Comment on Steve Keen on ‘Why China had to crash: Part 2’
Blog-Reference
Because Orthodoxy is a scientific failure it is, indeed, an intuitively promising approach to start from the exact opposite assumptions.
Roughly speaking, you have shown that leverage, or more precisely, debt acceleration, is the ultimate cause of the boom/crash of the Chinese stock market. This is equally true for the subprime meltdown in 2008 and for the crash in 1929. #1
The general conclusion is that markets do not work as the textbook story suggests and that the supply-demand-equilibrium paradigm is empirically refuted for the financial markets.
The pervasive boom/crash phenomenon tells us that the institutional framework and, in particular, the monetary order in the U.S. is fundamentally flawed. The conclusion for China and other countries is to identify the defect and to come up with a superior institutional framework.
Until now, China has mainly adopted the U.S. financial market blueprint. Therefore, it does not come as a surprise that she crashes against the wall just like the U.S. did on several occasions since 1929.
Rethinking the actual stock market crash, China, first of all, has to ask herself (i) whether she needs a stock market in the first place, and if so (ii), whether her stock market should institutionalize the possibility of leverage.
The U.S. is not very talented at institution-building. The Wall Street/Fed configuration is not a success story. If China wants to overtake the U.S., it has to create a superior institutional framework.
In a sense, Modigliani-Miller was right: ultimately, it is a matter of indifference whether a firm is financed by equity or debt. And if equity is not needed, the stock market is not needed.
What China urgently needs is the correct economic theory. Financial crashes and persistent unemployment are the empirical mirror images of false monetary and employment theories. Standard economics has scientifically crashed; that is, China needs a superior approach. Can Heterodoxy deliver?
Egmont Kakarot-Handtke
#1 Mathematical Proof of the Breakdown of Capitalism
Showing posts sorted by relevance for query China. Sort by date Show all posts
Showing posts sorted by relevance for query China. Sort by date Show all posts
September 16, 2015
March 2, 2018
Economies are culturally different but economic laws are universal
Comment on Tom Hickey on ‘Ellen Brown ― Funding Infrastructure: Why China Is Running Circles Around America’
Blog-Reference
The economic laws for the monetary economy are the SAME under capitalism and communism or anything in between, just as the laws of aerodynamics are the same for a bird or a plane, whether one flies to the South Sea or to Antarctica.
Of course, the cultural superstructure of different economies is different. So, universal economic laws and national culture together produce concrete historical outcomes for different economies. Analytically, though, both things have to be kept apart. Economics deals with objective-systemic laws of the monetary economy and not with the sociology or history of an individual country. This is analogous to physics, where the Law of Gravity is the same for different countries, for different cultures, and for people with different worldviews.
The crucial point for the economist to understand is that economics deals neither primarily nor secondarily with individual human behavior or society at large. This is the realm of psychology, sociology, anthropology, history, political science, social philosophy, biology/evolution etcetera. It is high time that economists take their sticky fingers out of these pies. #1
The Employment Law and the Profit Law are the same for China, the USA, and Germany. #2 The macroeconomic profit in an economy is the same whether firms are run by owner-appointed managers or state-appointed managers, and it is given by Qm≡Yd+(I−Sm)+(G−T)+(X−M). #3
Obviously, the philosophy of society/state/politics is different in different national economies. In China, the underlying state ethics is Confucian, in Germany, it is Prussian, and in the USA, it is Utilitarian. The former two have a strong social component that manifests itself in economic institutions like banking or old-age assurance.
Different overall profitabilities in different countries are NOT due to cultural differences, or the ownership order, or the proficiency of workers, or the greediness of managers, but uniquely and exclusively to the macroeconomic Profit Law. Put bluntly, if ‘capitalist’ American firms appear on average to be more profitable than ‘communist’ Russian firms, this is because public and private deficit spending in the USA is a bit over the top. The mirror image of corporate/private financial wealth is the public debt of the US government. In other words, overall profit Qm in the USA is for the greater part state-determined.
Therefore, in a systemic comparison, it is NOT the case that the US economic order is superior to the Chinese economic order or vice versa. The fact is that ALL monetary economies are identical with regard to the underlying systemic economic laws. The differences are in the social philosophies. But philosophy is NOT an issue for economists. All the more so, because economists have not yet understood the foundational concept of their subject matter, i.e., profit. How can they understand anything else?
Egmont Kakarot-Handtke
#1 Economics: Poor philosophy, poor psychology, poor science
#2 Full employment: thinking like the macro-boss
#3 For details of the big picture, see cross-references Profit
Blog-Reference
The economic laws for the monetary economy are the SAME under capitalism and communism or anything in between, just as the laws of aerodynamics are the same for a bird or a plane, whether one flies to the South Sea or to Antarctica.
Of course, the cultural superstructure of different economies is different. So, universal economic laws and national culture together produce concrete historical outcomes for different economies. Analytically, though, both things have to be kept apart. Economics deals with objective-systemic laws of the monetary economy and not with the sociology or history of an individual country. This is analogous to physics, where the Law of Gravity is the same for different countries, for different cultures, and for people with different worldviews.
The crucial point for the economist to understand is that economics deals neither primarily nor secondarily with individual human behavior or society at large. This is the realm of psychology, sociology, anthropology, history, political science, social philosophy, biology/evolution etcetera. It is high time that economists take their sticky fingers out of these pies. #1
The Employment Law and the Profit Law are the same for China, the USA, and Germany. #2 The macroeconomic profit in an economy is the same whether firms are run by owner-appointed managers or state-appointed managers, and it is given by Qm≡Yd+(I−Sm)+(G−T)+(X−M). #3
Obviously, the philosophy of society/state/politics is different in different national economies. In China, the underlying state ethics is Confucian, in Germany, it is Prussian, and in the USA, it is Utilitarian. The former two have a strong social component that manifests itself in economic institutions like banking or old-age assurance.
Different overall profitabilities in different countries are NOT due to cultural differences, or the ownership order, or the proficiency of workers, or the greediness of managers, but uniquely and exclusively to the macroeconomic Profit Law. Put bluntly, if ‘capitalist’ American firms appear on average to be more profitable than ‘communist’ Russian firms, this is because public and private deficit spending in the USA is a bit over the top. The mirror image of corporate/private financial wealth is the public debt of the US government. In other words, overall profit Qm in the USA is for the greater part state-determined.
Therefore, in a systemic comparison, it is NOT the case that the US economic order is superior to the Chinese economic order or vice versa. The fact is that ALL monetary economies are identical with regard to the underlying systemic economic laws. The differences are in the social philosophies. But philosophy is NOT an issue for economists. All the more so, because economists have not yet understood the foundational concept of their subject matter, i.e., profit. How can they understand anything else?
Egmont Kakarot-Handtke
#1 Economics: Poor philosophy, poor psychology, poor science
#2 Full employment: thinking like the macro-boss
#3 For details of the big picture, see cross-references Profit
Related: 'Economists understand neither Capitalism nor Socialism' and 'No exploitation, no classes' and 'Confounding sociology and economics' and 'Stock prices, profit, and other self-fulfilling idiocies' and 'PsySoc — the scourge of economics' and 'How to get out of the Econ 101 PsySoc woods'.
***
Twitter/X Jan 20, 2026 Corruption, integrity, culture, and the State
August 14, 2025
Occasional X: The futile attempt to recycle MMT (CLX)
#MMT#BadScienceBadPolicyBadPeople
— AXEC (@EgmontHandtke) August 14, 2025
“China's top economists have turned to Ray Dalio and Modern Monetary Theory in search of intellectual support for their arguments over debt-fuelled fiscal spending.” (Shahin Ashkiani)
Dear China's top economists, MMT cannot give you any…
For more about China, see AXECquery
June 24, 2018
Political economists ― the village idiots of science
Comment on Anonymous on ‘Goebbels or Gompers Addendum’
Blog-Reference
You say: “I should add that I am very concerned about current widespread vilifying of China among American opinion makers both conservative and supposedly liberal.”
I should add that I am also concerned about vilifying China but even more about climate change, growing populism, foreign and domestic hackers, Middle Eastern rogue states, the caged children in the detention camps, the plastic apocalypse in the Pacific, the mass extinction of bees, the new Space Force, the swamp in Washington, Mr. Trump’s tax returns, fake news but most of all about the utter ignorance of economists.
How does it come that economists are not concerned about the state of their discipline?
I am concerned that economists are not at all concerned about their absolute lack of knowledge of how the economic system works, but are instead permanently distracted by the vilification of China and any other issue that is blown up by the opinion makers. #1
Economists seem to have forgotten, or have never been told during their substandard education, that their business is NOT opinion (= doxa) or phony concerns, but knowledge (= episteme). #2
Egmont Kakarot-Handtke
#1 Do first your macroeconomic homework!
#2 Right troll left troll pack your bag and get out of economics
Related 'Yes, economics is a bogus science' and 'Economics: When the scientifically unfit blather about science'. For details of the big picture, see cross-references Failed/Fake Scientists and cross-references Scientific Incompetence and cross-references Political Economics.
Like Anonymous, we are all “completely impressed, though of course still surprised and dismayed at the racial attacks by Gompers.”
Being on a blog called EconoSpeak, though, we all should now turn to contemporary economics and be “completely impressed, though of course still surprised and dismayed” at the utter idiocy and corruption of economists and the most embarrassing failure in the history of modern science.
Blog-Reference
You say: “I should add that I am very concerned about current widespread vilifying of China among American opinion makers both conservative and supposedly liberal.”
I should add that I am also concerned about vilifying China but even more about climate change, growing populism, foreign and domestic hackers, Middle Eastern rogue states, the caged children in the detention camps, the plastic apocalypse in the Pacific, the mass extinction of bees, the new Space Force, the swamp in Washington, Mr. Trump’s tax returns, fake news but most of all about the utter ignorance of economists.
How does it come that economists are not concerned about the state of their discipline?
- Employment theory has not risen since the founding fathers above the level of Lump-of-Labor polemics.
- The profit theory has been false since Adam Smith/Karl Marx.
- Walrasianism, Keynesianism, Marxianism, and Austrianism are mutually contradictory, axiomatically false, and materially/formally inconsistent.
- Theoretical economics (= science) has been captured and corrupted by political economists (= agenda pushers).
- Political economics has produced NOTHING of scientific value. All that has been achieved is a pluralism of provably false theories.
- Economic policy guidance has never had valid scientific foundations.
- Economists collectively deceive the general public by claiming that they are doing science.
- Economists reconstruct their history of scientific failure as a history of progress and continuously erect False-Hero Memorials with the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.
I am concerned that economists are not at all concerned about their absolute lack of knowledge of how the economic system works, but are instead permanently distracted by the vilification of China and any other issue that is blown up by the opinion makers. #1
Economists seem to have forgotten, or have never been told during their substandard education, that their business is NOT opinion (= doxa) or phony concerns, but knowledge (= episteme). #2
Egmont Kakarot-Handtke
#1 Do first your macroeconomic homework!
#2 Right troll left troll pack your bag and get out of economics
Related 'Yes, economics is a bogus science' and 'Economics: When the scientifically unfit blather about science'. For details of the big picture, see cross-references Failed/Fake Scientists and cross-references Scientific Incompetence and cross-references Political Economics.
***
REPLY to Sandwichman on Jul 25Like Anonymous, we are all “completely impressed, though of course still surprised and dismayed at the racial attacks by Gompers.”
Being on a blog called EconoSpeak, though, we all should now turn to contemporary economics and be “completely impressed, though of course still surprised and dismayed” at the utter idiocy and corruption of economists and the most embarrassing failure in the history of modern science.
***
AXEC108l
November 25, 2015
Profit and the collective failure of economists
Comment on David Ruccio on ‘Accumulate, accumulate! Or not’
Blog-Reference
Economists do not understand how the economy works. The deeper reason is that neither the Walrasian, nor the Keynesian, nor the Marxian, nor the Austrian sect understands what profit is. What the general public can see and touch and smell and feel is that the representative economist does not understand the pivotal phenomenon of his subject matter. Economists are like astronomers before gravity was properly understood.
Marx was, like the Classicals, a political economist and mainly concerned with society and the underlying laws/trends of societal evolution. As a matter of fact, he was rather good at descriptive sociology but completely failed as an economist. Like Smith, Ricardo, and other classical economists, he got the profit theory wrong (2014a). And this fate Marxianism shares with the other sects until this very day: “A satisfactory theory of profits is still elusive.” (Desai, 2008, p. 10)
Because of this, the formula that David Ruccio presents as Marx’s theory of accumulation is simply false, while his observations about declining capital investment in the USA are spot on. As with most heterodox economists, the sociology is better than economics proper.
