them can be true.” (Popper) Being stupid and corrupt for 200+ years, though, economists propagate more of the same: “Economics commentator Martin Wolf, in his Foreword to Rethinking Economics, puts it in more homely terms: ‘The economics that humanity will need will surely display the vigour of the mongrel, not the neuroses of the pure-bred.’”
The New Economic Thinking of folks who have not gotten the foundational concepts of economics right to this day and who have no idea where exactly economics went wrong is as brain-dead as the old economic thinking has been for over 200 years.
Keynes, at least, spotted the crucial methodological point: “For if orthodox economics is at fault, the error is to be found not in the superstructure, which has been erected with great care for logical consistency, but in a lack of clearness and of generality in the premises.” and “The classical theorists resemble Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight — as the only remedy for the unfortunate collisions which are occurring. Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. Something similar is required to-day in economics.”
Unfortunately, Keynes messed up the Paradigm Shift from microfoundations to macrofoundations. Here is the precise location in the General Theory where macroeconomics went wrong: “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.)
Keynes, the economist and political busybody, had no idea what profit, the foundational concept of economics, is. Worse, neither pro-Keynesians nor anti-Keynesians spotted Keynes’ lethal blunder in the last 80+ years.#2-#4 All of them are too stupid for the elementary algebra that underlies macroeconomics. So, in effect since the founding fathers, economists get away with plain scientific garbage. The fact of the matter is that neither the general public nor the representative economist is able to spot a scientific blunder even when it is done in slow motion in front of their faces. They cannot spot fake science even when all the traditional warning signs are present and when they have been warned in no uncertain terms about 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)
Those who tell the world that economics is failed/fake science are right. However, to state the obvious is scientifically not good enough: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug)
In other words, it takes a Paradigm Shift. The problem with economists is that they have no idea what a Paradigm Shift is all about. Paradigm Shift does NOT mean exponentially increasing the pluralism of false theories. Given the state of economics, Paradigm Shift means to move from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations.#5-#8 Needless to emphasize that this is absolutely beyond both orthodox and heterodox economists, i.e. of folks with an intellectual capacity that is just sufficient for an assignment as a clown and useful idiot in the political Circus Maximus.
The new start in economics, i.e. the Paradigm Shift, presupposes that all these folks, the ‘throng of superfluous economists’ as Joan Robinson called them, are expelled from the scientific community.
Next time, when somebody waffles about New Economic Thinking, ask her/him to show their set of axioms, i.e. their foundational propositions. If this set is not macroeconomic and not precise and not consistent and not testable in its logical implications but consists of critique, moralizing, and policy proposals that have no valid scientific foundations you know you have just another stupid/corrupt agenda pusher before you.
Time to bury these folks at the Flat-Earth-Cemetery.
#1 Econogenics: economists pose a hazard to their fellow citizens
#2 Modern macro moronism
#3 Macroeconomics: Drain the scientific swamp
#4 Macroeconomics and the fake History of Economic Thought
#5 From false microfoundations to true macrofoundations (II)
#6 The canonical macroeconomic model
#7 Swimming naked: economists and the Paradigm Shift
#8 For details of the big picture see cross-references Paradigm Shift and cross-references Axiomatization.
Related 'Economics: The greatest scientific fraud in modern times' 'Eclecticism, anything goes, and the pluralism of false theories' and 'The inexorable Paradigm Shift in economics' and 'Both orthodox and heterodox economists are cargo cult scientists' and 'How Keynes got macro wrong and Allais got it right' and 'Show first your economic axioms or get out of the discussion' and 'If it isn’t macro-axiomatized, it isn’t economics'.
You say: “Economics, as any historian or anthropologist can tell you instantly, is hopelessly intertwined with politics and culture. Perhaps the lesson is obvious, but many had to learn it the hard way. Everything is interlocked, and no piece of the puzzle can be considered in isolation from the others. Thus, the basic question we need to ask and work to answer is: how does society work? In this work it became quickly clear that instead of looking for the simplest pieces possible, as social scientists do now, we needed to look at how those pieces go together into complex wholes. Complexity enters our work.”
First, economics is NOT a social science but a systems science. The question is NOT how society works but how the economy works. Second, you forgot to mention that the whole complexity thing was an Oligarchy-sponsored project. Not much different from the General Equilibrium thing that went before.
“By the way, he said, he'd recently been up in New York at a meeting of the board of the Russell Sage Foundation, which gives away a lot of money for social science-type research. And while he was there he'd talked to a friend of his, fohn Reed, the new chief executive officer of Citicorp. Now, Reed was a pretty interesting guy, said Adams.” (Waldrop, p. 91)
“Since becoming CEO in 1984, said Reed, he'd spent the bulk of his time cleaning up this mess. It had already cost Citibank several billion dollars-so far-and had caused worldwide banking losses of roughly $300 billion. So what kind of alternative was he looking for? Well, Reed didn't expect that any new economic theory would be able to predict the appointment of a specific person such as Paul Volker. But a theory that was better attuned to social and political realities might have predicted the appointment of someone like Volker-who, after all, was just doing the politically necessary job of inflation control superbly well. More important, he said, a better theory might have helped the banks appreciate the significance of Volker's actions as they were happening. ‘Anything we could do that would enhance our understanding and tease out a better appreciation for the dynamics of the economy in which we live would be well worth having,’ he said. And from what he'd heard about modern physics and chaos theory, the physicists had some ideas that might apply. Could the Santa Fe Institute help?” (Waldrop, p. 95)
Better to forget the complexity hype which was just another failed approach. For more on increasing returns and macroeconomics see Increasing Returns and Stability and Increasing returns and the art of self-trapping and The happy end of distortion.