Getting out of the economics swamp

Comment on Noah Smith on ‘Vast literatures as mud moats’

Blog-Reference and Blog-Reference adapted to context

You say: “The point is, a bunch of smart people can get very big things wrong for a very long period of time, and that period of time may include the present.”

True, this happened with geocentrism for roughly 1500 years, starting with the smart mathematician, astronomer, and geographer Ptolemy around 100 AD. It happened again with economics, starting 200+ years ago with the not-so-smart Adam Smith. As a result, it holds for economics in general that “the vast literature actually contains more misinformation than information.”

The situation in economics is special insofar as there are TWO economixes: political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, and 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.

Political economics as a whole is scientifically worthless. The proper place for this “vast literature” is the wastebasket. Political economics is easily recognizable by its swampiness. Swampiness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) Therefore, the political economist is mainly occupied with producing a methodological smoke screen that consists of vague concepts, anything goes, pluralism of false theories, alleged complexity, ontological uncertainty, unreliable data, the faux humility of ‘I know that I know nothing’, and the post-modern replacement of true theory by an emotional narrative. #1

The beauty of the swamp, ‘where nothing is clear, and everything is possible’ (Keynes), is that logical and empirical failure is inconsequential. #2 What you call the mud moat has indeed saved the life of the representative economist for 200+ years.

The other part of the “crappy vast literature” consists of methodological blunders, i.e. stuff that does not satisfy the scientific criteria of material and formal consistency. This holds for everything that comes under the banner of Walrasianism, Keynesianism, Marxianism, Austrianism, and Pluralism. These approaches are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL got the pivotal economic concept of profit wrong.

There are the hard rocks of true or false and the swamp between them. The swamp is the natural habitat of agenda pushers, confused confusers, incompetent scientists, political economists, status-quo inertionalists, commonsensers, and anti-scientists. The very characteristic of science is to relentlessly drive the question under discussion to the point of a clear-cut decision between true or false, in other words, to get out of the swamp: “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)

The braids or bootstraps of science are material and formal consistency. Formal consistency is established by the axiomatic-deductive method, and material consistency by state-of-the-art testing.

The very characteristic of economics is that the “vast literature” consists of inconsistent and inconclusive blather or politics dressed up as science. So, perhaps 90 per cent of the content of peer-reviewed quality journals consists of models/theories that are axiomatically false. Axiomatically false means based on false Walrasian microfoundations or false Keynesian macrofoundations or ad hoc, plucked out of thin air. Therefore, the one and only interesting question in the given situation is how to achieve the paradigm shift from defective microfoundations and macrofoundations to materially and formally consistent macrofoundations. #3

Accordingly, the straightforward criterion for disposing of the “crappy vast literature” speedily into the wastebasket is: If it isn’t macro-axiomatized, it isn’t economics.

Egmont Kakarot-Handtke


#1 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#2 The political economist and incompetent scientist Keynes was one of the loudest defenders of conceptual vagueness: “Another danger is that you may ‘precise everything away’ and be left with only a comparative poverty of meaning. ... Such a problem was avoided, said Keynes, by Marshall who used loose definitions but allowed the reader to infer his meaning from ‘the richness of context’.” (Coates)
#3 True macrofoundations: the reset of economics

Related 'Macroeconomics: Drain the scientific swamp' and '#DrainTheScientificSwamp' and 'What is so great about cargo cult science? or, How economists learned to stop worrying about failure' and 'Solving Mill’s starting problem' and 'A new curriculum for swampies?' and 'It is better to be precisely right than roughly wrong' and 'Economic recommendations out of the swamp between true and false' and 'And the answer is NCND ― economics after 200+ years of Glomarization' and 'Marshall and the Cambridge School of plain economic gibberish' and 'Why J. S. Mill had no friendly word for the bigots and votaries of common sense' and 'Mental messies and loose losers'.

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REPLY to Barkley Rosser & other swampies on May 21

Noah Smith’s post has been titled “Vast literatures as mud moats” and deals with the use of cargo cult science for agenda pushing. Mud moats are just another term for the phenomenon which I call swampiness.

Noah Smith’s argument does not only apply to the production of scientifically worthless papers but a fortiori to blog posts.#1 It is pretty obvious that EconoSpeak is in the business of swampification. The proof is in Barkley Rosser’s recent posts about Trump, Putin, populism etcetera which do not contain one single atom of valid economics.

When Barkley Rosser occasionally turns to economics, swampiness goes into hyperdrive. To recall, Noah Smith’s argument has been: “If you and your buddies have a political argument, a vast literature can help you defend your argument even if it’s filled with vague theory, sloppy bad empirics, arguments from authority, and other crap.”

This is the actual situation in economics: economic policy arguments and proposals have NO sound scientific foundation. How does Barkley Rosser counter this argument, which applies to Walrasianism, Keynesianism, Marxianism, Austrianism, and Pluralism alike? With the recommendation to read good review essays. This is off the point, like recommending not to drink leaded water but to take the lead in the more convenient pill form.

Good review essays, of course, are NOT the way to get rid of the “crappy vast literature” that has been produced by incompetent scientists and agenda pushers. Good review essays only preserve the swamp. Harcourt’s review of the capital controversy is a case in point.

The ambition of science is, of course, to drain the swamp of mere opinion and to eventually reach the firm ground of true theory. Lifelong swampies who see their natural habitat in jeopardy quite naturally defend it.#2 This is why Walrasians, Keynesians, Marxians, and Austrians are currently so busy producing even more mud in the econblogosphere. Barkley Rosser and his buddies, in their utter scientific incompetence, are setting up new records in mud production.


