AXEC: New Foundations of Economics: Search results for Larry Summers

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August 8, 2020

Economists can hardly wait for their burial at the Flat-Earth Cemetery

Comment on Barkley Rosser on ‘Is The Latest Apparent Economist Suicide A Sign "Economics Is A Disaster"?’

“Economics is the study of the economy, not the study of economists.” (Ricardo Reis)

Economists, though, are not very talented scientists (they fail already at elementary macroeconomic algebra #1) and therefore every professional debate turns sooner or later into gossiping about idiosyncratic aches, pains, and neuroses. #2 Thus, academic economics has completely lost its scientific status and has become just another shitshow in the political Circus Maximus.

What economics needs after the obvious failure of Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism is a Paradigm Shift. What it gets is another report about economics as a human cesspool.

Claudia Sahm, who mentions as their credentials bipolar disorder and an econ Ph.D. has recently given a report of the psychological toxicity of economics and its on-duty tormenters. #3

No word about economics as a failed/fake science, though. And that means that she is part of it. #4,#5

Not even at gossiping economists are overwhelmingly smart. Claudia Sahm “names names of quite a few prominent economists she charges with bad behavior of one sort or another.” “At least one of those she criticizes has engaged in public behavior that is well known and notorious, namely Larry Summers, who is also notoriously arrogant, and some of these the charge of arrogance is a large part of her argument, indeed mostly towards those beneath them, as well as simply to rivals, with it being especially nasty when directed at women or minorities.” (Barkley Rosser)

However, what is also well-known is that Summers and Epstein were best buddies. #6

I wonder why neither Claudia Sahm nor Barkley Rosser ― the Sherlock Holmes of EconoSpeak ― nor anybody else connects the dots that seem to neatly explain the human and institutional rottenness of academic economics.

Egmont Kakarot-Handtke

#1 Cross-reference: Scientific Incompetence

#2 Economics as storytelling and entertainment for the masses

#3 Economics is a disgrace (Sahm)

#4 Economics is a disgrace (EKH)

#5 Economics is a disgrace ― now more than ever

#6 Twitter, Michael Krieger, here and here

Source: Twitter

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Twitter Aug 8

Source: Twitter

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REPLY to Barkley Rosser Aug 10

Where is Barkley Rosser (“He is guilty guilty guuilty”) when you need him?

These are the dots to connect:

• Barkley Rosser mentions Larry Summers “At least one of those she [Claudia Sahm] criticizes has engaged in public behavior that is well known and notorious, namely Larry Summers, who is also notoriously arrogant, and some of these the charge of arrogance is a large part of her argument, indeed mostly towards those beneath them, as well as simply to rivals, with it being especially nasty when directed at women or minorities.”

• Larry Summers, though, is not only known for nasty behavior but for heavy-duty political agenda-pushing. Epstein was convicted in 08. So, how could LHSummers possibly have known something was amiss? Clearly, he was in the dark; like when he scrapped Glass-Steagall, blocked the regulation of derivatives, & lost $1bn for Harvard. Poor Larry, how could he have known?” #1

• The Epstein/Maxwell duo was not only in the sex business but also in the science business.

• There are four suicides in academic economics in the wake of Epstein’s suicide. #2

• Claudia Sahm attributes these strange events to the psychological toxicity of economics: “Many graduate students and economists have mental health issues. Research at Harvard found notably higher rates of depression and anxiety among economics PhD students than other PhD students and the general population. Departments often do send students to campus health resources. The faculty place unrealistic expectations on the students. … Faculty suffer too. [Krueger, Weitzman, Sandholm, Farhi, rest in peace. I am so sorry.]”.

• Barkley Rosser knew Krueger, Weitzman, and Sandholm personally. Not to forget Mark Thoma, who retired unexpectedly and abandoned the leading blog Economist’s View.

Strange things happen in economics. Being a lifelong insider, Barkley Rosser maintains that “economics and economists have some very serious problems to deal with.”

Yes, the first and foremost problem is, how could it happen that economics has become a scientific fake/fraud from the peer review selection process onwards to the EconNobel?

Barkley Rosser concludes cryptically, “I could say more, actually a lot more, but I think this will do for now.”

What shitshow economics is!

#1 MarkGB, Twitter

#2 Is doing economics really depressing?

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Twitter/X Nov 18,2025 A member in good standing of the economic community until 2025

April 1, 2016

How the American working class can bring overall profits down to zero without bloody revolution

Comment on anne on ‘Corporate profits are near record highs. That’s a problem’

Blog-Reference

Thank you for the reproduction of Summers’s article about his troubles with profits: “This is an apparent problem for the secular stagnation hypothesis I have been advocating for some time ...” It has to be emphasized that the real problem of Larry Summers is that he has been advocating scientific garbage for too long a time.

In his article, Larry Summers evaluates several logically possible explanations for the record high of profit, among others, productivity and monopoly power. Now, these factors are indeed effective for a SINGLE firm or a sub-sector. But what is true in partial analysis is NOT true for the economy as a whole. This false generalization is known as the Fallacy of Composition. Most of the standard economics consists of this fallacy. Economists are feeble thinkers.

For the economy as a whole, neither productivity nor monopoly power plays a role; overall profit for the closed investment economy is given by Q_m≡Y_d+I−S_m. Legend: Q_m monetary profit, Y_d distributed profit, I investment expenditures, S_m monetary saving. With the trade balance and government added, the equation becomes a bit longer.

