“In both ecosystem and economy, survival rewards efficiency. Inefficiency is punished by extinction.” (Michael Rothschild)
— AXEC (@EgmontHandtke) July 19, 2026
Wrong analogy.
The U.S. economy is known to run on profit. Macroeconomic profit is given by the axiomatically correct Profit Law / Balances Equation…
Showing posts with label Evolutionary Economics. Show all posts
Showing posts with label Evolutionary Economics. Show all posts
July 19, 2026
Occasional X: Clueless economists / Science (CCCLX)
December 2, 2025
Occasional X: Clueless economists / Science (CCXXXIV)
#Economics#AllYouNeedToKnow
— AXEC (@EgmontHandtke) December 2, 2025
Veblen, too, got it totally wrong. This is much like Shahin Ashkiani nowadays.
Groundhog Day (economics)https://t.co/zGcZZCGHZk
September 14, 2023
Occasional Xs: Clueless economists / Time & Evolution
#Economics#Walrasianism, #Keynesianism, #Marxianism, #Austrianism etc. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. Therefore, a #ParadigmShift is inevitable.
— E.K-H (@AXECorg) September 14, 2023
The Synthesis of Economic Law, Evolution, and Historyhttps://t.co/dHn56N7bbH
March 25, 2022
Occasional Tweets: Can the evolutionary Paradigm tell what macroeconomic profit is? ― nil return
#Economics#FailedScience#FakeScience#CargoCultScience#Walrasianism, #Keynesianism, #Marxianism, #Austrianism, #MMT are mutually contradictory, axiomatically false, materially/formally inconsistent. ALL got #Profit wrong. Economics needs a #ParadigmShift to #MacroFoundations. pic.twitter.com/MhE1wIiob4
— E.K-H (@AXECorg) March 25, 2022
December 16, 2017
Robots, exploitation, and the reproducible economy
Comment on David Ruccio on ‘Don’t worry?!’
Blog-Reference
David Ruccio maintains, “Sure, new forms of automation might lead to higher productivity and much else that Tyson and Lund find so alluring. But who’s going to benefit? If we go by the last few decades, large corporations and wealthy individuals are the ones who are going to capture most of the gains from the new technologies.” and “When it comes to separating fact from fiction, aside from the embarrassing epistemological positions liberals rely on, where are the statistics that might help us make sense of what is going on out there ― numbers like the Reserve Army of Unemployed, Underemployed, and Low-wage Workers or the rate of exploitation.”
This blather proves that heterodox economists, too, have no idea how the economy works.#1
In order to fully appreciate the proto-scientific state of both orthodox and heterodox economics, one needs the axiomatically correct theory. Because economics is a failed science, it has to be reconstructed from scratch.
As the new analytical starting point, the pure production-consumption economy is defined with this set of macroeconomic axioms: (A0) The objectively given and most elementary configuration of the economy consists of the household and the business sector, which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
Under the conditions of market-clearing X=O and budget-balancing C=Yw in each period, the price is given by P=W/R (1), i.e., the market-clearing price is equal to unit wage costs. This is the most elementary form of the macroeconomic Law of Supply and Demand. For the graphical representation, see Figure 1. #2
The price is determined by the wage rate, which takes the role of the nominal numéraire, and productivity.
From (1) follows W/P=R, i.e., the real wage is equal to the productivity. So, for a start, labor gets the whole product.
Monetary profit for the economy as a whole is defined as Qm≡C−Yw, and monetary saving as Sm≡Yw−C. It always holds Qm≡−Sm, in other words, the business sector’s surplus = profit (deficit = loss) equals the household sector’s deficit = dissaving (surplus = saving). This is the most elementary form of the macroeconomic Profit Law. Under the condition of budget-balancing total monetary profit is zero.
In order that profit comes into the world, consumption expenditures C must be greater than wage income Yw, that is, the household sector must run a deficit. This means, first of all, that profit for the economy as a whole has NOTHING to do with productivity. From the fact that an individual firm can increase profit by increasing productivity does NOT follow that this is true for the economy as a whole. What we have here is the built-in blunder of microfounded economics, i.e., the Fallacy of Composition.
The axiomatically correct Profit Law is given for the GENERAL case as Qm≡Yd+(I−Sm)+(G−T)+(X−M). Legend: Qm total monetary profit, Yd distributed profit, I investment expenditures, Sm monetary saving, G government expenditures, T taxes, X exports, M imports. Neither Walrasians, nor Keynesians, nor Marxians, nor Austrians got profit right until this very day.#3 This is why economics is a failed science and why economists have always been such a threat to their fellow citizens.
Now, we let robots in the pure production-consumption economy. The immediate effect of improved organization/machinery/robots is an increase in productivity.
From (1) follows that if productivity increases over time, the market-clearing price falls. So, in order to avoid deflation, the wage rate has to rise at the same rate as productivity. Output O increases according to axiom (A2) O=RL. The real situation of the household sector, measured in output, improves continuously with increasing productivity R and employment L. Let L here denote full employment. The workers get the whole product O, and profit Qm is zero because the budget is balanced C=Yw. The bottom line for the elementary production-consumption economy is that robots need not pose any problems with regard to underemployment or exploitation.
The problems come from another direction. Increasing output O (i) requires more raw materials/energy, and (ii), may run against the point of satiation/bliss point. So, there are limits to growth.
At the bliss point O*, the economy switches from ascent to gliding, that is, the implicit causality of O=RL has to be changed to L=O*/R, that is, total labor time L is reduced with increasing productivity. In other words, the productivity increase translates at the bliss point O* into an increase of leisure.
The challenge is how to reduce total labor input L without creating unemployment for a part of the labor force. The sustainable economy behind the bliss point works as follows: with productivity R up, L goes down and L per worker goes down proportionally, the wage rate goes up with the rate of productivity increase, the price remains constant, the real wage is always equal to the increased productivity, the budget is balanced C=Yw, the market is cleared X=O, leisure increases across the board, L goes asymptotically to zero.
In the end, it holds “… in the long run leisure is an economic summum bonum.” (Georgescu-Roegen) The growth of material consumption is only an interim phase.
Egmont Kakarot-Handtke
#1 Heterodoxy and Pluralism, too, are proto-scientific garbage
#2 Graphic AXEC31 Elementary production-consumption economy
#3 Profit for Marxists
Blog-Reference
David Ruccio maintains, “Sure, new forms of automation might lead to higher productivity and much else that Tyson and Lund find so alluring. But who’s going to benefit? If we go by the last few decades, large corporations and wealthy individuals are the ones who are going to capture most of the gains from the new technologies.” and “When it comes to separating fact from fiction, aside from the embarrassing epistemological positions liberals rely on, where are the statistics that might help us make sense of what is going on out there ― numbers like the Reserve Army of Unemployed, Underemployed, and Low-wage Workers or the rate of exploitation.”
This blather proves that heterodox economists, too, have no idea how the economy works.#1
In order to fully appreciate the proto-scientific state of both orthodox and heterodox economics, one needs the axiomatically correct theory. Because economics is a failed science, it has to be reconstructed from scratch.
As the new analytical starting point, the pure production-consumption economy is defined with this set of macroeconomic axioms: (A0) The objectively given and most elementary configuration of the economy consists of the household and the business sector, which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
Under the conditions of market-clearing X=O and budget-balancing C=Yw in each period, the price is given by P=W/R (1), i.e., the market-clearing price is equal to unit wage costs. This is the most elementary form of the macroeconomic Law of Supply and Demand. For the graphical representation, see Figure 1. #2
The price is determined by the wage rate, which takes the role of the nominal numéraire, and productivity.
From (1) follows W/P=R, i.e., the real wage is equal to the productivity. So, for a start, labor gets the whole product.
Monetary profit for the economy as a whole is defined as Qm≡C−Yw, and monetary saving as Sm≡Yw−C. It always holds Qm≡−Sm, in other words, the business sector’s surplus = profit (deficit = loss) equals the household sector’s deficit = dissaving (surplus = saving). This is the most elementary form of the macroeconomic Profit Law. Under the condition of budget-balancing total monetary profit is zero.
In order that profit comes into the world, consumption expenditures C must be greater than wage income Yw, that is, the household sector must run a deficit. This means, first of all, that profit for the economy as a whole has NOTHING to do with productivity. From the fact that an individual firm can increase profit by increasing productivity does NOT follow that this is true for the economy as a whole. What we have here is the built-in blunder of microfounded economics, i.e., the Fallacy of Composition.
The axiomatically correct Profit Law is given for the GENERAL case as Qm≡Yd+(I−Sm)+(G−T)+(X−M). Legend: Qm total monetary profit, Yd distributed profit, I investment expenditures, Sm monetary saving, G government expenditures, T taxes, X exports, M imports. Neither Walrasians, nor Keynesians, nor Marxians, nor Austrians got profit right until this very day.#3 This is why economics is a failed science and why economists have always been such a threat to their fellow citizens.
Now, we let robots in the pure production-consumption economy. The immediate effect of improved organization/machinery/robots is an increase in productivity.
From (1) follows that if productivity increases over time, the market-clearing price falls. So, in order to avoid deflation, the wage rate has to rise at the same rate as productivity. Output O increases according to axiom (A2) O=RL. The real situation of the household sector, measured in output, improves continuously with increasing productivity R and employment L. Let L here denote full employment. The workers get the whole product O, and profit Qm is zero because the budget is balanced C=Yw. The bottom line for the elementary production-consumption economy is that robots need not pose any problems with regard to underemployment or exploitation.
The problems come from another direction. Increasing output O (i) requires more raw materials/energy, and (ii), may run against the point of satiation/bliss point. So, there are limits to growth.
At the bliss point O*, the economy switches from ascent to gliding, that is, the implicit causality of O=RL has to be changed to L=O*/R, that is, total labor time L is reduced with increasing productivity. In other words, the productivity increase translates at the bliss point O* into an increase of leisure.
The challenge is how to reduce total labor input L without creating unemployment for a part of the labor force. The sustainable economy behind the bliss point works as follows: with productivity R up, L goes down and L per worker goes down proportionally, the wage rate goes up with the rate of productivity increase, the price remains constant, the real wage is always equal to the increased productivity, the budget is balanced C=Yw, the market is cleared X=O, leisure increases across the board, L goes asymptotically to zero.
In the end, it holds “… in the long run leisure is an economic summum bonum.” (Georgescu-Roegen) The growth of material consumption is only an interim phase.
Egmont Kakarot-Handtke
#1 Heterodoxy and Pluralism, too, are proto-scientific garbage
#2 Graphic AXEC31 Elementary production-consumption economy
#3 Profit for Marxists
September 8, 2017
Why economists don’t know what profit is
Comment on Steve Roth on ‘Why Economists Don’t Know How to Think about Wealth (or Profits)’
Blog-Reference and Blog-Reference
The short answer is that economists are scientifically incompetent. The profit theory is false since Adam Smith or, as the Palgrave Dictionary puts it, “A satisfactory theory of profits is still elusive.” (Desai, 2008) #1, #2 In fact, Walrasians, Keynesians, Marxians, Austrians, and Pluralists have NO idea of profit ― the foundational concept of their subject matter.
Both Orthodoxy and Heterodoxy lack material/formal consistency. From the viewpoint of science, economics is a failure; from the viewpoint of the general public, economics is a fraud.
In order to establish material consistency, one needs measurement, and one of the most important measurement tools of economics is National Accounting. The importance of National Accounting for testing of economic models is comparable to CERN for testing in physics. MMTers got the point in principle (albeit not in practice #3), yet in general, it holds that economists neither understand the significance nor the elementary mathematics of National Accounting.
Economic theory and accounting are like hand in glove. Therefore, it is of utmost importance that the foundational concepts are consistently defined and the SAME in theory and accounting. It is the worst mistake to play accounting against theory/model. At a deeper level, they have a common conceptual/formal core, i.e., the axioms of economics.
Because the nominal magnitudes of accounting are a subset of a comprehensive theory, which is composed of nominal and real variables, the concepts have to be consistently defined in theory and then applied one-to-one in National Accounting. #4 Theory has to take the lead. #5
It holds: “The only way to arrive at coherent languages is to set up axiomatic systems implicitly defining the basic concepts.” (Schmiechen) The fact is that Walrasian microfoundations and Keynesian/MMT macrofoundations are axiomatically false. This is why economics is a failed science.
Steve Roth names two big discrepancies between theory and National Accounting, i.e., ‘The Paradox of Monetary Profits’ #6 and ‘Saving and Investment’. #7 These discrepancies can only be resolved by a Paradigm Shift, that is, by a move from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations. #8
Steve Roth concludes: “To quote David Glasner, ‘as much as macroeconomics may require microfoundations, microeconomics requires macrofoundations.’ … Those foundations are the technical economic terms used — because words are what we use to think together — and the mutually coherent and interrelated accounting identities that define those terms. Absent those definitions, economists quite literally don’t know what they’re talking about.” In brief: If it isn’t macro-axiomatized, it isn’t economics. #9
Egmont Kakarot-Handtke
#1 The Profit Theory is False Since Adam Smith
#2 How the Intelligent Non-Economist Can Refute Every Economist Hands Down
#3 Rectification of MMT macro accounting
#4 True macrofoundations: the reset of economics
#5 A tale of three accountants
#6 For more details of the big picture, see cross-references Profit.
#7 For details of the big picture, see cross-references Refutation I=S.
#8 Keynesians ― terminally stupid or worse?
#9 For details of the big picture, see cross-references Paradigm Shift.
Blog-Reference and Blog-Reference
The short answer is that economists are scientifically incompetent. The profit theory is false since Adam Smith or, as the Palgrave Dictionary puts it, “A satisfactory theory of profits is still elusive.” (Desai, 2008) #1, #2 In fact, Walrasians, Keynesians, Marxians, Austrians, and Pluralists have NO idea of profit ― the foundational concept of their subject matter.
Both Orthodoxy and Heterodoxy lack material/formal consistency. From the viewpoint of science, economics is a failure; from the viewpoint of the general public, economics is a fraud.
In order to establish material consistency, one needs measurement, and one of the most important measurement tools of economics is National Accounting. The importance of National Accounting for testing of economic models is comparable to CERN for testing in physics. MMTers got the point in principle (albeit not in practice #3), yet in general, it holds that economists neither understand the significance nor the elementary mathematics of National Accounting.