#1 Feynman Integrity, fake science and the econblogosphere
#2 Failed economics: The losers’ long list of lame excuses

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Graphic AXEC121g

Occasional X: Clueless economists / Science (CCCXCI)

“Do you find yourself wondering… ‘What is economics?’, ‘How did economics become language of power and its practitioners, the gatekeepers?’, ‘How do you do economics?’, ‘Can economics help serve people and planet?’” (Rethinking Economics) “Once we learn that different economic theories say different things partly because they are based on different ethical and political values, we will have the confidence to discuss economics for what it really is - a political argument – and not a 'science' in which there is clear right and wrong.” (Ha Joon Chang) Ha Joon Chang has no clue about what science is all about. He is the next political smoke-blower. “Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). The distinction between science and non-science corresponds to the ancient Greeks’ distinction between episteme (= knowledge) and doxa (= opinion). The fact is that about ninety-nine per cent of people are satisfied with opinion, and only one per cent is devoted to episteme. Economists do NOT belong to the latter group. Economics is a cargo cult science, and economists are fake scientists, and the EconNobel is a fraud. The state of economics is this: there is political economics and theoretical economics. The founding fathers called themselves political economists; that is, they left no doubt that their main business was agenda pushing. Economists never got out of political economics. In other words, theoretical economics (= science) ultimately could not emancipate itself from political economics (= agenda-pushing). This is why economics never rose above the level of a proto- or cargo cult science. There are the hard rocks of true or false and the swamp between them. The swamp is the natural habitat of morons, agenda pushers, confused confusers, incompetent scientists, political economists, status-quo inertionalists, commonsensers, and anti-scientists. Political economists are natural-born swampies. In marked contrast to scientists who drive the question under discussion to the point of a clear-cut decision between true or false, neither the orthodox nor the heterodox swampy has a genuine interest in a definite outcome but seeks to keep matters in the swamp of inconclusiveness. Swampiness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) Therefore, the cargo cult scientist is mainly occupied with producing a methodological smoke screen that consists of vague concepts, anything-goes, pluralism of false theories, alleged complexity, ontological uncertainty, unreliable data, faux humility, the post-modern replacement of true theory by political narrative, and a veritable artillery barrage of silly excuses. The beauty of the swamp is that logical and empirical failure is inconsequential.” (AXEC) For more details, see What is so great about cargo cult science? or, How economists learned to stop worrying about failure https://t.co/VoQJMa4CUZ From the beginning, economics has not been a science but silly political agenda pushing. There has not been genuine scientific progress since the Enlightenment, only changes in propaganda. Watch the sorry contemporary academic discussion. They're just turning over the scientific dung heap without ever arriving at a result that satisfies the most elementary scientific principle: “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) Economics has defined itself as a social science and accordingly has been based on subjective/behavioral assumptions/axioms. This is the methodological ur-mistake. The major approaches (Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives) are mutually contradictory, axiomatically false, and materially/formally inconsistent. They all got profit wrong. When the subject's foundational concepts are inconsistent, the entire analytical superstructure is scientifically worthless. The minimum requirement in science is logical consistency. Economists never rose above confused blather. As far as an approach is formalized, economists apply the wrong math. However: “The problem is not just to say that something might be wrong, but to replace it by something ― and that is not so easy.” (Feynman) To finally become a science, economics needs a Paradigm Shift from false behavioral microfoundations and false Keynesian macrofoundations to true macrofoundations (⇓ AXEC121l). Economics does not need another smoke-blower like Ha Joon Chang.

— AXEC (@EgmontHandtke) October 21, 2026

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

“There is no progress in knowledge, no right and wrong, it's all just political discussions, everything can somehow be right.” (Jan Schnellenbach, quoted by Lars Feld) Yes, this is the wishy-washy state of economics. It's scientifically worthless — only good for inconclusive political blahblah. But they award themselves the EconNobel for 'economic sciences'. “Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). The distinction between science and non-science corresponds to the ancient Greeks’ distinction between episteme (= knowledge) and doxa (= opinion). The fact is that about ninety-nine per cent of people are satisfied with opinion, and only one per cent is devoted to episteme. Economists do NOT belong to the latter group. Economics is a cargo cult science, and economists are fake scientists, and the EconNobel is a fraud. The state of economics is this: there is political economics and theoretical economics. The founding fathers called themselves political economists; that is, they left no doubt that their main business was agenda pushing. Economists never got out of political economics. In other words, theoretical economics (= science) ultimately could not emancipate itself from political economics (= agenda-pushing). This is why economics never rose above the level of a proto- or cargo cult science. There are the hard rocks of true or false and the swamp between them. The swamp is the natural habitat of morons, agenda pushers, confused confusers, incompetent scientists, political economists, status-quo inertionalists, commonsensers, and anti-scientists. Political economists are natural-born swampies. In marked contrast to scientists who drive the question under discussion to the point of a clear-cut decision between true or false, neither the orthodox nor the heterodox swampy has a genuine interest in a definite outcome but seeks to keep matters in the swamp of inconclusiveness. Swampiness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) Therefore, the cargo cult scientist is mainly occupied with producing a methodological smoke screen that consists of vague concepts, anything-goes, pluralism of false theories, alleged complexity, ontological uncertainty, unreliable data, faux humility, the post-modern replacement of true theory by political narrative, and a veritable artillery barrage of silly excuses. The beauty of the swamp is that logical and empirical failure is inconsequential.” (AXEC) For more details, see What is so great about cargo cult science? or, How economists learned to stop worrying about failure https://t.co/VoQJMa4CUZ From the beginning, economics has not been a science but silly political agenda pushing. There has not been genuine scientific progress since the Enlightenment, only changes in propaganda. Watch the sorry contemporary academic discussion. They're just turning over the scientific dung heap without ever arriving at a result that satisfies the most elementary scientific principle: “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) Economics has defined itself as a social science and accordingly has been based on subjective/behavioral assumptions/axioms. This is the methodological ur-mistake. The major approaches (Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives) are mutually contradictory, axiomatically false, and materially/formally inconsistent. They all got profit wrong. When the subject's foundational concepts are inconsistent, the entire analytical superstructure is scientifically worthless. The minimum requirement in science is logical consistency. Economists never rose above confused blather. As far as an approach is formalized, economists apply the wrong math. However: “The problem is not just to say that something might be wrong, but to replace it by something ― and that is not so easy.” (Feynman) To finally become a science, economics needs a Paradigm Shift from false behavioral microfoundations and false Keynesian macrofoundations to true macrofoundations (⇓ AXEC121l). Economics does not need another smoke-blower or clueless academic blatherer.

