Occasional Tweets: All one needs to know about economics

 

#FailedScience#FakeScience#Walrasianism, #Keynesianism, #Marxianism, #Austrianism, #MMT, #Pluralism are mutually contradictory, axiomatically false, materially/formally inconsistent, and all get #Profit wrong. That's #AllOneNeedsToKnow about the last 200+ years of #Economics.

— E.K-H (@AXECorg) June 17, 2021

***

Graphic AXEC109i

Prediction/Forecasting

Comment on Lars Syll on ‘Why economists are useless at forecasting’

Blog-Reference

It is a naive misunderstanding that the purpose of science is to predict the future. This is not the case; see Science does NOT predict the future.

So, orthodox economics can be accused of many things, but incorrect prognoses are not its worst defect. The lethal defect is that orthodox economics is materially and formally inconsistent, i.e., entirely outside of science.

What makes science special is that it figures out laws or, in a more general term, invariants. A popular example is E=mc². Obviously, this law does not predict the future. Neither does the Law of the Lever. Laws simply hold ALWAYS ― past, present, and future. See The Synthesis of Economic Law, Evolution, and History.

What economists can indeed be accused of is that they have failed at their PRIMARY task and have not figured out the laws that govern the actual market system. See The general theory of scientific incompetence.

Some economists excuse their failure to explain how the economy works by asserting that there is no such thing as an economic law. See A heap of proto-scientific garbage.

These economic law deniers are political economists (in contradistinction to theoretical economists) who defend their natural habitat, that is, the intellectual swamp where “nothing is clear and everything is possible” (Keynes). Political economists are unable/ unwilling to leave the scientific no man’s land between true and false and to proceed from opinion to knowledge. See From Orthodoxy to Heterodoxy to Metadoxy.

In political economics, to know nothing is not a declaration of scientific bankruptcy but the very premise of the Laissez-faire philosophy. Just because we know nothing, we'd better leave all to the invisible hand a.k.a. the market. Who knows nothing, cannot do anything. Thus, naturally given ignorance implies the futility of economic policy. This has been Hayek’s core message. In the Hayekian world, knowledge is hubris, and science is denounced as scientism. In political economics, the arbitrariness and inevitable failure of prognoses are taken as indirect proof that Laissez-faire is the best policy. In Laissez-faire philosophy, there is no need for scientific knowledge of how the system works. Because of this, political economics is not merely unscientific but anti-scientific.

Since the founding fathers, who identified themselves as political economists, the role of the economist has NOT been to produce provable scientific knowledge but to produce rhetorically effective opinion in the outer form of science. It is no accident that economic debates always end without a clear-cut true/false conclusion and that the main failed research programs, Walrasianism, Keynesianism, Marxianism, and Austrianism coexist in the status quo of proven false theories and an entire lack of scientific knowledge, see The Profit Theory is False Since Adam Smith.

Ambivalence, ignorance, and inconclusiveness are the original sins in science but virtues in politics. Because of this, economists have always been quite comfortable with the running gag that they have forecast nine of the last five recessions or that they never saw a crisis coming. These forecasting mishaps do not count as a refutation of the underlying theory. After all, you know folks, ALL forecasts are a matter of luck, and ALL models are false. In political economics, there is no truth and therefore no refutation, only the pluralism of false theories and false prophecy.

Economic forecasting is Circus Maximus, and here, scientifically failed economists are not entirely useless for the crowd's entertainment.

Egmont Kakarot-Handtke

***

Twitter Dec 7, 2021

Twitter/X Jan 7, 2026

#DeleteKeynes #ExpelAllKeynesians

Comment on Asad Zaman on ‘Methodology of Modern Economics’

Blog-Reference

• The formal basis of the General Theory is given with “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

• This proposition is conceptually/logically false because Keynes NEVER came to grips with profit.

• Because the foundational economic concepts of profit/income/saving are misspecified, the whole theoretical superstructure of Keynesianism in all its variants is false.

• Keynes messed up the inexorable Paradigm Shift from microfoundations to macrofoundations.

• Keynes was an agenda pusher, NOT a scientist. Keynesian policy guidance has NO sound scientific foundations and, in effect, enables the self-alimentation of the Oligarchy.

• The extremely unequal distribution of income and financial wealth is the direct result of public deficit spending. It holds Public Deficit = Private Profit.

• After-Keynesians have not detected/rectified Keynes’s blunders to this day. Macroeconomics ― profit and employment theory, in particular ― is materially/formally inconsistent.

• Keynesianism is scientifically worthless. All Keynesians have to be expelled from the sciences.

• The same holds for Walrasians, Marxians, Austrians, and Pluralists.