Economic theory and accounting are like hand in glove. Therefore, it is of utmost importance that the foundational concepts are consistently defined and the SAME in theory and accounting. It is the worst mistake to play accounting against theory/model. At a deeper level, they have a common conceptual/formal core, i.e., the axioms of economics.
Because the nominal magnitudes of accounting are a subset of a comprehensive theory, which is composed of nominal and real variables, the concepts have to be consistently defined in theory and then applied one-to-one in National Accounting. #4 Theory has to take the lead. #5
It holds: “The only way to arrive at coherent languages is to set up axiomatic systems implicitly defining the basic concepts.” (Schmiechen) The fact is that Walrasian microfoundations and Keynesian/MMT macrofoundations are axiomatically false. This is why economics is a failed science.
Steve Roth names two big discrepancies between theory and National Accounting, i.e., ‘The Paradox of Monetary Profits’ #6 and ‘Saving and Investment’. #7 These discrepancies can only be resolved by a Paradigm Shift, that is, by a move from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations. #8
Steve Roth concludes: “To quote David Glasner, ‘as much as macroeconomics may require microfoundations, microeconomics requires macrofoundations.’ … Those foundations are the technical economic terms used — because words are what we use to think together — and the mutually coherent and interrelated accounting identities that define those terms. Absent those definitions, economists quite literally don’t know what they’re talking about.” In brief: If it isn’t macro-axiomatized, it isn’t economics. #9
Egmont Kakarot-Handtke
#1 The Profit Theory is False Since Adam Smith
#2 How the Intelligent Non-Economist Can Refute Every Economist Hands Down
#3 Rectification of MMT macro accounting
#4 True macrofoundations: the reset of economics
#5 A tale of three accountants
#6 For more details of the big picture, see cross-references Profit.
#7 For details of the big picture, see cross-references Refutation I=S.
#8 Keynesians ― terminally stupid or worse?
#9 For details of the big picture, see cross-references Paradigm Shift.
***
Graphic AXEC121g
March 5, 2017
NAIRU and economists’ lethal swampiness
Comment on David Glasner on ‘Richard Lipsey and the Phillips Curve Redux’
Blog-Reference and Blog-Reference
David Glasner contributes to the NAIRU discussion#1 by reproducing the essential content of his 2013 paper. Back then, he propagated Lipsey’s concept of multiple equilibria or band of unemployment (NAIBU), which is consistent with a stable rate of inflation. The NAIBU concept is a fine example of the tendency of economists to soften, relativize, qualify, and semantically dilute every concept until it is senseless and useless.
It is the very characteristic of economics that there are no well-defined concepts, and this begins with the pivotal economic concepts of profit and income. The habit of swampification keeps the discourse safely in the no man’s land where “nothing is clear and everything is possible” (Keynes) and where anything goes.
Swampiness is what Popper called an immunizing stratagem. The beauty of vagueness and ambiguity is that it cannot be falsified: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) #2
David Glasner applies the concept of evolution in order to swampify the NAIRU: “The current behavior of economies … is consistent with evolutionary theory in which the economy is constantly evolving in the face of path-dependent, endogenously generated, technological change, and has a wide range of unemployment and GDP over which the inflation rate is stable.”
In other words, presumably, there is a relationship between unemployment and inflation, but nobody knows what it is. While science is known to strive for uniqueness, economics is known to strive for ambiguity and obfuscation. This swampiness is rationalized as realism. After all, reality is messy, isn’t it?
To recall, the Phillips curve started as a simple and remarkably stable EMPIRICAL relationship between wage rate changes and the rate of unemployment. The original Phillips curve has subsequently been reinterpreted and thereby messed up by Samuelson and Solow, who introduced the economic policy trade-off between inflation and unemployment, which was finally thrown out again with the NAIRU.
A conceptual error/mistake/blunder slipped in with the bastardization of the original Phillips curve that was never rectified, but in effect, buried under a huge heap of inconclusive economic shop talk. This means that until this very day, economics has no valid theory of the labor market.
So, the microfounded NAIRU-Phillips curve has, first of all, to be rectified. #3 The macrofounded systemic Employment Law is shown on Graphic AXEC62
From this axiomatically correct equation follows, in the MOST ELEMENTARY case, that an increase of the macro-ratio ρF≡W/PR leads to higher total employment L. The ratio ρF embodies the price mechanism. Let the rate of change of productivity R for simplicity be zero, i.e., r=0, then there are three logical cases, that is, THREE types of inflation.
(i) If the rate of change of the wage rate W is equal to the rate of change of the price P, i.e., w=p, then employment does NOT change, NO MATTER how big or small the rates of change are. That is, NO amount of inflation or deflation has any effect on employment. Inflation is neutral; there is no trade-off between unemployment and inflation.
(ii) If the rate of change in the wage rate is greater than the rate of change of the price, then employment INCREASES. There is a POSITIVE effect of “inflation” on employment.
(iii) If the rate of change in the wage rate is lower than the rate of change of the price, then employment DECREASES. There is a NEGATIVE effect of “inflation” on employment.
So, it is the DIFFERENCE in the rates of change of wage rate and price, and not the absolute magnitude of change, that is decisive. Every PERFECTLY SYNCHRONOUS inflation/deflation is employment-neutral, that is, employment remains indefinitely where it actually is. Neutral inflation can start at ANY point between full and zero employment. The crucial fact to notice is that there is no such thing as “inflation”, there are THREE types of inflation.
The systemic Employment Law defines the causal relationship of “inflation” on employment. However, there is the inverse causality of employment on “inflation”.
Common sense suggests that positive inflation (ii) is more probable the closer actual employment is to full employment, and negative inflation (iii) is more probable the farther away actual employment is from full employment. In other words, the market economy is inherently unstable. The feedback loop between employment and “inflation” is the very antithesis to the idea of equilibrium. To recall, the NAIRU is DEFINED as an equilibrium. Standard economics has built equilibrium right into the premises, i.e., into the axiomatic foundations. All of economics starts with the idea that the market economy is an equilibrium system. It turns out that this premise is false; just the opposite is the case.
Standard labor market theory, as it is incorporated in the NAIRU-Phillips curve, is not vaguely true, or evolutionary true as David Glasner maintains, but provably false.
Egmont Kakarot-Handtke
#1 See NAIRU: an exhaustive dancing-angels-on-a-pinpoint blather and NAIRU and the scientific incompetence of Orthodoxy and Heterodoxy and NAIRU does not exist because equilibrium does not exist.
#2 “By having a vague theory it is possible to get either result. ... It is usually said when this is pointed out, ‘When you are dealing with psychological matters things can’t be defined so precisely’. Yes, but then you cannot claim to know anything about it.”
#3 Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster
Blog-Reference and Blog-Reference
David Glasner contributes to the NAIRU discussion#1 by reproducing the essential content of his 2013 paper. Back then, he propagated Lipsey’s concept of multiple equilibria or band of unemployment (NAIBU), which is consistent with a stable rate of inflation. The NAIBU concept is a fine example of the tendency of economists to soften, relativize, qualify, and semantically dilute every concept until it is senseless and useless.
It is the very characteristic of economics that there are no well-defined concepts, and this begins with the pivotal economic concepts of profit and income. The habit of swampification keeps the discourse safely in the no man’s land where “nothing is clear and everything is possible” (Keynes) and where anything goes.
Swampiness is what Popper called an immunizing stratagem. The beauty of vagueness and ambiguity is that it cannot be falsified: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) #2
David Glasner applies the concept of evolution in order to swampify the NAIRU: “The current behavior of economies … is consistent with evolutionary theory in which the economy is constantly evolving in the face of path-dependent, endogenously generated, technological change, and has a wide range of unemployment and GDP over which the inflation rate is stable.”
In other words, presumably, there is a relationship between unemployment and inflation, but nobody knows what it is. While science is known to strive for uniqueness, economics is known to strive for ambiguity and obfuscation. This swampiness is rationalized as realism. After all, reality is messy, isn’t it?
To recall, the Phillips curve started as a simple and remarkably stable EMPIRICAL relationship between wage rate changes and the rate of unemployment. The original Phillips curve has subsequently been reinterpreted and thereby messed up by Samuelson and Solow, who introduced the economic policy trade-off between inflation and unemployment, which was finally thrown out again with the NAIRU.
A conceptual error/mistake/blunder slipped in with the bastardization of the original Phillips curve that was never rectified, but in effect, buried under a huge heap of inconclusive economic shop talk. This means that until this very day, economics has no valid theory of the labor market.
So, the microfounded NAIRU-Phillips curve has, first of all, to be rectified. #3 The macrofounded systemic Employment Law is shown on Graphic AXEC62
From this axiomatically correct equation follows, in the MOST ELEMENTARY case, that an increase of the macro-ratio ρF≡W/PR leads to higher total employment L. The ratio ρF embodies the price mechanism. Let the rate of change of productivity R for simplicity be zero, i.e., r=0, then there are three logical cases, that is, THREE types of inflation.
(i) If the rate of change of the wage rate W is equal to the rate of change of the price P, i.e., w=p, then employment does NOT change, NO MATTER how big or small the rates of change are. That is, NO amount of inflation or deflation has any effect on employment. Inflation is neutral; there is no trade-off between unemployment and inflation.
(ii) If the rate of change in the wage rate is greater than the rate of change of the price, then employment INCREASES. There is a POSITIVE effect of “inflation” on employment.
(iii) If the rate of change in the wage rate is lower than the rate of change of the price, then employment DECREASES. There is a NEGATIVE effect of “inflation” on employment.
So, it is the DIFFERENCE in the rates of change of wage rate and price, and not the absolute magnitude of change, that is decisive. Every PERFECTLY SYNCHRONOUS inflation/deflation is employment-neutral, that is, employment remains indefinitely where it actually is. Neutral inflation can start at ANY point between full and zero employment. The crucial fact to notice is that there is no such thing as “inflation”, there are THREE types of inflation.
The systemic Employment Law defines the causal relationship of “inflation” on employment. However, there is the inverse causality of employment on “inflation”.
Common sense suggests that positive inflation (ii) is more probable the closer actual employment is to full employment, and negative inflation (iii) is more probable the farther away actual employment is from full employment. In other words, the market economy is inherently unstable. The feedback loop between employment and “inflation” is the very antithesis to the idea of equilibrium. To recall, the NAIRU is DEFINED as an equilibrium. Standard economics has built equilibrium right into the premises, i.e., into the axiomatic foundations. All of economics starts with the idea that the market economy is an equilibrium system. It turns out that this premise is false; just the opposite is the case.
Standard labor market theory, as it is incorporated in the NAIRU-Phillips curve, is not vaguely true, or evolutionary true as David Glasner maintains, but provably false.
Egmont Kakarot-Handtke
#1 See NAIRU: an exhaustive dancing-angels-on-a-pinpoint blather and NAIRU and the scientific incompetence of Orthodoxy and Heterodoxy and NAIRU does not exist because equilibrium does not exist.
#2 “By having a vague theory it is possible to get either result. ... It is usually said when this is pointed out, ‘When you are dealing with psychological matters things can’t be defined so precisely’. Yes, but then you cannot claim to know anything about it.”
#3 Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster
February 5, 2017
New Economic Thinking, or, let’s put lipstick on the dead pig
Comment on Eric Beinhocker on ‘It’s Time for New Economic Thinking Based on the Best Science Available, Not Ideology’
Blog-Reference
For non-economists, the most important thing to know about economics is that there is NO economic science. Yes, there is a prize with the title: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” but NOTHING REAL corresponds to the word Sciences.
For non-economists, the most important thing is to keep political and theoretical economics apart. The main differences are: (i) The goal of political economics is to successfully push an agenda; the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics, anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.
The goal of theoretical economics is the 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)
For non-economists, the most important thing to realize is that theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years. Economics is a failed science.
So, yes indeed, new economic thinking is urgently needed. This new thinking has to advance from political agenda-pushing to science. This, though, is not what Eric Beinhocker understands by new economic thinking. For him, new economic thinking means replacing the old political agenda with a new political agenda.
The political economist introduces himself as the emphatic person who fights for a good cause. He listens to the downtrodden people and takes them seriously: “But they [the populist movements] also contain many normal people who are fed up with a system that doesn’t work for them. People who have seen their living standards stagnate or decline, who live precarious lives one paycheque at a time, who think their children will do worse than they have. And their issues aren’t just economic; they are also social and psychological. They have lost dignity and respect, and crave a sense of identity and belonging.”
After this depressing reality check, everybody understands that the old agenda has failed and that a new one is urgently needed: “After we listen we then have to give new answers. New narratives and policies about how people’s lives can be made better and more secure, how they can fairly share in their nation’s prosperity, how they can have more control over their lives, how they can live with dignity and respect, how everyone will play by the same rules and the social contract will be restored, how openness and international cooperation benefits them not just an elite, and how governments, corporations, and banks will serve their interests, and not the other way around.”
Conclusion: “This is why we need new economic thinking.”
This new thinking does NOT consist in replacing the existing false theories with the true theory but in replacing the old narrative with a new narrative: “... communications is critical ... stories, narratives, visuals, and memes are needed to shift the media and public thinking.”
And exactly at this point, ‘new economic thinking’ turns into sheer political blathering: “So what might such a new narrative look like? ... I believe it will contain four stories: A new story of growth; A new story of inclusion; A new social contract; A new idealism.”
There is no better example of soapbox economics and how science is hijacked by politics. False economic theory is not replaced by the true theory, but the age-old storytelling continues with a made-over narrative. Evolutionary economists have listened to the good people and learned that the old rational models and all this mathiness stuff piss them off.
The fact of the matter is, though, that “stories, narratives, visuals, and memes” are simply euphemisms for proto-scientific garbage. The average person dislikes an objective explanation (e.g., the thunderbolt is an electromagnetic phenomenon subject to physical laws) and likes a subjective explanation (e.g., Zeus threw the thunderbolt because he was angry). The scientific explanation takes the form of a theory; the non-scientific explanation takes the form of an emotionally reinforced narrative. Ninety-nine percent of all societal communication consists of storytelling/blather/wish-wash/truisms/propaganda/gossip, and only one percent has scientific content.
The very problem of economics is that it has ZERO scientific content. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives ― are mutually contradictory, axiomatically false, and ALL got profit wrong. #1 This includes evolutionary economics.
