AXEC: New Foundations of Economics: Search results for label:Methodology

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August 1, 2026

Occasional X: Economists’ eternal problem with methodology (XV)

“I prefer true but imperfect knowledge, even if it leaves much indetermined and unpredictable, to a pretence of exact knowledge that is likely to be false.” (Friedrich Hayek)

This is one of the most revealing propositions in the field of methodology. It immediately proves that…
— AXEC (@EgmontHandtke) August 1, 2026

July 25, 2026

Occasional X: Clueless economists / Science (CCCLXIII)

“Virtually all economics since Ricardo been based on equilibrium paradigm.” (Richard Werner)

Richard Werner is right. Ricardo got methodology wrong. Moreover, he got the foundational concept of economics — profit — wrong. As a consequence, he never understood how the economic… pic.twitter.com/pCeqOGYt9d
— AXEC (@EgmontHandtke) July 25, 2026

July 8, 2026

Occasional X: Clueless economists / Science (CCCLIII)

“GDP answers the question posed to it, as well as we know how: What is the total value of goods and services produced in the market economy, and what is the value of income earned by such production in the market economy? It is a terrible measure of things it wasn't designed to…
— AXEC (@EgmontHandtke) July 8, 2026

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

“Debates on what monies to include or not to include in GDP have been going on forever, some examples are about profits or interest/fees on usury(debt).” (Stefan Demetz)

Yes, economic debates go on endlessly without reaching a definite conclusion because economics is failed… pic.twitter.com/e7UcGTlYNN
— AXEC (@EgmontHandtke) July 8, 2026

July 3, 2026

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

“Pretty much the entire academic literature on 'neoliberalism' is a dumpster fire of bad history and even worse economics that should be jettisoned in its entirety for being built on an edifice of ideologically-motivated errors.” (Phil Magness)

Economics has defined itself as a… pic.twitter.com/eBsF7PBVgJ
— AXEC (@EgmontHandtke) July 3, 2026

June 28, 2026

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

“Böhm-Bawerk explained it at the end of the nineteenth century: value does not arise from cost and rise up to price; it arises from the marginal utility that the consumer attributes to the good … ” (Miguel Hernández)

Neither Marxians nor Austrians ever understood profit and, by… pic.twitter.com/G1UPAoxrSI
— AXEC (@EgmontHandtke) June 28, 2026

June 25, 2026

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

“The Book That Dismantled Marx Was Almost Never Published. He [Menger] Saved It.” (Peter Boettke)

Austrianism is failed/fake science to this day, but Peter Boettke is too stupid to get it.

Carl von Menger never understood profit, and by logical consequence, how the economic…
— AXEC (@EgmontHandtke) June 25, 2026

June 17, 2026

Occasional X: Clueless economists / Science (CCCXLIII)

“Tech change between 1870 and 1890 favored a slight shift to household production causing us to miss some gains in welfare that could not be measured.” (Vincent Geloso)

One characteristic problem of economics as a failed/fake science is that economists endlessly discuss minor…
— AXEC (@EgmontHandtke) June 17, 2026

“Biased measurement doesn't invalidate economics; …” (Sr simpático)

Clarification: Biased measurement is different from false numbers that are ultimately created by illicit operations. When somebody creates and uses counterfeit money in a big way, testing the Quantity Theory of…
— AXEC (@EgmontHandtke) June 17, 2026

“Distorted numbers from failed policies (like central bank's) will lead to an outcome that can me measured as has happened in 🇦🇷 for example.” (Sr simpático)

All policies have mesurable outcomes. This is trivial and has nothing to do with false data.

Example: If the govenment…
— AXEC (@EgmontHandtke) June 17, 2026

June 16, 2026

Occasional X: Clueless economists / Employment (XXXIV)

“What's wrong?” (Shahin Ashkiani)

The representative economist is wrong.

Economics claims to be Science but is NOT. The major approaches and their derivatives are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit wrong. Because… pic.twitter.com/wq1AnJkszM
— AXEC (@EgmontHandtke) June 16, 2026

June 12, 2026

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

“The final outcome of the credit expansion is general impoverishment.” (Ludwig von Mises)

Austrians in general, and von Mises in particular, never understood the profit mechanism, which is the pivotal feature of the free-market economy.

The free-market economy runs on profit.…
— AXEC (@EgmontHandtke) June 12, 2026

June 10, 2026

Occasional X: Paradigm Shift (CXVIII)

I have summarized 7,354 posts, 78 papers, and 1 book in the table below. ⇓ If you still do not understand economics, your last hope is an excellent brain specialist. pic.twitter.com/wgU8kaQ27O
— AXEC (@EgmontHandtke) June 10, 2026

June 9, 2026

Occasional X: Clueless economists / Science (CCCXL)

“The standard of living of the common man is higher in those countries which have the greatest number of wealthy entrepreneurs.” (Ludwig von Mises)

Ludwig von Mises never understood profit and, by consequence, how the economic system works.