— AXEC (@EgmontHandtke) October 25, 2026

Occasional X: Clueless economists / Science (CCCXCII)

“Economists will look you dead in the face and call this science.” (Jack Meyer) Yes, this is the sorry state of economics. It's scientifically worthless — only good for inconclusive political blather. But they award themselves the EconNobel for 'economic sciences' (AXEC136j ⇓). Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). The distinction between science and non-science corresponds to the ancient Greeks’ distinction between episteme (= knowledge) and doxa (= opinion). Methodologically, economists are 2400 years behind the curve. The fact is that about ninety-nine per cent of people are satisfied with opinion, and only one per cent is devoted to episteme. Economists do NOT belong to the latter group. Economics is a cargo cult science, and economists are fake scientists, and the EconNobel is a fraud. When they've used all their arguments, the scientifically clueless hit the social media emergency brake and retreat to an etiquette class: “Personal insults are best left in the schoolyard. Nor do they contribute to the persuasiveness of your derivative arguments. You are Blocked.” (Roger Farmer, #EconBlocker) The state of economics is this: there is political economics and theoretical economics. The founding fathers called themselves political economists; that is, they left no doubt that their main business was agenda pushing. Economists never got out of political economics. In other words, theoretical economics (= science) ultimately could not emancipate itself from political economics (= agenda-pushing). This is why economics never rose above the level of a proto- or cargo cult science. There are the hard rocks of true or false and the swamp between them. The swamp is the natural habitat of morons, agenda pushers, confused confusers, incompetent scientists, political economists, status-quo inertionalists, commonsensers, and anti-scientists. Political economists are natural-born swampies. In marked contrast to scientists who drive the question under discussion to the point of a clear-cut decision between true or false, neither the orthodox nor the heterodox swampy has a genuine interest in a definite outcome but seeks to keep matters in the swamp of inconclusiveness. Swampiness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) Therefore, the cargo cult scientist is mainly occupied with producing a methodological smoke screen that consists of vague concepts, anything-goes, pluralism of false theories, alleged complexity, ontological uncertainty, unreliable data, faux humility, the post-modern replacement of true theory by political narrative, and a veritable artillery barrage of silly excuses. The beauty of the swamp is that logical and empirical failure is inconsequential.” (AXEC) For more details, see What is so great about cargo cult science? or, How economists learned to stop worrying about failure https://t.co/VoQJMa4CUZ From the beginning, economics has not been a science but silly political agenda pushing. There has not been genuine scientific progress since the Enlightenment, only changes in propaganda. Watch the sorry contemporary academic discussion. They're just turning over the scientific dung heap without ever arriving at a result that satisfies the most elementary scientific principle: “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) Economics has defined itself as a social science and accordingly has been based on subjective/behavioral assumptions/axioms. This is the methodological ur-mistake. The major approaches (Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives) are mutually contradictory, axiomatically false, and materially/formally inconsistent. They all got profit wrong. When the subject's foundational concepts are inconsistent, the entire analytical superstructure is scientifically worthless. The minimum requirement in science is logical consistency. Economists never rose above confused blather. As far as an approach is formalized, economists apply the wrong math. However: “The problem is not just to say that something might be wrong, but to replace it by something ― and that is not so easy.” (Feynman) To finally become a science, economics needs a Paradigm Shift. The current group of academic non-scientists will not survive this.

— AXEC (@EgmontHandtke) November 2, 2026

Economics • Communication • Disinfotainment

Comment on Matt Franko on ‘AOC weighs in on “inflation!”’

Blog-Reference

Economists from Adam Smith/Karl Marx onward claimed to do science. They never did. For 200+ years, economics has been failed/fake science.#1, #2

“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) Economists do NOT have the true theory: Walrasianism, Keynesianism, Marxianism, Austrianism, and MMT are mutually contradictory, axiomatically false, materially / formally inconsistent, and all got macroeconomic profit wrong.

So, economists have NO scientific knowledge but only their worthless personal opinions. As a matter of principle, everybody has the right to his own opinion no matter how stupid, crazy, wrong, or absurd, the only exception is scientists. The ancient Greeks started science by distinguishing between doxa (= opinion) and episteme (= knowledge). Scientific knowledge is well-defined by material and formal consistency. Knowledge is established by proof — belief or opinion counts for NOTHING. Economics is provably false.#3

As a matter of principle, scientists do NOT discuss the statements of politicians on scientific matters because politicians have by definition only opinions but no knowledge. Politics and science are mutually exclusive. Only economists who are themselves political agenda pushers discuss the silly pronouncements of politicians on economic matters.

Inflation is a case in point. Of course, what Alexandria Ocasio-Cortez says about inflation is garbage. Nobody expects anything else from a politician. However, one expects more from an economist because economists are ― according to their self-presentation since Adam Smith/Karl Marx ― scientists.

The fact of the matter is, though, that what MMTers say about inflation is worth as much as what the member of the United States Congress, Alexandria Ocasio-Cortez, says: nothing.#4

Economists in general, and MMTers in particular, are NOT scientists but an integral part of a political disinformation exercise.#5

Egmont Kakarot-Handtke

#1 Delusions of useful idiots

#2 Economists: Incompetent? Stupid? Corrupt?

#3 Wikipedia, economics, scientific knowledge, or political agenda pushing?