The axiomatically correct macroeconomic Profit Law for the 2-sector economy reads Qm ≡Yd+I−Sm (2014b, p. 8, eq. (18)) #1 Legend: Qm monetary profit, Yd distributed profit, Sm monetary saving, I investment expenditure, dimension €, $, etc. per period
The Profit Law gets a bit more complex when foreign trade and government are included. By summing up investment expenditures over time and taking depreciation into account, the equation ultimately yields the profit rate (2011, Sec. 6.2). These details are not needed at the moment. Nonmonetary profit Qn and nonmonetary saving Sn, which relate to re-valuations are also left out of the picture.
The macroeconomic Profit Law says (for the world economy as a whole):
(i) strong growth = high investment I = accumulation is good for the overall monetary profit Qm of the business sector as a whole,
(ii) strong consumption expenditures = low monetary saving Sm or even dissaving −Sm = growing consumer debt is good for profit,
(iii) by implication high government deficit spending = growing public debt is good for profit, #2
(iv) substantial profit distribution Yd is good for profit.
Profit and profit distribution constitute a self-reinforcing feedback loop. The same holds for profit and investment. These built-in positive feedback loops explode the notion of equilibrium once and for all. The market economy is not a self-optimizing equilibrium system.
Note that overall profit has nothing to do with high productivity or low wages or the capital stock. These and other factors affect only the distribution of overall profit between firms or countries.
Note also that the Profit Law holds for the USA, Russia, China, the EU, and all other countries or associations; that is, it does not matter at all whether one has a pure/mixed market economy or private property or free enterprise or any other of the alleged characteristics of capitalism. The Profit Law holds for every national monetary economy and for the world economy as a whole.
In the last decades, overall (= world) profit has been driven by the growth in Asia (= high I), by dissaving, i.e., the growth of private debt mainly in the USA, by the growth of public debt worldwide, and by substantial profit distribution mainly in the USA. Overall profit has been redistributed between nations/regions via export surpluses/deficits.
Roughly speaking, as accumulation (= I) slows down in China/Asia and the developing regions, world-profit goes down, then overall profit distribution goes down, then again profit goes down, then investment goes down, and so on. Rising unemployment and falling wages accelerate the downward spiral (2015). This spiral is deflationary no matter what the Fed or other central banks do.
So Marx got the life formula — accumulate, accumulate! — of the monetary economy almost right. He had, in any case, a better grasp of economic dynamics than standard equilibrium theory. Independent of all these differences between the major sects of economics, the greatest collective scientific embarrassment of all time is: the profit theory is false since Adam Smith.
Egmont Kakarot-Handtke
References
Desai, M. (2008). Profit and Profit Theory. In S. N. Durlauf, and L. E. Blume (Eds.), The New Palgrave Dictionary of Economics Online, 1–11. Palgrave Macmillan, 2nd edition. URL
Kakarot-Handtke, E. (2011). Squaring the Investment Cycle. SSRN Working Paper Series, 1911796: 1–25. URL
Kakarot-Handtke, E. (2014a). Profit for Marxists. SSRN Working Paper Series, 2414301: 1–25. URL
Kakarot-Handtke, E. (2014b). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
#1 For the rising complexity of the Profit Law, see Graphic AXEC143d.
#2 Keynesianism as ultimate profit machine
Related 'Rethinking the Profit Law' and 'The perennial conundrum: profit and distribution' and 'Ricardo, too, got profit theory wrong!' and 'The Common Error of Common Sense: An Essential Rectification of the Accounting Approach' and 'Profit'. For details of the big picture, see cross-references Profit.
Blog-Reference
Economists do not understand how the economy works. The deeper reason is that neither the Walrasian, nor the Keynesian, nor the Marxian, nor the Austrian sect understands what profit is. What the general public can see and touch and smell and feel is that the representative economist does not understand the pivotal phenomenon of his subject matter. Economists are like astronomers before gravity was properly understood.
Marx was, like the Classicals, a political economist and mainly concerned with society and the underlying laws/trends of societal evolution. As a matter of fact, he was rather good at descriptive sociology but completely failed as an economist. Like Smith, Ricardo, and other classical economists, he got the profit theory wrong (2014a). And this fate Marxianism shares with the other sects until this very day: “A satisfactory theory of profits is still elusive.” (Desai, 2008, p. 10)
Because of this, the formula that David Ruccio presents as Marx’s theory of accumulation is simply false, while his observations about declining capital investment in the USA are spot on. As with most heterodox economists, the sociology is better than economics proper.
The axiomatically correct macroeconomic Profit Law for the 2-sector economy reads Qm ≡Yd+I−Sm (2014b, p. 8, eq. (18)) #1 Legend: Qm monetary profit, Yd distributed profit, Sm monetary saving, I investment expenditure, dimension €, $, etc. per period
The Profit Law gets a bit more complex when foreign trade and government are included. By summing up investment expenditures over time and taking depreciation into account, the equation ultimately yields the profit rate (2011, Sec. 6.2). These details are not needed at the moment. Nonmonetary profit Qn and nonmonetary saving Sn, which relate to re-valuations are also left out of the picture.
The macroeconomic Profit Law says (for the world economy as a whole):
(i) strong growth = high investment I = accumulation is good for the overall monetary profit Qm of the business sector as a whole,
(ii) strong consumption expenditures = low monetary saving Sm or even dissaving −Sm = growing consumer debt is good for profit,
(iii) by implication high government deficit spending = growing public debt is good for profit, #2
(iv) substantial profit distribution Yd is good for profit.
Profit and profit distribution constitute a self-reinforcing feedback loop. The same holds for profit and investment. These built-in positive feedback loops explode the notion of equilibrium once and for all. The market economy is not a self-optimizing equilibrium system.
Note that overall profit has nothing to do with high productivity or low wages or the capital stock. These and other factors affect only the distribution of overall profit between firms or countries.
Note also that the Profit Law holds for the USA, Russia, China, the EU, and all other countries or associations; that is, it does not matter at all whether one has a pure/mixed market economy or private property or free enterprise or any other of the alleged characteristics of capitalism. The Profit Law holds for every national monetary economy and for the world economy as a whole.
In the last decades, overall (= world) profit has been driven by the growth in Asia (= high I), by dissaving, i.e., the growth of private debt mainly in the USA, by the growth of public debt worldwide, and by substantial profit distribution mainly in the USA. Overall profit has been redistributed between nations/regions via export surpluses/deficits.
Roughly speaking, as accumulation (= I) slows down in China/Asia and the developing regions, world-profit goes down, then overall profit distribution goes down, then again profit goes down, then investment goes down, and so on. Rising unemployment and falling wages accelerate the downward spiral (2015). This spiral is deflationary no matter what the Fed or other central banks do.
So Marx got the life formula — accumulate, accumulate! — of the monetary economy almost right. He had, in any case, a better grasp of economic dynamics than standard equilibrium theory. Independent of all these differences between the major sects of economics, the greatest collective scientific embarrassment of all time is: the profit theory is false since Adam Smith.
Egmont Kakarot-Handtke
References
Desai, M. (2008). Profit and Profit Theory. In S. N. Durlauf, and L. E. Blume (Eds.), The New Palgrave Dictionary of Economics Online, 1–11. Palgrave Macmillan, 2nd edition. URL
Kakarot-Handtke, E. (2011). Squaring the Investment Cycle. SSRN Working Paper Series, 1911796: 1–25. URL
Kakarot-Handtke, E. (2014a). Profit for Marxists. SSRN Working Paper Series, 2414301: 1–25. URL
Kakarot-Handtke, E. (2014b). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
#1 For the rising complexity of the Profit Law, see Graphic AXEC143d.
#2 Keynesianism as ultimate profit machine
Related 'Rethinking the Profit Law' and 'The perennial conundrum: profit and distribution' and 'Ricardo, too, got profit theory wrong!' and 'The Common Error of Common Sense: An Essential Rectification of the Accounting Approach' and 'Profit'. For details of the big picture, see cross-references Profit.
***
Graphic AXEC109i
August 27, 2015
The heterodox perspective becomes dominant
Comment on BC on ‘Quick thoughts on the stock market and the economy’
Blog-Reference
I agree with your analysis. My perspective, however, is different. You say financial crises are the nature of capitalism. The Nature-argument implies — intentionally or unintentionally — that things have to be accepted as given, like the law of gravity. This, however, is not true for institutions like the financial sector of any regional/national economy.
We know that orthodox economics is a scientific failure. Therefore, the familiar explanations of how the economy works cannot be taken at face value. Heterodoxy has to do better. This implies that we do not ask: does the stock market work as the efficient market hypothesis assumes? but: do we need a stock market? And if so, how can we make sure that it functions without negative externalities?
As you say, the market economy can only exist as a growing economy. On the other hand, it cannot grow much longer. The core problem is how to achieve the transition to a stationary or even shrinking economy without a self-reinforcing downward spiral. This is the actual situation of China, but under the broader perspective, it is the situation of the world economy.
Neither Walrasian nor Keynesian theory can deal with the situation. My point is: we have a lot of good descriptions of what goes on in the world economy — and yours is one of it — but we still lack a comprehensive theory that includes some ideas for a soft transition of the world economy after expansion has run its course.
China's chance is that it invents the new sustainable economic order and the appropriate institutions. This presupposes rethinking theoretical economics from the ground up. Hence, Chinese economists are by nature heterodox. Why are we still discussing local pseudo-issues like DSGE, rational expectations, Lucas’s mathiness, or McCloskey's silliness? That has become rather boring, to say the least.
Egmont Kakarot-Handtke
Connects to 'Quick rethinking of the stock market'. For the long run perspective, see the working papers 'Mathematical proof of the breakdown of capitalism' and 'Beginning, crises, and end of the money economy'.
Blog-Reference
I agree with your analysis. My perspective, however, is different. You say financial crises are the nature of capitalism. The Nature-argument implies — intentionally or unintentionally — that things have to be accepted as given, like the law of gravity. This, however, is not true for institutions like the financial sector of any regional/national economy.
We know that orthodox economics is a scientific failure. Therefore, the familiar explanations of how the economy works cannot be taken at face value. Heterodoxy has to do better. This implies that we do not ask: does the stock market work as the efficient market hypothesis assumes? but: do we need a stock market? And if so, how can we make sure that it functions without negative externalities?
As you say, the market economy can only exist as a growing economy. On the other hand, it cannot grow much longer. The core problem is how to achieve the transition to a stationary or even shrinking economy without a self-reinforcing downward spiral. This is the actual situation of China, but under the broader perspective, it is the situation of the world economy.
Neither Walrasian nor Keynesian theory can deal with the situation. My point is: we have a lot of good descriptions of what goes on in the world economy — and yours is one of it — but we still lack a comprehensive theory that includes some ideas for a soft transition of the world economy after expansion has run its course.
China's chance is that it invents the new sustainable economic order and the appropriate institutions. This presupposes rethinking theoretical economics from the ground up. Hence, Chinese economists are by nature heterodox. Why are we still discussing local pseudo-issues like DSGE, rational expectations, Lucas’s mathiness, or McCloskey's silliness? That has become rather boring, to say the least.
Egmont Kakarot-Handtke
Connects to 'Quick rethinking of the stock market'. For the long run perspective, see the working papers 'Mathematical proof of the breakdown of capitalism' and 'Beginning, crises, and end of the money economy'.
October 24, 2025
Occasional X: The futile attempt to recycle MMT (CLXVIII)
#Economics#AllYouNeedToKnow
— AXEC (@EgmontHandtke) October 24, 2025
“The rise of MMT in China” (chinabankingnews quoted by Clint Ballinger)
If China were to follow MMT, it would suggest that they do not understand economics/monetary theory. This would mean that they are just as stupid as Western economists.
That…
October 20, 2017
Economists understand neither Capitalism nor Socialism
Comment on Michael Hudson on ‘Socialism, Land and Banking: 2017 Compared to 1917’
Blog-Reference and Blog-Reference
Michael Hudson tells economic history from early Western Capitalism to Russian Socialism to modern China. This account suffers from the fact that he does not know what profit is. In his ignorance, he is not alone. The profit theory is false since Adam Smith. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the foundational economic concept of profit wrong.
