January 28, 2020

Economics, MMT, and the corruption of science

Comment on Bill Mitchell on ‘If it quacks!’*

Blog-Reference and Blog-Reference

The political fact of the matter is this: currently there is NO Democracy and there is NO Autocracy. The currently prevailing form of government has been called Oligarchy by the ancient Greeks.#1 The first problem of the Oligarchy is to keep up the appearances of democracy, that is, political measures should appear as the faithful execution of the will/best interest of WeThePeople. This applies in particular to economic policy. So, one important activity of the Oligarchy has always been to produce public opinion and populist pressure. Needless to emphasize that the term Oligarchy does not denote something homogenous and fixed but a temporary institutional arrangement. Neither does the term imply a moral valuation.

The economic fact of the matter is this: the market economy is already for a long time on the life support of the State. The economy runs on profits and macroeconomic profit is in the main produced by public deficits. The axiomatically correct macroeconomic Profit Law reads Q≡Qm+Qn with Qm≡Yd+(I−Sm)+(G−T)+(X−M). This Law tells one, among many other things, that Public Deficit G−T>0 = Private Profit Qm which means that the Oligarchy’s financial wealth and public debt grow in lockstep, or, in a formula: Financial Wealth of the Oligarchy = Public Debt of WeThePeople. The beauty of the situation is that people think that public debt is somebody else’s problem. This is true, of course, until it is no longer true, that is until the debt stops growing or goes into the reverse. The market economy lives literally on borrowed time.

The Oligarchy, in turn, uses the opulent deficit-produced free lunches to nudge the State’s legislative, executive, judiciary institutions in its favor. Much of the money goes into the production of public opinion. Without knowing the details, one can assume for a mature Oligarchy that key opinion producers like journalists, entertainers, priests/preachers/ gurus, writers, filmmakers, and academics are with few exceptions directly or indirectly sponsored/supported/controlled by the Oligarchy.

And here is the problem: in the political realm, anybody can talk any bullshit whatsoever, in the scientific realm this is NOT admitted. Science is committed to the growth of knowledge and scientific knowledge is well-defined by material and formal consistency. At least, this was the idea before science became politically weaponized. This happened in economics at an early stage. The founding fathers considered themselves as political economists which is to say as useful idiots for the (then-) Oligarchy.

“That Political Economy is a science which teaches, or professes to teach, in what manner a nation may be made rich. This notion of what constitutes science is in some degree countenanced by the title and arrangement which Adam Smith gave to his invaluable work. A systematic treatise on Political Economy, he chose to call an Inquiry into the Nature and Causes of the Wealth of Nations; and the topics are introduced in an order suitable to that view of the purpose of his book.” (J. S. Mill)

To this day, economics is at the proto-scientific level. The major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism, MMT — are mutually contradictory, axiomatically false, and materially/formally inconsistent. Economics does NOT satisfy scientific criteria. This would be no problem because under the license of free speech/ freedom of the press anything goes in the political realm. However, economists claim from Adam Smith/Karl Marx onward to the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” to do science. This is NOT the case, the representative economist is NOT a scientist but a political fraudster.

The actual case is MMT. Academic MMTers like Bill Mitchell and Stephanie Kelton are currently extremely busy to spread the gospel of deficit-spending/money-creation. This runs in perfect harmony with Mr. Trump’s policy.

The exact point where the fraud kicks in is when MMTers tell the general public that MMT is for the benefit of WeThePeople and that MMT helps to solve almost all problems between unemployment and the survival of humanity.

Bill Mitchell argues: “… the current challenges are different to a military threat but an existential threat no less and require urgent and significant response from the public sector. … The broader point is that the ‘means’… cannot be constructed in terms of financial aggregates. To do so is to construct the currency-issuing government as being financially-constrained in the same way a household is. A household has to earn income or borrow or run down prior savings or sell previously acquired assets (financial or otherwise) in order to spend. A currency-issuing government is not financially constrained and can purchase whatever is for sale in that currency including all idle labour.”

This is true in the same sense that a counterfeiter always has the ‘means’ to buy whatever he wants. However, from the fact that this is technically possible does NOT follow that it is good policy. Taken the economy as a whole, it is bad policy for WeThePeople and good policy for the Oligarchy. Bringing money into the economy at the demand side amounts to robbing WeThePeople.#2, #3

There is NO way around it: MMT policy is a political fraud and MMT academics are stupid/corrupt scientists. Science is built on the ethics of individual integrity and self-government of the scientific community. As MMT proves, economics is politically corrupted and the mechanisms of scientific self-government do not function properly.

MMT is false theory, MMT is false policy, MMTers are fake scientists and agenda pushers for the Oligarchy.#4 The rest of economics, though, is NOT any better.

Egmont Kakarot-Handtke

*   Billy Blog
#1 Wikipedia Oligarchy
#2 Criminals and the monetary order
#3 Q: How are you going to pay for it? MMT: By stealth taxation!
#4 MMT: How the Oligarchy communicates with WeThePeople

Related 'There is no truth in political economics' and 'Keynes, Lerner, MMT, Trump, etc. and exploding profit' and 'Another MMT shitshow' and 'Bill Mitchell, MMT, Progressives: economists as Oligarchy hacks' and 'Cryptoeconomics ― the best of Bill Mitchell’s spam folder' and 'Bill Mitchell cracks the spending whip over the Swabian Housewife' and 'MMT, Bill Mitchell, and the lack of basic scientific integrity' and 'MMT: Academic snake oil for the people'. and 'Very busy these days: Wall Street’s agents' and 'The problem with economics as a discipline' and 'Trust in science? Yes, but economics is NOT a science' and 'Exploding the Household Fallacy' and 'Stephanie Kelton: “All deficits are good for someone” Yes, Someone=Oligarchy' and 'Mr. Wray goes to Washington' and 'Deficit cheerleaders ― the Oligarchy’s useful idiots' and 'How to spot economics trolls' and 'Show first your economic axioms or get out of the discussion' and 'Links on the Economics Nobel' and 'Economics and corruption'.


Philip Mirowski Money and the Unflappable Economist