#4 Clueless economists / Inflation

#5 AXEC176b

Related 'How to get out of the swamp of ignorance' and 'Economic recommendations out of the swamp between true and false' and 'A new curriculum for swampies?' and 'NAIRU and economists’ lethal swampiness' and 'Getting out of the economics swamp' and 'Macroeconomics: Drain the scientific swamp' and 'Dialectic: the swampies’ methodology of choice' and '#DrainTheScientificSwamp' and 'Economists and philosophers ― creatures from the scientific swamp.

For more about disinfotainment, see AXECquery.

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Twitter Oct 14, 2022

Twitter/X Jan 13, 2024 In the meantime, misinformation/disinformation/disinfotainment has become the #1 global risk

Twitter/X, Feb 16, 2025

Better precisely right than roughly wrong (II)

Comment on Lars Syll on ‘Why it is better to be roughly right than precisely wrong’

Blog-Reference

Scientists know it, but economists do not: “The chief demerit is inconsistency, including inconsistency with the results of experiments that a competing theory can explain.” (Popper, 1994)

Scientists know it, but economists do not: “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, 1994)

So, science is about formal AND material consistency ― BOTH simultaneously, NOT either/or. It is all simple and clear.

But in all walks of life, there is always the original and a look-alike. Accordingly, there is science and cargo cult science. Feynman characterized the look-alikes: “they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”

What is missing is an understanding of what science is all about. Science is digital = binary = true/false and NOTHING in between. There is NO such thing in science as roughly right or roughly wrong; it is only materially/formally true/false. All the rest is storytelling, gossip, sitcom, and blather.

Vague blather, untestable wish-wash, inconclusive either-or, and storytelling have always been the hallmark of political economists. Political economics is the look-alike of theoretical economics. Walrasianism, Keynesianism, Marxianism, and Austrianism are political economics.

So, there are the hard rocks of true and false and the bottomless swamp between them where “nothing is clear and everything is possible” (Keynes). The swamp is the natural habitat of morons, agenda pushers, confused confusers,#1 trolls, and incompetent scientists.

Economists are natural-born swampies. This explains why economics is a failed science. Walrasianism, Keynesianism, Marxianism, and Austrianism are mutually contradictory, and the proponents fight each other. But this does not go very deep, and it never goes to the final refutation of one approach or the other. Every swampie respects the other swampie's wish to fool around in the swamp.

In marked contrast, scientists drive the question under discussion to the point of a clear-cut decision between true and false. And they do not touch questions that cannot be decided by the accepted means, that is, by logic and testing.

The swamp cronies have no genuine interest in a definite true/false outcome but seek to stay, for whatever reasons, in the status quo swamp. Swampies subscribe to a common methodological hallucination: it is better to be roughly right than precisely wrong, anything goes, truth is subjective and relative, reality is a social construct; nobody has the truth with a big T, everybody has some truth with a small t, and finally, to the pluralism of provably false theories. Swampies have produced the gigantic heap of toxic scientific waste that is called economics.

Swampies simply do not understand what science is all about. As Feynman put it: “The first principle is that you must not fool yourself ― and you are the easiest person to fool. So you have to be very careful about that. After you’ve not fooled yourself, it’s easy not to fool other scientists. You just have to be honest in a conventional way after that.”

Neither orthodox nor heterodox economists fit this description of a scientist. But BOTH orthodox and heterodox economists fit the description of lookalike scientists, political agenda pushers, and self-foolers. And this is exactly why it is best to throw BOTH now speedily out of the scientific community.

Egmont Kakarot-Handtke


#1 Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist

Related 'There is NO such thing as an economic expert' and 'The father of modern economics and his imbecile kids' and 'How Keynes got macro wrong and Allais got it right' and 'From false micro to true macro: the new economic paradigm' and 'New Economic Thinking: the 10 crucial points' and 'There is NO such thing as “smart, honest, honorable economists”' and 'Your economics is refuted on all counts: here is the real thing'.

And the answer is NCND ― economics after 200+ years of Glomarization

Comment on Lars Syll on ‘What are axiomatizations good for?’

Blog-Reference

Gilboa, Postlewaite, Samuelson, and Schmeidler ask: “What have these axiomatizations done for us lately?” Wrong question, of course. The right question economists have to ask themselves is: what have WE done for the proper axiomatization of economics lately?

The fact is, to begin with, that economic methodologists do not understand to this day what axiomatization is all about. Lars Syll even maintains that it is a kind of mental body-building: “Studying mathematics and logic is interesting and fun. It sharpens the mind.”

It is not at all a surprise, therefore, that economics is a failed science. Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives are mutually contradictory, axiomatically false, and materially/formally inconsistent. As a result, economic policy guidance has NO valid scientific foundations since Adam Smith/Karl Marx.

This pluralism of provably false theories is pretty strange. How could it happen that economics is still at the proto-scientific level while science has made such incredible advances? The answer is that economics had been captured from the very beginning by political agenda pushers. Agenda-pushers, though, have no truck with science except for building Potemkin facades.

Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false where “nothing is clear and everything is possible” (Keynes). Vagueness/ inconclusiveness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) While scientifically this is a bad thing, politically it is a good thing.

Because economists are not scientists but swamp creatures, they see to it that no analysis and no debate ever leave the swamp. This is achieved by the tried and tested method of Glomarization. #1 For example, to the central question, Does a General Economic Equilibrium exist? The answer is: “We can neither confirm nor deny the existence of a General Equilibrium.” And so on with NCND for any other question. #2, #3, #4

Accordingly, if a clear-cut refutation occasionally happens, it is simply filibustered away: “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)

Glomarization is the communicative modus operandi in the political sphere. Science is the exact opposite of the political swamp. Science aims for a clear-cut true/false answer with truth well-defined as material and formal consistency. The methodological tool to achieve this is the axiomatic-deductive method. As Aristotle put it 2000+ years ago: “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.” This is why axiomatization is of overriding importance.

Neither orthodox nor heterodox economists know how to apply the axiomatic-deductive method correctly. #5 This is why their economic policy proposals have no valid scientific foundation. To the question What have economists ever done for their fellow citizens? The clear-cut answer is nothing but vacuous political blather.

