AXEC: New Foundations of Economics: Behavior

Showing posts with label Behavior. Show all posts

November 3, 2026

Occasional X: The foul spirit of political economics (CDXXIX)

“Really? :-D it doesn't matter what guides people to do things? The incentive and behavior under the incentives doesn't matter for your economics? :-D then what do you study, you don't study the economy - how people allocate resources. So what do you study?” (Inclamiente) You are behind the curve. The question has already been answered: “The subject matter of economics is not homo oeconomicus but the economic system. Because of this, economics has to be redefined. — Old definition, subjective-behavioral: “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” (Lionel Robbins, 1935) — New definition, objective-structural: “Economics is the science which studies how the monetary economy works.” (AXEC) The original methodological blunder of Orthodoxy has been that it attempted to axiomatize human behavior. This is a fine example of what Feynman called cargo cult science, i.e., ‘The form is perfect. But it doesn't work.’ The correct approach consists of axiomatizing the objective structural relationships of the monetary economy.” For details, see Redefining economics (I) https://t.co/Ju2upUfGPg To finally become a science, economics needs a Paradigm Shift (AXEC121l. It's pretty obvious that low-IQ folks like Inclamiente will not survive this intellectually.
— AXEC (@EgmontHandtke) November 3, 2026

October 30, 2026

Occasional X: The foul spirit of political economics (CDXIX)

“Austrian, more properly Mengerian economics, is perfect deduction from pure a priori first principles. So history, statistics, all empirical data, is irrelevant. Mengerianism is what must by true, not what merely happens, or any distracting reality.” (RFB) Methodologically, the Austrian Action Axiom is a tautology. Nobody can deny it, but nothing follows from it. Deduction does not work if the premises are false. Scientists have known this for more than 2400 years: “When the premises are certain, true, and primary and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.” Austrianism is proto-scientific garbage because of the behavioral premise. Economics is a genuine systems science, NOT a social science; i.e., it is NOT about Human Nature / motives / behavior / preferences / choice / incentives / values / actions / expectations, etc. Psycho-social economics has always been cargo cult science (Feynman's term). No way leads from the understanding of individual behavior to the understanding of the behavior of the economy as a whole. Mindreading homo oeconomicus, a.k.a. the economic agent, is (i) a futile exercise to begin with, and (ii) pointless because it runs with logical necessity into the Fallacy of Composition. Economics 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. Put simply: Human-Nature economists in general, and Austrians in particular, are scientifically incompetent imbeciles and methodologically in the darkest woods. The Mises Institute is not an independent think tank with a scientific mission, but a dependent propaganda tank with a political mission.
— AXEC (@EgmontHandtke) October 30, 2026

October 26, 2026

Occasional X: The foul spirit of political economics (CDXII)

“I love Economists who think that complex human behavior across hundreds of millions actors can be precisely calculated with an equation, based on data that no one audits or can be verified.” (RFB) You are in the wrong movie. Economics is a genuine systems science, NOT a social science; i.e., it is NOT about Human Nature / motives / behavior / preferences / choice / incentives / values / actions / expectations, etc. Psycho-social economics has always been cargo cult science (Feynman's term). No way leads from the understanding of individual behavior to the understanding of the behavior of the economy as a whole. Mindreading homo oeconomicus, a.k.a. the economic agent, is (i) a futile exercise to begin with, and (ii) pointless because it runs with logical necessity into the Fallacy of Composition. Economics 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. Put simply: Human-Nature economists are scientifically incompetent imbeciles and methodologically in the dark woods. RFB is living proof.
— AXEC (@EgmontHandtke) October 26, 2026

October 19, 2026

Occasional X: Paradigm Shift (CXXVII)