The structural-axiomatic Profit Law says that for the economy as a whole, it is NOT wages that are the antagonist of profits but monetary saving S_m (see the minus sign). Put the other way round: it is deficit spending/dissaving of the household sector (and the government sector) that is a major profit determinant. Distributed profit, investment, and an export surplus are the others. None of these factors appears in Larry Summers’s musings.

So, the height of OVERALL profit is not an indicator that American firms are particularly productive or that American businesspeople are particularly smart or greedy or monopolistically. Overall profits are, in the main, the mirror image of GROWING private and public debt. #1

The Profit Law tells the working class how to bring down overall monetary profits: save and pay back your debt. No further action is needed if prices fall proportionally; if not, falling employment complicates the situation.

Larry Summers is groping in the dark because ALL commonsensical partial profit theories are false, and he has not grasped this since Econ 101. #2

Egmont Kakarot-Handtke

#1 See chart St. Louis Fed
#2 The Profit Theory is False Since Adam Smith. What About the True Distribution Theory?

Immediately preceding Profit, marginalism, and other anomalies.

Related 'Profit' and 'No future for Socialism and Capitalism'. For details of the big picture, see cross-references Profit.

January 8, 2020

ASSA2020 has been a success ― sorta kinda

Comment on Rudi Bachmann on ‘When you pay $6.20 for a Diet Pepsi. #ASSA2020 insanity.’

Own post, Twitter-Reference

Once a year, economists flock to the #ASSA/#AEA gathering to have fun, to congratulate themselves with all kinds of prizes, to socialize and to network, and to get their communicative marching orders for the new year. ASSA/AEA is the Central Committee of the profession and defines what mainstream means, what the criteria for inclusion/ exclusion are, and, by implication, what the qualifications for leadership positions are. These have been the main messages:

The location is perfect

The kids are happy

And there is the great econ family

Economists are by definition above-average in all respects, but there is, of course, room for improvement at all levels.

MMT is not accepted by the mainstream.

As always, economists are divided about what the subject matter of economics is. Some folks still maintain that economics is a social science.

Ricardo Reis is right. Economics is the study of the economy. The core problem of economics is never mentioned among economists, i.e., that economics is NOT a science to this day. The major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives — are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the foundational economic concept of profit wrong. Economics is a failed science, or what Feynman called a cargo cult science. What economists have achieved in 200+ years is the pluralism of provably false theories. Obviously, they have NO idea what science is all about: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum) Economists do not have the true theory but many opinions. Because of this, their economic policy advice — left/center/right does NOT matter — NEVER had sound scientific foundations.

This, of course, has never disturbed economists. Accordingly, the official takeaway consisted of vacuous policy guidance.

This was the implicit message of ASSA2020: Larry Summers* is still a member in good standing and a highly visible representative of the American Economic Association AEA. Needless to emphasize that the members of the econ family did not get the point. No surprise here, after all, the representative economist is too stupid for the elementary algebra that underlies macroeconomics. Luckily, a brain is the last thing clowns and political agenda pushers in the political Circus Maximus need. Economics is NOT a science, economists are NOT scientists, and the AEA is proof.

Egmont Kakarot-Handtke

* Source Twitter

Dec 23

Jan 1, 2020

Apr 6, 2020, James K. Galbraith, |The Death of Neoliberalism Is Greatly Exaggerated

Mar 2, 2022 Strong stuff from the NYT

Twitter Mar 21, 2022

The Chronicle of Higher Education, May 13, 2022 Charles Ferguson, Larry Summers and the Subversion of Economics

Twitter Jan 13, 2023

Twitter Jan 30, 2023

Twitter/X Aug 5, 2023

Twitter/X Sep 17, 2023 Academic economics in the final stages of #DisInfoTainment

Twitter/X Nov 18, 2025 A member in good standing of the economic community until 2025

Twitter/X Nov 18, 2025

Harvard Crimson Nov 22, 2025 The Skeletons in Summers’s Closet

"At this point, the only nice thing you can say about Summers is that he is good at economics."

Another Harvard illusion.

Twitter/X Dec 2, 2025 The end of one representative economist

Reminder: According to the Code of Professional Conduct, #EconBlocker must be dismissed.

Twitter/X Feb 25, 2026 The personal trajectory of economics as a failed/fake science

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Knowledge only — no opinion

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

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

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

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

Political economics is scientifically worthless.

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

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

Economics is a failed science. Economists are incompetent scientists.

Profit

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

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

The hybrid science

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

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

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

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

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

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

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

Narrative vs.Theory

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

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

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

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

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

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

Theory starts with a set of objective and consistent axioms.

Paradigm Shift

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

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

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

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

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

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

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

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

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

Selftest and to watch for

You apply one of these items

• supply-demand-equilibrium,

• general equilibrium,

• marginal utility,

• well-behaved production functions,

• total income = value of output,

• total income = wages + profits,

• I=S,

• wage rate down - employment up,

• behavioral axioms?

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

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

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

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

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

To be replaced (1)

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

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

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

To be replaced (2)

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

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

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

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

Consensus

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

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

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

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

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

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

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

About me

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

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

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

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

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

Achim Truger,

German Council of Economic Experts,

in a failed attempt to be ironic

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

William Luther

Assistant Professor of Economics

in a failed attempt to be funny

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

Dean

About the rest of economics

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

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

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

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

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

Nopopop

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

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

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

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

Focus

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

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

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

Science is about true/false and nothing else.

Disclaimer

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

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Outlook

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

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

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

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

Major economic policy implication

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

Right policy depends on true theory.

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

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