Smith treated profit as the income of the factor capital. This was the original blunder. #1 It was followed by Ricardo’s theory of rent #2, Marx’s theory of profit #3, and Keynes’s messed-up macro. #4 As the Palgrave Dictionary summarizes: “A satisfactory theory of profits is still elusive.” (Desai, 2008)
Because Michael Hudson does not understand profit, he does not understand how the monetary economy works. The fact is that profit for the economy as a whole does not at all depend on who owns the means of production. In other words, the Profit Law holds always and everywhere: in capitalist America, in former communist Russia, and in the mixed economy of China. Michael Hudson’s historical account remains on the surface of political economics. Political economics has produced nothing of scientific value in the last 200+ years.
For the proof, macroeconomic profit is here determined for the most elementary case. The pure production-consumption economy is defined with this set of macroeconomic axioms: (A0) The objectively given and most elementary configuration of the economy consists of the household and the business sector, which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
Under the conditions of market-clearing X=O and budget-balancing C=Yw the price is given by P=C/X or P=W/R (1), i.e., the market-clearing price is equal to unit wage costs. This is the most elementary form of the macroeconomic Law of Supply and Demand.#5
From (1) follows that the real wage is equal to productivity, i.e., W/P=R (2). The wage income receivers get the whole product.
Monetary profit for the economy as a whole is defined as Qm≡C−Yw, and monetary saving as Sm≡Yw−C. It always holds Qm≡−Sm, in other words, the business sector’s surplus = profit equals the household sector’s deficit = dissaving, and vice versa, the business sector’s deficit = loss equals the household sector’s surplus = saving. This is the most elementary form of the macroeconomic Profit Law. Under the condition of budget balancing, the total monetary profit is zero. The Profit Law holds for every monetary economy, no matter how it characterizes itself politically.
Overall profit depends solely on deficit spending, that is, the change of private or public debt. It does NOT depend on labor time, or productivity, or monopoly power, or greedy landlords, or rent-seeking bankers. These factors are only relevant to the distribution of overall profit between the firms. Traditional profit theory has been nothing more than a Fallacy of Composition, that is, an illegitimate generalization of what can be observed on the microeconomic level. Economists are failed/fake scientists, and Michael Hudson is no exception.
Egmont Kakarot-Handtke
#1 The Profit Theory is False Since Adam Smith
#2 When Ricardo Saw Profit, He Called It Rent: On the Vice of Parochial Realism
#3 Profit for Marxists
#4 How Keynes got macro wrong and Allais got it right
#5 For the graphical representation, see Graphic AXEC31
Related 'When non-thinkers rethink' and 'Ricardo and the invention of class war'. For details of the big picture, see cross-references Profit.
Blog-Reference and Blog-Reference
Michael Hudson tells economic history from early Western Capitalism to Russian Socialism to modern China. This account suffers from the fact that he does not know what profit is. In his ignorance, he is not alone. The profit theory is false since Adam Smith. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the foundational economic concept of profit wrong.
Smith treated profit as the income of the factor capital. This was the original blunder. #1 It was followed by Ricardo’s theory of rent #2, Marx’s theory of profit #3, and Keynes’s messed-up macro. #4 As the Palgrave Dictionary summarizes: “A satisfactory theory of profits is still elusive.” (Desai, 2008)
Because Michael Hudson does not understand profit, he does not understand how the monetary economy works. The fact is that profit for the economy as a whole does not at all depend on who owns the means of production. In other words, the Profit Law holds always and everywhere: in capitalist America, in former communist Russia, and in the mixed economy of China. Michael Hudson’s historical account remains on the surface of political economics. Political economics has produced nothing of scientific value in the last 200+ years.
For the proof, macroeconomic profit is here determined for the most elementary case. The pure production-consumption economy is defined with this set of macroeconomic axioms: (A0) The objectively given and most elementary configuration of the economy consists of the household and the business sector, which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
Under the conditions of market-clearing X=O and budget-balancing C=Yw the price is given by P=C/X or P=W/R (1), i.e., the market-clearing price is equal to unit wage costs. This is the most elementary form of the macroeconomic Law of Supply and Demand.#5
From (1) follows that the real wage is equal to productivity, i.e., W/P=R (2). The wage income receivers get the whole product.
Monetary profit for the economy as a whole is defined as Qm≡C−Yw, and monetary saving as Sm≡Yw−C. It always holds Qm≡−Sm, in other words, the business sector’s surplus = profit equals the household sector’s deficit = dissaving, and vice versa, the business sector’s deficit = loss equals the household sector’s surplus = saving. This is the most elementary form of the macroeconomic Profit Law. Under the condition of budget balancing, the total monetary profit is zero. The Profit Law holds for every monetary economy, no matter how it characterizes itself politically.
Overall profit depends solely on deficit spending, that is, the change of private or public debt. It does NOT depend on labor time, or productivity, or monopoly power, or greedy landlords, or rent-seeking bankers. These factors are only relevant to the distribution of overall profit between the firms. Traditional profit theory has been nothing more than a Fallacy of Composition, that is, an illegitimate generalization of what can be observed on the microeconomic level. Economists are failed/fake scientists, and Michael Hudson is no exception.
Egmont Kakarot-Handtke
#1 The Profit Theory is False Since Adam Smith
#2 When Ricardo Saw Profit, He Called It Rent: On the Vice of Parochial Realism
#3 Profit for Marxists
#4 How Keynes got macro wrong and Allais got it right
#5 For the graphical representation, see Graphic AXEC31
Related 'When non-thinkers rethink' and 'Ricardo and the invention of class war'. For details of the big picture, see cross-references Profit.
February 13, 2026
Occasional X: Clueless economists / Inflation / Deflation (XLXIV)
“China is in the grip of a DEFLATION. In January, its Producer Price Index (PPI) was NEGATIVE at -1.42%/yr. If that's not bad enough, China's PPI has been negative for 3 STRAIGHT YEARS. DEFLATION = AN ANEMIC MONEY SUPPLY GROWTH STORY.” (Steve Hanke)
— AXEC (@EgmontHandtke) February 13, 2026
Steve Hanke has no clue how… pic.twitter.com/PPtiW03CtB
February 12, 2026
Occasional X: Clueless economists / Inflation / Deflation (XLXII)
“The mystery of China's 15 years of deflation, and how its economy continues to defy Milton Friedman's monetarist doctrine.” (China Banking News)
— AXEC (@EgmontHandtke) February 12, 2026
Actually, there is no mystery, but only provably false legacy economics.
The axiomatically correct macroeconomic Law of Supply and… pic.twitter.com/aOZLhT5mE3
July 18, 2026
Occasional X: The foul spirit of political economics (CCCXVII)
“China owns ~248,000 acres of American farmland. America owns 0 acres in China. Our past leaders sold us out. Time for Trump to take all of our land back for free.” (MAGA Posts)
— AXEC (@EgmontHandtke) July 18, 2026
The axiomatically correct macroeconomic profit formula is as follows: Qm:=Yd+(I−Sm)+(G−T)+(X−M).…
October 19, 2025
Occasional X: The foul spirit of political economics (CLIV)
#Economics#AllYouNeedToKnow
— AXEC (@EgmontHandtke) October 19, 2025
“Folks, China ended its socialist misery and poverty when it introduced some free market principles like private property.” (Michael Arouet)
As an economist, Michael Arouet should know better. Profit/nominal wealth has nothing to do with 'free… pic.twitter.com/MJ8ShcRR8u
For more about China, see AXECquery.
August 26, 2015
Quick rethinking of the stock market
Comment on Dean Baker on ‘Quick thoughts on the stock market and the economy’
Blog-Reference
The monetary order, banking, and the stock market are institutions that evolved historically. Like in biological evolution, the outcome of this messy process is often suboptimal. Institutions can and must be designed, constructed, and maintained. The U.S. is particularly bad at institution-building.
Mortgage financing, for example, is a very old and rather simple business. In Germany, it was institutionalized in 1900 with the Mortgage Banking Act. This law was so well-crafted that it worked with minor modifications until 2005, when it was abolished in an act of institutional suicide. This was when deregulation was the hype of the day, which lasted until Wall Street's meltdown. This financial mega-crash, first of all, showed one thing: what happens when you do mortgage banking the American way.
Remember that the investment banks literally invented and pushed subprime lending and the derivatives superstructure. No classical mortgage banker, neither in Germany nor in France, would ever have touched this type of business. It is important to realize that after 1900, there has never been a real estate boom-bust cycle in Germany. That is quite remarkable when one considers that Japan, the U.S., Britain, Spain, and many other economies have been badly devastated by real estate busts.
Interim results: (i) financial crises are the result of a bad institutional design, (ii) the U.S. is particularly untalented at institution building, (iii) in the international arena, according to a variant of Gresham’s Law, bad institutions crowd good institutions out, (iv) without well-crafted counter-measures the financial superstructure quite naturally deteriorates and becomes a menace to the real economy.
Therefore, the question is not: Does the stock market have an effect on the real economy? But should the stock market be allowed to have such an effect in the first place? Or, even more fundamentally, is a stock market needed at all, or can its useful functions be taken over by a better-designed institution and its negative impacts thereby eliminated?
The stock market wrecked the U.S. economy in the 1930s and in 2008. This is sufficient proof of a dilettantish institutional design of the financial sector, including the central bank. For China, the fundamental question is whether it needs a stock market at all. It should not be impossible for Chinese economists to come up with a superior institutional design that shields the real economy from dysfunctional international shifts between liquidity, stocks, and bonds.
With a plan B in place, China could let equities crash, buy the rest cheap, close the stock market, regain its full financial sovereignty, and live happily thereafter.
Rethinking economic theory is indispensable because neither Walrasians nor Keynesians have found out to this day how the market system works.
Egmont Kakarot-Handtke
Blog-Reference
The monetary order, banking, and the stock market are institutions that evolved historically. Like in biological evolution, the outcome of this messy process is often suboptimal. Institutions can and must be designed, constructed, and maintained. The U.S. is particularly bad at institution-building.
Mortgage financing, for example, is a very old and rather simple business. In Germany, it was institutionalized in 1900 with the Mortgage Banking Act. This law was so well-crafted that it worked with minor modifications until 2005, when it was abolished in an act of institutional suicide. This was when deregulation was the hype of the day, which lasted until Wall Street's meltdown. This financial mega-crash, first of all, showed one thing: what happens when you do mortgage banking the American way.
Remember that the investment banks literally invented and pushed subprime lending and the derivatives superstructure. No classical mortgage banker, neither in Germany nor in France, would ever have touched this type of business. It is important to realize that after 1900, there has never been a real estate boom-bust cycle in Germany. That is quite remarkable when one considers that Japan, the U.S., Britain, Spain, and many other economies have been badly devastated by real estate busts.
Interim results: (i) financial crises are the result of a bad institutional design, (ii) the U.S. is particularly untalented at institution building, (iii) in the international arena, according to a variant of Gresham’s Law, bad institutions crowd good institutions out, (iv) without well-crafted counter-measures the financial superstructure quite naturally deteriorates and becomes a menace to the real economy.
Therefore, the question is not: Does the stock market have an effect on the real economy? But should the stock market be allowed to have such an effect in the first place? Or, even more fundamentally, is a stock market needed at all, or can its useful functions be taken over by a better-designed institution and its negative impacts thereby eliminated?
The stock market wrecked the U.S. economy in the 1930s and in 2008. This is sufficient proof of a dilettantish institutional design of the financial sector, including the central bank. For China, the fundamental question is whether it needs a stock market at all. It should not be impossible for Chinese economists to come up with a superior institutional design that shields the real economy from dysfunctional international shifts between liquidity, stocks, and bonds.
With a plan B in place, China could let equities crash, buy the rest cheap, close the stock market, regain its full financial sovereignty, and live happily thereafter.
Rethinking economic theory is indispensable because neither Walrasians nor Keynesians have found out to this day how the market system works.
Egmont Kakarot-Handtke
August 29, 2018
China does NOT need Keynesianism
Comment on Frank Li on ‘John Maynard Keynes: The Best Economist Since 1899?’
Blog-Reference
Frank Li argues: “Keynesian economics makes a world of sense today. Two main reasons: It is a valid theory, developed on top of the past economic theories, including both Adam Smith’s and Karl Marx’s. It was developed mostly in Britain, a great country with a long history, without an excessive delusion of exceptionalism.”
Let us put some points straight:
• The formal basis of the General Theory is given with “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)#1
• This proposition is conceptually/logically false because Keynes NEVER came to grips with profit.#2 This is self-defeating for an economist.