“Economists spent 200 years assuming humans make perfect decisions, until a political scientist proved we just grab the first option that's good enough, won the Nobel Prize in economics for it, and then taught a machine to think the exact same way. …His name was Herbert Simon. The book is called Administrative Behavior.” (Millie Marconi) It has been well known for a long time that behavioral microfoundations have been proto-scientific garbage from the beginning. However, this is the original scientific corruption of economics: “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.” (Morgenstern, 1941) Every economics student can see that the entire history of economic thought is the history of scientific failure. Either he is (i) a scientist and tries to perform the inevitable Paradigm Shift, or (ii) he joins the ranks of brain-dead academic parrots. Needless to emphasize, that, given the incentive structure, he chooses (ii), and ultimately his cognitive dissonance ends in schizophrenia. Then, he is finally awarded the EconNobel. Economics 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. Economics is not a behavioral science, but a genuine systems science. Therefore, to finally become a science, economics needs a Paradigm Shift from false behavioral microfoundations and false Keynesian macrofoundations to true macrofoundations. Herman Simon rectified the standard behavioral assumptions. However: “The problem is not just to say that something might be wrong, but to replace it by something ― and that is not so easy.” (Feynman) Herman Simon proved legacy economics wrong, but he missed the Paradigm Shift.
— AXEC (@EgmontHandtke) October 19, 2026

September 24, 2026

Occasional X: The foul spirit of political economics (CCCLXIV)

“Milton Friedman explains how affirmative action can’t eradicate prejudice and argues that society can make better progress by understanding human nature.” (Students for Liberty)

From the beginning, economists didn't get the difference between science/politics and economics/…
— AXEC (@EgmontHandtke) September 24, 2026

September 4, 2026

Occasional X: The foul spirit of political economics (CCCLXII)

“When I think of Behavioral Economics, I think of an economics that is open-minded. I think of a field that is open to the world of ideas outside our often narrow-minded profession.” (Remy Levin)

The Assistant Professor of Economics Remy Levin never understood profit and,… pic.twitter.com/C4DupstDIO
— AXEC (@EgmontHandtke) September 4, 2026

September 3, 2026

Occasional X: Clueless economists / Science (CCCLXXXIV)

“The main reason socialism has always failed and caused misery and poverty is that equality of outcome is incompatible with the incentives a society needs to build, create, innovate and prosper.” (Michael Arouet)

To explain social behavior is the task of psychology, sociology,…
— AXEC (@EgmontHandtke) September 3, 2026

August 29, 2026

Occasional X: The futile attempt to recycle behavioral economics (XVII)

“Economist Sam Bowles says it’s time to cultivate and empower the better side of human nature instead of letting the few who behave like selfish maximizers ruin our economy.” (Sam Bowles, quoted by evonomics)

There are greedy persons, but the economic system does not run on…
— AXEC (@EgmontHandtke) August 29, 2026

August 28, 2026

Occasional X: Clueless economists / Science (CCCLXXX)

“How Neoclassical Economics Corrupted Business Schools, Corporations, and the Economy. …Those of us who study society, coach soccer, help our neighbors, raise children, and look within ourselves, all know such a view of human behavior is not true, and more important, if such a… pic.twitter.com/snsonedvT5
— AXEC (@EgmontHandtke) August 28, 2026

August 3, 2026

Occasional X: Clueless economists / Science (CCCLXVIII)

“The beauty of Austrian economics is that it springs from real human action and does not depend upon the construction of abstract mathematical models meant to parallel reality.” (James Anthony)

Austrianism is a cargo cult science, and Austrians are look-alike scientists. How do…
— AXEC (@EgmontHandtke) August 3, 2026

August 2, 2026

Occasional X: The futile attempt to recycle Austrianism (CXVII)

“As Ludwig von Mises showed, economics is the study of human behaviour. And the tools of economics can explain far more than markets, prices and production - they can illuminate almost every aspect of human behaviour.” (Creative Deduction)

No, economics is not 'the study of… pic.twitter.com/bExzWDLwM2
— AXEC (@EgmontHandtke) August 2, 2026

July 31, 2026

Occasional X: The foul spirit of political economics (CCCXXXVI)

