G. L. S. Shackle: Not such a #GreatThinker

Comment on The British Academy on ‘Great Thinkers: John Kay FBA on G. L. S. Shackle FBA’*

Blog-Reference

“He [Shackle] also claimed the importance of Gunnar Myrdal’s analysis by which saving and investment are allowed to adjust ex ante to each other. However, the reference to ex ante and ex post analysis has become so usual in modern macroeconomics that the position of Keynes to not include it in his work, is currently considered as an oddity, if not a mistake. As Shackle put it: Myrdalian ex ante language would have saved the General Theory from describing the flow of investment and the flow of saving as identically, tautologically equal, and within the same discourse, treating their equality as a condition which may, or not, be fulfilled.”#1

Like his Post Keynesian colleagues, G. L. S. Shackle never spotted the lethal blunder in the General Theory. It is this: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

This syllogism is conceptually and logically defective because Keynes NEVER came to grips with profit: “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)

Let this sink in, the economist Keynes NEVER understood profit, i.e. the fundamental concept of economics. So, Keynes’ I=S is false and by consequence the multiplier and all I=S/IS-LM models. Instead, Q≡I−S is true with Q as macroeconomic profit.#2, #3

Keynes, Shackle, and the Post Keynesians were simply too stupid for the elementary algebra that underlies macroeconomics.

Egmont Kakarot-Handtke


* Link to TBA Tweet
#1 Wikipedia G. L. S. Shackle
#2 How Keynes got macro wrong and Allais got it right
#3 Links on Michael Roberts’ ‘Keynes: socialist, liberal or conservative?’

For details of the big picture see cross-references Refutation of I=S and cross-references Failed/Fake Scientists.

MMT: A new myth for WeThePeople

Comment on Bill Mitchell on ‘Seize the Means of Production of Currency ― Part 1’

Blog-Reference and Blog-Reference

Bill Mitchell accuses the former British Labour Party advisor James Meadway and indirectly the current Labour leadership of incompetence/foul play: “In doing so, Meadway demonstrates that he has not grasped (or refuses to grasp) the subtleties of MMT. In a political sense, his arguments repeat those that Chancellor Dennis Healey used when he lied to the British people in the mid-1970s about the Government running out of money. These falsehoods eased the path for Margaret Thatcher, created the space within Labour for the highly damaging Blairite years, and constrain the current British Labour leadership’s conception of what is possible in terms of economic policy formation.”

Bill Mitchell contrasts stupid/corrupt Labour policy with the superior scientific approach of MMT: “At the outset, it is important to note that MMT should not been seen as a regime that you ‘apply’ or ‘switch to’ or ‘introduce’. Rather, it is a lens which allows us to see the true (intrinsic) workings of the fiat monetary system.”

MMT pursues the noble goals of (i) myth-busting, and (ii), improving democracy: “An MMT understanding means that statements such as the ‘government cannot provide better services because it will run out of money’ are immediately known to be false. Such an understanding will change the questions we ask of our politicians and the range of acceptable answers that they will be able to give. In this sense, an MMT understanding enhances the quality of our democracies. MMT is agnostic about policy, bar its preference for an employment buffer rather than an unemployment buffer to discipline inflation.”

This, in a nutshell, is the MMT myth. The fact is that MMT theory is scientifically refuted on all counts#1 and MMT policy is actually NOT for the benefit of WeThePeople but for the benefit of the Oligarchy.#2

The core claims of MMT are provably false:

1. “It [the government] creates a demand for its otherwise worthless currency by requiring all tax liabilities to be extinguished in that currency.” FALSE! TRUE: The currency is created by the Central Bank as a means of transaction. The creation and value of money does NOT depend on the taxing power of the State.#3, #4

2. “The government spends its currency into existence through the purchase of goods and services from the non-government sector (so-called government spending) which provides the non-sector with the funds necessary to pay its tax obligations.” FALSE! TRUE: Spending on current output with newly created money is analogous to the spending of the counterfeiter.#5 The Central Bank’s creation of fiat money for the payment of the wage bill is the correct way of bringing money into the economy.

3. “The consequence of this logical ordering of events (spending to fund taxation) is that currency-issuing governments do not have to ‘fund’ their spending and can never run out of currency.” FALSE because of 1. and 2. TRUE: Unlimited spending is possible because of the government’s unlimited overdrafts at the Central Bank. Overdrafts are public debt that may be consolidated through bond issuance or not. Interest on the public debt redistributes income from WeThePeople to the Oligarchy as long as the debt is rolled over.