Egmont Kakarot-Handtke


#1 Wikipedia, Glomar response
#2 How the representative economist gets it wrong big-time
#3 Economic recommendations out of the swamp between true and false
#4 Failed economics: The losers’ long list of lame excuses
#5 For details of the big picture, see cross-references Axiomatization

Related 'Clueless about money and profit' and 'Keynesianism ― the economists’ senile dementia' and 'Buridan’s ass economics' and 'Knowledge is attainable ― even in economics' and 'Failed critique of failed economics' and 'Stop knowing nothing, start knowing something' and 'The scientific self-elimination of Heterodoxy' and 'Prophets of Preemptive Vanitizations' and 'Economics as fool’s paradise' and 'A heap of proto-scientific rubbish' and 'Truth by definition? The Profit Theory has been axiomatically false for 200+ years' and 'Real-World Economics: The sanctuary of stupidity and corruption' and 'The inexorable paradigm shift in economics'.

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AXEC121i

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REPLY to John Vertegaal on Jul 15

You say: “Lars and Asad, great minds but still groping after all these years… All reasoning starts from assumptions, but in order to be valid in the real world, those assumptions require empirical confirmation. All economists, as far as I know, assume that the present is complete and we live within our economy. Hence, they come up with assumed points of departure like the accounting identity: Y=C+I, blissfully unaware that accounting itself is based on unprovable assumptions.”

Scientific analysis starts with premises, and these have to be clearly stated. This is the minimum requirement. #1 Otherwise, things end after a few steps in confusion and blather. This happened with economics in general, and this happens every day in the econblogosphere.

The current state of economics is that neither Orthodoxy nor Heterodoxy nor Lars Syll nor Asad Zaman nor Craig nor Dave Marsay nor the rest has gotten the foundational concepts of profit and income right. #2

Economists are swampies. Economics is a failed science. All microfounded (Walrasian) and macrofounded (Keynesian) models are provably false. Economists do not know how the economy works. Economics is a cargo cult science. The “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a fraud.

“The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug) Economics needs a Paradigm Shift, and the expulsion of the scientifically incompetent or the “throng of superfluous economists” as Joan Robinson called them. #3

#1 United in the social science delusion

#2 Wikipedia and the promotion of economists’ idiotism (II)

#3 Joan Robinson and the ‘throng of superfluous economists’

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REPLY to Asad Zaman on Jul 16

Since Adam Smith/Karl Marx, economics claims to be a science, but is NOT. 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. #1

The fact is that economics is a failed science and that Heterodoxy has been complicit in the failure. #2 Whether this outcome was unintended/intended by individual economists does not matter. What counts is the collective effect, which is the perfect Glomarization of economics. There is not one policy proposal drawn from employment theory to monetary theory that embodies valid scientific knowledge about how the economy works, it is just opinion: “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)

Economists do not have the true theory. For every opinion, there is an equally plausible counter-opinion, and that is Glomarization ― hailed as pluralism and anything goes. #3

The political beauty of Glomarization is that it is paralyzing and therefore secures the status quo. Hayek, for one, instrumentalized this effect by arguing that just because of the lack of knowledge of economists and politicians about how the economy works, there is NO such thing as economic policy. For this epistemological reason, everything has to be left to the market as an information processor and knowledge producer.

To say economics needs a Paradigm Shift is to say that traditional Heterodoxy, too, has to be buried at the Flat-Earth-Cemetery. #4 This applies also to Asad Zaman, who has been refuted on all methodological counts. #5

By denying that, in principle, axiomatization produces logical consistency, and that state-of-the-art econometrics produces material consistency, heterodox methodologists in effect prevent scientific progress and indirectly support the political status quo.

#1The myth of economics knowledge

#2 Both orthodox and heterodox economists are cargo cult scientists

#3 The philosophy of know-nothingers

#4 Throw them out! Orthodox and heterodox economists are unfit for science

#5 Refutation of Asad Zaman’s heterodox methodology: all arguments you ever need

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REPLY to davetaylor1, Prof Dr James Beckman, Germany, on Aug 2

davetaylor1 argues: “According to my dictionary the word ‘axiom’ can refer either to a self-evident truth or a universally accepted principle. Economists seem to be assuming the first of these and forgetting about the importance of the second, as exemplified in the ways of denoting sounds and numbers.”

And Prof Dr James Beckman, Germany, asks: “Self-evident to whom?”

This shows only that both heterodox blatherers have NO idea what axiomatization is all about. “Self-evidence” is NOT a criterion of axioms; this has always been popular BS.

Note that Newton, under the title of Axiomata Sive Leges Motu, states (in modern language): “In an inertial frame of reference, an object either remains at rest or continues to move at a constant velocity, unless acted upon by a force.”

This is NOT self-evident but an abstraction/idealization of observable motion on earth where an object does NOT move at a constant velocity.

All this is long known among people with more than two brain cells: “We may, therefore, agree with Ernst Mach, who very wisely pointed out that the law of inertia could hardly be ‘obvious’ or ‘self-evident’ since throughout most of recorded history men believed in a quite different law and would have denied the Cartesian-Newtonian inertial principle.” (Cohen, 1977)

The point of axiomatization is to clearly state the premises. As long as this is not done, any analysis and discussion will produce only proto-scientific garbage. Heterodox economists have never stated their axioms, and this is why Heterodoxy has never produced anything of scientific value. #1, #2, #3

#1 Don Lars and the axiomatic windmill

#2 For details of the big picture, see cross-references Axiomatization

#3 If it isn’t macro-axiomatized, it isn’t economics

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REPLY to davetaylor1, John Vertegaal, Craig on Aug 10

The elementary production-consumption economy is, for a start, defined by three macroeconomic axioms (Y_w=WL, O=RL, C=PX), two conditions (X=O, C=Y_w), and two definitions (Q_m≡C−Y_w, S_m≡Y_w−C). #1