“Economists think about what people ought to do. Psychologists watch what they actually do.” (Daniel Kahneman, quoted by Robert Murphy)

Economics has defined itself as a social science and accordingly has been based on subjective/behavioral assumptions/axioms. This is the… pic.twitter.com/XwwPqfXFKj
— AXEC (@EgmontHandtke) July 31, 2026

July 16, 2026

Occasional X: The foul spirit of political economics (CCCXII)

“Argentina as the ambivalence of the multipolar world. It (unjustifiably) defeats Egypt and thus the Global South. But then it defeats England and makes a point for the Global South.” (Branko Milanovic)

Whatever this is, it is not economics.

Economics has defined itself as a… pic.twitter.com/ErdM5EBwvR
— AXEC (@EgmontHandtke) July 16, 2026

Related 'From PsySoc to SysHum'

July 15, 2026

Occasional X: Clueless economists / Science (CCCLVII)

“Harvard anthropologist Joseph Henrich: 'The first problem is that many behavioral economists haven’t fully confronted what I call the WEIRD People problem. (Western, Educated, Industrialized, Rich and Democratic) Researchers often think they’re studying 'Homo sapiens', but… pic.twitter.com/HQmdecBNbr
— AXEC (@EgmontHandtke) July 15, 2026

July 6, 2026

Occasional X: Clueless economists / Science (CCCLI)

“The biggest mistake economists make is treating people like particles. People don't obey equations. They learn, adapt and change their minds. That's why Ludwig von Mises believed economics requires a fundamentally different method.” (Creative Deduction)

Since J. S. Mill,…
— AXEC (@EgmontHandtke) July 6, 2026

For more about inexact and separate science, see AXECquery.

July 3, 2026

Occasional X: Clueless economists / Science (CCCL)

“But there's a problem with economics, even first-year economics. Economics isn't settled. That's not all bad, or a disgraceful scandal in the science. Obviously, for one thing, economics involves issues of ethics about which humans disagree. For another, the disagreeing,… pic.twitter.com/I4MBm49Aky
— AXEC (@EgmontHandtke) July 3, 2026

May 29, 2026

Occasional X: Clueless economists / Science (CCCXXXIII)

“The Austrian corpus is internally consistent.” (Rothbard, quoted by Law the Lawless)

No, Austrianism is axiomatically false and deductively inconsistent. It is based on the behavioral triviality that human wants have a priority order. ⇓ This is true, but leads to nothing of… pic.twitter.com/UPk1avP5Ih
— AXEC (@EgmontHandtke) May 29, 2026

May 16, 2026

Occasional X: The futile attempt to recycle Austrianism (CV)

“A professor proposed ethno-mathematics: maybe 2+2 could be something else in your culture.” (Mises Media)

Yes, question the premises, but don't stop there. Advance to the Paradigm Shift. The new premises represent the ultimate critique of the old ones.

This applies primarily…
— AXEC (@EgmontHandtke) May 16, 2026

Occasional X: Clueless economists / Science (CCCXXII)

“'Time preference' is one of the sharpest concepts in the Austrian School of Economics. … Those who exhibit 'high time preference' prioritize immediate gratification: consume today, go into debt, plunder the present. Those with 'low time preference' sacrifice current pleasures… pic.twitter.com/UaWMvDvQEx
— AXEC (@EgmontHandtke) May 16, 2026

May 2, 2026

Occasional X: Clueless economists / Science (CCCII)

“Violence and oppression must be considered a critical factor for capitalisms survival. You left the concept of structural violence out of your equation.” (DecentraliseEverything)

From the beginning, economists didn't get the difference between science/politics and…
— AXEC (@EgmontHandtke) May 2, 2026

“The problem is distribution. But we can't address that without acknowledging what deficit really is.” (DecentraliseEverything)

You are light-years behind the curve. Learn to read and read my post

MMT: Distribution is the drawback NOT Inflationhttps://t.co/bN9m3BqFC1
— AXEC (@EgmontHandtke) May 2, 2026

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Knowledge only — no opinion

Science does not explain everything, but non-science explains nothing.