4. “In general, MMT uses the sectoral balances (or flow of funds) approach, which tells us that the government sector’s deficit (surplus) is always equal to the non-government sector’s surplus (deficit).” Indeed, but the MMT sectoral balances equation, i.e. (I−S)+(G−T)+(X−M)=0, is provably false. Because of this, the whole analytical superstructure of MMT is scientifically worthless.

As a result, Bill Mitchell’s policy conclusion is false: “… it follows that the only way private debt ― and the power of financial institutions over society ― can be brought under control without driving the economy into recession is for the government to run persistent and substantial fiscal deficits.”

Persistent and substantial fiscal deficits are persistent and substantial free lunches for the Oligarchy.#6 MMT policy guidance is, contrary to the social/environmental optic, ultimately to the detriment of WeThePeople and Democracy. MMTers are not competent scientists but useful idiots for the Oligarchy.

Egmont Kakarot-Handtke


#1 For the full-spectrum refutation of MMT see cross-references MMT
#2 MMT: A Trojan Horse for Labour courtesy of the Oligarchy
#3 The creation and value of money and near-monies
#4 MMT: fundamentally false
#5 How counterfeiters save America with an extra profit and make WeThePeople pay for it
#6 For MMT = For the Oligarchy

Related 'Controlled demolition of MMT ― an exercise in elementary logic' and 'Against the mainstream! Against MMT!' and 'How to pay for the war and to be bamboozled by economists' and 'Stephanie Kelton sells children into debt slavery'.

Economics textbooks ― tombstones at the Flat-Earth Cemetery

Links on Peter Dorman on ‘CORE and Periphery in the Reform of Econ 101’

Blog-Reference and Blog-Reference

“I often wonder whether other subjects suffer as much from textbook writers.” (Hahn, 1980)

► CORE: more lipstick on the dead economics pig
► To this day, economists have produced NOT ONE textbook that satisfies scientific standards
► Refuting MMT’s Macroeconomics Textbook
► Economists have no brain
► False on principle
► Where economics went wrong (II)
► The father of modern economics and his imbecile kids

► For details of the big picture see cross-references Econ 101/Old Curriculum/New Curriculum

Egmont Kakarot-Handtke

***

REPLY to Owen Paine on Jun 13

You say “And yes the core text is a big step.”

NO. In the section ‘9.6 Wages, profits, and unemployment in the whole economy’ the determination of macroeconomic profit is provably false. The axiomatically correct macroeconomic Profit Law reads Q≡Yd+I−S+(G−T)+(X−M).

Because the foundational concept of economics, i.e. profit, is ill-defined the CORE textbook is scientifically worthless.#1

That the whole thing is not more than proto-scientific garbage, storytelling, gossip, and name-dropping may be gleaned from such references as

“Arguably the most famous scientific controversy of all time was between Sir Isaac Newton and Gottfried Leibniz over who invented calculus.

Newton first used calculus methods in a manuscript published in 1666. The methods were used in his book Mathematical Principles of Natural Philosophy, which was published in 1687. He completed his book on calculus, Method of Fluxions, in 1671, but did not publish it until 1736.

Newton’s supporters accused Leibniz of plagiarism in his work on calculus. By the time of his death, his reputation was in decline and he died in poverty. His reputation has subsequently been rebuilt by both mathematicians and philosophers.

Modern historians accept that Newton and Leibniz invented calculus independently, at about the same time. Therefore, to decide whom to name the calculus supplements after, we tossed a coin. Leibniz won.”

The fact is that modern historians have found out that Newton was a fraudster.#2

More exercises in the erection of False-Hero Memorials can be found in the section ‘Great economists’.#3

#1 CORE: more lipstick on the dead economics pig

#2 Kollerstrom, N. (2018). The Dark Side of Isaac Newton: Science’s Greatest Fraud? Pen and Sword Books.

#3 For details, see cross-references Failed/Fake Scientists

***

AXEC106k

MMT: A Trojan Horse for Labour courtesy of the Oligarchy

Links on Dan McCurry's ‘Why Labour shouldn’t rule out Modern Monetary Theory’#1

Blog-Reference

Scientifically, MMT is refuted on all counts. Politically and economically, the MMT policy of deficit-spending/money-creation benefits the Oligarchy. Social/environmental programs are in real terms always paid for by WeThePeople themselves either through direct taxation or through stealth taxation via the market price. The social/progressive flag-waving of MMT is for the deception of WeThePeople.