Economics claims to be a science, yet it has never risen above the level of storytelling. Within the tiny box of folk psychology, folk sociology, folk history, and folk politics, economic storytelling has taken place since Adam Smith: “Smith ... disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along.” (Schumpeter)
The sole purpose of Eric Beinhocker’s new economic narrative is to make the dull folks feel comfortable again. The claim that his polit-kitsch is based on the best science available is a bad joke at the expense of the downtrodden masses. #2
Egmont Kakarot-Handtke
#1 The Profit Theory is False Since Adam Smith
#2 Economists and the destructive power of stupidity
Related 'Scientific suicide in the revolving door' and 'Evolutionary economics: Just another degenerate research program' on 'The bigots of common sense' and 'New economic thinking ― false promises and hopes' and 'The x-th reinvention of evolutionary economics' and 'Yes, orthodox economics is poor science, but can Heterodoxy raise hope?' and 'First Lecture in New Economic Thinking' and 'How economists missed out on the essential relationship of economics' and 'Your economics is refuted on all counts: here is the real thing'.
Blog-Reference
For non-economists, the most important thing to know about economics is that there is NO economic science. Yes, there is a prize with the title: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” but NOTHING REAL corresponds to the word Sciences.
For non-economists, the most important thing is to keep political and theoretical economics apart. The main differences are: (i) The goal of political economics is to successfully push an agenda; the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics, anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.
The goal of theoretical economics is the 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)
For non-economists, the most important thing to realize is that theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years. Economics is a failed science.
So, yes indeed, new economic thinking is urgently needed. This new thinking has to advance from political agenda-pushing to science. This, though, is not what Eric Beinhocker understands by new economic thinking. For him, new economic thinking means replacing the old political agenda with a new political agenda.
The political economist introduces himself as the emphatic person who fights for a good cause. He listens to the downtrodden people and takes them seriously: “But they [the populist movements] also contain many normal people who are fed up with a system that doesn’t work for them. People who have seen their living standards stagnate or decline, who live precarious lives one paycheque at a time, who think their children will do worse than they have. And their issues aren’t just economic; they are also social and psychological. They have lost dignity and respect, and crave a sense of identity and belonging.”
After this depressing reality check, everybody understands that the old agenda has failed and that a new one is urgently needed: “After we listen we then have to give new answers. New narratives and policies about how people’s lives can be made better and more secure, how they can fairly share in their nation’s prosperity, how they can have more control over their lives, how they can live with dignity and respect, how everyone will play by the same rules and the social contract will be restored, how openness and international cooperation benefits them not just an elite, and how governments, corporations, and banks will serve their interests, and not the other way around.”
Conclusion: “This is why we need new economic thinking.”
This new thinking does NOT consist in replacing the existing false theories with the true theory but in replacing the old narrative with a new narrative: “... communications is critical ... stories, narratives, visuals, and memes are needed to shift the media and public thinking.”
And exactly at this point, ‘new economic thinking’ turns into sheer political blathering: “So what might such a new narrative look like? ... I believe it will contain four stories: A new story of growth; A new story of inclusion; A new social contract; A new idealism.”
There is no better example of soapbox economics and how science is hijacked by politics. False economic theory is not replaced by the true theory, but the age-old storytelling continues with a made-over narrative. Evolutionary economists have listened to the good people and learned that the old rational models and all this mathiness stuff piss them off.
The fact of the matter is, though, that “stories, narratives, visuals, and memes” are simply euphemisms for proto-scientific garbage. The average person dislikes an objective explanation (e.g., the thunderbolt is an electromagnetic phenomenon subject to physical laws) and likes a subjective explanation (e.g., Zeus threw the thunderbolt because he was angry). The scientific explanation takes the form of a theory; the non-scientific explanation takes the form of an emotionally reinforced narrative. Ninety-nine percent of all societal communication consists of storytelling/blather/wish-wash/truisms/propaganda/gossip, and only one percent has scientific content.
The very problem of economics is that it has ZERO scientific content. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives ― are mutually contradictory, axiomatically false, and ALL got profit wrong. #1 This includes evolutionary economics.
Economics claims to be a science, yet it has never risen above the level of storytelling. Within the tiny box of folk psychology, folk sociology, folk history, and folk politics, economic storytelling has taken place since Adam Smith: “Smith ... disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along.” (Schumpeter)
The sole purpose of Eric Beinhocker’s new economic narrative is to make the dull folks feel comfortable again. The claim that his polit-kitsch is based on the best science available is a bad joke at the expense of the downtrodden masses. #2
Egmont Kakarot-Handtke
#1 The Profit Theory is False Since Adam Smith
#2 Economists and the destructive power of stupidity
Related 'Scientific suicide in the revolving door' and 'Evolutionary economics: Just another degenerate research program' on 'The bigots of common sense' and 'New economic thinking ― false promises and hopes' and 'The x-th reinvention of evolutionary economics' and 'Yes, orthodox economics is poor science, but can Heterodoxy raise hope?' and 'First Lecture in New Economic Thinking' and 'How economists missed out on the essential relationship of economics' and 'Your economics is refuted on all counts: here is the real thing'.
***
January 30, 2017
Going beyond Wicksell, Keynes, and MMT
Comment on Lars Syll on ‘The origins of MMT’
Blog-Reference and Blog-Reference and Blog-Reference
No doubt, with regard to the theory of money Wicksell, Keynes, and MMT are superior to DSGE/RBC/New Keynesianism. However, Wicksell, Keynes, and MMT failed to integrate the theory of money into a consistent macroeconomic framework.
MMTers are right: mainstream economics is a failed approach and irrecoverably lost in the parallel universe of error, inconsistency, feeblemindedness, and aberration. But MMTers are wrong in believing that MMT is firmly on the right track.#1, #2
MMT is still caught in the PsySoc trap by maintaining that economics is about human behavior. The first point to realize is that economics is about the behavior of the economic system. Economics is NOT a social science but a systems science. To derive the theory of money from the history of money is therefore doomed to failure.
The second point to realize is that all variants of Keynesianism suffer from methodological self-delusion. Paul Davidson maintains: “Post Keynesian models are designed specifically to deal with real-world problems.” And Bill Mitchell adds: “In this tradition, MMT ... is not an imaginary approach that deals with imaginary problems. It is about the real world and starts with some basic macroeconomic principles like ― spending equals income.”
Time to wake up to the fact that this ‘principle’ is provably false since Keynes applied it in the General Theory.#3 Because of this, the whole analytical superstructure of Keynesianism, Post Keynesianism, and MMT breaks apart. From this, in turn, follows that policy guidance with regard to monetary and fiscal policy has no sound scientific foundation.#4
Monetary theory has to be based on axiomatically true macrofoundations.#5, #6
Egmont Kakarot-Handtke
#1 The final implosion of MMT
#2 Rethinking MMT
#3 Why Post Keynesianism Is Not Yet a Science
#4 Rethinking deficit spending
#5 Reconstructing the Quantity Theory
#6 First Economic Law, derived from the correct macrofoundations
Keynesianism, Post Keynesianism, and MMT are provably false in the same sense as 2+2=5 is false. The fact of the matter is that the MMT folks do not even get the elementary mathematics of accounting right.
The economy is a complex system and a system is subject to systemic laws.#1 The obvious analogy is an aircraft that is subject to the laws of aerodynamics, thermodynamics, etcetera. Only the retarded folks from the economics department believe that utility maximization or animal spirits make an aircraft fly.
Keynesianism, Post Keynesianism, and MMT is provably false and because of this Keynesians, Post Keynesians, and MMTers are forever unacceptable in the scientific community.#2
The good thing in economics is that morons have always an alternative career path open as political soapbox blatherers in the Circus Maximus.#3
#1 For details see From PsySoc to SysHum and Complexity and stupidity
#2 Why Post Keynesianism Is Not Yet a Science
#3 Political economics: a deadhead sitcom
The theory of money has to be embedded in a consistent macroeconomic framework or in what Keynes called the ‘monetary theory of production’. MMT gives a historical account of how money came into existence as a creation of the state. This historical account is not false but methodologically it is NO substitute for the theory of money, just as the history of the burning of Rome, London, and San Francisco is no substitute for the theory of thermodynamics.
There is NO way around the macrofoundations of the theory of money. And this, indeed, is the route Keynes took.
The formal foundation of the General Theory is given with: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
This syllogism is conceptually and logically defective because Keynes did not come 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.)
Because profit is ill-defined the WHOLE theoretical superstructure of Keynesianism is false. The foundational mistake/error/blunder carries over to Post Keynesianism and MMT. As Bill Mitchell says: “It [MMT] is about the real world and starts with some basic macroeconomic principles like ― spending equals income.”
It is pretty obvious that an economist who cannot tell the difference between the fundamental economic magnitudes of profit and income is a laughing stock. This applies to Walrasians and Keynesians of all colors. It applies, of course, to the MMT folks in general and more specifically to Auburn Parks and Ralph Musgrave.
Neither Keynesians nor Post Keynesians nor MMTers will make it into the future of economics because of proven logical incompetence.
REPLY to Auburn Parks, Ralph Musgrave, Six, TofuNFiatRGood4U, and other blogging cranks on Jan 31
In the political sphere, we have freedom of speech, so everybody can climb on a soapbox and make an economic policy proposal: “A sure sign of a crisis is the prevalence of cranks. It is characteristic of a crisis in theory that cranks get a hearing from the public which orthodoxy is failing to satisfy. In the thirties we had Major Douglas, and social credit ― it can all be done with a fountain pen ― and Warren and Pearson who convinced President Roosevelt that raising the dollar price of gold would raise the price of everything else and bring the slump to an end. The cranks are to be preferred to the orthodox because they see that there is a problem. Nowadays we have plenty of cranks taking up the problems that the economists overlook.” (Joan Robinson)
Everybody can make a soapbox economic policy proposal EXCEPT an economist because: “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)
The big, big, big problem is that economists do NOT have the true theory. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, and ALL got profit wrong.
Because economists lack the true theory there is no significant difference between a crank and an economist.#1 The general public, of course, does not know that the profit theory is false for 200+ years, marginalism and supply-demand-equilibrium are false for 150+ years and Keynesianism is false for 80+ years. False means scientifically false, that is, materially and formally inconsistent.
From this follows that economic policy guidance with regard to monetary, fiscal, and employment policy has NO sound scientific foundation.#2 In the political sphere, this is a matter of indifference, because here only political beliefs matter. But the fact that false theories are politically useful does not make them scientifically acceptable.
The MMT folks make policy proposals that are commonsensically acceptable but this does not change the fact that MMT is false because it is based on faulty macrofoundations. It is of utmost importance to keep politics and science apart and this implies that political agenda pushers have to be thrown out of science.#3
Political economics has produced NOTHING of scientific value in the last 200+ years. This includes MMT. The way forward is: “Scrap the lot and start again.” (Joan Robinson)
#1 There is NO such thing as an economic expert
#2 Unemployment is high because economics is false
#3 Scientific suicide in the revolving door
Related 'Why Bernie Sanders is unintentionally a godsend for the one-percenters' and 'Keynesianism as ultimate profit machine' and 'Macroeconomics without Keynes'.
Blog-Reference and Blog-Reference and Blog-Reference
No doubt, with regard to the theory of money Wicksell, Keynes, and MMT are superior to DSGE/RBC/New Keynesianism. However, Wicksell, Keynes, and MMT failed to integrate the theory of money into a consistent macroeconomic framework.
MMTers are right: mainstream economics is a failed approach and irrecoverably lost in the parallel universe of error, inconsistency, feeblemindedness, and aberration. But MMTers are wrong in believing that MMT is firmly on the right track.#1, #2
MMT is still caught in the PsySoc trap by maintaining that economics is about human behavior. The first point to realize is that economics is about the behavior of the economic system. Economics is NOT a social science but a systems science. To derive the theory of money from the history of money is therefore doomed to failure.
The second point to realize is that all variants of Keynesianism suffer from methodological self-delusion. Paul Davidson maintains: “Post Keynesian models are designed specifically to deal with real-world problems.” And Bill Mitchell adds: “In this tradition, MMT ... is not an imaginary approach that deals with imaginary problems. It is about the real world and starts with some basic macroeconomic principles like ― spending equals income.”
Time to wake up to the fact that this ‘principle’ is provably false since Keynes applied it in the General Theory.#3 Because of this, the whole analytical superstructure of Keynesianism, Post Keynesianism, and MMT breaks apart. From this, in turn, follows that policy guidance with regard to monetary and fiscal policy has no sound scientific foundation.#4
Monetary theory has to be based on axiomatically true macrofoundations.#5, #6
Egmont Kakarot-Handtke
#1 The final implosion of MMT
#2 Rethinking MMT
#3 Why Post Keynesianism Is Not Yet a Science
#4 Rethinking deficit spending
#5 Reconstructing the Quantity Theory
#6 First Economic Law, derived from the correct macrofoundations
 |
| First Economic Law |
***
REPLY to Auburn Parks on Jan 30Keynesianism, Post Keynesianism, and MMT are provably false in the same sense as 2+2=5 is false. The fact of the matter is that the MMT folks do not even get the elementary mathematics of accounting right.
The economy is a complex system and a system is subject to systemic laws.#1 The obvious analogy is an aircraft that is subject to the laws of aerodynamics, thermodynamics, etcetera. Only the retarded folks from the economics department believe that utility maximization or animal spirits make an aircraft fly.
Keynesianism, Post Keynesianism, and MMT is provably false and because of this Keynesians, Post Keynesians, and MMTers are forever unacceptable in the scientific community.#2
The good thing in economics is that morons have always an alternative career path open as political soapbox blatherers in the Circus Maximus.#3
#1 For details see From PsySoc to SysHum and Complexity and stupidity
#2 Why Post Keynesianism Is Not Yet a Science
#3 Political economics: a deadhead sitcom
***
REPLY to Tom Hickey on Jan 30The theory of money has to be embedded in a consistent macroeconomic framework or in what Keynes called the ‘monetary theory of production’. MMT gives a historical account of how money came into existence as a creation of the state. This historical account is not false but methodologically it is NO substitute for the theory of money, just as the history of the burning of Rome, London, and San Francisco is no substitute for the theory of thermodynamics.
There is NO way around the macrofoundations of the theory of money. And this, indeed, is the route Keynes took.
The formal foundation of the General Theory is given with: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
This syllogism is conceptually and logically defective because Keynes did not come 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.)
Because profit is ill-defined the WHOLE theoretical superstructure of Keynesianism is false. The foundational mistake/error/blunder carries over to Post Keynesianism and MMT. As Bill Mitchell says: “It [MMT] is about the real world and starts with some basic macroeconomic principles like ― spending equals income.”