Neither orthodox nor heterodox economics satisfies the scientific criteria of material and formal consistency.

Economists cannot explain how the economy works. The Profit Theory is false since Adam Smith. There is much opinion and little knowledge.

Opinion is the realm of political economics, knowledge is the realm of theoretical economics.

Political economics is scientifically worthless.

Theoretical economics is built upon clearly stated premises, i.e., upon a set of axioms.

Orthodoxy got the axiomatic foundations wrong and Heterodoxy has none at all.

Economics is a failed science. Economists are incompetent scientists.

Profit

Neither Classicals, nor Walrasians, nor Marshallians, nor Marxians, nor Keynesians, nor Institutionialists, nor Monetary Economists, nor MMTers, nor Austrians, nor Sraffaians, nor Evolutionists, nor Game theorists, nor EconoPhysicists, nor RBCers, nor New Keynesians, nor New Classicals ever came to grips with profit. Hence, they all fail to capture the essence of the market economy.

Because of this, economists have nothing to offer in the way of a scientifically founded economic policy guidance.

The hybrid science

As a first approximation, one can agree on the general characteristic that the economy is a complex system.

However, with the term system one usually associates a structure with components that are non-human. In order to stress the obvious fact that humans are an essential component of the economic system the market economy should be characterized more precisely as a complex hybrid human/system entity.

The scientific method is straightforwardly applicable to the sys-component but not to the hum-component. While it is clear that the economy always has to be treated as an indivisible whole, for good methodological reasons the analysis has to start with the objective system-component.

In gestalt-psychological terms the economic system is the foreground, individual behavior the background. Common sense wrongly insists that the hum-component must always be in the foreground. This fallacy compares to geo-centrism. The economic system has its own logic which is different from the behavioral logic of humans. The systemic logic is what Adam Smith called the Invisible Hand.

There are systemic laws but no behavioral laws. Systemic laws have the same methodological status as physical laws.

Neither Orthodoxy nor Heterodoxy can tell what the systemic laws of the actual monetary economy are.

Whether the outcome of the human/system-interaction is good or bad is a politcal question that lies outside of theoretical economics. Theoretical economics explains how the actual economy works - no less, no more.

Narrative vs.Theory

Psychological, sociological or behavioral assumptionism cannot yield anything other than a gossip model of the world. Second-guessing the agents is not economic analysis.

Science deals exclusively with propositions that can in principle be decided by objective means. The rest is opinion, faith, phantasy, motive speculation, allegation, hallucination, myth, paranoia, ink-blot association, psychology, philosophy, in one word: storytelling.

Storytelling is the original mode of communication in the social realm — except science.

Political economics is storytelling and, by default, the natural habitat of confused confusers. Walrasianism, Keynesianism, Marxianism, Austrianism are social narratives and not scientifically valid representations of reality.

"The truth is, most persons, not excepting professional economists, are satisfied with very hazy notions." (Fisher)

In marked contrast, theoretical economics lives up to the standards of material and formal consistency. A scientific theory is the best mental representation of reality that is humanly possible.

Theory starts with a set of objective and consistent axioms.

Paradigm Shift

"The problem is not just to say that something might be wrong, but to replace it by something — and that is not so easy." (Feynman)

"As will become evident, there is more agreement on the defects of orthodox theory than there is on what theory is to replace it: but all agreed that the point of the criticism is to clear the ground for construction." (Nell)

"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)

"Is it not a fact, which stares at us from the histories of all sciences, that it is much more difficult for the human mind to forge the most elementary conceptual schemes than it is to elaborate the most complicated superstructure when those elements are well in hand?" (Schumpeter)

"The task of producing knowledge against the grain requires imagination." (Mirowski)

