Occasional X: Clueless economists / Science (CCCXCV)

“Murray Rothbard spent two volumes and over 1,500 pages doing what mainstream economics departments refuse to do: tracing the intellectual lineage of economic thought without flattering the victors.” (Handre) The history of economic thought is the history of scientific failure. Economics has been failed/fake science since the Founding Fathers (AXEC179a ⇓). It has defined itself as a social science and accordingly has been based on subjective/behavioral assumptions/axioms. This is the methodological ur-mistake. The major approaches (Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives) are mutually contradictory, axiomatically false, and materially/formally inconsistent. They all got profit wrong. When the subject's foundational concepts are inconsistent, the entire analytical superstructure is scientifically worthless. The existential requirement of a free-market economy is that macroeconomic profit is greater than zero. Otherwise, recession/depression/breakdown results. This is the main economic principle; all other explanations of how the economy works are secondary. Utility/profit maximization or free people on free markets or competition or hard work or innovation or the entrepreneur do not keep the economy above the zero-profit cutoff. Scientifically, it's rather simple: no macroeconomic profit, no economy. Actually, economics is about how the economy works. It is a genuine systems science. The representative economist does not understand what economics is all about. The School of Salamanca, too, did not get much above moralizing. They remained in the theological tradition. Therefore, from the fact that Adam Smith and his followers promoted failed/fake science, it does not logically follow that the School of Salamanca and their Austrian proponents are scientifically superior. Austrianism, too, is failed/fake science. As Feynman put it: “The problem is not just to say that something might be wrong, but to replace it by something ― and that is not so easy.” Handre and Rothbard are right to say that Adam Smith was a lousy scientist, but their implication that Austrians did categorically better is self-delusional. To finally become a science, economics needs a Paradigm Shift from false behavioral microfoundations and false Keynesian macrofoundations to true macrofoundations.

— AXEC (@EgmontHandtke) November 12, 2026