It is pretty obvious that an economist who cannot tell the difference between the fundamental economic magnitudes of profit and income is a laughing stock. This applies to Walrasians and Keynesians of all colors. It applies, of course, to the MMT folks in general and more specifically to Auburn Parks and Ralph Musgrave.
Neither Keynesians nor Post Keynesians nor MMTers will make it into the future of economics because of proven logical incompetence.
***
In the political sphere, we have freedom of speech, so everybody can climb on a soapbox and make an economic policy proposal: “A sure sign of a crisis is the prevalence of cranks. It is characteristic of a crisis in theory that cranks get a hearing from the public which orthodoxy is failing to satisfy. In the thirties we had Major Douglas, and social credit ― it can all be done with a fountain pen ― and Warren and Pearson who convinced President Roosevelt that raising the dollar price of gold would raise the price of everything else and bring the slump to an end. The cranks are to be preferred to the orthodox because they see that there is a problem. Nowadays we have plenty of cranks taking up the problems that the economists overlook.” (Joan Robinson)
Everybody can make a soapbox economic policy proposal EXCEPT an economist because: “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)
The big, big, big problem is that economists do NOT have the true theory. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, and ALL got profit wrong.
Because economists lack the true theory there is no significant difference between a crank and an economist.#1 The general public, of course, does not know that the profit theory is false for 200+ years, marginalism and supply-demand-equilibrium are false for 150+ years and Keynesianism is false for 80+ years. False means scientifically false, that is, materially and formally inconsistent.
From this follows that economic policy guidance with regard to monetary, fiscal, and employment policy has NO sound scientific foundation.#2 In the political sphere, this is a matter of indifference, because here only political beliefs matter. But the fact that false theories are politically useful does not make them scientifically acceptable.
The MMT folks make policy proposals that are commonsensically acceptable but this does not change the fact that MMT is false because it is based on faulty macrofoundations. It is of utmost importance to keep politics and science apart and this implies that political agenda pushers have to be thrown out of science.#3
Political economics has produced NOTHING of scientific value in the last 200+ years. This includes MMT. The way forward is: “Scrap the lot and start again.” (Joan Robinson)
#1 There is NO such thing as an economic expert
#2 Unemployment is high because economics is false
#3 Scientific suicide in the revolving door
Related 'Why Bernie Sanders is unintentionally a godsend for the one-percenters' and 'Keynesianism as ultimate profit machine' and 'Macroeconomics without Keynes'.
October 20, 2016
New Economic Thinking ― false promises and hopes
Comment on Haynes Goddard on ‘David Sloan Wilson’s econ critique’
Blog-Reference
You say: “For years I debated with a close relative, a prominent political scientist at a major university, whether the economist’s utility maximization hypothesis was empty or not ― specifically, a tautology. Tautology because economists take as axiomatic that we seek to maximize utility. The framework readily yields downward sloping demand curves or an inverse relationship between price and quantity, a relationship widely confirmed empirically.”
Take notice that the statement: “The framework readily yields downward sloping demand curves ...” is provably false. You could know this from Mas-Colell et al., 1995, Sec. 4C or from Wikipedia#1.
The first section of your post is proto-scientific garbage and this continues until the end. Proof:
(i) You refer to the axioms of Orthodoxy. They are given with this set: “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, 1985, p. 147)
These premises are forever unacceptable. It should be pretty obvious that the neo-Walrasian axiom set contains three NONENTITIES: (i) constrained optimization (HC2), (ii) rational expectations (HC4), (iii) equilibrium (HC5).
Every model that contains a NONENTITY is a priori false. In practical terms: as soon as the word equilibrium/disequilibrium appears in an economic paper it can be thrown into the wastebasket. The same holds for utility maximization and all other nonentities.
Take note that economics from Jevons/Walras/Menger to DSGE contains HC1/HC5 and therefore is proto-scientific garbage.
(ii) You refer to the “mathematical economist Roy Weintraub”. Take notice that mathematical economists misapplied mathematics because of a lack of real understanding.#2 By implication, the arguments of mathematical economists in defense of the orthodox research program are worthless. (Make no mistake, from this MISapplication does NOT follow that mathematics is inapplicable or useless in economics. The mathiness critique is beside the point.)
(iii) You argue: “Further, this utility assessing capability is an evolutionary result, and it would seem to fit squarely into Prof. Wilson’s favorite framework.”
Take note that from the fact that BOTH neoclassical microeconomics and evolutionary economics are degenerate research programs follows that it means NOTHING that they fit together and that neuroscience “confirms” utility maximization.
Neither neuroeconomics, behavioral economics, biology, complexity theory, chaos theory, common sense, nor more empirical work can save economics. All this is lipstick on the dead pig. Walrasianism, Keynesianism, Marxianism, and Austrianism are axiomatically false, that is, beyond repair. Nothing less than a Paradigm Shift will do.
Egmont Kakarot-Handtke
#1 Wikipedia Aggregate consumer demand curve
#2 For proof see Barzilai
Preceding The bigots of common sense and Evolutionary economics: Just another degenerate research program.
Blog-Reference
You say: “For years I debated with a close relative, a prominent political scientist at a major university, whether the economist’s utility maximization hypothesis was empty or not ― specifically, a tautology. Tautology because economists take as axiomatic that we seek to maximize utility. The framework readily yields downward sloping demand curves or an inverse relationship between price and quantity, a relationship widely confirmed empirically.”
Take notice that the statement: “The framework readily yields downward sloping demand curves ...” is provably false. You could know this from Mas-Colell et al., 1995, Sec. 4C or from Wikipedia#1.
The first section of your post is proto-scientific garbage and this continues until the end. Proof:
(i) You refer to the axioms of Orthodoxy. They are given with this set: “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, 1985, p. 147)
These premises are forever unacceptable. It should be pretty obvious that the neo-Walrasian axiom set contains three NONENTITIES: (i) constrained optimization (HC2), (ii) rational expectations (HC4), (iii) equilibrium (HC5).
Every model that contains a NONENTITY is a priori false. In practical terms: as soon as the word equilibrium/disequilibrium appears in an economic paper it can be thrown into the wastebasket. The same holds for utility maximization and all other nonentities.
Take note that economics from Jevons/Walras/Menger to DSGE contains HC1/HC5 and therefore is proto-scientific garbage.
(ii) You refer to the “mathematical economist Roy Weintraub”. Take notice that mathematical economists misapplied mathematics because of a lack of real understanding.#2 By implication, the arguments of mathematical economists in defense of the orthodox research program are worthless. (Make no mistake, from this MISapplication does NOT follow that mathematics is inapplicable or useless in economics. The mathiness critique is beside the point.)
(iii) You argue: “Further, this utility assessing capability is an evolutionary result, and it would seem to fit squarely into Prof. Wilson’s favorite framework.”
Take note that from the fact that BOTH neoclassical microeconomics and evolutionary economics are degenerate research programs follows that it means NOTHING that they fit together and that neuroscience “confirms” utility maximization.
Neither neuroeconomics, behavioral economics, biology, complexity theory, chaos theory, common sense, nor more empirical work can save economics. All this is lipstick on the dead pig. Walrasianism, Keynesianism, Marxianism, and Austrianism are axiomatically false, that is, beyond repair. Nothing less than a Paradigm Shift will do.
Egmont Kakarot-Handtke
#1 Wikipedia Aggregate consumer demand curve
#2 For proof see Barzilai
Preceding The bigots of common sense and Evolutionary economics: Just another degenerate research program.
October 19, 2016
The bigots of common sense
Comment on Barkley Rosser on ‘David Sloan Wilson’s econ critique’
Blog-Reference
In your account of the various strands of evolutionary economics, you forgot the pivotal connection: Malthus is the key figure, he represents the deep unity of Political Economy and Darwinism.
Economics is a cargo cult science, that is, it always copied genuine science without ever getting on its own scientific feet. The history of economic thought consists of two main strands. First, economists copied Newtonian physics then they copied (re-imported) Darwinian biology. Having NO own scientific gravitas economists jumped on every bandwagon from game theory to evolutionary game theory, to chaos theory, to complexity theory and had their dilettantish fingers in every pie from psychology, sociology, anthropology, history, political science, social philosophy to biology/Darwinism.
Curiously, until this day the representative economist has no idea of the foundational concepts of his own discipline, that is, of profit and income. Walrasianism, Keynesianism, Marxianism, Austrianism is provably false.
The fundamental distinction in economics is between political economics and theoretical economics and the fact of the matter is that political economics (= agenda pushing) dominates theoretical economics (= science) since the founding fathers. And this is why economics never rose above the proto-scientific level.
The very characteristic of political economics is its rhetorical appeal to common sense. This started with Adam Smith: “... he disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along.” (Schumpeter, 1994, p. 185)
This continued to Marshall and Keynes: “In the early thirties he [Keynes] confessed to Roy Harrod that he was ‘returning to an age-long tradition of common sense’.” (Coates, 2007, p. 11)
Now, David Sloan Wilson tries again to unite the scientific retards under the banner of common sense: “... [econ] is dominated by a single theoretical edifice ... The edifice is based upon a conception of human nature that is profoundly false, defying the dictates of common sense, before we even get to the more refined dictates of psychology and evolutionary theory.”
About the relationship between common sense and science all has been said by the great methodologist J. S. Mill: “People fancied they saw the sun rise and set, the stars revolve in circles round the pole. We now know that they saw no such thing; what they really saw was a set of appearances, equally reconcileable with the theory they held and with a totally different one. It seems strange that such an instance as this, ... , should not have opened the eyes of the bigots of common sense, and inspired them with a more modest distrust of the competency of mere ignorance to judge the conclusions of cultivated thought.”
The very characteristic of science is to TRANSCEND common sense. Therefore, there is no need at all to go into the details of Wilson’s soapbox economics, his appeal to common sense is sufficient to disqualify him as a scientist.
Egmont Kakarot-Handtke
Immediately preceding Evolutionary economics: Just another degenerate research program
Immediately following New economic thinking ― false promises and hopes
Blog-Reference
In your account of the various strands of evolutionary economics, you forgot the pivotal connection: Malthus is the key figure, he represents the deep unity of Political Economy and Darwinism.
Economics is a cargo cult science, that is, it always copied genuine science without ever getting on its own scientific feet. The history of economic thought consists of two main strands. First, economists copied Newtonian physics then they copied (re-imported) Darwinian biology. Having NO own scientific gravitas economists jumped on every bandwagon from game theory to evolutionary game theory, to chaos theory, to complexity theory and had their dilettantish fingers in every pie from psychology, sociology, anthropology, history, political science, social philosophy to biology/Darwinism.
Curiously, until this day the representative economist has no idea of the foundational concepts of his own discipline, that is, of profit and income. Walrasianism, Keynesianism, Marxianism, Austrianism is provably false.
The fundamental distinction in economics is between political economics and theoretical economics and the fact of the matter is that political economics (= agenda pushing) dominates theoretical economics (= science) since the founding fathers. And this is why economics never rose above the proto-scientific level.
The very characteristic of political economics is its rhetorical appeal to common sense. This started with Adam Smith: “... he disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along.” (Schumpeter, 1994, p. 185)
This continued to Marshall and Keynes: “In the early thirties he [Keynes] confessed to Roy Harrod that he was ‘returning to an age-long tradition of common sense’.” (Coates, 2007, p. 11)
Now, David Sloan Wilson tries again to unite the scientific retards under the banner of common sense: “... [econ] is dominated by a single theoretical edifice ... The edifice is based upon a conception of human nature that is profoundly false, defying the dictates of common sense, before we even get to the more refined dictates of psychology and evolutionary theory.”
About the relationship between common sense and science all has been said by the great methodologist J. S. Mill: “People fancied they saw the sun rise and set, the stars revolve in circles round the pole. We now know that they saw no such thing; what they really saw was a set of appearances, equally reconcileable with the theory they held and with a totally different one. It seems strange that such an instance as this, ... , should not have opened the eyes of the bigots of common sense, and inspired them with a more modest distrust of the competency of mere ignorance to judge the conclusions of cultivated thought.”
The very characteristic of science is to TRANSCEND common sense. Therefore, there is no need at all to go into the details of Wilson’s soapbox economics, his appeal to common sense is sufficient to disqualify him as a scientist.
Egmont Kakarot-Handtke
Immediately preceding Evolutionary economics: Just another degenerate research program
Immediately following New economic thinking ― false promises and hopes
October 17, 2016
Evolutionary economics: Just another degenerate research program
Comment on Noah Smith on ‘David Sloan Wilson’s econ critique’
Blog-Reference
Economics is a bit complicated because there is (i) political economics vs. theoretical economics, and (ii) orthodox economics vs. heterodox economics (see the 2x2 map at Graphic #1)
The situation is this: political economics (= agenda-pushing) dominates theoretical economics (= science) since the founding fathers and has not produced much, if anything, of scientific value for the last 200+ years.
Heterodoxy has always argued that something might be wrong with Orthodoxy. To be sure, Heterodoxy’s rejection of Orthodoxy is right. In 2016, no thinking being can defend orthodox economics any longer. The problem with traditional Heterodoxy is that it has not produced much, if anything, of scientific value either.
Economics is what Feynman famously called a cargo cult science because BOTH Orthodoxy and traditional Heterodoxy do NOT satisfy the scientific criteria of material and formal consistency.
Evolutionary economics is part of Heterodoxy since Thorstein Veblen asked, “Why is Economics Not an Evolutionary Science?” The next was Marshall with his famous call for a new methodology: “The Mecca of the economist lies in economic biology.” Evolutionary economics is institutionalized in different countries and communicates its research in the Journal of Evolutionary Economics.
David Sloan Wilson has had a great insight: “Nevertheless, I had faith that evolution could say something important about the regulatory systems that economists preside over, even if I did not yet know the details.” This insight has occurred many times before, and it is only new and exciting to the average dull Econ 101 student.