• Because the foundational economic concepts profit/income/saving are miss-specified, the whole theoretical superstructure of Keynesianism in ALL its variants is false.#3
• Keynes messed up the inexorable Paradigm Shift from microfoundations to macrofoundations.#4
• Keynes was an agenda pusher, NOT a scientist. Keynesian policy guidance has NO valid scientific foundations and in effect enables the self-alimentation of the oligarchy.#5
• Keynes’ policy proposals are nothing more than educated common sense and have NO valid scientific foundations. They are superior to Walrasian/Marshallian economics, though, but only because it is impossible to be worse.
• The extremely unequal distribution of income and financial wealth is the direct result of public deficit spending over the last decades. The macroeconomic Profit Law says Public Deficit = Private Profit.#6
• After-Keynesians have not detected/rectified Keynes’ blunders to this day. Macroeconomics ― profit and employment theory, in particular ― is materially/formally inconsistent.#7
• Keynesianism is scientifically worthless.
Frank Li summarizes: “(1) the free market cannot possibly be all self-functioning and self-stabilizing, and (2) a critical and indispensable ‘balancing’ force is the government, especially in time of crisis.” This is only a great insight to economists who, to recall, are known to be scientifically incompetent since the founding fathers. Keynes stood firmly in this tradition of cargo cult science.#8
China can do better without Smith, Marx, and Keynes.#9
Egmont Kakarot-Handtke
#1 Keynes and the logical brilliance of Bedlam
#2 How Keynes got macro wrong and Allais got it right
#3 Forget Keynes
#4 Finalizing the Keynesian Revolution
#5 Who or what exactly did Keynes save?
#6 Keynes, Lerner, MMT, Trump and exploding profit
#7 Post Keynesianism, science, and universal idiocy
#8 Marshall and the Cambridge School of plain economic gibberish
#9 For details of the big picture see cross-references Keynesianism
Blog-Reference
Frank Li argues: “Keynesian economics makes a world of sense today. Two main reasons: It is a valid theory, developed on top of the past economic theories, including both Adam Smith’s and Karl Marx’s. It was developed mostly in Britain, a great country with a long history, without an excessive delusion of exceptionalism.”
Let us put some points straight:
• The formal basis of the General Theory is given with “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)#1
• This proposition is conceptually/logically false because Keynes NEVER came to grips with profit.#2 This is self-defeating for an economist.
• Because the foundational economic concepts profit/income/saving are miss-specified, the whole theoretical superstructure of Keynesianism in ALL its variants is false.#3
• Keynes messed up the inexorable Paradigm Shift from microfoundations to macrofoundations.#4
• Keynes was an agenda pusher, NOT a scientist. Keynesian policy guidance has NO valid scientific foundations and in effect enables the self-alimentation of the oligarchy.#5
• Keynes’ policy proposals are nothing more than educated common sense and have NO valid scientific foundations. They are superior to Walrasian/Marshallian economics, though, but only because it is impossible to be worse.
• The extremely unequal distribution of income and financial wealth is the direct result of public deficit spending over the last decades. The macroeconomic Profit Law says Public Deficit = Private Profit.#6
• After-Keynesians have not detected/rectified Keynes’ blunders to this day. Macroeconomics ― profit and employment theory, in particular ― is materially/formally inconsistent.#7
• Keynesianism is scientifically worthless.
Frank Li summarizes: “(1) the free market cannot possibly be all self-functioning and self-stabilizing, and (2) a critical and indispensable ‘balancing’ force is the government, especially in time of crisis.” This is only a great insight to economists who, to recall, are known to be scientifically incompetent since the founding fathers. Keynes stood firmly in this tradition of cargo cult science.#8
China can do better without Smith, Marx, and Keynes.#9
Egmont Kakarot-Handtke
#1 Keynes and the logical brilliance of Bedlam
#2 How Keynes got macro wrong and Allais got it right
#3 Forget Keynes
#4 Finalizing the Keynesian Revolution
#5 Who or what exactly did Keynes save?
#6 Keynes, Lerner, MMT, Trump and exploding profit
#7 Post Keynesianism, science, and universal idiocy
#8 Marshall and the Cambridge School of plain economic gibberish
#9 For details of the big picture see cross-references Keynesianism
November 27, 2017
Freedom for fake scientists?
Comment on Barkley Rosser on ‘A Race To Suppress Academic Freedom?’
Blog-Reference
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, the scientific standards of material and formal consistency are observed.
It is important to realize that theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years.
Orthodox economics is clearly defined: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.” (Arrow)
Since the soapbox economists and agenda pushers Adam Smith and Karl Marx, economics is what Feynman called a cargo cult science. In the genuine sciences, peer review is institutionalized as quality control, in economics it has been perverted to an instrument of selection and career promotion of suitable spokespersons and representatives of the prevailing view.
The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL got the foundational concept of the subject matter ― profit ― wrong. What we actually have is the pluralism of provably false theories.
This pluralism is not an indicator of academic freedom and creativity but the very proof of scientific degeneration, incompetence, and confusion. Pluralism is a political concept and relates to matters of belief. Science is about knowledge and the sole criterion is true/false with truth clearly defined as material/formal consistency.
Theoretical economics is scientifically unacceptable from Jevons/Walras/Menger onward to DSGE. So, what remains is political economics.#1 And that is exactly what can be observed from Krugman’s liberal soapbox blather to Keen’s leftist agenda pushing. Not to forget Barkley Rosser, the expert for political unrest in Catalonia, Saudi Arabia, and China who, disqualifying for an economist, does still not know what profit is.#2
Economists have never understood the overriding importance of the separation of science and politics and simply ignore that they have NO political mandate. Strictly speaking, there is no place for political economics in academia. Because of this, the question of whether there is more academic freedom in the USA or in China is pointless. In the last 200+ years, economists have never been more than useful political idiots. Time to make economics a science.
Egmont Kakarot-Handtke
#1 For details see cross-references Political Economics/Stupidity/Corruption
#2 You are fired!
For details of the big picture see cross-references Science.
You say “As for me not knowing what profit is, well, I know that you think the most important thing about profit is to distinguish between retained and distributed earnings, which is an utter accounting triviality.”
In the last instance, it is not an accounting triviality but one of elementary mathematics. And the fact of the matter is that economists are too stupid for simple math.#1 You still don’t get it.#2
All this, though, does not matter much because academic economics is, to begin with, NOT about scientific excellence but about political agenda-pushing.
Traditionally, there are two methods of governance: carrot and stick. In entrenched/ affluent societies the carrot is preferred (= an offer you cannot refuse), while vulnerable post-regime-change societies rely more on the stick (= a threat you cannot ignore). Neither method has much to do with the Humboldtian ideal of unconditional academic freedom.
#1 National Accounting: scientific incompetence or political fraud?
#2 How the intelligent non-economist can refute every economist hands down
You say: “Every accountant and the vast majority of economists are fully aware that retained earnings and distributed earnings are not the same thing, yes, this is trivial arithmetic we all know, even the dumbest of us, …”
No, you simply don’t get it.
Macroeconomics is false since Keynes. Here is the corpus delicti from the General Theory: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
This two-liner is conceptually and logically defective because Keynes did not come to grips with profit: “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Because macroeconomic profit is ill-defined
(i) the whole theoretical superstructure of Keynesianism is provably false,#1
(ii) all I=S and IS-LM models are provably false,#2
(iii) Post-Keynesianism is provably false,#3
(iv) MMT is provably false,#4
(v) all microfounded approaches are a priori false.
Macroeconomic profit is in the Keynesian case given with Qm≡I−Sm. The Profit Law says that the monetary profit of the business sector Qm is equal to the difference between investment expenditures of the business sector I and monetary saving of the household sector Sm (or dissaving −Sm as the case may be).
The correct macroeconomic Profit Law Qm=I−Sm REPLACES the untenable Keynesian I=S.
The scientific incompetence of the representative economist consists of not having realized in 80+ years the foundational error in Keynesian and After-Keynesian macro. No more proof of utter scientific incompetence is needed.
All this elementary stuff comes well before the distinction between profit and distributed profit is introduced as even the dumbest member of orthodox and heterodox academic economics has to admit.
When distributed profit Yd is taken into the picture the Profit Law expands to Qm≡Yd+I−Sm. Only Allais got this equation right,#5. The rest of econ academia is still lost in the proto-scientific woods.
The fact is that economists have not gotten the Profit Law right in the last 200+ years. Academic freedom has been perverted into the privilege of producing cargo cultic trash for the political Circus Maximus and violating the scientific standards of material and formal consistency with impunity.
#1 Keynesians ― terminally stupid or worse?
#2 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#3 Why Post Keynesianism Is Not Yet a Science
#4 Where MMT got macro wrong
#5 How Keynes got macro wrong and Allais got it right
Related Macroeconomics without Keynes
Behind the facade of academic freedom, peer review has long ago been corrupted to gatekeeping. See James Heckman’s Summary Chart on Twitter.
Accordingly, the scientific content of AER and the rest of economic journals has been zero for generations.
This is the track record of economics:
#2 “There are always many different opinions and conventions concerning any one problem or subject-matter …. This shows that they are not all true. For if they conflict, then at best only one of them can be true.” (Popper)
#3 The father of modern economics and his imbecile kids
#4 Yes, economics is a bogus science
#5 For details of the big picture see cross-references Science and cross-references Failed/Fake scientists
#6 The real problem with the economics Nobel
With regard to economics, academic freedom has been clearly defined: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.” (Arrow)
In economics, peer review ensures that only papers that conform to methodological individualism ≈ Walrasianism ≈ Neoclassics ≈ Orthodoxy are accepted. It is plain that the AER as its flagship journal has executed these methodological guidelines faithfully for generations and the rest has followed suit. Unfortunately, methodological individualism is proto-scientific garbage for 150+ years.
What more proof does anybody need that, with regard to economics, academic freedom has been perverted to a license for morons to crowd out scientists.
Your comparison of academic freedom in the USA and China is simply absurd and a deflection of the plain fact that economics is a cargo cult science and that the representative orthodox/heterodox economist is either stupid or corrupt or both.
NOTE on Barkley Rosser’s ‘Are Voters In Nations With A Poland Problem Especially Sophisticated?’ on Jan 16
Over the past weeks, Barkley Rosser, the alleged economist, identified a “Poland Problem” in the USA, Germany, Iran, and Poland. These are obviously journalistic exercises in political economics. Political economics, though, lacks sound scientific foundations since Adam Smith/Karl Marx. For this simple reason, political economics has been vacuous blather or fake news for 200+ years.#1
While the alleged economist Barkley Rosser has been occupied with newspaper reading, the formal impeccable proof has been given that MMT rests on macroeconomic foundations that are false since Keynes’ General Theory.#2 The fact that Keynesianism is axiomatically false obviously escaped Barkley Rosser over the last 50 or so years. So, while he was distracted by the “Poland Problem” he entirely missed that just under his nose developed an MMT problem.#3
#1 The end of political economics(I)
#2 MMT = proto-scientific garbage + deception of the 99-percenters
#3 For the full-spectrum refutation of MMT see cross-references MMT
The mission of economics is to figure out how the economy works. The mission of sociology is to figure out how society works. The objective of science is the true theory with truth defined for 2300+ years as material and formal consistency.
Obviously, economics is a failed science. Obviously, economists are incompetent scientists. What they have done in the last 200+ years is folk sociology, folk psychology, and political agenda-pushing.
Worse, economists are not only incompetent scientists but in direct opposition to plain evidence claim that what they are doing is science: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.
Barkley Rosser, that much is clear, is doing neither economics nor science. Neither does Peter T, Bruce Wilder, and the rest of the self-styled political experts at EconoSpeak.#1
The institutional choice of current economics is to speedily clean the Augean stable or to drown in shit.#2
#1 For details see cross-references The Representative Economist
#2 Time to retire political economists
Twitter Jan 29, 2020 Problems with peer review
Blog-Reference
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, the scientific standards of material and formal consistency are observed.
It is important to realize that theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years.
Orthodox economics is clearly defined: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.” (Arrow)
Since the soapbox economists and agenda pushers Adam Smith and Karl Marx, economics is what Feynman called a cargo cult science. In the genuine sciences, peer review is institutionalized as quality control, in economics it has been perverted to an instrument of selection and career promotion of suitable spokespersons and representatives of the prevailing view.
The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL got the foundational concept of the subject matter ― profit ― wrong. What we actually have is the pluralism of provably false theories.