For details of the big picture, see cross-references Keynesianism

Egmont Kakarot-Handtke

***

Graphic AXEC138

History delivers the questions but not the answers

Comment on Robert Locke on ‘The naiveté of science as the history of Ideas’

Blog-Reference

It is rather trivial that a scientific/mathematical proposition/law/discovery/theorem emerges in a specific social, historical, geographical, or biographical context. But for the question of whether, for example, the Law of Universal Gravitation #1 is true or false, these specifics are absolutely irrelevant.

What, then, is relevant?: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)

Everything else, e.g., calendar time, religion, nationality, gender, etc., is a distraction from actual scientific problem-solving and irrelevant to the assessment of the truth/falsity of a theory. Historians are occupied with the context of discovery, and scientists are occupied with the context of justification, i.e. the logical and material consistency of a theory.

Science is about general and invariant features of reality (= invariances, see Nozick 2001 ), history/ evolution is about unique event configurations on the surface which never repeat themselves. This is known since Heraclitus, and that is why Descartes said that history was not a science. Science abstracts from historical detail. No way leads from the history of falling apples to the universal Law of Falling Bodies. No way leads from the historical fact that Einstein wore no socks to the understanding of the Theory of Relativity.

Economics is about the underlying structural laws of the economic system. If you do not understand these (e.g., the macroeconomic Profit Law #2), you neither understand the present nor the past.

The current state of economics is this: economists got the premises/basic concepts/axioms of economic theory hopelessly wrong. Because of this, the whole theoretical superstructure that in turn informs economic policy is defective. What we actually have is folk psychology, folk sociology,#3 storytelling, political blather, senseless model bricolage, the history of money since the cowrie shell, and utter methodological confusion.

Egmont Kakarot-Handtke


#1 Wikipedia
#2 Graphic AXEC08

#3 How to get out of the Econ 101 PsySoc woods

***

REPLY to Robert Locke on Jun 4

You say: “ the pursuit of knowledge tempered by the subjectivity of the individual observer and by extension the political, economic, and social subjectivities specific to historical time and place.”

I agree. Just because of this, economics has to leave all subjective/behavioral/human nature issues to psychology, sociology, history, politics, etc., and focus on the systemic aspect of the (world-) economy.

This is what the shift from subjective-behavioral microfoundations to objective-structural macrofoundations is all about. And this is the economic methodology of the 21st century.

Economics: The pluralism of false theories is over

Comment on Tom Hickey on ‘Steve Keen — Teaching Economics the Pluralist Way’

Blog-Reference

You say, “Because the lines are blurred, econ is heavily infected with ideology and that is a reason that econ is less scientific than it should be ideally.”

This is obviously beside the point. Economics is no less scientific than it should be, but economics is a failed science. From this, in turn, follows that economics as we know it cannot be repaired with some institutional quick fixes, but that it has to be completely abandoned.

The problem of economics as a science has two dimensions: an economic and an ethical dimension.

In strictly economic terms, economics itself has not produced any value: “Thousands upon thousands of scholars, as well as thousands of statesmen and men of affairs, have contributed their efforts to the attempt to understand the course of events of the economic world. And today, this field of investigation is being cultivated more extensively than ever before. How is it, then, that in all these years, and with all the undoubted talent that has been lavished upon it, the subject of economics has advanced so little?” (Schoeffler, 1955)

Translated into Tayloristic terms, the scientific productivity of economics has been zero. Translated into business school terms, economics has been a losing deal of epic proportions.

In addition to burning money, economics has caused enormous social devastation because mass unemployment is ultimately the result of false economic theory, more specifically, of defective labor market theory. #1

The ethical bottom line is even worse. Economists violate scientific standards on a daily basis. One of the fundamental principles of the self-regulation of science is that falsified theories have to be dropped and replaced. Morgenstern reminded his fellow economists already in 1941: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.”

As Hausman summarized the situation: “Yet most economists neither seek alternative theories nor believe that they can be found.”

Walrasianism, Keynesianism, Marxianism, and Austrianism are provably false, i.e., materially and formally inconsistent, but economists do not only stick to their proto-scientific garbage but advertise it each year to the general public as genuine science: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.

Exactly at this point, scientific failure turns into fraud. Political economics (= agenda-pushing) has not only crowded out theoretical economics (= science) but, as collateral damage, also tarnished the reputation of science in general with its fake Nobel.

To put it metaphorically: Economics is not a house with a hole in the roof that can be repaired, but a termite-infested ramshackle hut that must be burned to the ground in order to clear the site for an entirely new state-of-the-art construction. In methodological terms, this is called a Paradigm Shift.

A Paradigm Shift is not to be confused with the ongoing infighting of political economists (Walrasians, Keynesians, Marxians, Austrians) for a better place at the political pig trough. The Paradigm Shift puts an end to the pluralism of false theories.

Egmont Kakarot-Handtke


#1 The one stone that kills orthodox and heterodox employment theory

For details of the big picture, see cross-references Pluralism and cross-references Paradigm Shift.