Evolutionary economics has been tried, and it has failed: “In a recent series of publications, ‘Generalized Darwinism’ has been proposed as a new overarching research strategy that is based on the assumption of a fundamental homology between evolution in nature and the evolution of the economy. The principles of variation, selection, and retention that have been distilled from evolutionary biology by isolating abstraction are claimed to be generally valid. It is suggested to apply these abstract principles as a unifying framework for all evolutionary theories. By a brief reconstruction of the different historical forms of Darwinism we have shown that the identification of these abstract principles with Darwinism is misleading. Moreover, on a priori grounds other principles — non-Darwinian or even anti-Darwinian ones like, e.g., orthogenesis, saltationism, or neo-Lamarckism — could claim a similar plausibility in explaining economic evolution.” (Levit et al., 2011, p. 559)
David Sloan Wilson advertises a common-sense approach. This, of course, appeals to all economists who have not much more than that. As a matter of fact, Wilson’s approach is fundamentally flawed. The first thing to be clear about is: economics is NOT about psychology, human behavior, sociology, politics, biology, anthropology, etcetera. Economics is about the properties and the working of the economic SYSTEM.
ALL Human-Nature approaches are bound to fail. The ultimate reason can be stated as a methodological impossibility theorem: NO way leads from the explanation of individual behavior to the explanation of how the economic system works.
Egmont Kakarot-Handtke
References
Levit, G. S., Hossfeld, U., and Witt, U. (2011). Can Darwinism be "Generalized" and of What Use Would This Be? Journal of Evolutionary Economics, 21(4): 545–562. DOI DOI10.1007/s00191-011-0235-3. URL
#1 Graphic AXEC83 Map of current economics
While you were asleep, a very smart methodologist has found out that “... economics is not a science of behaviour”. (Hudík, 2011)
So, the point is NOT “that it’s just very hard to make a general mathematical model of human behavior” but that there is NO NEED to make such a model. To speculate about constrained optimization, bounded rationality, animal spirits, or rational expectations is just as brain dead as to speculate about how many angels can dance on a pinpoint.
While you were asleep, the very definition of economics has been changed from: “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” (Robbins, 1935, p. 16) to “Economics is the science which studies how the monetary economy works.” (2014)
Now, go and wake up your Econ 101 teacher and tell him that he is fired.
References
Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL
Robbins, L. (1935). An Essay on the Nature and Significance of Economic Science. London, Bombay, etc.: Macmillan, 2nd edition.
Immediately following The bigots of common sense.
Blog-Reference
Economics is a bit complicated because there is (i) political economics vs. theoretical economics, and (ii) orthodox economics vs. heterodox economics (see the 2x2 map at Graphic #1)
The situation is this: political economics (= agenda-pushing) dominates theoretical economics (= science) since the founding fathers and has not produced much, if anything, of scientific value for the last 200+ years.
Heterodoxy has always argued that something might be wrong with Orthodoxy. To be sure, Heterodoxy’s rejection of Orthodoxy is right. In 2016, no thinking being can defend orthodox economics any longer. The problem with traditional Heterodoxy is that it has not produced much, if anything, of scientific value either.
Economics is what Feynman famously called a cargo cult science because BOTH Orthodoxy and traditional Heterodoxy do NOT satisfy the scientific criteria of material and formal consistency.
Evolutionary economics is part of Heterodoxy since Thorstein Veblen asked, “Why is Economics Not an Evolutionary Science?” The next was Marshall with his famous call for a new methodology: “The Mecca of the economist lies in economic biology.” Evolutionary economics is institutionalized in different countries and communicates its research in the Journal of Evolutionary Economics.
David Sloan Wilson has had a great insight: “Nevertheless, I had faith that evolution could say something important about the regulatory systems that economists preside over, even if I did not yet know the details.” This insight has occurred many times before, and it is only new and exciting to the average dull Econ 101 student.
Evolutionary economics has been tried, and it has failed: “In a recent series of publications, ‘Generalized Darwinism’ has been proposed as a new overarching research strategy that is based on the assumption of a fundamental homology between evolution in nature and the evolution of the economy. The principles of variation, selection, and retention that have been distilled from evolutionary biology by isolating abstraction are claimed to be generally valid. It is suggested to apply these abstract principles as a unifying framework for all evolutionary theories. By a brief reconstruction of the different historical forms of Darwinism we have shown that the identification of these abstract principles with Darwinism is misleading. Moreover, on a priori grounds other principles — non-Darwinian or even anti-Darwinian ones like, e.g., orthogenesis, saltationism, or neo-Lamarckism — could claim a similar plausibility in explaining economic evolution.” (Levit et al., 2011, p. 559)
David Sloan Wilson advertises a common-sense approach. This, of course, appeals to all economists who have not much more than that. As a matter of fact, Wilson’s approach is fundamentally flawed. The first thing to be clear about is: economics is NOT about psychology, human behavior, sociology, politics, biology, anthropology, etcetera. Economics is about the properties and the working of the economic SYSTEM.
ALL Human-Nature approaches are bound to fail. The ultimate reason can be stated as a methodological impossibility theorem: NO way leads from the explanation of individual behavior to the explanation of how the economic system works.
Egmont Kakarot-Handtke
References
Levit, G. S., Hossfeld, U., and Witt, U. (2011). Can Darwinism be "Generalized" and of What Use Would This Be? Journal of Evolutionary Economics, 21(4): 545–562. DOI DOI10.1007/s00191-011-0235-3. URL
#1 Graphic AXEC83 Map of current economics
***
COMMENT on Some guy on Oct 18While you were asleep, a very smart methodologist has found out that “... economics is not a science of behaviour”. (Hudík, 2011)
So, the point is NOT “that it’s just very hard to make a general mathematical model of human behavior” but that there is NO NEED to make such a model. To speculate about constrained optimization, bounded rationality, animal spirits, or rational expectations is just as brain dead as to speculate about how many angels can dance on a pinpoint.
While you were asleep, the very definition of economics has been changed from: “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” (Robbins, 1935, p. 16) to “Economics is the science which studies how the monetary economy works.” (2014)
Now, go and wake up your Econ 101 teacher and tell him that he is fired.
References
Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL
Robbins, L. (1935). An Essay on the Nature and Significance of Economic Science. London, Bombay, etc.: Macmillan, 2nd edition.
Immediately following The bigots of common sense.
July 21, 2016
Substandard reasoners
Comment on Lars Syll on ‘Why economists can’t reason’
Blog-Reference and Blog-Reference on Jul 22
The simple fact is that about one percent of the population can reason. The rest merely recycles stories of different degrees of absurdity according to Tertullian’s motto, ‘Credo quia absurdum est’. #1 Unfortunately, economics has been done since Adam Smith by the ninety-nine-percenters. This happened because “... we can never make sure that the right man will be attracted to scientific research.” (Popper, 1960, p. 157)
The failure of economics proves that it has been particularly attractive for substandard reasoners.
Science is special because it is the systematic attempt to establish truth, which in turn is well-defined by material AND formal consistency. Scientific truth is double-checked; everything else is storytelling.
About the logical part, Scriven says: “Reasoning is the process whereby we get from old truths to new truths, from the known to the unknown, from the accepted to the debatable … If the reasoning starts on firm ground, and if it is itself sound, then it will lead to a conclusion which we must accept, though previously, perhaps, we had not thought we should.” (See intro)
The key term is “firm ground” or, as Aristotle put it, “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.” #2
Scientific methodology is old stuff for more than 2300 years, but economists have never been able to get their heads around it.
What does the “firm ground” of economics look like? Standard economics is built upon this set of foundational propositions, a.k.a. axioms: “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, 1985, p. 147)
With this “firm ground,” sound logical thinking with iron necessity arrives eventually in a parallel universe. Clearly, with manifest NONENTITIES in the premises, the inevitable outcome is a bubbling angels-on-a-pinpoint discourse. The real question is why so many economists could ever accept HC1 to HC5. Obviously, the motto ‘Credo quia absurdum est’ applies as ever and has only to be translated into modern English as ‘You can sell any crap to an economist’. #3
The curious thing is that there is no difference between orthodox and heterodox economists in this respect. What is, in fact, different between them is the color of their methodological tinfoil hats. Orthodoxy says HC1 to HC5 is firm ground, and Heterodoxy subscribes to anything-goes or optionally to nothing-goes.
Scientists have always known one crucial thing about firm ground: “We are lost in a swamp, the morass of our ignorance. ... We have to find the roots and get ourselves out! ... Braids or bootstraps are necessary for two purposes: to pull ourselves out of the swamp and, afterwards, to keep our bits and pieces together in an orderly fashion.” (Schmiechen, 2009, p. 11)
In order to pull themselves out of the swamp, economists have to replace the microfoundations HC1 to HC5 with macrofoundations. There is no hope at all that the old swampies can do the trick.
Egmont Kakarot-Handtke
References
Popper, K. R. (1960). The Poverty of Historicism. London, Henley: Routledge and Kegan Paul.
Schmiechen, M. (2009). Newton’s Principia and Related ‘Principles’ Revisited, volume 1. Norderstedt: Books on Demand, 2nd edition. URL
Weintraub, E. R. (1985). Joan Robinson’s Critique of Equilibrium: An Appraisal. American Economic Review, Papers and Proceedings, 75(2): 146–149. URL
#1 Wikipedia Credo quia absurdum
#2 Wikipedia Posterior Analytics
#3 Mental messies and loose losers
Blog-Reference and Blog-Reference on Jul 22
The simple fact is that about one percent of the population can reason. The rest merely recycles stories of different degrees of absurdity according to Tertullian’s motto, ‘Credo quia absurdum est’. #1 Unfortunately, economics has been done since Adam Smith by the ninety-nine-percenters. This happened because “... we can never make sure that the right man will be attracted to scientific research.” (Popper, 1960, p. 157)
The failure of economics proves that it has been particularly attractive for substandard reasoners.
Science is special because it is the systematic attempt to establish truth, which in turn is well-defined by material AND formal consistency. Scientific truth is double-checked; everything else is storytelling.
About the logical part, Scriven says: “Reasoning is the process whereby we get from old truths to new truths, from the known to the unknown, from the accepted to the debatable … If the reasoning starts on firm ground, and if it is itself sound, then it will lead to a conclusion which we must accept, though previously, perhaps, we had not thought we should.” (See intro)
The key term is “firm ground” or, as Aristotle put it, “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.” #2
Scientific methodology is old stuff for more than 2300 years, but economists have never been able to get their heads around it.
What does the “firm ground” of economics look like? Standard economics is built upon this set of foundational propositions, a.k.a. axioms: “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, 1985, p. 147)
With this “firm ground,” sound logical thinking with iron necessity arrives eventually in a parallel universe. Clearly, with manifest NONENTITIES in the premises, the inevitable outcome is a bubbling angels-on-a-pinpoint discourse. The real question is why so many economists could ever accept HC1 to HC5. Obviously, the motto ‘Credo quia absurdum est’ applies as ever and has only to be translated into modern English as ‘You can sell any crap to an economist’. #3
The curious thing is that there is no difference between orthodox and heterodox economists in this respect. What is, in fact, different between them is the color of their methodological tinfoil hats. Orthodoxy says HC1 to HC5 is firm ground, and Heterodoxy subscribes to anything-goes or optionally to nothing-goes.
Scientists have always known one crucial thing about firm ground: “We are lost in a swamp, the morass of our ignorance. ... We have to find the roots and get ourselves out! ... Braids or bootstraps are necessary for two purposes: to pull ourselves out of the swamp and, afterwards, to keep our bits and pieces together in an orderly fashion.” (Schmiechen, 2009, p. 11)
In order to pull themselves out of the swamp, economists have to replace the microfoundations HC1 to HC5 with macrofoundations. There is no hope at all that the old swampies can do the trick.
Egmont Kakarot-Handtke
References
Popper, K. R. (1960). The Poverty of Historicism. London, Henley: Routledge and Kegan Paul.
Schmiechen, M. (2009). Newton’s Principia and Related ‘Principles’ Revisited, volume 1. Norderstedt: Books on Demand, 2nd edition. URL
Weintraub, E. R. (1985). Joan Robinson’s Critique of Equilibrium: An Appraisal. American Economic Review, Papers and Proceedings, 75(2): 146–149. URL
#1 Wikipedia Credo quia absurdum
#2 Wikipedia Posterior Analytics
#3 Mental messies and loose losers
July 9, 2016
Enough! Economists, retire now!
Comment on Lars Syll on ‘Krugman’s dangerous lack of methodological reflection’
Blog-Reference
(i) There is Orthodoxy with microfoundations, and it has been nicely defined by Krugman: “... most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point.” #1
(ii) Methodologically, these premises are forever unacceptable. #2
(iii) When the premises/axioms/foundational propositions are false or contain NONENTITIES, the whole theory/model/superstructure is false. Because of this, there is NO need to check the theoretical superstructure or the policy conclusions of Neoclassics in great detail.
(iv) Hydra Rule: It is not only a waste of time to fight the countless heads of the beast and to decapitate them one by one, but de facto counterproductive. #3 The only effective method of refutation is to go directly to the heart of the matter, i.e., to the axioms.
(v) Neoclassical policy proposals have NO valid theoretical foundations. However, because many details/add-ons/illustrations of a longer and mixed argument are accurate, commonsensical, tautological, approximately true on a small/micro-scale, credible, or part of the unquestioned social belief system, the general public cannot see that there is a TOTAL DISCONNECT between an economic policy proposal and the underlying theory. Just as there is a total disconnect between poultry entrails and the utterances of the haruspex, which guided ancient Roman policy. #4
(vi) The Disconnect Generalization: ALL economic policy arguments of Walrasians, Keynesians, Marxians, and Austrians are hanging in midair and are scientifically unfounded.
(vii) The only general statement that can be made with certainty about human behavior is that it is target-oriented. Targets, though, are dependent on expectations. Expectations, in turn, are almost instantaneously adaptable, only loosely connected to objective reality, emotionally inflated, and subject to sudden changes that are transmitted with high speed between individuals. Because of the ONTOLOGICAL UNCERTAINTY of expectations and by implication targets, there can be NO such thing as a behavioral axiom. Axioms must be certain, or as Aristotle put it, certain, true, and primary.
(viii) Because human behavior cannot be axiomatized, the microfoundations program has already been dead in the cradle 150+ years ago.
(ix) Keynes started the macrofoundations research program in the General Theory formally as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” These formal foundations are conceptually and logically defective because Keynes never came to grips with profit (2011; 2012).
(x) Because of this, the macrofoundations approach (including After-Keynesianism, Post-Keynesianism, New Keynesianism, and all I=S/IS-LM models) was already dead in the cradle 80+ years ago.
Review of the Troops. Provably false
• profit theory, for 200+ years,
• microfoundations, for 150+ years,
• macrofoundations, for 80+ years,
• application of elementary (2012) and high-powered mathematical tools, for approx. 100 years. #5
ALL models that contain maximization-and-equilibrium or I=S are a priori false, and this is more than 90 percent of the content of peer-reviewed economic quality journals and 100 percent of textbooks of renowned authors.