This pluralism is not an indicator of academic freedom and creativity but the very proof of scientific degeneration, incompetence, and confusion. Pluralism is a political concept and relates to matters of belief. Science is about knowledge and the sole criterion is true/false with truth clearly defined as material/formal consistency.
Theoretical economics is scientifically unacceptable from Jevons/Walras/Menger onward to DSGE. So, what remains is political economics.#1 And that is exactly what can be observed from Krugman’s liberal soapbox blather to Keen’s leftist agenda pushing. Not to forget Barkley Rosser, the expert for political unrest in Catalonia, Saudi Arabia, and China who, disqualifying for an economist, does still not know what profit is.#2
Economists have never understood the overriding importance of the separation of science and politics and simply ignore that they have NO political mandate. Strictly speaking, there is no place for political economics in academia. Because of this, the question of whether there is more academic freedom in the USA or in China is pointless. In the last 200+ years, economists have never been more than useful political idiots. Time to make economics a science.
Egmont Kakarot-Handtke
#1 For details see cross-references Political Economics/Stupidity/Corruption
#2 You are fired!
For details of the big picture see cross-references Science.
***
REPLY to Barkley Rosser on Nov 28You say “As for me not knowing what profit is, well, I know that you think the most important thing about profit is to distinguish between retained and distributed earnings, which is an utter accounting triviality.”
In the last instance, it is not an accounting triviality but one of elementary mathematics. And the fact of the matter is that economists are too stupid for simple math.#1 You still don’t get it.#2
All this, though, does not matter much because academic economics is, to begin with, NOT about scientific excellence but about political agenda-pushing.
Traditionally, there are two methods of governance: carrot and stick. In entrenched/ affluent societies the carrot is preferred (= an offer you cannot refuse), while vulnerable post-regime-change societies rely more on the stick (= a threat you cannot ignore). Neither method has much to do with the Humboldtian ideal of unconditional academic freedom.
#1 National Accounting: scientific incompetence or political fraud?
#2 How the intelligent non-economist can refute every economist hands down
***
REPLY to Barkley Rosser on Nov 29You say: “Every accountant and the vast majority of economists are fully aware that retained earnings and distributed earnings are not the same thing, yes, this is trivial arithmetic we all know, even the dumbest of us, …”
No, you simply don’t get it.
Macroeconomics is false since Keynes. Here is the corpus delicti from the General Theory: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
This two-liner is conceptually and logically defective because Keynes did not come to grips with profit: “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Because macroeconomic profit is ill-defined
(i) the whole theoretical superstructure of Keynesianism is provably false,#1
(ii) all I=S and IS-LM models are provably false,#2
(iii) Post-Keynesianism is provably false,#3
(iv) MMT is provably false,#4
(v) all microfounded approaches are a priori false.
Macroeconomic profit is in the Keynesian case given with Qm≡I−Sm. The Profit Law says that the monetary profit of the business sector Qm is equal to the difference between investment expenditures of the business sector I and monetary saving of the household sector Sm (or dissaving −Sm as the case may be).
The correct macroeconomic Profit Law Qm=I−Sm REPLACES the untenable Keynesian I=S.
The scientific incompetence of the representative economist consists of not having realized in 80+ years the foundational error in Keynesian and After-Keynesian macro. No more proof of utter scientific incompetence is needed.
All this elementary stuff comes well before the distinction between profit and distributed profit is introduced as even the dumbest member of orthodox and heterodox academic economics has to admit.
When distributed profit Yd is taken into the picture the Profit Law expands to Qm≡Yd+I−Sm. Only Allais got this equation right,#5. The rest of econ academia is still lost in the proto-scientific woods.
The fact is that economists have not gotten the Profit Law right in the last 200+ years. Academic freedom has been perverted into the privilege of producing cargo cultic trash for the political Circus Maximus and violating the scientific standards of material and formal consistency with impunity.
#1 Keynesians ― terminally stupid or worse?
#2 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#3 Why Post Keynesianism Is Not Yet a Science
#4 Where MMT got macro wrong
#5 How Keynes got macro wrong and Allais got it right
Related Macroeconomics without Keynes
***
ADDENDUM on Nov 30Behind the facade of academic freedom, peer review has long ago been corrupted to gatekeeping. See James Heckman’s Summary Chart on Twitter.
 |
| Source: Twitter, James Heckman |
Accordingly, the scientific content of AER and the rest of economic journals has been zero for generations.
***
REPLY to Barkley Rosser on Dec 1This is the track record of economics:
- profit theory, false for 200+ years,
- Walrasian microfoundations (including equilibrium), false for 150+ years,
- Keynesian macrofoundations (including I=S, IS-LM), false for 80+ years,
- Walrasianism, Keynesianism, Marxianism, Austrianism = mutually contradictory, axiomatically false, materially/formally inconsistent,#1
- unresolved pluralism of provably false theories,#2
- scientific content of economic journals = zero,
- scientific content of economic textbooks = zero,#3
- economics is what Feynman called a cargo cult science: “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.”,#4
- what is entirely missing among economists is scientific competence,#5
- economics never rose above the proto-scientific level.#6
#2 “There are always many different opinions and conventions concerning any one problem or subject-matter …. This shows that they are not all true. For if they conflict, then at best only one of them can be true.” (Popper)
#3 The father of modern economics and his imbecile kids
#4 Yes, economics is a bogus science
#5 For details of the big picture see cross-references Science and cross-references Failed/Fake scientists
#6 The real problem with the economics Nobel
***
REPLY to Barkley Rosser on Dec 2With regard to economics, academic freedom has been clearly defined: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.” (Arrow)
In economics, peer review ensures that only papers that conform to methodological individualism ≈ Walrasianism ≈ Neoclassics ≈ Orthodoxy are accepted. It is plain that the AER as its flagship journal has executed these methodological guidelines faithfully for generations and the rest has followed suit. Unfortunately, methodological individualism is proto-scientific garbage for 150+ years.
What more proof does anybody need that, with regard to economics, academic freedom has been perverted to a license for morons to crowd out scientists.
Your comparison of academic freedom in the USA and China is simply absurd and a deflection of the plain fact that economics is a cargo cult science and that the representative orthodox/heterodox economist is either stupid or corrupt or both.
***
Over the past weeks, Barkley Rosser, the alleged economist, identified a “Poland Problem” in the USA, Germany, Iran, and Poland. These are obviously journalistic exercises in political economics. Political economics, though, lacks sound scientific foundations since Adam Smith/Karl Marx. For this simple reason, political economics has been vacuous blather or fake news for 200+ years.#1
While the alleged economist Barkley Rosser has been occupied with newspaper reading, the formal impeccable proof has been given that MMT rests on macroeconomic foundations that are false since Keynes’ General Theory.#2 The fact that Keynesianism is axiomatically false obviously escaped Barkley Rosser over the last 50 or so years. So, while he was distracted by the “Poland Problem” he entirely missed that just under his nose developed an MMT problem.#3
#1 The end of political economics(I)
#2 MMT = proto-scientific garbage + deception of the 99-percenters
#3 For the full-spectrum refutation of MMT see cross-references MMT
***
REPLY to Barkley Rosser on Jan 23The mission of economics is to figure out how the economy works. The mission of sociology is to figure out how society works. The objective of science is the true theory with truth defined for 2300+ years as material and formal consistency.
Obviously, economics is a failed science. Obviously, economists are incompetent scientists. What they have done in the last 200+ years is folk sociology, folk psychology, and political agenda-pushing.
Worse, economists are not only incompetent scientists but in direct opposition to plain evidence claim that what they are doing is science: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.
Barkley Rosser, that much is clear, is doing neither economics nor science. Neither does Peter T, Bruce Wilder, and the rest of the self-styled political experts at EconoSpeak.#1
The institutional choice of current economics is to speedily clean the Augean stable or to drown in shit.#2
#1 For details see cross-references The Representative Economist
#2 Time to retire political economists
***
 |
| Source: Twitter |
February 15, 2019
Who is really a scientist?
Comment on Barkley Rosser on ‘Who Is Really A Socialist?’
Blog-Reference
Forget the whole Capitalism/Socialism thing. Neither left-wing nor right-wing economists know how the economy works.
Because economists have to this day NO scientifically valid Profit-, Money-, Distribution- or Employment Theory, economic policy guidance from left-wing to right-wing has NEVER been more than brain-dead agenda pushing.
Economics is a failed science. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/ formally inconsistent, and all got the foundational concept of the subject matter ― profit ― wrong.
As a result, since Adam Smith/Karl Marx, economic policy guidance has NEVER had sound scientific foundations. #1 This, of course, holds also for Marxism and its derivatives.
Marxians are scientifically incompetent just like non-Marxians, and all together are only employable as clowns and useful idiots in the political Circus Maximus.
Forget the whole Capitalism/Socialism thing. Economists’ contributions to the development of the Good Society were just as helpful as those of Flat-Earthers. #6 All real progress in the last 200+ years has come from genuine scientists, not from political soapbox blatherers.
Egmont Kakarot-Handtke
#1 Karl Marx, fake scientist
#2 Profit for Marxists
#3 Capitalism, poverty, exploitation, and cross-over exploitation
#4 If we only had classes
#5 Economists simply don’t get it
#6 Econogenics in action
The so-called Russian Revolution was neither Russian nor a Revolution. It was an ordinary coup d’état engineered by foreign powers. It is well known that Lenin was sent with some starting capital in a sealed train from Zurich to Sweden/Russia courtesy of the Generalstab. The plan worked fine until the Peace of Brest-Litovsk. #1
All this had NOTHING AT ALL to do with Marx’s economic theory. This theory is proto-scientific garbage. However, it provides a justification for taking over the “commanding heights” of the state. Clearly, Marxism was used by Lenin as a pretext, much like religion was used in the old days as a pretext for conquest.
Since Smith/Marx, the whole Capitalism/Socialism debate has NOTHING to do with science, that is, with the materially/formally consistent theory about how the economy works, but with brain-dead agenda pushing.
So, your question Who is really a Socialist? has as much economic/scientific content as Who murdered Mr. Khashoggi?
#1 "The Treaty of Brest-Litovsk was a peace treaty signed on March 3, 1918, between the new Bolshevik government of Russia and the Central Powers (German Empire, Austria-Hungary, Bulgaria, and the Ottoman Empire), that ended Russia’s participation in World War I.” (Wikipedia)
You say: “… most economists think it is a big deal whether or not an economy is run as a command socialist system or a market capitalist system. They tend to behave very differently in well known ways.”
Capitalism and Socialism are (i) political belief systems (ii) economic theories. As political belief systems, they are on the same level as religious belief systems; that is, they are literary fabrications and storytelling or, as Marx called it, ideologies. The subject matter of ideologies is NONENTITIES (God, paradise, classes, supply-demand-equilibrium, world spirit, etcetera), but although ideologies have no reality content, they are a big deal for most people.
Ideologies are the subject matter of Psychology, Sociology, Political Science, History, etc. The well-known problem with History is that it is, for the greater part, literary fiction.
Economics, on the other hand, is a systems science and deals with how the actual economy works. Science materializes itself as true theory, with truth well-defined as material and formal consistency. Theory is different from storytelling. Theory has ninety-nine percent reality content, storytelling one percent.
Capitalism and Socialism are allegedly underpinned by true theory. This, though, is a bad joke. General Equilibrium Theory and Marxianism is proto-scientific garbage. So, Capitalism and Socialism are ultimately vacuous belief systems.
The fact of the matter is that the monetary economy can be described by economic laws, the Profit Law, for example. It is given as Q≡Yd+(X−M)+(G−T)+(I−S), and it holds for the USA, Russia, and China, and it is absolutely independent of the ownership of the firms or from the self-identification as capitalistic or socialistic, or from the agenda pushers that occupy the political commanding heights.
For the past 200+ years, economists have been so occupied with political propaganda and agenda-pushing that they have had no time for genuine scientific work. This is why Walrasianism, Keynesianism, Marxianism, and Austrianism are mutually contradictory, axiomatically false, and materially/formally inconsistent. Economics is a failed science; economists are not scientists but storytellers and useful political idiots.
Dear idiots, Marx got profit and exploitation wrong
Comment on Peter May on ‘A communist manifesto for money?’