"A new idea is extremely difficult to think of. It takes a fantastic imagination." (Feynman)

"The scientific imagination dreams of explanations and laws." (Peirce)

"It is brilliance of imagination which makes the glory of science." (Evans)

"... we know little more now about ‘how the economy works,’ ... than we knew in 1790, after Adam Smith completed the last revision of The Wealth of Nations." (Clower)

Selftest and to watch for

You apply one of these items

• supply-demand-equilibrium,

• general equilibrium,

• marginal utility,

• well-behaved production functions,

• total income = value of output,

• total income = wages + profits,

• I=S,

• wage rate down - employment up,

• behavioral axioms?

Then you are out of science because of unnoticed material or formal inconsistency.

Every economist who uses the concept of equilibrium is scientifically incompetent because she/he failed to notice that equilibrium is an economic nonentity.

Practically this means: as soon as the word equilibrium appears in an economic text it can be thrown into the waste basket. The same holds for all other nonentities.

The vast majority of economists deals mainly with nonentities. This is why Walrasianism, Keynesianism, Marxianism, Austrianism is scientifically worthless.

Since Adam Smith, economic policy guidance has no sound scientific foundations.

To be replaced (1)

The core premises of Orthodoxy are uncertain and false and this fully explains the failure of the research program.

“As with any Lakatosian research program, the neo-Walrasian program is characterized by its hard core, heuristics, and protective belts. Without asserting that the following characterization is definitive, I have argued that the program is organized around the following propositions: HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub)

The inescapable Paradigm Shift consists of the move from this obsolete hard core to the superior set of structural axioms.

To be replaced (2)

The fundamental equations of macroeconomics have been formulated by Keynes in two lines.

"Income = value of output = consumption + investment. Saving = income - consumption. Therefore saving = investment."

This elementary syllogism is demonstrably false. The demonstration consists in the proof that Keynes could not solve the Profit Puzzle. Neither did Post-Neo-New-Keynesians.

In the most general terms, the economics Paradigm Shift consists in switching from the behavior-centric bottom-up approach to the structure-centric top-down approach. This is comparable to the Copernican turn from geo-centrism to helio-centrism.

Consensus

Economics is a science without scientists. Because they are ignorant of the elementary difference between profit and income, the present generation of economists has not made and cannot make a significant contribution to the discussion about how the actual economy works.

Every orthodox or heterodox economist can convince himself/herself that their profit theory is defective.

Every non-economist can — by applying elementary logic — convince himself that conventional profit theories are false. See 'How the intelligent non-economist can refute every economist hands down'.

Because the profit theory is false the whole of conventional economic theory has to be rejected.

"What is now taught as standard economic theory will eventually disappear, no trace of it will remain in the universities or boardrooms because it simply doesn’t work: were it engineering, the bridge would collapse." (McCauley)

No scientist will ever accept Walrasianism, Keynesianism, Marxianism, or Austrianism. These approaches are logically and/or empirically refuted. This is the actual methodological state-of-art. Walrasians, Keynesians, Marxians, or Austrians are still at the proto-scientific stage. These approaches cannot be improved, only abandoned.

Economists are a public nuisance because they have an opinion on everything but knowledge of nothing.

About me

“Bottom line is that your profit law is just a definition you made up nobody else agrees with, nobody. You are all alone with your precious tautology.” Barkley Rosser

“In any event, your entire theory is based on you doing macro accounting in wacky fashion that nobody agrees with.” Brian Romanchuk

"Your stuff is at least original: it's quite cool after a couple of decades at this to see a fresh Economics. But real promises are not advanced: they were around for millennia until the Greeks obscured them with Metaphysics." Chris Cook

"No mate, they're you-blockers. You have all the personality traits of a crank, and the rest of them have tired of you. You could be 100% right, and you'd still die as your only follower." Steve Keen

"What you are doing fills is all with joy, your constructive critique is most welcome!"