(xi) No more proof of scientific incompetence is needed. Remains only one question for society: how to get rid of the ‘throng of superfluous economists’. #6
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Kakarot-Handtke, E. (2012). The Common Error of Common Sense: An Essential Rectification of the Accounting Approach. SSRN Working Paper Series, 2124415: 1–23. URL
#1 More detailed, the starting point is given with these axioms: “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, 1985)
#2 For details and proofs, see the blog and working papers
#3 Wikipedia Lernaean Hydra
#4 Wikipedia Haruspex
#5 For the REAL mathiness problem, see Jonathan Barzilai, Scientific Metrics, Open Letter to the President of the American Economic Association and papers
#6 Joan Robinson
Related 'Economists ― standing on the shoulders of dwarfs' and 'Hooray! The formalization issue is finally settled' and 'Economics: a science without scientists' and 'Economics: communication without content' and 'Economics: A failed/fake science for 200+ years' and 'Modern macro moronism' and 'The clock runs down on economics' and 'MMT and the canonical macroeconomic model'. For details of the big picture, see cross-references Failed/Fake Scientists.
Your positioning of Krugman’s approach is false. Krugman is NOT in the right way and at an early stage of development that will eventually lead to success. Krugman is definitely at the dead-end of the wrong way. So he is not comparable to a precursor like Tycho Brahe#1 but to Ptolemy #2, the iconic representative of geocentrism. Geocentrism was refuted by Copernicus, Kepler, Galileo, and Newton in the course of the Scientific Revolution and was fully REPLACED by heliocentrism.
So, Krugman is the representative of an approach that will vanish from the corpus of accepted scientific truths without a trace.
The actual situation and the alternative futures of economics are summarized in this chart on Graphic AXEC79.
(i) Neoclassical economics is dead but not buried (squares D and G).
(ii) Most heterodox economists are on square E (traditional Heterodoxy) and have the choice between E-C, E-F, and E-I.
(ii) I am on square B (Constructive Heterodoxy).
(iii) Some heterodox economists are on square H (nihilistic Heterodoxy), and they are going nowhere.
The two wrong ways are E-F (toward the pluralism of false/inconclusive theories) and E-I (toward the weaponizing/capturing/politicizing of economics).
Like you, I see Lars Syll in squares H/E, but you in squares G/D. In brief, Orthodoxy/ Krugman/Lewis is at the ultimate end of a cul-de-sac. Compared to this, Lars Syll’s position is progress. It all depends on where he goes from there. Krugman, in marked contrast, is locked and will not go anywhere. Your positioning of Krugman as a hopeful and modestly successful precursor of scientific truth is indefensible.
#1 See Brahe
#2 See Ptolemy
If you have a serious interest in rigorous formal proofs of Krugman’s and your own scientific incompetence, I recommend
Alternatively, you can enter Krugman’s and my full name in Google, and you will get 1.910 hits in 0,38 seconds. This is much faster and more productive than typing silly questions and comments.
Blog-Reference
(i) There is Orthodoxy with microfoundations, and it has been nicely defined by Krugman: “... most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point.” #1
(ii) Methodologically, these premises are forever unacceptable. #2
(iii) When the premises/axioms/foundational propositions are false or contain NONENTITIES, the whole theory/model/superstructure is false. Because of this, there is NO need to check the theoretical superstructure or the policy conclusions of Neoclassics in great detail.
(iv) Hydra Rule: It is not only a waste of time to fight the countless heads of the beast and to decapitate them one by one, but de facto counterproductive. #3 The only effective method of refutation is to go directly to the heart of the matter, i.e., to the axioms.
(v) Neoclassical policy proposals have NO valid theoretical foundations. However, because many details/add-ons/illustrations of a longer and mixed argument are accurate, commonsensical, tautological, approximately true on a small/micro-scale, credible, or part of the unquestioned social belief system, the general public cannot see that there is a TOTAL DISCONNECT between an economic policy proposal and the underlying theory. Just as there is a total disconnect between poultry entrails and the utterances of the haruspex, which guided ancient Roman policy. #4
(vi) The Disconnect Generalization: ALL economic policy arguments of Walrasians, Keynesians, Marxians, and Austrians are hanging in midair and are scientifically unfounded.
(vii) The only general statement that can be made with certainty about human behavior is that it is target-oriented. Targets, though, are dependent on expectations. Expectations, in turn, are almost instantaneously adaptable, only loosely connected to objective reality, emotionally inflated, and subject to sudden changes that are transmitted with high speed between individuals. Because of the ONTOLOGICAL UNCERTAINTY of expectations and by implication targets, there can be NO such thing as a behavioral axiom. Axioms must be certain, or as Aristotle put it, certain, true, and primary.
(viii) Because human behavior cannot be axiomatized, the microfoundations program has already been dead in the cradle 150+ years ago.
(ix) Keynes started the macrofoundations research program in the General Theory formally as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” These formal foundations are conceptually and logically defective because Keynes never came to grips with profit (2011; 2012).
(x) Because of this, the macrofoundations approach (including After-Keynesianism, Post-Keynesianism, New Keynesianism, and all I=S/IS-LM models) was already dead in the cradle 80+ years ago.
Review of the Troops. Provably false
• profit theory, for 200+ years,
• microfoundations, for 150+ years,
• macrofoundations, for 80+ years,
• application of elementary (2012) and high-powered mathematical tools, for approx. 100 years. #5
ALL models that contain maximization-and-equilibrium or I=S are a priori false, and this is more than 90 percent of the content of peer-reviewed economic quality journals and 100 percent of textbooks of renowned authors.
(xi) No more proof of scientific incompetence is needed. Remains only one question for society: how to get rid of the ‘throng of superfluous economists’. #6
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Kakarot-Handtke, E. (2012). The Common Error of Common Sense: An Essential Rectification of the Accounting Approach. SSRN Working Paper Series, 2124415: 1–23. URL
#1 More detailed, the starting point is given with these axioms: “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, 1985)
#2 For details and proofs, see the blog and working papers
#3 Wikipedia Lernaean Hydra
#4 Wikipedia Haruspex
#5 For the REAL mathiness problem, see Jonathan Barzilai, Scientific Metrics, Open Letter to the President of the American Economic Association and papers
#6 Joan Robinson
Related 'Economists ― standing on the shoulders of dwarfs' and 'Hooray! The formalization issue is finally settled' and 'Economics: a science without scientists' and 'Economics: communication without content' and 'Economics: A failed/fake science for 200+ years' and 'Modern macro moronism' and 'The clock runs down on economics' and 'MMT and the canonical macroeconomic model'. For details of the big picture, see cross-references Failed/Fake Scientists.
***
COMMENT on Kingsley Lewis on Jul 11Your positioning of Krugman’s approach is false. Krugman is NOT in the right way and at an early stage of development that will eventually lead to success. Krugman is definitely at the dead-end of the wrong way. So he is not comparable to a precursor like Tycho Brahe#1 but to Ptolemy #2, the iconic representative of geocentrism. Geocentrism was refuted by Copernicus, Kepler, Galileo, and Newton in the course of the Scientific Revolution and was fully REPLACED by heliocentrism.
So, Krugman is the representative of an approach that will vanish from the corpus of accepted scientific truths without a trace.
The actual situation and the alternative futures of economics are summarized in this chart on Graphic AXEC79.
(i) Neoclassical economics is dead but not buried (squares D and G).
(ii) Most heterodox economists are on square E (traditional Heterodoxy) and have the choice between E-C, E-F, and E-I.
(ii) I am on square B (Constructive Heterodoxy).
(iii) Some heterodox economists are on square H (nihilistic Heterodoxy), and they are going nowhere.
The two wrong ways are E-F (toward the pluralism of false/inconclusive theories) and E-I (toward the weaponizing/capturing/politicizing of economics).
Like you, I see Lars Syll in squares H/E, but you in squares G/D. In brief, Orthodoxy/ Krugman/Lewis is at the ultimate end of a cul-de-sac. Compared to this, Lars Syll’s position is progress. It all depends on where he goes from there. Krugman, in marked contrast, is locked and will not go anywhere. Your positioning of Krugman as a hopeful and modestly successful precursor of scientific truth is indefensible.
#1 See Brahe
#2 See Ptolemy
***
REPLY to Kingsley Lewis on Jul 11If you have a serious interest in rigorous formal proofs of Krugman’s and your own scientific incompetence, I recommend
Alternatively, you can enter Krugman’s and my full name in Google, and you will get 1.910 hits in 0,38 seconds. This is much faster and more productive than typing silly questions and comments.
June 23, 2016
Hayek ― agenda pusher or scientist?
Comment on Syll/Solow on ‘Good Hayek vs. Bad Hayek’
Blog-Reference
Robert Solow is here quoted with: “The Good Hayek was a serious scholar who was particularly interested in the role of knowledge in the economy (and in the rest of society).” (See intro)
This is a misunderstanding that is grounded in the fact that most people/economists have no proper understanding of what economics is all about. Therefore, it is, first of all, of utmost importance to distinguish between political and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda; the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics, anything goes; in theoretical economics, scientific standards are observed.
Theoretical economics has to be judged according to the criteria true/false and NOTHING else. The history of political economics from Adam Smith to Hayek and beyond can be summarized as an utter scientific failure. A closer look at what is naively called economics as if it were a homogeneous entity shows that theoretical economics has been captured by the agenda pushers of political economics. Smith and Ricardo fought for Liberalism, Marx and Keynes were agenda pushers, so were Hayek and Friedman, and so are Krugman and Varoufakis.
It is a widespread misunderstanding to think that people who talk about the economy understand how the economy works. Hayek’s ‘Road to Serfdom’ is a political pamphlet and it is not backed by the true economic theory simply because Hayekian economics is scientifically worthless storytelling until this day.
Hayek, of course, had the right to write political pamphlets, to defend capitalism, to support Thatcher, to found the political club Mont Pelerin, and to dabble in sociology and political philosophy. One thing, though, should be perfectly clear: the moment an economist starts with politics, he leaves economics, understood as a science, for good.
Political economists of all stripes are characterized by four common traits: (i) They are mainly occupied with sociology, psychology, anthropology, political science, history, law/institutions, Darwinism/evolution theory, social philosophy, etcetera. That is, they miss the essentials of economics proper. #1 (ii) They use theoretical economics as a means/support for their agenda. By this, they abuse science unknowingly or knowingly. (iii) As far as they have tried to underpin their agenda theoretically, it can be proved in each case that their approaches lack formal and material consistency. (iv) Political economists have no idea about how the actual economy works because they lack the correct profit theory.
It is not decisive what the political agenda is: ALL of the political economics is cargo cult science (Feynman’s term). Political economics has not produced anything of scientific value since Adam Smith.
One task of Heterodoxy is to refute false theories. The more important task, though, is to develop the true theory of how markets work (2015). Hayek argued that the existing economic system is self-adjusting. He could never prove it in a way that satisfies the criteria of material and formal consistency. Neither could General Equilibrium Theory. Worse, it can be rigorously proved that the existing economy is NOT self-adjusting #2 and that it must ― inescapably programmed by the Profit Law ― eventually break down (2014) even if the price mechanism is perfectly flexible and perfectly efficient. Hayek never understood the profit mechanism, which is the essential feature of the existing economy. Neither did the rest of the Mont Pelerin "thought collective" #3.
Blog-Reference
Robert Solow is here quoted with: “The Good Hayek was a serious scholar who was particularly interested in the role of knowledge in the economy (and in the rest of society).” (See intro)
This is a misunderstanding that is grounded in the fact that most people/economists have no proper understanding of what economics is all about. Therefore, it is, first of all, of utmost importance to distinguish between political and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda; the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics, anything goes; in theoretical economics, scientific standards are observed.
Theoretical economics has to be judged according to the criteria true/false and NOTHING else. The history of political economics from Adam Smith to Hayek and beyond can be summarized as an utter scientific failure. A closer look at what is naively called economics as if it were a homogeneous entity shows that theoretical economics has been captured by the agenda pushers of political economics. Smith and Ricardo fought for Liberalism, Marx and Keynes were agenda pushers, so were Hayek and Friedman, and so are Krugman and Varoufakis.
It is a widespread misunderstanding to think that people who talk about the economy understand how the economy works. Hayek’s ‘Road to Serfdom’ is a political pamphlet and it is not backed by the true economic theory simply because Hayekian economics is scientifically worthless storytelling until this day.
Hayek, of course, had the right to write political pamphlets, to defend capitalism, to support Thatcher, to found the political club Mont Pelerin, and to dabble in sociology and political philosophy. One thing, though, should be perfectly clear: the moment an economist starts with politics, he leaves economics, understood as a science, for good.
Political economists of all stripes are characterized by four common traits: (i) They are mainly occupied with sociology, psychology, anthropology, political science, history, law/institutions, Darwinism/evolution theory, social philosophy, etcetera. That is, they miss the essentials of economics proper. #1 (ii) They use theoretical economics as a means/support for their agenda. By this, they abuse science unknowingly or knowingly. (iii) As far as they have tried to underpin their agenda theoretically, it can be proved in each case that their approaches lack formal and material consistency. (iv) Political economists have no idea about how the actual economy works because they lack the correct profit theory.
It is not decisive what the political agenda is: ALL of the political economics is cargo cult science (Feynman’s term). Political economics has not produced anything of scientific value since Adam Smith.
One task of Heterodoxy is to refute false theories. The more important task, though, is to develop the true theory of how markets work (2015). Hayek argued that the existing economic system is self-adjusting. He could never prove it in a way that satisfies the criteria of material and formal consistency. Neither could General Equilibrium Theory. Worse, it can be rigorously proved that the existing economy is NOT self-adjusting #2 and that it must ― inescapably programmed by the Profit Law ― eventually break down (2014) even if the price mechanism is perfectly flexible and perfectly efficient. Hayek never understood the profit mechanism, which is the essential feature of the existing economy. Neither did the rest of the Mont Pelerin "thought collective" #3.
Not one of the political economists and agenda pushers from Smith to Hayek will, in the final assessment, be accepted as a scientist.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014). Mathematical Proof of the Breakdown of Capitalism. SSRN Working Paper Series, 2375578: 1–21. URL
Kakarot-Handtke, E. (2015). Essentials of Constructive Heterodoxy: The Market. SSRN Working Paper Series, 2547098: 1–10. URL
#1 Economics is the science that studies how the monetary economy works and NOT how society works, which means methodologically, it is NOT subjective-behavioral but objective-structural. See the working paper Objective Principles of Economics.