Peter May recaps: “Marx is saying that money ― a monetary production economy ― is the basis for capitalism since capitalists use money to produce goods for sale for more money ― investment is for return, that is, profit. The profit comes from the wage being less than the market price of commodities produced by wage labor. The end-in-view is not to provide a rationale for abolishing money but rather for terminating the extraction of economic rent in the form of ‘surplus value,’ profit accruing from unpaid labor time.”
Marx’s definition of profit is ultimately based on the Labour Theory of Value, which does not relate to the economy as a whole. #1 But Marx also applied macroeconomic reasoning: “How can they continually draw 600 p. st. out of circulation, when they continually throw only 500 p. st. into it? From nothing comes nothing. The capitalist class as a whole cannot draw out of circulation what was not previously in it.”
This, indeed, is the crux of Profit Theory. To come to the point, Marx got the answer wrong. #2 Here is the short proof. #3
(i) 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.
(ii) The elementary production-consumption economy is defined by three macroeconomic 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.
(iii) The focus is here on the nominal/monetary balances. For the time being, real balances are excluded, i.e., X=O.
(iv) The monetary profit of the business sector is defined as Q≡C−Yw,
(v) The monetary saving of the household sector is defined as S≡Yw−C.
(vi) Ergo Q≡−S.
The balances add up to zero. The counterpart of household sector saving S is business sector loss −Q. The counterpart of household sector dissaving −S is business sector profit Q.
For a start, the household sector’s budget is balanced, i.e., C=Yw. From this follows that macroeconomic profit is zero. The market-clearing price is given by P=W/R, and from this follows W/P=R, i.e., the real wage is equal to the productivity. The workers get the whole product.
Now, the owner of a single macroeconomics firm can do what he wants, i.e., lengthen the labor time or cut wages, nothing happens to profit and the real wage. #4 In Marx’s impeccable logic: “From nothing comes nothing. The capitalist class cannot draw more out of circulation than they throw into it.” They throw Yw in and get C out, and because of C=Yw macroeconomic profit is zero.
The business sector can only get more out of the circulation if the household sector throws more in, that is, if the household sector deficit-spends/dissaves. This is what the most elementary version of the Profit Law says, i.e., Q≡−S. The logical minimum condition of deficit spending is a banking system that lends money to households.
So, profit does NOT come from exploitation but, in the most elementary case, from the growth of the household sector’s debt. And this, in turn, means that Capitalism does not end with a revolution of the exploited workers, but as soon as the growth of private and public debt ends. #5
#1 Basics of Value Theory
#2 Profit for Marxists
#3 Profit Theory in less than 5 minutes
#4 Capitalism, poverty, exploitation, and cross-over exploitation
#5 MMTers make capitalism work
REPLY to Barkley Rosser, Calgacus on Feb 23 and Blog-Reference MNE
For monetary economies like the USA, USEu, Russia, China, the macroeconomic Profit Law reads Q≡Yd+(X−M)+(G−T)+(I−S), and it holds independently of whether these countries describe themselves as capitalistic/socialistic/mixed and independently of how the commanding heights of the economy are staffed.
The fact of the matter is that in most countries, the deficit-spending of the government has become the major source of macroeconomic profit. This means that so-called free market economies like the USA are on full life support of the state.
The all-decisive political decision in all monetary economies is between breakdown now or growing public/private debt with breakdown later, and NOT between private or public ownership.
The composition of the government’s budget is of secondary importance. The economic minimum condition for the continuation of the political status quo is that the deficit is sufficient to produce an overall profit Q given the other sectoral balances. This is the implicit rationale of full employment policy since Keynes. #1, #2 Implicit because it is obvious that politicians/economists do not really understand how the monetary economy works. In the old days, deficit spending was justified by the urgency of defense against hostile neighbors/Communism/Terrorism; now it is justified by the urgency of the avoidance of human extinction.
For the survival of the so-called free-market economy, the allocation of the government’s budget between military and environmental/social spending is a matter of indifference. Politically, though, a Green New Deal sells better than a Space Force or tax reductions for the rich. Thus, the allocation problem boils down to a marketing pitch between the “good” environmental/social guys and the “bad” military/Oligarchy guys.
Independent of the allocation of the government’s budget, it is WeThePeople who are going to pay for it in real terms through either open or stealth taxation. Stealth taxation via the price mechanism is the Invisible-Hand outcome of deficit-spending/money-creation.
No matter under what cloak deficit-spending/money-creation appears, it is NEVER for the benefit of WeThePeople as a whole but ― because of the Profit Law, Public Deficit = Private Profit ― a free lunch for the Oligarchy. The macroeconomic Laws apply to all monetary economies, no matter what stupid/corrupt economists blather about Capitalism/Socialism.
#1 Keynes, Lerner, MMT, Trump and exploding profit
#2 MMTers make Capitalism work
You say: “… during the final years of the Bill Cllinton presidency at the end of the last century, the US government was rnning budget surpluses. But, guess what? Businesses were also enjoying high profits …”
You cannot even read a simple equation. The macroeconomic Profit Law is given by Q=Yd+(X−M)+(G−T)+(I−S), and it boils down to Public Deficit (G>T) = Private Profit Q if the other factors are taken out of the picture for a moment. #1
From the full-length equation follows that a government budget surplus is perfectly compatible with a high macroeconomic profit, depending on the other components of the equation.
A refutation requires the test of the full-length equation. This is obvious to any remotely intelligent economics freshman.
How can you talk about capitalism and socialism without any idea about what profit is and how the monetary economy works?
#1 Label Graphic, Profit Law
Your simple-minded distinction between Capitalism and Socialism is long outdated. Since the 1960s, the sub-sectors of the economy where the commanding heights are traditionally staffed with criminal/corrupt/unethical actors (weapons, drugs, money laundering, tax evasion, human trafficking, land theft, waste dumping, etc.) have grown above-average. So, an updated classification of socio-economic systems should at least include Capitalism, Gangsterism, and Socialism.
My idiosyncratic macroeconomic profit Law Q≡Yd+(X−M)+(G−T)+(I−S) holds for Capitalism, Gangsterism, and Socialism just like Newton’s idiosyncratic Law of Gravity. Only the DISTRIBUTION of overall profit Q between the firms that compose the business sector is different in different national economies.
To the extent that firms of the legal economy are ultimately controlled by the mob, which is NOT visible to the naked eye, the superficial distinction between Capitalism and Socialism becomes progressively meaningless.
Lenin’s takeover of power is better characterized as the implementation of mob rule than socialism. I leave it to your historical erudition to figure out whether something similar has happened to countries that identify themselves as capitalistic or socialistic.
NOTE on Barkley Rosser’s ‘Is Russia Becoming A Neo-Socialist NEP Economy?’ on Mar 16
The distinction between Capitalism/Socialism is obsolete. The updated distinction is Capitalism/Gangsterism/Socialism.
What does the Neo-Capitalist economy look like? The answer is not in the supply-demand-equilibrium textbooks but on the Internet: “When we look at western countries, especially the USA, we see what some call ‘crony capitalism’ with absolutely fantastic levels of corruptions, huge mega-corporations in control of entire segments of the economy, exports imposed by sanctions and threat of sanctions rather than competitive advantages, feudal labor laws, a ruthless imperialist/colonial policy of systematically robbing those who dare to live above resources the Empire needs or wants.” #1
Accordingly, the commanding heights of the economy are no longer occupied by capitalists/entrepreneurs but by actors/entertainers like Elon Musk.
Whether there is long-range central planning in Neo-Capitalism is unclear. However, the fact that the crucial qualification of presidents like Reagan or Trump or business leaders like Musk is media-suitability lets one guess that at least the casting is centralized in Hollywood.
Unfortunately, Barkley Rosser is stuck with the NEP in interwar Russia and somehow missed that there has been a NEP in the United States in the 1960s. As a result, the economy no longer resembles the classical description of free-market Capitalism.
The economist as a scientist cannot say anything about the political system, but he can say something about the economic system. The most important insight is that all monetary economies are governed by the same economic laws. For example, the macroeconomic Profit Law, i.e., Q≡Yd+(I−S)+(G−T)+(X−M) holds independently of whether an economy is capitalist or socialist. More specifically, this Law holds for the USA, Russia, China, the EU, etcetera.
The Law boils down to Q=(G−T), i.e., the profit of the business sector is equal to the deficit of the public sector.
For the USA, this means (i) the profitability of the so-called free market economy is maintained by the state’s permanent deficit spending, (ii) financial wealth grows in lockstep with public debt, and (iii) the positive performance of the stock market is maintained by the operations of the Central Bank.
In sum, the wealth creation of the so-called free market economy depends on the joint operations of the Treasury/Central Bank. The state produces macroeconomic profit, and this money is, in turn, partly used to control the state. The power-fighting between the different factions (military, CIA, FBI, organized crime, media, agriculture/industry/ banking, states, churches/religious groups/sects, political parties, domestic/foreign lobbies, wealthy individuals, etc.) is NOT the subject matter of economics.
It is characteristic of economists from Paul Krugman to Barkley Rosser that they blather a lot about the ongoing political infighting but have no idea how the monetary economy works. With these unqualified personages, it is no wonder that economics is to this day a failed science.
You say: “The US government ran a budget surplus during the last several years of the Clinton presidency, but, guess what? Corporate profits were at a record high.”
Have you never heard of vector addition?
The macroeconomic Profit Law, i.e., Q≡Yd+(I−S)+(G−T)+(X−M), consists of 4 vectors. The government vector reads Qg=(G−T), i.e., the deficit of the public sector adds to the profit of the business sector, and the surplus of the public sector adds to the loss of the business sector; in short, Public Deficit = Private Profit. The negative gov vector, though, can be overcompensated by the other vectors, such that the vector sum is positive.
Your Clinton-era example is proof that you cannot even read a simple equation.
You talk about Capitalism/Socialism and do not understand the Profit Law. What about doing some scientific homework first?
You say: “Your comment shows that you do not know what a fact is, much less broader empirical data.”
The macroeconomic Profit Law consists of measurable variables and is testable in the USA, Russia, China, the EU, etc., with the precision of two decimal places. That makes it scientifically superior to your political blather about interwar Russia.
You say: “Yes, the variables are measurable, and they are measured all the time, and your claims about what those measurements should show are blatantly false. Corporate profits were very high in the US in the late 1990s, at the same time that the budget was running a surplus. Since you claim that corporate profits equal the budget deficit, you are wrong. Period.”
I said: “… the macroeconomic Profit Law, i.e., Q≡Yd+(I−S)+(G−T)+(X−M), holds independently of whether an economy is capitalist or socialist. ... The Law boils down to Q=(G−T), i.e., the profit of the business sector is equal to the deficit of the public sector. For the USA, this means (i) the profitability of the so-called free-market economy is maintained by the state’s permanent deficit spending, …”
For the record: you are wrong, I am right.
Blog-Reference
Forget the whole Capitalism/Socialism thing. Neither left-wing nor right-wing economists know how the economy works.
Because economists have to this day NO scientifically valid Profit-, Money-, Distribution- or Employment Theory, economic policy guidance from left-wing to right-wing has NEVER been more than brain-dead agenda pushing.
Economics is a failed science. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/ formally inconsistent, and all got the foundational concept of the subject matter ― profit ― wrong.
As a result, since Adam Smith/Karl Marx, economic policy guidance has NEVER had sound scientific foundations. #1 This, of course, holds also for Marxism and its derivatives.
- Marx’s profit theory is provably false. #2
- As a consequence, the concepts of exploitation and classes are false.
- Marx lacks the concept of cross-over exploitation. #3, #4
- Because the foundational concepts are false, Marx’s whole analytical superstructure is false.
- Because the theory is defective, Marxian economic policy guidance was bound to fail from the very beginning.
- After-Marxians have not spotted Marx’s foundational blunder to this day. #5
Marxians are scientifically incompetent just like non-Marxians, and all together are only employable as clowns and useful idiots in the political Circus Maximus.
Forget the whole Capitalism/Socialism thing. Economists’ contributions to the development of the Good Society were just as helpful as those of Flat-Earthers. #6 All real progress in the last 200+ years has come from genuine scientists, not from political soapbox blatherers.
Egmont Kakarot-Handtke
#1 Karl Marx, fake scientist
#2 Profit for Marxists
#3 Capitalism, poverty, exploitation, and cross-over exploitation
#4 If we only had classes
#5 Economists simply don’t get it
#6 Econogenics in action
For the concept of cross-over exploitation, see AXECquery.