First of all, it is important to…
— AXEC (@EgmontHandtke) June 9, 2026

“The richness of America Is provided by NATURAL RESOURCES Like oil.” (Lawrence Widman)

The richness of America consists of valued natural resources, valued capital goods, and financial assets. The source of the latter is private/public deficit-spending, which materializes as…
— AXEC (@EgmontHandtke) June 10, 2026

June 7, 2026

Occasional X: Clueless economists / Science (CCCXXXVIII)

“This is Ricardo’s Vice. The practice of selecting your conclusion first, constructing assumptions that make your mathematics arrive there, and presenting the internally consistent logic as empirical truth about the world. Yet. Logic is not truth. If there is one thing worth…
— AXEC (@EgmontHandtke) June 7, 2026

June 2, 2026

Occasional X: Clueless economists / Science (CCCXXXV)

“This comes from the tradition of econometrics. The idea is that everything in economics has to be measurable like in physics. So economists have to keep denying the inexact reality of economics at every turn. A good example of this is the most inexact field in economics: macro.”… pic.twitter.com/KCG3rw2NWU
— AXEC (@EgmontHandtke) June 2, 2026

May 24, 2026

Occasional X: Clueless economists / Science (CCCXXVII)

“Smith did not invent free markets. He explained why the markets that already existed produced order without anyone intending it. The insight was descriptive before it was prescriptive. He was watching something happen and asking: why does this work? Most people who cite him have… pic.twitter.com/vYDVRUEi4s
— AXEC (@EgmontHandtke) May 24, 2026

May 19, 2026

Occasional X: How it works (CDLXXVII)

“You claim to have refuted Austrian methodology. … The disagreement is about where profit actually comes from.” (NReadmoore)

Yes, and I claim that you are unable to understand (i) science, (ii) economics, (iii) math/accounting, and (iv) profit.

You agree that profit is… pic.twitter.com/8uUNcRTQmN
— AXEC (@EgmontHandtke) May 19, 2026

May 18, 2026

Occasional X: Clueless economists / Science (CCCXXIV)

“Just calling a S-D association modelling a 'law' shows someone is illiterate. This level of positivist idiocy is criminally high.” (Shahin Ashkiani)

The founding fathers have defined economics as a social science, and accordingly, it has been based on subjective/behavioral… pic.twitter.com/yndknWkMlF
— AXEC (@EgmontHandtke) May 18, 2026

May 17, 2026

Occasional X: Clueless economists / Science (CCCXXIII)

“… and refusing to engage with any of the substantive points.” (NReadmoore)

The opposite is true. Summary of AXEC's argument:

(1) Premise: A monetary economy without profit cannot exist.

(2) In mathematical terms, the objective/systemic minimum requirement is Qm≥0.

(3) The…
— AXEC (@EgmontHandtke) May 17, 2026

Related 'The Profit Law'

May 15, 2026

Occasional X: Economists’ eternal problem with methodology (XIII)

“The sectoral identity is true by definition after the fact.“ (NReadMoore)

This is one of the dumbest statements in all of methodology. It clearly shows the scientific incompetence of Austrians.

When an apple falls from the tree, science tells one exactly which distance it has…
— AXEC (@EgmontHandtke) May 15, 2026

May 13, 2026

Occasional X: Clueless economists / Science (CCCXVIII)

“Very much looking forward to the 𝐙𝐮𝐫𝐢𝐜𝐡 𝐐𝐮𝐚𝐧𝐭𝐢𝐭𝐚𝐭𝐢𝐯𝐞 𝐌𝐚𝐜𝐫𝐨 𝐖𝐨𝐫𝐤𝐬𝐡𝐨𝐩 next week! Excited to welcome an outstanding group of macroeconomists pushing the very frontier …” (Yucheng Yang)

Keynes, too, misunderstood the concept of profit because he was… pic.twitter.com/up9loOrYhm
— AXEC (@EgmontHandtke) May 13, 2026

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Knowledge only — no opinion

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

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

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

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

Political economics is scientifically worthless.

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

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

Economics is a failed science. Economists are incompetent scientists.

Profit

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

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

The hybrid science

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

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

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

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

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

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

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

Narrative vs.Theory

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

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

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

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

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

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

Theory starts with a set of objective and consistent axioms.

Paradigm Shift

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

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

"The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory." (Blaug)

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

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

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

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

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

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

Selftest and to watch for

You apply one of these items

• supply-demand-equilibrium,

• general equilibrium,

• marginal utility,

• well-behaved production functions,

• total income = value of output,

• total income = wages + profits,

• I=S,

• wage rate down - employment up,

• behavioral axioms?

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

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

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

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

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

To be replaced (1)

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

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

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

To be replaced (2)

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

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

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

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

Consensus

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

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

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

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

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

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

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

About me

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

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

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

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

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

Achim Truger,

German Council of Economic Experts,

in a failed attempt to be ironic

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

William Luther

Assistant Professor of Economics

in a failed attempt to be funny

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

Dean

About the rest of economics

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

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

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

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

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

Nopopop

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

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

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

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

Focus

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

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

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

Science is about true/false and nothing else.

Disclaimer

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

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

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

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

Outlook

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

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

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

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

Major economic policy implication

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

Right policy depends on true theory.

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

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