#2 Could we, please, all focus on the key question of economics?
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014). Mathematical Proof of the Breakdown of Capitalism. SSRN Working Paper Series, 2375578: 1–21. URL
Kakarot-Handtke, E. (2015). Essentials of Constructive Heterodoxy: The Market. SSRN Working Paper Series, 2547098: 1–10. URL
#1 Economics is the science that studies how the monetary economy works and NOT how society works, which means methodologically, it is NOT subjective-behavioral but objective-structural. See the working paper Objective Principles of Economics.
#2 Could we, please, all focus on the key question of economics?
#3 Mirowski, P., and Plehwe, D. (2009). The Road From Mont Pelerin. The Making of the Neoliberal Thought Collective. Cambridge, London: Harvard University Press.
Related 'Why Hayek was not a scientist' and 'Hayek was not an economist' and 'Hayek: mad, bad, or just another incompetent economist?' and 'Hayek or how economists miss their subject matter since more than 200 years'.
Related 'Why Hayek was not a scientist' and 'Hayek was not an economist' and 'Hayek: mad, bad, or just another incompetent economist?' and 'Hayek or how economists miss their subject matter since more than 200 years'.
March 22, 2016
How to get out of the swamp of ignorance
Comment on Noah Smith on ‘New paradigms in economic theory? Not so fast.’
Blog-Reference and Blog-Reference on Mar 24
The natural cognitive state vis-à-vis reality — and by implication vis-à-vis the economy — is this: “We are lost in a swamp, the morass of our ignorance. ... We have to find the roots and get ourselves out! ... Braids or bootstraps are necessary for two purposes: to pull ourselves out of the swamp and, afterwards, to keep our bits and pieces together in an orderly fashion.” (Schmiechen, 2009, p. 11)
How to get out of the swamp is known for more than 2300 years as the scientific method: “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.” (Aristotle)
Orthodoxy has followed this method and laid down its hard-core 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, 1985, p. 147)
Orthodoxy is a failed approach because this axiom set contains NONENTITIES, i.e. HC2, HC4, HC5 cannot by any stretch of the imagination taken to be true. Clearly, when the premises are not ‘certain, true, and primary’ the whole theoretical superstructure falls apart. Exactly this happened with maximization-and-equilibrium economics.
In this situation an ‘empirical revolution’ is pointless. Propositions that contain NONENTITIES like utility, equilibrium, or Easter Bunny are not testable, to begin with.
What instead has to be done is to replace the orthodox set of foundational propositions with a new set. J. S. Mill identified the very first question of methodology: “What are the propositions which may reasonably be received without proof? That there must be some such propositions all are agreed, since there cannot be an infinite series of proof, a chain suspended from nothing. But to determine what these propositions are, is the opus magnum of the more recondite mental philosophy.”
The current state of economics is that Heterodoxy, too, has failed at the opus magnum. It is not sufficient to throw in any number of unrelated concepts like evolution, complexity, networks, nonlinearity, incomplete optimization, incomplete forward-lookingness, externalities, behavioral heuristics, social preferences, and cooperative games. This only proves the utter confusion about the subject matter.
Economics is about the properties of the monetary economy. Because of this, economic analysis has to start with the objective system component of reality. The necessary Paradigm Shift requires the replacement of the false orthodox axiom set by an entirely new one.
The most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm and is given by these three objective structural axioms: (A1) Yw=WL wage income Yw is equal to wage rate W times working hours L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
These premises are certain, true, and primary, and therefore satisfy all methodological requirements. The Paradigm Shift consists of the move from HC1/HC6 to (A1)/(A3). Everything else is frog-quacking in the swamp of ignorance.
Egmont Kakarot-Handtke
References
Schmiechen, M. (2009). Newton’s Principia and Related ‘Principles’ Revisited, volume 1. Norderstedt: Books on Demand, 2nd edition. URL
Weintraub, E. R. (1985). Joan Robinson’s Critique of Equilibrium: An Appraisal. American Economic Review, Papers and Proceedings, 75(2): 146–149. URL
Related 'Vain hopes in the ruins of economics' and 'Toward the true economic axioms' and 'Why economics is a failed science ― 24 excuses and 1 explanation'. For details of the big picture cross-references Paradigm Shift.
REPLY to Barkley Rosser on Mar 23
(i) As you should know from Econ 101, accounting identities consist exclusively of nominal magnitudes. The three structural axioms consist of nominal AND real variables. Therefore, there are NO accounting identities, stupid.
(ii) The three structural axioms constitute the formal backbone of economics. Models that do not consistently fit into this elementary mathematical framework, e.g. real models or Keynesian models, are out of economics for good.
(iii) The three structural axioms define the elementary consumption economy, which every economist should thoroughly understand. #1 Because who does not understand the most elementary case has no chance at all to understand anything.
(iv) Your problem is that you are not even aware that you never understood what profit is. For your overdue enlightenment, see the Palgrave Dictionary: “A satisfactory theory of profits is still elusive.” (Desai). What do you call an economist who cannot tell what profit is? Clearly, being incompetent would be a euphemism.
(v) From a deeper analysis of the elementary production-consumption economy follows the most elementary version of the Profit Law. #2 Every economist — even you — has now a chance to understand the basics of economics.
(vi) From the differentiated structural axiom set follows the Employment Law, see eq. (33) of the working paper Keynes’s Employment Function and the Gratuitous Phillips Curve Disaster. Either you empirically refute this equation or simply get out of the way. To recall, science is about formal and material proof. Blather does not count for much.
#1 Toward the true economic axioms
#2 How the intelligent non-economist can refute every economist hands down
REPLY to Barkley Rosser on Mar 24
You say: “Your supposed axioms are ... true by definition.” Yes, this is exactly what I assert. So we have common ground. Not only this, we are in perfect accordance with what Aristotle defined as the scientific method: “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.”
Having established a rock-solid starting point, we can now advance: “The object of reasoning is to find out, from the consideration of what we already know, something else which we do not know.” (Peirce)
From the axioms we have agreed upon to be true follows that Walrasianism and Keynesianism are provably false.
This, in a nutshell, is the straightforward application of the axiomatic-deductive method to economics. The method is known for more than 2300 years, and you can look it up in Wikipedia: “Euclid’s method consists in assuming a small set of intuitively appealing axioms, and deducing many other propositions (theorems) from these.”
One very important theorem is the Profit Law, which says in its most elementary form (i) Qm=-Sm (Qm monetary profit, Sm monetary saving). This is the beauty of the scientific method to ‘find out, from the consideration of what we already know, something else which we do not know.’ What theorem (i) tells you is that all I=S models are false and, by implication, that both Walrasianism and Keynesianism are as dead as a doornail. I am pretty sure that you did not know this until now.
You say about the axioms A1 to A3, “They lead to nowhere at all other than to help in a ‘measurement without theory’ sort of empirical investigation, which you claim is ‘pointless.’ But your axioms are good for nothing more, and not even all that useful for even that.”
It cannot be said that my axioms ‘lead to nowhere.’ At a minimum, they have led to the incontrovertible conclusion that you have been hanging around for too long in the scientific Neanderthal.
REPLY to Tom Brown on Mar 25
You say: “Your concept of science sounds more like mathematics.” This is perhaps because you have a wrong idea of what science is all about. Science was already well established when Adam Smith declared that economics, too, is a science. Economics defends this claim to this day but has never delivered anything fitting the description of science.
So, it is not “my” concept or “your” concept. Science is well-defined, and economists either stick to the rules or they will be thrown out of science. According to the criteria of formal and material consistency (Klant, 1994, p. 31), economics is indisputably a failed science. In methodological terms, this means that the old paradigm is dead and a new paradigm is urgently needed. Because a paradigm is defined by its foundational propositions, a.k.a axioms, a Paradigm Shift means practically fully replacing the old axiom set, i.e., HC1 to HC6 above, with a new one. This has nothing to do with mathematics as such. Newton put his PHYSICAL axioms on the first pages of the Principia.* In methodological analogy ECONOMIC axioms have to be laid down by economists. This defines the subject matter.
The actual situation is this: Orthodoxy clings to a thoroughly refuted axiom set, and Heterodoxy so far has failed to formulate a new one. As Keynes famously put it: “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.” (Keynes, 1973, p. 16)
As a matter of fact, Keynes’ Paradigm Shift (= overthrow of axioms) failed. This means in the strict sense that economics has no scientifically valid axiomatic foundations at all. Walrasian and Keynesian economics are what Feynman famously called cargo cult science. In other words, economics is de facto OUT of science.
Economists violate well-defined scientific standards on a daily basis. To recall: “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, pp. 369-370)
In the proto-science of economics, it is indeed possible to teach falsified theories like supply-demand-equilibrium generation after generation, 'as if nothing had happened’.
Therefore, in economics, the task is NOT to replace something like true but qualified ‘Newtonian’ axioms with something like true but general ‘Einsteinian’ axioms but to replace the neoclassical axioms that are KNOWN to be FALSE.
There is no “my” or “your” concept of science or different concepts in mathematics, physics, the so-called social sciences, or economics. There is only ONE way to build up a valid theory: “The basic concepts and laws which are not logically further reducible constitute the indispensable and not rationally deducible part of the theory. It can scarcely be denied that the supreme goal of all theory is to make the irreducible basic elements as simple and as few as possible without having to surrender the adequate representation of a single datum of experience.” (Einstein, 1934, p. 165)
The methodological term for ‘basic concepts and laws which are not logically further reducible’ is axioms. As long as economic theory is not based on a consistent set of axioms, it is out of science. This is the case since Adam Smith. There is no use to wish-wash around this embarrassing fact.
References
Einstein, A. (1934). On the Method of Theoretical Physics. Philosophy of Science, 1(2): 163–169. URL
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. London, Basingstoke: Macmillan.
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield: Edward Elgar.
Morgenstern, O. (1941). Professor Hicks on Value and Capital. Journal of Political Economy, 49(3): 361–393. URL
REPLY to Tom Brown on Mar 26
(i) You say: “Having a consistent set of axioms is not a guarantee that you’re doing science.” Yes, indeed, because science requires formal AND material consistency. THIS is the guarantee: “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)
The fact of the matter is that orthodox economics lacks BOTH formal AND material consistency. This, in turn, is the guarantee that economics is NOT a science. In order to refute a theory, it SUFFICES to prove EITHER logical or material inconsistency.
Walrasian and Keynesian economics are logically defective, and the proof has been carried out by using the axiomatic-deductive method. No scientist will ever accept Walrasian or Keynesian economics.
(ii) Walrasian and Keynesian economics are refuted. Economists either do not know it, do not understand it, or ignore it. Either way, they are violating the well-defined standards of science. This is inexcusable.
(iii) It is a silly game to challenge a scientist by asking him to predict the future. He will simply tell you “The future is unpredictable.” (Feynman) #1 Predicting the future is the business of imbeciles.
(iv) Because of this, economics from Jevons/Walras/Menger onward to DSGE is NOT dismissed because it has not predicted crises. Neoclassics is unacceptable because it is logically and empirically inconsistent.
(v) From the structural axioms follows the elementary version of the Profit Law. #2 You, or a competent economist for that matter, are invited to test it against the DSGE profit law. This test, though, is an entirely separate issue and should not distract from the fact that neoclassical economics is axiomatically false for more than 150 years.
(vi) That the Fed uses DSGE does not speak for DSGE but against the Fed.
#1 Scientists do not predict and Prediction does not work? Try retrodiction first
#2 The three fundamental economic laws.
ADDENDUM
The formula for the simulation of the elementary structural axiomatic consumption economy is given with Graphic AXEC25. You are certainly in a position to produce the source code yourself.
REPLY to Tom Brown on Mar 28
We have two SEPARATE issues (i) orthodox economics is false and thoroughly refuted according to well-defined scientific criteria, and (ii), given that Orthodoxy is dead, what does the new paradigm look like?
The problem with Noah Smith and you is that you have not yet realized (i). Because of this, you are hopelessly locked in at the proto-scientific stage. With regard to Orthodoxy or so-called mainstream economics, this is the situation: “... we may say that ... the omnipresence of a certain point of view is not a sign of excellence or an indication that the truth or part of the truth has at last been found. It is, rather, the indication of a failure of reason to find suitable alternatives which might be used to transcend an accidental intermediate stage of our knowledge.” (Feyerabend)
Therefore, for every economist, there is but ONE worthwhile task: to contribute to the NEW paradigm. All the rest is pointless behind-the-curve blather.
Instead of doing your scientific homework, you argue with regard to (ii): “Even a zeroth order model will do (up or down). Is your theory useful? I’d like to see the evidence that it is. Make them conditional if you like: tell me what things cannot happen and what's more likely to happen. Tell us the kinds of states we’ll likely find the economy in, and those that are excluded by your theory (past, present, and future).”
Obviously, you cannot read. With regard to the issues of scientific prediction and testable economic laws, I have referred you above to the pertinent posts, which are in turn backed up by working papers. You have not realized this either.
Economics could make much faster progress toward science if failed mainstream economists could simply get out of the way — NOW.
REPLY to Tom Brown on Mar 30
Science is not about preaching but proof. You are provably false and are defending the indefensible.
Thank you for the link to TheMoneyIllusion. See my comment there The futility of testing economics blather.
In case you have not followed the short excursion to Austrianism on TheMoneyIllusion-blog here is the resume that applies generally:
Science was there before economics was there. Economists either conform to scientific standards or are out of science: they are in NO position to redefine scientific criteria.
Because economics — as represented by the major sects Walrasians, Keynesians, Marxians, and Austrians — has never risen above the level of a proto-science, it has become popular among economists to question the standards, to lower them, or, as Blaug aptly put it, ‘to play tennis with the net down’. When this is pointed out, economists make the backward somersault: ‘Economics is not a Science with a capital S’ (Solow).
The scientific method is well-defined: “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)
Logical consistency is secured by applying the axiomatic-deductive method, and empirical consistency is secured by applying state-of-the-art testing.
Economics fails on both counts: the axiomatic foundations are provably false, and testing is regularly inconclusive. So, economics has happily established itself in the swamp between true and false where ‘nothing is clear, and everything is possible’ (Keynes).
