August 6, 2020

Economics is a disgrace ― now more than ever

Comment on Claudia Sahm on ‘Economics is a disgrace’ * ‡

The true disgrace of economics is that it is failed/fake/cargo cult science for 200+ years. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept of profit wrong.#1 By consequence, economic policy guidance has never had sound foundations. This applies to left/center/right policy. Economists are a hazard to their fellow citizens.#2

This is why economics has to be burnt down to the ground. However, Claudia Sahm demands “Burn it down: economics failed us.” This is upside-down thinking. In the scientific realm, the question is, what have you done for science and not what has science done for you. However, economists are not scientists, and science is the last thing Claudia Sahm cares about.

Claudia Sahm is “privileged enough to hold a PhD” but has not realized to this day that economics is failed/fake science.#3 That means that she is part of it.

What she cares about primarily is to make the story of her martyrdom in a toxic institutional culture (painful appears 7 times in her post) and her psychic condition (bipolar disorder) as widely known as possible. She does this for herself and on behalf of other victims, in particular vulnerable students and women of color, but does not forget to mention the recent deaths of Krueger, Weitzman, Sandholm, Farhi as proof of the psychological toxicity of economics.

Everybody knows that something is rotten in economics as a scientific discipline. But Claudia Sahm does not deliver a material/formal refutation of mainstream economics but sends a letter to Janet Yellen, Ben Bernanke, and Peter Rosseau complaining about the toxic culture of the profession.

This, of course, is a farce. You cannot be an economist without realizing at some point that academic economics is not committed to the advancement of objective scientific truth but that it is a crucial propaganda outlet of the Oligarchy.

This is no secret. Arrow defined the rules of the game in his famous AEA address: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.”

So, either you subscribe to the ideology of methodological individualism and the peer-review gatekeepers let you in and thus help you to get on a financially attractive trajectory with the Bank of Sweden Nobel at the end of the rainbow or you get problems ― psychological or otherwise.

All this is really old stuff. Economics started as Political Economy and J. S. Mill was on the payroll of the East India Company. Economics has from the beginning on been the Oligarchy’s heavily promoted queen of the so-called social sciences.

The disgrace of economics is that economists have not produced much of genuine scientific value for 200+ years: “Thousands upon thousands of scholars, as well as thousands of statesmen and men of affairs, have contributed their efforts to the attempt to understand the course of events of the economic world. And today this field of investigation is being cultivated more extensively, than ever before. How is it, then, that in all these years, and with all the undoubted talent that has been lavished upon it, the subject of economics has advanced so little? (Schoeffler)

Worse, economists still do not understand profit ― the foundational concept of their subject matter.#4 Worse, MMTers with academic credentials apply a provably false macroeconomic balances equation in order to camouflage that public deficit-spending/money-creation is to the disadvantage of WeThePeople and a free lunch for the Oligarchy.

Claudia Sahm does not address any scientific issues or the role of economists as useful idiots, she instead accuses academic economics of psychological cruelty, well knowing that this emotional issue will bring her immediate attention and the approval of the general public.

No doubt, the economics profession in the incarnation of the AEA will pledge guilty and promise betterment and reform and rework their code of conduct.

This, of course, is the usual farce. Claudia Sahm wittingly or unwittingly helps to cover the real disgrace of economics. Economics ― orthodox and heterodox alike ― needs to be condemned for the corruption of science. The condemnation for toxic culture is justified but entirely beside the point. It is like a sociopathic mobster getting off cheaply by pleading guilty of having stolen a candy bar.

Egmont Kakarot-Handtke


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