#1 For details of the big picture, see cross-references Axiomatization

What is so great about cargo cult science? or, How economists learned to stop worrying about failure

Comment on David Glasner on ‘What’s so Great about Science? or, How I Learned to Stop Worrying and Love Metaphysics’

Blog-Reference and Blog-Reference

Everybody who has ever used a knife and fork or a wheelbarrow or a cooking spoon somehow understands the concept of the lever and can apply it successfully in everyday situations. Science, though, goes beyond the endless multitude of concrete instantiations of the lever and tries to figure out the common denominator of ALL variants of levers past, present, and future. Science abstracts from the superficial reality of the Here and Now and tries to figure out the underlying fundamental reality, which has been found to be Fb/Fa=a/b: “This is the law of the lever, which was proven by Archimedes using geometric reasoning.” (Wikipedia) #1

The characteristic of the Law of the Lever is that it is abstract and universal. The fact is that about ninety-nine per cent of people simply cannot go beyond the concrete and space-time particular. For an explanation of what happens in the world around them, they are perfectly satisfied with a plausible story and cannot understand the fuss about generality, rigour, and proof. All the more so, because it happened, again and again, that science demonstrated the absurdity of common-sense intuition. #2 For the ninety-nine percenters, science produces only cognitive dissonance.

Clearly, for all practical purposes between cradle and grave, nobody needs to know the Law of the Lever. Strictly speaking, the criterion of usefulness does NOT apply at all to science: “True science is distinctively the study of useless things. For the useful things will get studied without the aid of scientific men. To employ these rare minds on such work is like running a steam engine by burning diamonds.” (Peirce)

A second misunderstanding relates to the concept of prediction. Since time immemorial, prediction has been used either for decision-making under uncertainty or for religious/ political brainwashing. Against widespread commonsensical preconceptions, it has, therefore, to be emphasised that science does NOT predict the future. #3

Although the results of scientific research can be useful and have indeed been useful beyond the wildest dreams, this is NOT the criterion to judge the results of scientific research. The SOLE criterion to judge a theory, which is the embodiment of scientific knowledge, is the binary true/false, with truth defined as material and formal consistency. #4 This has been known for 2300+ years ― except among economists.

Economics is a failed science. The fact is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL got the pivotal economic concept of profit wrong. After 200+ years, economics is still at the level of a proto-science or what Feynman called a cargo cult science. #5

However, from Adam Smith to the Faux Nobel economists consistently claimed to do science. #6 So, there is a blatant contradiction between the claim and the definitive failure after 200+ years. To paper over the contradiction, economists habitually resort to J. S. Mill’s characterization of economics as ‘inexact and separate’ science. To be sure, there is NO such thing; there are only science and non-science.

Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). The distinction between science and non-science corresponds to the ancient Greeks’ distinction between episteme (= knowledge) and doxa (= opinion).

The fact is that about ninety-nine per cent of people are satisfied with opinion, and only one per cent is devoted to episteme. Economists do NOT belong to the latter group. Economics is a cargo cult science, and economists are fake scientists.

The state of economics is this: there is political economics and theoretical economics. The founding fathers called themselves political economists; that is, they left no doubt that their main business was agenda pushing. Economists never got out of political economics. In other words, theoretical economics (= science) ultimately could not emancipate itself from political economics (= agenda-pushing). This is why economics never rose above the level of a proto- or cargo cult science.

There are the hard rocks of true or false and the swamp between them. The swamp is the natural habitat of morons, agenda pushers, confused confusers, incompetent scientists, political economists, status-quo inertionalists, commonsensers, and anti-scientists.

Political economists are natural-born swampies. In marked contrast to scientists who drive the question under discussion to the point of a clear-cut decision between true or false, neither the orthodox nor the heterodox swampy has a genuine interest in a definite outcome but seeks to keep matters in the swamp of inconclusiveness.

Swampiness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) Therefore, the cargo cult scientist is mainly occupied with producing a methodological smoke screen that consists of vague concepts, #7 anything-goes, pluralism of false theories, alleged complexity, ontological uncertainty, unreliable data, faux humility, the post-modern replacement of true theory by political narrative, and a veritable artillery barrage of silly excuses. #8 The beauty of the swamp is that logical and empirical failure is inconsequential.

David Glasner argues, “… there is almost nobody out there that is openly and explicitly campaigning against science.” True, but this is NOT the problem. What is out there is cargo cult science, and cargo cult science is much worse than anti-science.

The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are provably false, i.e. materially/formally inconsistent. Whoever calls himself a Walrasian, Keynesian, Marxian, Austrian, or Pluralist is either an incompetent scientist or a political fraudster. #9

David Glasner asks: What’s so great about science? What is so great about science is that it satisfies the well-defined criteria of scientific truth for 2300+ years. What is so pathetic about economics is that the dull creatures who call themselves economists sell their sitcom garbage for 200+ years in the bluff package of science.

Egmont Kakarot-Handtke


#1 How to look at reality
#2 Economics, too, has been almost ruined by the bigots of common sense
#3 Science does NOT predict the future
#4 No trade-off, Kant said
#5 “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... So I call these things cargo cult science because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”
#6 Economics’ lack of scientific legitimacy
#7 The political economist and incompetent scientist Keynes has been one of the loudest defenders of conceptual vagueness: “Another danger is that you may ‘precise everything away’ and be left with only a comparative poverty of meaning. ... Such a problem was avoided, said Keynes, by Marshall who used loose definitions but allowed the reader to infer his meaning from ‘the richness of context’.” (Coates)
#8 Economists and their silly excuses
#9 Feynman Integrity, fake science, and the econblogosphere

Related 'Economics has arrived at the bottom of the proto-scientific shithole' and 'Beware of the moralizing economist'. For details of the big picture, see cross-references Failed/Fake Scientists and cross-references Scientific Incompetence.