► MMTers are NOT Friends-of-the-People
► Deficit-spending/money-creation is ALWAYS a bad deal for WeThePeople
► The economist as useful political idiot
► How Bill Mitchell stalks Jeremy Corbyn
► Mr. Corbyn and the perils of political economics
► Political economics: Who hijacks British Labour?
► MMT Progressives: stupid or corrupt or both?
► How MMT enlightens Washington
► MMT and grassroots movements
► Dear idiots, MMTers are Wall Street’s agenda pushers

Egmont Kakarot-Handtke


#1 LABOURLIST

Related 'Links on MMTers push Wall Street’s agenda' and 'Just one more day: How deficit-spending postpones the breakdown of Capitalism' and 'For MMT = For the Oligarchy' and 'Stephanie Kelton’s legendary Plain-Sight-Ink-Trick' and 'Bill Mitchell, MMT’s fake scientist' and 'Warren Mosler: scientific dilettante and political fraudster' and 'Bill Mitchell, MMT, Progressives: economists as Oligarchy hacks' and 'Mission accomplished: Economists as useful idiots of the Oligarchy' and 'MMT: Corbynism is dead, British Labour is next' and 'Links on Austerity'.

Thomas Sargent, fake scientist

Comment on Lars Syll on ‘An interview with Tom Sargent’

Blog-Reference

Walrasian economics, the flagship of the profession, is based on these hardcore 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)

Methodologically, microfoundations are unacceptable. Economics has to be based on macrofoundations. Mainstream economics is false at the most fundamental level. #1 In addition, the Walrasian axiom set is false because it contains multiple NONENTITIES. Equilibrium is one; the other relates to knowledge and expectations.

All this was noticed early on by genuine scientists: “Walras approached Poincaré for his approval. ... But Poincaré was devoutly committed to applied mathematics and did not fail to notice that utility is a nonmeasurable magnitude. ... He also wondered about the premises of Walras’s mathematics: It might be reasonable, as a first approximation, to regard men as completely self-interested, but the assumption of perfect foreknowledge ‘perhaps requires a certain reserve’.” (Porter)

Every economics student who accepts Walrasianism ― and supply-demand-equilibrium (S-D-E) as its core piece ― as a scientifically valid approach flunks the intelligence test.

Thomas Sargent not only failed to notice that mainstream economics is what Feynman called a cargo cult science but also actively participated in the greatest scientific hoax of modern times. He promoted the Rational Expectation Hypothesis that bears the sign of idiocy on its forehead: “REH basically says that people on the average hold expectations that will be fulfilled. This makes the economist’s analysis enormously simplistic since it means that the model used by the economist is the same as the one people use to make decisions and forecasts of the future.”

Scientific truth has two inseparable methodological components: material and formal consistency. This, of course, also holds for economics: “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)

To this day, economists do not have the true theory. Economics is fake science. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit ― the foundational concept of the subject matter ― wrong. With the pluralism of provably false theories, economics sits squarely at the proto-scientific level.# 2

So, since Adam Smith/Karl Marx, economic policy guidance has never had sound scientific foundations. Economics is one of the most embarrassing scientific failures of all time, and the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is plain fraud.

Economists are NOT scientists, and economics is NOT science. Economics ― both Orthodoxy and Heterodoxy ― needs a Paradigm Shift from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations. #3

What Thomas Sargent did over his whole academic career was to produce proto-scientific garbage.

Egmont Kakarot-Handtke


#1 “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)
#2 For details of the big picture, see cross-references Failed/Fake Scientists
#3 How to restart economics

For MMT = For the Oligarchy

Comment on Thomas Fazi/Bill Mitchell on ‘For MMT’*

Blog-Reference

Thomas Fazi/Bill Mitchell observe: “More surprising is the fact that MMT has also been the subject of fierce criticism by left-wing economists and commentators, such as Doug Henwood and Paul Mason. In the last year or so, the critiques of MMT have accelerated as its public profile has risen, partly due to Alexandria Ocasio-Cortez’s promotion of the theory in relation to her endorsement of a ‘Green New Deal’ (GND). This was to be expected: MMT not only threatens powerful vested interests in our societies, but also challenges the hegemony of mainstream macroeconomists who have been able to dominate the policy debate for decades using a series of linked myths about how our fiat monetary system operates and the capacities of currency-issuing governments within such a system.”

This is a case of either self-delusion or political fraud.

MMT does NOT threaten “powerful vested interests”, the MMT policy of deficit-spending/ money-creation clearly benefits the Oligarchy because it increases macroeconomic profit according to the Profit Law, which entails Public Deficit = Private Profit. Thus, the Oligarchy’s financial wealth and public debt (currently $22 trillion) grow in lockstep. The so-called free-market economy has already been on the full life support of the State for a long time. #1

What MMT actually does is to put a social/green label on the public debt, which has hitherto been accumulated mainly with military deficit spending. To put social/environmental deficit-spending on top of military deficit-spending does NOT threaten vested interests but is the best thing that can happen to the Oligarchy.