The swamp between the hard rocks of true and false is the natural habitat of blathering frogs, of which there are four species, which are clearly identifiable by their respective axiom sets. The funniest species are the Austrians, who are in possession of an irrefutable magic axiom but never managed to produce a testable proposition. So, there is NO WAY to get an Austrian frog ever out of the swamp. And of this, they are very proud.
No problem with this, of course. What has to be made crystal clear is that Austrians have never produced anything of scientific value. For the proof, re-read Major.Freedom’s posts. With this stuff, the poor souls in scientific hell are tortured.
Time to become constructive now: let’s proceed with the Paradigm Shift.
Related 'Where Advanced Heterodoxy — represented by Steve Keen — took the wrong turn'and 'The futility of testing economics blather' and 'Austrian blather' and 'The zombie wars are over'
Blog-Reference and Blog-Reference on Mar 24
The natural cognitive state vis-à-vis reality — and by implication vis-à-vis the economy — is this: “We are lost in a swamp, the morass of our ignorance. ... We have to find the roots and get ourselves out! ... Braids or bootstraps are necessary for two purposes: to pull ourselves out of the swamp and, afterwards, to keep our bits and pieces together in an orderly fashion.” (Schmiechen, 2009, p. 11)
How to get out of the swamp is known for more than 2300 years as the scientific method: “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.” (Aristotle)
Orthodoxy has followed this method and laid down its hard-core 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, 1985, p. 147)
Orthodoxy is a failed approach because this axiom set contains NONENTITIES, i.e. HC2, HC4, HC5 cannot by any stretch of the imagination taken to be true. Clearly, when the premises are not ‘certain, true, and primary’ the whole theoretical superstructure falls apart. Exactly this happened with maximization-and-equilibrium economics.
In this situation an ‘empirical revolution’ is pointless. Propositions that contain NONENTITIES like utility, equilibrium, or Easter Bunny are not testable, to begin with.
What instead has to be done is to replace the orthodox set of foundational propositions with a new set. J. S. Mill identified the very first question of methodology: “What are the propositions which may reasonably be received without proof? That there must be some such propositions all are agreed, since there cannot be an infinite series of proof, a chain suspended from nothing. But to determine what these propositions are, is the opus magnum of the more recondite mental philosophy.”
The current state of economics is that Heterodoxy, too, has failed at the opus magnum. It is not sufficient to throw in any number of unrelated concepts like evolution, complexity, networks, nonlinearity, incomplete optimization, incomplete forward-lookingness, externalities, behavioral heuristics, social preferences, and cooperative games. This only proves the utter confusion about the subject matter.
Economics is about the properties of the monetary economy. Because of this, economic analysis has to start with the objective system component of reality. The necessary Paradigm Shift requires the replacement of the false orthodox axiom set by an entirely new one.
The most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm and is given by these three objective structural axioms: (A1) Yw=WL wage income Yw is equal to wage rate W times working hours L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
These premises are certain, true, and primary, and therefore satisfy all methodological requirements. The Paradigm Shift consists of the move from HC1/HC6 to (A1)/(A3). Everything else is frog-quacking in the swamp of ignorance.
Egmont Kakarot-Handtke
References
Schmiechen, M. (2009). Newton’s Principia and Related ‘Principles’ Revisited, volume 1. Norderstedt: Books on Demand, 2nd edition. URL
Weintraub, E. R. (1985). Joan Robinson’s Critique of Equilibrium: An Appraisal. American Economic Review, Papers and Proceedings, 75(2): 146–149. URL
Related 'Vain hopes in the ruins of economics' and 'Toward the true economic axioms' and 'Why economics is a failed science ― 24 excuses and 1 explanation'. For details of the big picture cross-references Paradigm Shift.
***
REPLY to Barkley Rosser on Mar 23
(i) As you should know from Econ 101, accounting identities consist exclusively of nominal magnitudes. The three structural axioms consist of nominal AND real variables. Therefore, there are NO accounting identities, stupid.
(ii) The three structural axioms constitute the formal backbone of economics. Models that do not consistently fit into this elementary mathematical framework, e.g. real models or Keynesian models, are out of economics for good.
(iii) The three structural axioms define the elementary consumption economy, which every economist should thoroughly understand. #1 Because who does not understand the most elementary case has no chance at all to understand anything.
(iv) Your problem is that you are not even aware that you never understood what profit is. For your overdue enlightenment, see the Palgrave Dictionary: “A satisfactory theory of profits is still elusive.” (Desai). What do you call an economist who cannot tell what profit is? Clearly, being incompetent would be a euphemism.
(v) From a deeper analysis of the elementary production-consumption economy follows the most elementary version of the Profit Law. #2 Every economist — even you — has now a chance to understand the basics of economics.
(vi) From the differentiated structural axiom set follows the Employment Law, see eq. (33) of the working paper Keynes’s Employment Function and the Gratuitous Phillips Curve Disaster. Either you empirically refute this equation or simply get out of the way. To recall, science is about formal and material proof. Blather does not count for much.
#1 Toward the true economic axioms
#2 How the intelligent non-economist can refute every economist hands down
***
REPLY to Barkley Rosser on Mar 24
You say: “Your supposed axioms are ... true by definition.” Yes, this is exactly what I assert. So we have common ground. Not only this, we are in perfect accordance with what Aristotle defined as the scientific method: “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.”
Having established a rock-solid starting point, we can now advance: “The object of reasoning is to find out, from the consideration of what we already know, something else which we do not know.” (Peirce)
From the axioms we have agreed upon to be true follows that Walrasianism and Keynesianism are provably false.
This, in a nutshell, is the straightforward application of the axiomatic-deductive method to economics. The method is known for more than 2300 years, and you can look it up in Wikipedia: “Euclid’s method consists in assuming a small set of intuitively appealing axioms, and deducing many other propositions (theorems) from these.”
One very important theorem is the Profit Law, which says in its most elementary form (i) Qm=-Sm (Qm monetary profit, Sm monetary saving). This is the beauty of the scientific method to ‘find out, from the consideration of what we already know, something else which we do not know.’ What theorem (i) tells you is that all I=S models are false and, by implication, that both Walrasianism and Keynesianism are as dead as a doornail. I am pretty sure that you did not know this until now.
You say about the axioms A1 to A3, “They lead to nowhere at all other than to help in a ‘measurement without theory’ sort of empirical investigation, which you claim is ‘pointless.’ But your axioms are good for nothing more, and not even all that useful for even that.”
It cannot be said that my axioms ‘lead to nowhere.’ At a minimum, they have led to the incontrovertible conclusion that you have been hanging around for too long in the scientific Neanderthal.
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REPLY to Tom Brown on Mar 25
You say: “Your concept of science sounds more like mathematics.” This is perhaps because you have a wrong idea of what science is all about. Science was already well established when Adam Smith declared that economics, too, is a science. Economics defends this claim to this day but has never delivered anything fitting the description of science.
So, it is not “my” concept or “your” concept. Science is well-defined, and economists either stick to the rules or they will be thrown out of science. According to the criteria of formal and material consistency (Klant, 1994, p. 31), economics is indisputably a failed science. In methodological terms, this means that the old paradigm is dead and a new paradigm is urgently needed. Because a paradigm is defined by its foundational propositions, a.k.a axioms, a Paradigm Shift means practically fully replacing the old axiom set, i.e., HC1 to HC6 above, with a new one. This has nothing to do with mathematics as such. Newton put his PHYSICAL axioms on the first pages of the Principia.* In methodological analogy ECONOMIC axioms have to be laid down by economists. This defines the subject matter.
The actual situation is this: Orthodoxy clings to a thoroughly refuted axiom set, and Heterodoxy so far has failed to formulate a new one. As Keynes famously put it: “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.” (Keynes, 1973, p. 16)
As a matter of fact, Keynes’ Paradigm Shift (= overthrow of axioms) failed. This means in the strict sense that economics has no scientifically valid axiomatic foundations at all. Walrasian and Keynesian economics are what Feynman famously called cargo cult science. In other words, economics is de facto OUT of science.
Economists violate well-defined scientific standards on a daily basis. To recall: “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, pp. 369-370)
In the proto-science of economics, it is indeed possible to teach falsified theories like supply-demand-equilibrium generation after generation, 'as if nothing had happened’.
Therefore, in economics, the task is NOT to replace something like true but qualified ‘Newtonian’ axioms with something like true but general ‘Einsteinian’ axioms but to replace the neoclassical axioms that are KNOWN to be FALSE.
There is no “my” or “your” concept of science or different concepts in mathematics, physics, the so-called social sciences, or economics. There is only ONE way to build up a valid theory: “The basic concepts and laws which are not logically further reducible constitute the indispensable and not rationally deducible part of the theory. It can scarcely be denied that the supreme goal of all theory is to make the irreducible basic elements as simple and as few as possible without having to surrender the adequate representation of a single datum of experience.” (Einstein, 1934, p. 165)
The methodological term for ‘basic concepts and laws which are not logically further reducible’ is axioms. As long as economic theory is not based on a consistent set of axioms, it is out of science. This is the case since Adam Smith. There is no use to wish-wash around this embarrassing fact.
References
Einstein, A. (1934). On the Method of Theoretical Physics. Philosophy of Science, 1(2): 163–169. URL
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. London, Basingstoke: Macmillan.
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield: Edward Elgar.
Morgenstern, O. (1941). Professor Hicks on Value and Capital. Journal of Political Economy, 49(3): 361–393. URL
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REPLY to Tom Brown on Mar 26
(i) You say: “Having a consistent set of axioms is not a guarantee that you’re doing science.” Yes, indeed, because science requires formal AND material consistency. THIS is the guarantee: “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)
The fact of the matter is that orthodox economics lacks BOTH formal AND material consistency. This, in turn, is the guarantee that economics is NOT a science. In order to refute a theory, it SUFFICES to prove EITHER logical or material inconsistency.
Walrasian and Keynesian economics are logically defective, and the proof has been carried out by using the axiomatic-deductive method. No scientist will ever accept Walrasian or Keynesian economics.
(ii) Walrasian and Keynesian economics are refuted. Economists either do not know it, do not understand it, or ignore it. Either way, they are violating the well-defined standards of science. This is inexcusable.
(iii) It is a silly game to challenge a scientist by asking him to predict the future. He will simply tell you “The future is unpredictable.” (Feynman) #1 Predicting the future is the business of imbeciles.
(iv) Because of this, economics from Jevons/Walras/Menger onward to DSGE is NOT dismissed because it has not predicted crises. Neoclassics is unacceptable because it is logically and empirically inconsistent.
(v) From the structural axioms follows the elementary version of the Profit Law. #2 You, or a competent economist for that matter, are invited to test it against the DSGE profit law. This test, though, is an entirely separate issue and should not distract from the fact that neoclassical economics is axiomatically false for more than 150 years.
(vi) That the Fed uses DSGE does not speak for DSGE but against the Fed.
#1 Scientists do not predict and Prediction does not work? Try retrodiction first
#2 The three fundamental economic laws.
ADDENDUM
The formula for the simulation of the elementary structural axiomatic consumption economy is given with Graphic AXEC25. You are certainly in a position to produce the source code yourself.
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REPLY to Tom Brown on Mar 28
We have two SEPARATE issues (i) orthodox economics is false and thoroughly refuted according to well-defined scientific criteria, and (ii), given that Orthodoxy is dead, what does the new paradigm look like?
The problem with Noah Smith and you is that you have not yet realized (i). Because of this, you are hopelessly locked in at the proto-scientific stage. With regard to Orthodoxy or so-called mainstream economics, this is the situation: “... we may say that ... the omnipresence of a certain point of view is not a sign of excellence or an indication that the truth or part of the truth has at last been found. It is, rather, the indication of a failure of reason to find suitable alternatives which might be used to transcend an accidental intermediate stage of our knowledge.” (Feyerabend)
Therefore, for every economist, there is but ONE worthwhile task: to contribute to the NEW paradigm. All the rest is pointless behind-the-curve blather.
Instead of doing your scientific homework, you argue with regard to (ii): “Even a zeroth order model will do (up or down). Is your theory useful? I’d like to see the evidence that it is. Make them conditional if you like: tell me what things cannot happen and what's more likely to happen. Tell us the kinds of states we’ll likely find the economy in, and those that are excluded by your theory (past, present, and future).”
Obviously, you cannot read. With regard to the issues of scientific prediction and testable economic laws, I have referred you above to the pertinent posts, which are in turn backed up by working papers. You have not realized this either.
Economics could make much faster progress toward science if failed mainstream economists could simply get out of the way — NOW.
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REPLY to Tom Brown on Mar 30
Science is not about preaching but proof. You are provably false and are defending the indefensible.
Thank you for the link to TheMoneyIllusion. See my comment there The futility of testing economics blather.
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ICYMI Tom Brown on Apr 7In case you have not followed the short excursion to Austrianism on TheMoneyIllusion-blog here is the resume that applies generally:
Science was there before economics was there. Economists either conform to scientific standards or are out of science: they are in NO position to redefine scientific criteria.
Because economics — as represented by the major sects Walrasians, Keynesians, Marxians, and Austrians — has never risen above the level of a proto-science, it has become popular among economists to question the standards, to lower them, or, as Blaug aptly put it, ‘to play tennis with the net down’. When this is pointed out, economists make the backward somersault: ‘Economics is not a Science with a capital S’ (Solow).
The scientific method is well-defined: “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)
Logical consistency is secured by applying the axiomatic-deductive method, and empirical consistency is secured by applying state-of-the-art testing.
Economics fails on both counts: the axiomatic foundations are provably false, and testing is regularly inconclusive. So, economics has happily established itself in the swamp between true and false where ‘nothing is clear, and everything is possible’ (Keynes).
The swamp between the hard rocks of true and false is the natural habitat of blathering frogs, of which there are four species, which are clearly identifiable by their respective axiom sets. The funniest species are the Austrians, who are in possession of an irrefutable magic axiom but never managed to produce a testable proposition. So, there is NO WAY to get an Austrian frog ever out of the swamp. And of this, they are very proud.
No problem with this, of course. What has to be made crystal clear is that Austrians have never produced anything of scientific value. For the proof, re-read Major.Freedom’s posts. With this stuff, the poor souls in scientific hell are tortured.
Time to become constructive now: let’s proceed with the Paradigm Shift.
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NOTE on Apr 19Related 'Where Advanced Heterodoxy — represented by Steve Keen — took the wrong turn'and 'The futility of testing economics blather' and 'Austrian blather' and 'The zombie wars are over'
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Graphic AXEC176b
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