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Twitter Cargo Cult

Solving Mill’s starting problem

Comment on Peter Cooper on ‘State Monies are Fundamental to Modern Monetary Economies’

Blog-Reference

After 20 posts about the MMT balances equations and the income-expenditure model, Peter Cooper gets second thoughts and asks himself: “What is the most appropriate entry point to the study of a monetary economy.” And he concludes, “There is no ‘natural’ field in economics that is anything like the natural sciences.”

Each science starts in the middle of a swamp: “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) #1

The starting problem is as old as economics. J. S. Mill put it thus: “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.”

In economics, there are two starting points, microfoundations and macrofoundations. Both are provably false. Orthodoxy went micro: “… most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point” (Krugman). Keynes went macro: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” MMT followed Keynes into the macro woods.

The methodologically correct solution consists of New Macrofoundations. #2 Here they are
(A0) The objectively given and most elementary systemic configuration of the economy consists of the household and the business sector, which in turn consists initially of one giant fully integrated firm.
(A1) Y_w=WL wage income Y_w 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 macro axioms satisfy all methodological requirements. The graphical representation of the elementary production-consumption economy is shown on Graphic. #3

The condition of market-clearing is X=O and of budget-balancing C=Y_w. From non-clearing and non-balancing follow the phenomena of inventory changes (O−X greater than 0 or less than 0) and of monetary saving/dissaving (Sm≡Y_w−C greater than 0 or less than 0), and of monetary profit/loss (Q_m≡C−Y_w greater than 0 or less than 0). It always holds Q_m≡−S_m, in other words, loss is the counterpart of saving, and profit is the counterpart of dissaving. This is the most elementary form of the macroeconomic Profit Law.

The Profit Law tells us immediately that the Keynesian macrofoundations and the MMT sectoral balances equations are false. And because the axiomatic foundations are false, the whole analytical superstructure of MMT is false. #4

Poincaré once remarked: “The essential thing is to learn to reason with the axioms once admitted. Uncle Sarcey, who loved to repeat himself, often said that the audience at a theatre willingly accepts all the postulates imposed at the start, but that once the curtain has gone up, it becomes inexorable on the score of logic.”

It is just the same in economics, but economists in general and MMTers, in particular, have neither gotten the foundational postulates right nor the subsequent logic. What unfolds before the audience's eyes is an absurd proto-scientific farce.

Egmont Kakarot-Handtke


#1 Getting out of the economics swamp
#2 The new macroeconomic Paradigm
#3 Graphic AXEC31 Elementary production-consumption economy
#4 For details of the big picture, see cross-references MMT

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REPLY to Matt Franko on Sep 20

You say: “Accounting is its own science... here in the US the good schools award a Bachelor of SCIENCE in Accounting.”

Obviously, MMTers got their BSAcc from Trump University. #1

You say: “If you are in business, You may use a Cash Basis accounting method and someone else might use an Accrual Basis, you can’t say ‘your accounting is false!’ to the other guy using Accrual...”

I do NOT say such nonsense. Both methods lead ultimately to the same result. #2 Cash Basis accounting is merely a practical relief for small firms that shift profits BETWEEN periods but does NOT alter the sum of pre-tax profit over all periods. The difference between the business accounting methods plays NO role in macroeconomics. As a matter of principle, profit is NOT produced by accounting only measured, just like speed is NOT produced by the speedometer only measured. Different methods of measurement do NOT affect a vehicle’s speed and should always give the SAME result (± a tiny inaccuracy). If they do not, something is wrong with the measurement tools.

Macroeconomic profit is clearly defined, i.e., as Q_m≡C−Y_w in the most elementary case, and measurable with the precision of two decimal places. The macro balances equations of MMT are mathematically false #3, and this has NOTHING AT ALL to do with the practical determination of taxable profit of an individual firm.

If accounting and money transactions were fully computerized and all firms applied the accrual method, the sum of all firms’ profits/losses is necessarily equal to macroeconomic profit Q_m, and everyone could look this number up in real-time on the internet. Cash Basis accounting is not “false”; it is merely a stone-age method for the mom-and-pop store. As a matter of principle, National Accounting is as good a measurement tool as any simple tool in physics.

The fact is that neither orthodox nor heterodox economists have noticed the macro accounting blunder to this day. Economics is a failed science because economists are scientifically incompetent and do not even get the elementary mathematics of macro accounting right. #4

Make no mistake, what Mitchell, Tcherneva‏, Mosler, Wray, Kelton, Fullwiler, Forstater, and the other MMTers propagate is Trump University economics.

#1 The Common Error of Common Sense: An Essential Rectification of the Accounting Approach
#2 MMT ― the economics moron as problem solver
#3 Rectification of MMT macro accounting
#4 For details of the big picture, see cross-references MMT

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REPLY to Matt Franko on Sep 20

(i) Wordplay does not help. 2+2=5 is mathematically false. The same holds for the MMT balances equation. For proof, see #1.

(ii) Monetary profit is measured by accounting, and if the accounting is properly done for an elementary production-consumption economy, then profit in the books is numerically identical to cash in the box. #2 Auditors carry out this check routinely. The macroeconomic Profit Law is testable just like the Law of the Lever. There is NO room for ambiguity and wordplay.

(iii) You say: “You can have production (real terms) without any accounting but you can’t have profit without accounting.” So what? Counting the inventory is part of the year-end profit determination.

(iv) Profit is not ‘created’ by accounting but by private and public deficit spending. For the economy as a whole, it holds that Public Deficit = Private Profit.

(v) Profit does not appear in the MMT balances equations. #3 How weird is this? The MMT balances equations hold only for a zero-profit economy. How weird is this?

(vi) Macro profit does not appear in macro models. It is absent in all I=S/IS-LM models since Keynes/Hicks. How weird is this? #4

(vii) Folks who cannot handle the pivotal concept of their subject matter and are too stupid for the elementary mathematics of accounting get economics diplomas and academic tenure. How laughable is this?