What MMT actually does is to discredit/undermine the parties that have stood for more than a century for the interests of the working class. What Thomas Fazi/Bill Mitchell and other MMTers actually attempt is to drive a wedge between leadership and membership of the traditional Left by questioning economic competence:

• “But when they [criticisms of MMT] come out of Social Democratic or Labour political machines, one realises that these economic spokespeople actually believe in the causalities that the mainstream macroeconomics framework asserts.” … “And then they wonder why they lose elections.”
• “MMT gives us the power to imagine truly transformational politics, without getting caught up in meaningless debates about whether we can ‘afford’ it or not. This is also why it is being attacked so fiercely. Not because of its theoretical foundations, but because of the range of economic and political possibilities that it opens up. The bottom line, however, is that MMT is here to stay. The Labour Party can choose to stick to an old neoliberal fiscal paradigm ― or it can join the revolution.”

MMT has zero scientific content, MMTers are scientifically incompetent, #2 MMT is refuted on all counts, #3 MMT policy guidance is political fraud in the interest of the Oligarchy. #4

The idea that creatures of polit-marketing like Alexandria Ocasio-Cortez and academic trolls like Thomas Fazi/Bill Mitchell are spearheading the revolutionary overthrow of vested interest is the latest joke in the ongoing reality show.

Egmont Kakarot-Handtke


* TRIBUNE
#1 Keynes, Lerner, MMT, Trump, etc. and exploding profit
#2 Controlled demolition of MMT ― an exercise in elementary logic
#3 See cross-references MMT
#4 Links on MMTers push Wall Street’s agenda

Related 'Against the mainstream! Against MMT!' and 'MMT and the Green New Deal: Where is the snag? (I)' and 'MMT and the Green New Deal: Where is the snag? (II)' and 'MMT is NOT bold policy but spineless fraud' and 'MMT: If you’ve got a problem, I don’t care what it is, let me help' and 'Profit and macrofoundations'.

Against the mainstream! Against MMT!

Comment on Bill Mitchell on ‘How social democratic parties erect the plank and then walk it’*

Blog-Reference and Blog-Reference on Jun 7

In his critique of the mainstream, Bill Mitchell is correct on these points:

• “… the likes of Larry Summers, Paul Krugman, and Kenneth Rogoff, who are regularly referred to as ‘the world’s leading economic thinkers’ or ‘Nobel Prize-winning economists’ as if any of that established authority.” Indeed, there are no scientific authorities in economics, only political clowns/useful idiots.#1

• “The standardised framework is crafted on a series of erroneous propositions, first, about human behaviour that no psychologist or sociologist would identify as being relevant to our decision-making at all; and, second, about the way the fiat monetary system operates.” Indeed, macroeconomics in all its variants is axiomatically false since Keynes.#2

• “Not much of what the mainstream has said ever turns out to be the case.” and “Mainstream macro has failed ― it is categorical.” Indeed, economics is what Feynman called a Cargo Cult science.#3

• “Le roi est mort!” As a matter of fact, he was already dead in the cradle.#4, #5, #6, #7

From the failure of the mainstream, however, does NOT logically follow that MMT is true.#8

Although MMT is methodologically better than mainstream economics, Bill Mitchell is wrong on two points:

• “Only through an MMT understanding can one understand what has been going on in the world economies.” No, MMT is not materially and formally consistent, that is, it does not satisfy scientific standards.#9, #10, #11, #12

• “But when they [criticisms of MMT] come out of Social Democratic or Labour political machines one realises that these economic spokespeople actually believe in the causalities that the mainstream macroeconomics framework asserts.” … “And then they wonder why they lose elections.” Not at all, the “Social Democratic or Labour political machines” somehow get it instinctively right. Their reservation is fully justified. The MMT policy of deficit-spending/money-creation is NOT for the benefit of WeThePeople but for the benefit of the Oligarchy. MMT-Progressives are fake Friends-of-the-People.#13

MMT is a scientific failure and a political fraud. Economics is in dire need of a genuine Paradigm Shift.

Egmont Kakarot-Handtke


* billyblog
#1 For details, see cross-references Failed/Fake Scientists
#2 Macroeconomics ― dead since Keynes
#3 Macroeconomics: Economists are too stupid for science
#4 Stop beating mainstream economics ― it is long dead
#5 CORE: more lipstick on the dead economics pig
#6 Just revealed: IS-LM is dead for 80+ years
#7 Just for the record: economics is dead
#8 Debunking idiots does not prove that MMT is valid
#9 Controlled demolition of MMT ― an exercise in elementary logic
#10 Refuting MMT’s Macroeconomics Textbook
#11 The canonical macroeconomic model
#12 MMT is refuted on all counts, see cross-references MMT
#13 Links on MMTers push Wall Street’s agenda