***
REPLY to Barkley Rosser on Feb 19The so-called Russian Revolution was neither Russian nor a Revolution. It was an ordinary coup d’état engineered by foreign powers. It is well known that Lenin was sent with some starting capital in a sealed train from Zurich to Sweden/Russia courtesy of the Generalstab. The plan worked fine until the Peace of Brest-Litovsk. #1
All this had NOTHING AT ALL to do with Marx’s economic theory. This theory is proto-scientific garbage. However, it provides a justification for taking over the “commanding heights” of the state. Clearly, Marxism was used by Lenin as a pretext, much like religion was used in the old days as a pretext for conquest.
Since Smith/Marx, the whole Capitalism/Socialism debate has NOTHING to do with science, that is, with the materially/formally consistent theory about how the economy works, but with brain-dead agenda pushing.
So, your question Who is really a Socialist? has as much economic/scientific content as Who murdered Mr. Khashoggi?
#1 "The Treaty of Brest-Litovsk was a peace treaty signed on March 3, 1918, between the new Bolshevik government of Russia and the Central Powers (German Empire, Austria-Hungary, Bulgaria, and the Ottoman Empire), that ended Russia’s participation in World War I.” (Wikipedia)
***
REPLY to Barkley Rosser on Feb 20You say: “… most economists think it is a big deal whether or not an economy is run as a command socialist system or a market capitalist system. They tend to behave very differently in well known ways.”
Capitalism and Socialism are (i) political belief systems (ii) economic theories. As political belief systems, they are on the same level as religious belief systems; that is, they are literary fabrications and storytelling or, as Marx called it, ideologies. The subject matter of ideologies is NONENTITIES (God, paradise, classes, supply-demand-equilibrium, world spirit, etcetera), but although ideologies have no reality content, they are a big deal for most people.
Ideologies are the subject matter of Psychology, Sociology, Political Science, History, etc. The well-known problem with History is that it is, for the greater part, literary fiction.
Economics, on the other hand, is a systems science and deals with how the actual economy works. Science materializes itself as true theory, with truth well-defined as material and formal consistency. Theory is different from storytelling. Theory has ninety-nine percent reality content, storytelling one percent.
Capitalism and Socialism are allegedly underpinned by true theory. This, though, is a bad joke. General Equilibrium Theory and Marxianism is proto-scientific garbage. So, Capitalism and Socialism are ultimately vacuous belief systems.
The fact of the matter is that the monetary economy can be described by economic laws, the Profit Law, for example. It is given as Q≡Yd+(X−M)+(G−T)+(I−S), and it holds for the USA, Russia, and China, and it is absolutely independent of the ownership of the firms or from the self-identification as capitalistic or socialistic, or from the agenda pushers that occupy the political commanding heights.
For the past 200+ years, economists have been so occupied with political propaganda and agenda-pushing that they have had no time for genuine scientific work. This is why Walrasianism, Keynesianism, Marxianism, and Austrianism are mutually contradictory, axiomatically false, and materially/formally inconsistent. Economics is a failed science; economists are not scientists but storytellers and useful political idiots.
***
REPLY to Barkley Rosser on Feb 21, Cross-postingDear idiots, Marx got profit and exploitation wrong
Comment on Peter May on ‘A communist manifesto for money?’
Peter May recaps: “Marx is saying that money ― a monetary production economy ― is the basis for capitalism since capitalists use money to produce goods for sale for more money ― investment is for return, that is, profit. The profit comes from the wage being less than the market price of commodities produced by wage labor. The end-in-view is not to provide a rationale for abolishing money but rather for terminating the extraction of economic rent in the form of ‘surplus value,’ profit accruing from unpaid labor time.”
Marx’s definition of profit is ultimately based on the Labour Theory of Value, which does not relate to the economy as a whole. #1 But Marx also applied macroeconomic reasoning: “How can they continually draw 600 p. st. out of circulation, when they continually throw only 500 p. st. into it? From nothing comes nothing. The capitalist class as a whole cannot draw out of circulation what was not previously in it.”
This, indeed, is the crux of Profit Theory. To come to the point, Marx got the answer wrong. #2 Here is the short proof. #3
(i) 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.
(ii) The elementary production-consumption economy is defined by three macroeconomic 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.
(iii) The focus is here on the nominal/monetary balances. For the time being, real balances are excluded, i.e., X=O.
(iv) The monetary profit of the business sector is defined as Q≡C−Yw,
(v) The monetary saving of the household sector is defined as S≡Yw−C.
(vi) Ergo Q≡−S.
The balances add up to zero. The counterpart of household sector saving S is business sector loss −Q. The counterpart of household sector dissaving −S is business sector profit Q.
For a start, the household sector’s budget is balanced, i.e., C=Yw. From this follows that macroeconomic profit is zero. The market-clearing price is given by P=W/R, and from this follows W/P=R, i.e., the real wage is equal to the productivity. The workers get the whole product.
Now, the owner of a single macroeconomics firm can do what he wants, i.e., lengthen the labor time or cut wages, nothing happens to profit and the real wage. #4 In Marx’s impeccable logic: “From nothing comes nothing. The capitalist class cannot draw more out of circulation than they throw into it.” They throw Yw in and get C out, and because of C=Yw macroeconomic profit is zero.
The business sector can only get more out of the circulation if the household sector throws more in, that is, if the household sector deficit-spends/dissaves. This is what the most elementary version of the Profit Law says, i.e., Q≡−S. The logical minimum condition of deficit spending is a banking system that lends money to households.
So, profit does NOT come from exploitation but, in the most elementary case, from the growth of the household sector’s debt. And this, in turn, means that Capitalism does not end with a revolution of the exploited workers, but as soon as the growth of private and public debt ends. #5
#1 Basics of Value Theory
#2 Profit for Marxists
#3 Profit Theory in less than 5 minutes
#4 Capitalism, poverty, exploitation, and cross-over exploitation
#5 MMTers make capitalism work
***
For monetary economies like the USA, USEu, Russia, China, the macroeconomic Profit Law reads Q≡Yd+(X−M)+(G−T)+(I−S), and it holds independently of whether these countries describe themselves as capitalistic/socialistic/mixed and independently of how the commanding heights of the economy are staffed.
The fact of the matter is that in most countries, the deficit-spending of the government has become the major source of macroeconomic profit. This means that so-called free market economies like the USA are on full life support of the state.
The all-decisive political decision in all monetary economies is between breakdown now or growing public/private debt with breakdown later, and NOT between private or public ownership.
The composition of the government’s budget is of secondary importance. The economic minimum condition for the continuation of the political status quo is that the deficit is sufficient to produce an overall profit Q given the other sectoral balances. This is the implicit rationale of full employment policy since Keynes. #1, #2 Implicit because it is obvious that politicians/economists do not really understand how the monetary economy works. In the old days, deficit spending was justified by the urgency of defense against hostile neighbors/Communism/Terrorism; now it is justified by the urgency of the avoidance of human extinction.
For the survival of the so-called free-market economy, the allocation of the government’s budget between military and environmental/social spending is a matter of indifference. Politically, though, a Green New Deal sells better than a Space Force or tax reductions for the rich. Thus, the allocation problem boils down to a marketing pitch between the “good” environmental/social guys and the “bad” military/Oligarchy guys.
Independent of the allocation of the government’s budget, it is WeThePeople who are going to pay for it in real terms through either open or stealth taxation. Stealth taxation via the price mechanism is the Invisible-Hand outcome of deficit-spending/money-creation.
No matter under what cloak deficit-spending/money-creation appears, it is NEVER for the benefit of WeThePeople as a whole but ― because of the Profit Law, Public Deficit = Private Profit ― a free lunch for the Oligarchy. The macroeconomic Laws apply to all monetary economies, no matter what stupid/corrupt economists blather about Capitalism/Socialism.
#1 Keynes, Lerner, MMT, Trump and exploding profit
#2 MMTers make Capitalism work
***
REPLY to Barkley Rosser on Feb 24You say: “… during the final years of the Bill Cllinton presidency at the end of the last century, the US government was rnning budget surpluses. But, guess what? Businesses were also enjoying high profits …”
You cannot even read a simple equation. The macroeconomic Profit Law is given by Q=Yd+(X−M)+(G−T)+(I−S), and it boils down to Public Deficit (G>T) = Private Profit Q if the other factors are taken out of the picture for a moment. #1
From the full-length equation follows that a government budget surplus is perfectly compatible with a high macroeconomic profit, depending on the other components of the equation.
A refutation requires the test of the full-length equation. This is obvious to any remotely intelligent economics freshman.
How can you talk about capitalism and socialism without any idea about what profit is and how the monetary economy works?
#1 Label Graphic, Profit Law
***
REPLY to Barkley Rosser on Feb 25Your simple-minded distinction between Capitalism and Socialism is long outdated. Since the 1960s, the sub-sectors of the economy where the commanding heights are traditionally staffed with criminal/corrupt/unethical actors (weapons, drugs, money laundering, tax evasion, human trafficking, land theft, waste dumping, etc.) have grown above-average. So, an updated classification of socio-economic systems should at least include Capitalism, Gangsterism, and Socialism.
***
REPLY Barkley Rosser on Feb 26My idiosyncratic macroeconomic profit Law Q≡Yd+(X−M)+(G−T)+(I−S) holds for Capitalism, Gangsterism, and Socialism just like Newton’s idiosyncratic Law of Gravity. Only the DISTRIBUTION of overall profit Q between the firms that compose the business sector is different in different national economies.
To the extent that firms of the legal economy are ultimately controlled by the mob, which is NOT visible to the naked eye, the superficial distinction between Capitalism and Socialism becomes progressively meaningless.
Lenin’s takeover of power is better characterized as the implementation of mob rule than socialism. I leave it to your historical erudition to figure out whether something similar has happened to countries that identify themselves as capitalistic or socialistic.
***
The distinction between Capitalism/Socialism is obsolete. The updated distinction is Capitalism/Gangsterism/Socialism.
What does the Neo-Capitalist economy look like? The answer is not in the supply-demand-equilibrium textbooks but on the Internet: “When we look at western countries, especially the USA, we see what some call ‘crony capitalism’ with absolutely fantastic levels of corruptions, huge mega-corporations in control of entire segments of the economy, exports imposed by sanctions and threat of sanctions rather than competitive advantages, feudal labor laws, a ruthless imperialist/colonial policy of systematically robbing those who dare to live above resources the Empire needs or wants.” #1
Accordingly, the commanding heights of the economy are no longer occupied by capitalists/entrepreneurs but by actors/entertainers like Elon Musk.
Whether there is long-range central planning in Neo-Capitalism is unclear. However, the fact that the crucial qualification of presidents like Reagan or Trump or business leaders like Musk is media-suitability lets one guess that at least the casting is centralized in Hollywood.
Unfortunately, Barkley Rosser is stuck with the NEP in interwar Russia and somehow missed that there has been a NEP in the United States in the 1960s. As a result, the economy no longer resembles the classical description of free-market Capitalism.
***
REPLY to Barkley Rosser on Mar 17The economist as a scientist cannot say anything about the political system, but he can say something about the economic system. The most important insight is that all monetary economies are governed by the same economic laws. For example, the macroeconomic Profit Law, i.e., Q≡Yd+(I−S)+(G−T)+(X−M) holds independently of whether an economy is capitalist or socialist. More specifically, this Law holds for the USA, Russia, China, the EU, etcetera.
The Law boils down to Q=(G−T), i.e., the profit of the business sector is equal to the deficit of the public sector.
For the USA, this means (i) the profitability of the so-called free market economy is maintained by the state’s permanent deficit spending, (ii) financial wealth grows in lockstep with public debt, and (iii) the positive performance of the stock market is maintained by the operations of the Central Bank.
In sum, the wealth creation of the so-called free market economy depends on the joint operations of the Treasury/Central Bank. The state produces macroeconomic profit, and this money is, in turn, partly used to control the state. The power-fighting between the different factions (military, CIA, FBI, organized crime, media, agriculture/industry/ banking, states, churches/religious groups/sects, political parties, domestic/foreign lobbies, wealthy individuals, etc.) is NOT the subject matter of economics.
It is characteristic of economists from Paul Krugman to Barkley Rosser that they blather a lot about the ongoing political infighting but have no idea how the monetary economy works. With these unqualified personages, it is no wonder that economics is to this day a failed science.
***
REPLY to Barkley Rosser on Mar 18You say: “The US government ran a budget surplus during the last several years of the Clinton presidency, but, guess what? Corporate profits were at a record high.”
Have you never heard of vector addition?