#1 Rectification of MMT macro accounting
The Common Error of Common Sense: An Essential Rectification of the Accounting Approach
#2 A tale of three accountants
#3 MMT and the magical profit disappearance
#4 Heterodoxy, too, is proto-scientific garbage

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REPLY to Matt Franko on Sep 21

You argue, “You say public deficit is private profit then you say the System of National Accounts doesn’t include profit: system of national accounts has G−T so there is your profit...”

I said “Public Deficit = Private Profit” and then “Profit does not appear in the MMT balances equations.” I did NOT say that the “System of National Accounts doesn’t include profit”.

You have obvious difficulties with understanding simple sentences.

The macroeconomic Profit Law has been derived from the set of macro axioms. This is the methodologically correct way. The question of Cash Basis or Accrual Basis accounting is absolutely irrelevant in the given context.

If C is total consumption expenditures during a given period, e.g., the calendar year, and Y_w is total wage income during the same period, then total period profit is defined as Q_m≡C−Y_w. C and Y_w reappear as the sums of all faithfully recorded transactions between Jan 1 and Dec 31 in the accounting system. The profit definition is a formal expression of what the accountants call striking a balance, which is something quite different from recording a transaction.

The big question is: Why does that balance ― the pivotal balance of the monetary economy ― not appear in the balances equations of MMT?

My hypothesis is that MMTers are extremely stupid, and your silly posts confirm this hypothesis.

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Graphic AXEC121i

A new curriculum for swampies?

Comment on Lars Syll on ‘The need for a new economics curriculum without the present suicidal formalism’

Blog-References and Blog-Reference and Blog-Reference on Nov 18 and Blog-Reference on Apr 25, 2017, adapted to context

A new economics curriculum is needed, no doubt about this. But why exactly? Some say because there is too much mathematics. Others say there is not enough history/ psychology/ sociology/ philosophy/ ethics. Still, others demand that heterodox economists like Schumpeter or Marx should be given more weight.

There is some superficial plausibility in all of this, but these popular arguments miss the crucial point. The fact of the matter is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism ―  are provably false. What economics needs is a scientifically valid curriculum, but there is none because there is no scientifically valid economic theory. After 200+ years, economics is still at the level of what Feynman called a cargo cult science.

So, when Keynesian and Marxian economists argue that the Walrasian curriculum is false, unrealistic, or biased, then one can readily agree. The problem is that Keynesian or Marxian economics is not one iota better; it is only false in a different way. Actually, both Keynesian and Marxian profit theories are provably false (2013; 2014), just like Walrasian profit theory.

To mix a new curriculum of Walrasian, Keynesian, Marxian, and Austrian contents is an idea of unsurpassable idiocy. The true theory does not emerge from a mixture of provably false theories.

The state of economics is this: there are political economics and theoretical economics. The founding fathers called themselves political economists; that is, they left no doubt that their main business was agenda-pushing. Economists never got out of political economics. In other words, theoretical economics (= science) ultimately could not emancipate itself from political economics (= agenda-pushing). And this is how economics became a failed science.

What is entirely missing among economists is an understanding of what science is all about. Science is digital = binary = true/false and NOTHING in between. There is NO such thing in science as roughly right or roughly wrong; there is only materially/formally true/false. All the rest of human communication is storytelling, gossip, sitcom, rhetoric, and opinion. Vague blather, untestable wish-wash, inconclusive either-or, plain inconsistency, moralizing, and preaching have always been the hallmark of political economists.

So, there are the hard rocks of true and false and the swamp between them where “nothing is clear and everything is possible” (Keynes). The swamp is the natural habitat of morons, agenda pushers, confused confusers, trolls, and incompetent scientists.

Economists are natural-born swampies. In marked contrast, scientists drive the question under discussion to the point of a clear-cut decision between true and false. And they do not touch questions that cannot be decided by the accepted means, that is, by logic and testing.

The fraternity of orthodox and heterodox swampies has no genuine interest in a definite true/false outcome but seeks to stay in the swamp. Their common enemy is science. Swampies have produced the gigantic heap of toxic scientific waste that is called economics.

Have swampies learned anything from their abysmal failure? Only this that they want more than ever to stay in the swamp: “Economics should not be taught as if it were about the discovery of timeless laws. Those who champion the discipline must remember that, at its core, it is about human behaviour, with all the messiness and disorder that this implies.” (Financial Times)

Economists never understood what their subject matter is. Economics is NOT a social science that deals with the behavior of people, but a systems science that deals with the behavior of the economic system. #1 Human behavior does not follow timeless laws, but the economic system does. The fact of the matter is that neither orthodox nor heterodox economists have figured out the fundamental systemic laws (the Profit Law, for example) to this very day.

More than two hundred years of failure are enough. Time to expel the swampies from the scientific community. And, of course, high time to install a scientifically valid economics curriculum. #2

Egmont Kakarot-Handtke


References
Kakarot-Handtke, E. (2013). Why Post Keynesianism is Not Yet a Science. Economic Analysis and Policy, 43(1): 97–106. URL or URL
Kakarot-Handtke, E. (2014). Profit for Marxists. SSRN Working Paper Series, 2414301: 1–25. URL

#1 For details, see cross-references Not a Science of Behavior
#2 For details, see cross-references Old Curriculum/New Curriculum

Related 'There is NO such thing as an economic expert' and 'The father of modern economics and his imbecile kids' and 'To this day, economists have produced NOT ONE textbook that satisfies scientific standards' and 'The economist as stand-up comedian' and 'How to make economics a science'. For more details of the big picture, see cross-references Econ 101/Old Curriculum/New Curriculum and cross-references New Curriculum.

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Graphic AXEC121f

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.

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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

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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 7

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.

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NOTE on Apr 19

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'

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Graphic AXEC176b