Achim Truger,

German Council of Economic Experts,

in a failed attempt to be ironic

"200+ years of thought and yet you are the only one who gets it—or even understands your argument. Thank god we have you, pseudonymous Twitter user. Otherwise no one would know."

William Luther

Assistant Professor of Economics

in a failed attempt to be funny

"Egmonts profit law is the perfect equation that demonstrates this in action. Put the equation into a spreadsheet and then add government spending and watch how it flows into profits. Enter in some debt (-Sm) and watch too how that flows into profits. It can't go anywhere else."

Dean

About the rest of economics

Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, Pluralism are mutually contradictory, axiomatically false, materially/ formally inconsistent. Economics is a failed science.

“There are three classes of people: those who see. Those who see when they are shown. Those who do not see.” Leonardo da Vinci

In economics, the overwhelming majority belongs to Class III. This explains why economics is after 200+ years still at the proto-scientific level.

The obvious task for every economist is to advance from cargo cult science and political agenda-pushing to science. This is absolutely beyond the means of Class III people.

For 200+ years now, economists are not scientists but agenda pushers, useful idiots, clowns in the political Circus Maximus.

Nopopop

This blog does not add to any popular/un- popular opinion.

This blog does not hand out advice about how to avoid taxes, to get rich on the stock market, to be successful in business, to increase the wealth of nations, to run an economy, to maximize welfare, to prevent national/global bankruptcy, to improve the institutional setup of society, to get out of national/global depression, nor about how to save humankind or any subgroup thereof.

This blog is about the true theory of the actual monetary economy.

"In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion." (Stigum)

Focus

Science is of primary interest and importance. Scientists are of secondary interest.

With regard to science, most people lose focus easily because of a natural preference for anecdotes and gossip over facts or subjectivity over objectivity.

Hence, Schumpeter once considered it necessary to remind his habitually disoriented fellow economists: “Remember: occasionally, it may be an interesting question to ask why a man says what he says; but whatever the answer, it does not tell us anything about whether what he says is true or false.”

Science is about true/false and nothing else.

Disclaimer

Missing Blog-Reference links: AXEC does not guarantee that their comments can at any time be recovered from where they have been posted intitially because the availability depends on the publication policy of the blog owner which is implicitly accepted on entering a debate. See also: 'Economists: Incompetent? Stupid? Corrupt?'

Texts: Parts of arbitrary length of any of the author's texts is and will be used again by the author in papers, books, websites, blogs, and other media without explicit reference. The right to make corrections or minor textual improvements on reutilization is reserved. Therefore, it is always a good idea to double-check for the latest version.

Caution: Do not expect a corroboration of your political view. Neither a refutation. Political economics has been scientifically worthless since Adam Smith. Politics has to be separated from economics because it is categorically different from science. The best science can do and has always done is to prove beyond reasonable doubt that you have been objectively wrong or ignorant until now. Science goes beyond the naive common sense of today and becomes the sophisticated common sense of tomorrow.

See also Terms of Use and Legal at www.AXEC.org

Outlook

To recall, while political economics is storytelling, theoretical economics adheres to scientific standards.

The first task of theoretical economics is to get the axiomatic foundations right. This is what J. S. Mill called the opus magnum. Neither Orthodoxy nor Heterodoxy came up with a reasonable solution to this day. This explains the secular stagnation of economics.

There is no serious alternative to structural axiomatic economics. This is not a matter of opinion but of proof. The sole criteria are material and formal consistency.

All of economics has to be reconstructed from the ground up.

Major economic policy implication

The price mechanism does not work as standard economics hypothesizes. The axiom-based Employment Law states that overall employment increases if the average wage rate increases relative to average price and productivity. This gives one the lever to improve the employment situation all over the world and to fend off deflation without rising debt and without artificial capacity growth. To increase the average price relative to the average wage rate and productivity increases unemployment.

Right policy depends on true theory.

“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

Lacking the true theory, economists promote for more than 200 years opinion instead of knowledge.