The macroeconomic Profit Law, i.e., Q≡Yd+(I−S)+(G−T)+(X−M), consists of 4 vectors. The government vector reads Qg=(G−T), i.e., the deficit of the public sector adds to the profit of the business sector, and the surplus of the public sector adds to the loss of the business sector; in short, Public Deficit = Private Profit. The negative gov vector, though, can be overcompensated by the other vectors, such that the vector sum is positive.
Your Clinton-era example is proof that you cannot even read a simple equation.
You talk about Capitalism/Socialism and do not understand the Profit Law. What about doing some scientific homework first?
***
REPLY to Barkley Rosser on Mar 19You say: “Your comment shows that you do not know what a fact is, much less broader empirical data.”
The macroeconomic Profit Law consists of measurable variables and is testable in the USA, Russia, China, the EU, etc., with the precision of two decimal places. That makes it scientifically superior to your political blather about interwar Russia.
***
REPLY to Barkley Rosser on Mar 20You say: “Yes, the variables are measurable, and they are measured all the time, and your claims about what those measurements should show are blatantly false. Corporate profits were very high in the US in the late 1990s, at the same time that the budget was running a surplus. Since you claim that corporate profits equal the budget deficit, you are wrong. Period.”
I said: “… the macroeconomic Profit Law, i.e., Q≡Yd+(I−S)+(G−T)+(X−M), holds independently of whether an economy is capitalist or socialist. ... The Law boils down to Q=(G−T), i.e., the profit of the business sector is equal to the deficit of the public sector. For the USA, this means (i) the profitability of the so-called free-market economy is maintained by the state’s permanent deficit spending, …”
For the record: you are wrong, I am right.
***
Source Twitter Bloomberg Businessweek Mar 22 |
| Source: Twitter |
July 8, 2019
Asad Zaman marches with the Zeitgeist down a blind alley
Comment on Asad Zaman/Tom Hickey on ‘My Journey from Theory to Reality’
Blog-Reference
The philosopher Tom Hickey sketches the great trends of history: “Many of the traditional worldviews are embedded in a religious contexts that have become cultural. Even in secular China, President Xi is resurrecting Confucius as a cultural icon, and in the supposedly secular US, dominant religious groups are asserting influence more openly, with science itself subject to challenge when it is perceived to conflict with tradition. Asad Zaman’s post is good example of this rising trend, as well as what a highly educated person asking such questions might do about it. This process is an iteration of the historical dialectic as liberal and traditionalism interact to forge a complementary Zeitgeist that moves history forward a step.”
What are the new insights of the new Zeitgeist? “Since most fancy assumptions we make in statistics and econometrics are wrong, we need to learn how to do simple and basic inferences, which actually makes life much easier for students of the subject ― we need to teach them basic and intuitive things, not complex models and math …”
The problem with simple and intuitive things is that they regularly turned out to be false as science progressed. This is why J. S. Mill had no friendly word for the bigots and votaries of common sense: “People fancied they saw the sun rise and set, the stars revolve in circles round the pole. We now know that they saw no such thing; what they really saw was a set of appearances, equally reconcileable with the theory they held and with a totally different one. It seems strange that such an instance as this, ... , should not have opened the eyes of the bigots of common sense, and inspired them with a more modest distrust of the competency of mere ignorance to judge the conclusions of cultivated thought.”
Common sense has never been a convincing argument in the scientific sphere, but it has always been a very effective rhetorical tool in the political sphere. All religious and political fraud in the last 3000 years has been performed by telling simple stories and by appealing to elementary emotions.
Science is different. Scientific truth is defined by material and formal consistency and not by what makes life easier for students. Lazy students have not developed aircraft and life-saving heart surgery. Neither have retarded political economists produced anything of scientific value. Walrasianism, Keynesianism, Marxianism, Austrianism, and MMT are provably false. Economics is not a body of certain knowledge but a heap of inconsistent opinions.
Asad Zaman resumes: “Regarding social, political and economic thought, many if not most of the foremost authorities equate economic liberalism with Western capitalism as the dominant mode of production and also view political liberalism in the form of representative democracy being determined by capitalism as economic liberalism.”
Obviously, liberalism and democracy are political concepts or ideologies. They have nothing to do with science. Economics as a science does NOT deal with ideologies but with how the economic system works. Political agenda pushers like Adam Smith or Karl Marx cannot, by any stretch of the imagination, be accepted as scientists. They were nothing but brain-dead political storytellers.
Asad Zaman is correct in his criticism of political economics. It is fake science. However, as long as he teaches his students “basic and intuitive things” economics will not rise above the proto-scientific level.#2 To replace one BS with another BS does not count as scientific progress.
The macroeconomic Profit Law reads Q≡Yd+(I−S)+(G−T)+(X−M), and it holds for Capitalism, Communism, and Socialism independently of whether the dominant belief is Islamic, Christian, Hinduistic, Confucian, Atheistic, or Pagan. Science is universal.
History tells one that human progress comes alone from science and neither from religious beliefs nor from political economics nor from philosophical Zeitgeist blather.
Egmont Kakarot-Handtke
#1 Why J. S. Mill had no friendly word for the bigots and votaries of common sense
#2 Zamanomics
Blog-Reference
The philosopher Tom Hickey sketches the great trends of history: “Many of the traditional worldviews are embedded in a religious contexts that have become cultural. Even in secular China, President Xi is resurrecting Confucius as a cultural icon, and in the supposedly secular US, dominant religious groups are asserting influence more openly, with science itself subject to challenge when it is perceived to conflict with tradition. Asad Zaman’s post is good example of this rising trend, as well as what a highly educated person asking such questions might do about it. This process is an iteration of the historical dialectic as liberal and traditionalism interact to forge a complementary Zeitgeist that moves history forward a step.”
What are the new insights of the new Zeitgeist? “Since most fancy assumptions we make in statistics and econometrics are wrong, we need to learn how to do simple and basic inferences, which actually makes life much easier for students of the subject ― we need to teach them basic and intuitive things, not complex models and math …”
The problem with simple and intuitive things is that they regularly turned out to be false as science progressed. This is why J. S. Mill had no friendly word for the bigots and votaries of common sense: “People fancied they saw the sun rise and set, the stars revolve in circles round the pole. We now know that they saw no such thing; what they really saw was a set of appearances, equally reconcileable with the theory they held and with a totally different one. It seems strange that such an instance as this, ... , should not have opened the eyes of the bigots of common sense, and inspired them with a more modest distrust of the competency of mere ignorance to judge the conclusions of cultivated thought.”
Common sense has never been a convincing argument in the scientific sphere, but it has always been a very effective rhetorical tool in the political sphere. All religious and political fraud in the last 3000 years has been performed by telling simple stories and by appealing to elementary emotions.
Science is different. Scientific truth is defined by material and formal consistency and not by what makes life easier for students. Lazy students have not developed aircraft and life-saving heart surgery. Neither have retarded political economists produced anything of scientific value. Walrasianism, Keynesianism, Marxianism, Austrianism, and MMT are provably false. Economics is not a body of certain knowledge but a heap of inconsistent opinions.
Asad Zaman resumes: “Regarding social, political and economic thought, many if not most of the foremost authorities equate economic liberalism with Western capitalism as the dominant mode of production and also view political liberalism in the form of representative democracy being determined by capitalism as economic liberalism.”
Obviously, liberalism and democracy are political concepts or ideologies. They have nothing to do with science. Economics as a science does NOT deal with ideologies but with how the economic system works. Political agenda pushers like Adam Smith or Karl Marx cannot, by any stretch of the imagination, be accepted as scientists. They were nothing but brain-dead political storytellers.
Asad Zaman is correct in his criticism of political economics. It is fake science. However, as long as he teaches his students “basic and intuitive things” economics will not rise above the proto-scientific level.#2 To replace one BS with another BS does not count as scientific progress.
The macroeconomic Profit Law reads Q≡Yd+(I−S)+(G−T)+(X−M), and it holds for Capitalism, Communism, and Socialism independently of whether the dominant belief is Islamic, Christian, Hinduistic, Confucian, Atheistic, or Pagan. Science is universal.
History tells one that human progress comes alone from science and neither from religious beliefs nor from political economics nor from philosophical Zeitgeist blather.
Egmont Kakarot-Handtke
#1 Why J. S. Mill had no friendly word for the bigots and votaries of common sense
#2 Zamanomics
March 30, 2021
Occasional Tweets: The dumb economist ― a jack of all trades
#Econ#FakeScience
— E.K-H (@AXECorg) March 30, 2021
The feeble thinker and #EconBlocker Noah Smith does NOT know how the #Economy works and what #Profit is. He is too stupid for the elementary math that underlies #MacroEconomics.⇒https://t.co/vTNWwrNUxA
And this #Clown tells people how to think about #China. pic.twitter.com/24XQ4GU9XP
For more about Noah Smith, see AXECquery.
For more about economics imperialism, see AXECquery.
For more about Jack of all trades, see AXECquery.
September 20, 2019
Links on “Capitalism. Time for a reset.”
Comment on the new FT campaign*
Blog-Reference and Blog-Reference
Right policy depends on true theory. The reset of economic policy presupposes the reset of economic theory because the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the foundational economic concept of profit wrong. Economics is a failed/fake/cargo-cult science to this day. The reset of economics requires a new set of axioms, i.e., the replacement of false Walrasian microfoundations and false Keynesian macrofoundations by true macrofoundations. Methodologically, this reset is called a Paradigm Shift. The FT is a bit late. The reset has already happened some time ago. See
► True macrofoundations: the reset of economics
For more details, see:
► The real trouble with Capitalism: stupid/corrupt economists
► The dirty secret of Capitalism: Economists have NO idea how Capitalism works
► Economics: The greatest scientific fraud in modern times
► The only thing we can learn from economic models is what proto-scientific garbage looks like
► Macroeconomics: Economists are too stupid for science
► After 200+ years even economics becomes a science
► From false micro to true macro: the new economic Paradigm
► The new macroeconomic Paradigm
► The canonical macroeconomic model
► If it isn’t macro-axiomatized, it isn’t economics
Egmont Kakarot-Handtke
* Twitter, Laurie Mcfarlane, FT, The times they are a changin’
and campaign The Financial Times “The new agenda” by The Brooklyn Brothers
Related 'No future for Socialism and Capitalism' and 'Who is really a scientist?' and 'Profit and the Private-Property-Irrelevance Theorem' and 'MMTers make Capitalism work' and 'Economics: failure, fake, fraud' and 'Show first your economic axioms or get out of the discussion'.
You say: “State planning in China. Seem to work much better than the USAs planning.”
The USA needs no planning because MMTers keep Capitalism going with deficit-spending/ money-creation.
► MMTers make Capitalism work
Blog-Reference and Blog-Reference
Right policy depends on true theory. The reset of economic policy presupposes the reset of economic theory because the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the foundational economic concept of profit wrong. Economics is a failed/fake/cargo-cult science to this day. The reset of economics requires a new set of axioms, i.e., the replacement of false Walrasian microfoundations and false Keynesian macrofoundations by true macrofoundations. Methodologically, this reset is called a Paradigm Shift. The FT is a bit late. The reset has already happened some time ago. See
► True macrofoundations: the reset of economics
For more details, see:
► The real trouble with Capitalism: stupid/corrupt economists
► The dirty secret of Capitalism: Economists have NO idea how Capitalism works
► Economics: The greatest scientific fraud in modern times
► The only thing we can learn from economic models is what proto-scientific garbage looks like
► Macroeconomics: Economists are too stupid for science
► After 200+ years even economics becomes a science
► From false micro to true macro: the new economic Paradigm
► The new macroeconomic Paradigm
► The canonical macroeconomic model
► If it isn’t macro-axiomatized, it isn’t economics
Egmont Kakarot-Handtke
* Twitter, Laurie Mcfarlane, FT, The times they are a changin’
and campaign The Financial Times “The new agenda” by The Brooklyn Brothers
Related 'No future for Socialism and Capitalism' and 'Who is really a scientist?' and 'Profit and the Private-Property-Irrelevance Theorem' and 'MMTers make Capitalism work' and 'Economics: failure, fake, fraud' and 'Show first your economic axioms or get out of the discussion'.
***
REPLY to S400 on Sep 22You say: “State planning in China. Seem to work much better than the USAs planning.”
The USA needs no planning because MMTers keep Capitalism going with deficit-spending/ money-creation.
► MMTers make Capitalism work
***
Graphic AXEC121f
***
#PointOfProof
Sep 20
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