***

Graphic AXEC113b

Does Asad Zaman fly with POL or SCI Airlines?

Comment on Asad Zaman on ‘Meta-theory and pluralism in the methodology of Polanyi’

Blog-Reference and Blog-Reference and Blog-Reference

All confusion about economics derives from the fact that there are TWO economixes: political economics (= POL) and theoretical economics (= SCI). The main differences are: (i) The goal of political economics is to successfully push an agenda, 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.

In the beginning, there was Political Economy. J. S. Mill defined it clearly as a social science: “The fundamental problem, therefore, of the social science, is to find the laws according to which any state of society produces the state which succeeds it and takes its place.” Or, a bit more specific with regard to economics: “The science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object.”

Economics started as a hodgepodge of sociology, history, folk psychology, and folk philosophy, which came under the heading of utilitarianism.

Classical Political Economy was carried one step further with methodological individualism: “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)

Methodological individualism is clearly defined by this set of behavioral axioms: “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)

Axiomatization is not only laudable but methodologically indispensable: “We should also like to underline Debreu’s effective reference to Bacon when he says that ‘citius emergit veritas ex errore quam ex confusione.’ It would be a mistake to lower the level of analysis and clarification. The only way possible is a thorough reexamination of the theory’s basic hypotheses, i.e., a true paradigmatic revolution.” (Ingrao et al.)

Orthodox economics remains firmly rooted in the social sciences because it is defined by behavioral axioms. Yet, orthodox economics is widely considered as scientific failure. To replace Orthodoxy requires the replacement of HC1-HC5 by an entirely new set of axioms. This is what a true paradigmatic revolution is all about.

The unity about the unacceptable state of economics, though, covers the disunity about how to proceed: “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)

Asad Zaman breaks this deadlock and advocates the adoption of Polanyi’s methodology.

• While traditional methodology operates at the elementary level with the binary true/false criterion “Polanyi operates at a meta-theoretical level.”
• The subject matter is essentially the same as classical economics: “Polanyi concentrates on the process of social change.”
• This leads to history: “We are learning this [English history] to understand the process of social change, and especially how this process generates theories about social change.”
• History, though, delivers only the raw material: “Given any collection of facts, there always exist multiple narratives which join together these facts into a coherent and causally ordered sequence.” As a result, we have the pluralism of narratives.
• It would be advantageous to determine which of the narratives is true but it is pretty obvious from the outset: “For most of the ideas that we study about the world we live in, we will never be able to ascertain for sure whether they are true or false. We must live with uncertainties, and we can only judge relative plausibility and levels of compatibility with observations of different theories.”
• Therefore: “We must give up the search for the Holy Grail; the one true narrative is only available to God.”
• However, we must come to a conclusion as a precondition for acting effectively: “This means that we look at competing narratives and evaluate them. Evaluation is not only with respect to the true/false binary. Rather we look at how different narratives support or conflict with interests of different social classes.”

As a result of the procedure, the 1-percenters prefer theory/narrative A because they think it is in their interest, and the 99-percenters prefer theory/narrative B because they think it is in their interest. According to the Polanyi/Zaman rule theory/narrative B is preferable because it benefits the 99-percenters. The Paradigm Shift in economics consists therefore in changing the rule for theory/narrative selection and abolishing the binary true/false criterion with truth defined as material/formal consistency.

Now, the snag is that without the true theory it cannot be determined what the ultimate effects of a measure are and who benefits and who loses. False theory leads to false economic policy advice.#1 The defect of Polanyi’s approach is that he does not understand economic history because he lacks the true theory, that is, he does not know how the economic SYSTEM works. The systemic laws, e.g. the Profit Law, do not follow from the observation of human behavior in concrete historical situations.#2 The economic historian is blind without economic theory.

There is no way around this: economists need the one true theory and not the pluralism of narratives: “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)

Asad Zaman argues in the tradition of political economics. Political economics, though, has achieved NOTHING of scientific value in the past 200+ years. At the bottom of his heart, Asad Zaman knows this.

Let us make a thought experiment: There are two air crafts called POL and SCI waiting in the maneuvering area. POL has been designed/constructed by folks who subscribe to Polanyi’s pluralist methodology as summarized above. SCI has been designed/constructed by folks who subscribe to the tried and tested methodology of material/formal consistency as explained in the foreword of every physics textbook. Which aircraft will Asad Zaman board?

Everybody knows: the so-called social sciences in general and political economics in particular NEVER got anything off the ground. Polanyi’s proto-scientific approach is no exception.

Egmont Kakarot-Handtke

#1 Austerity and the idiocy of political economists
#2 For the axiomatically true theory see True macrofoundations: the reset of economics.


Related 'Failed critique of failed economics' and 'The stupidity of Heterodoxy is the life insurance of Orthodoxy' and 'Ditch scientific incompetence!' and 'How Heterodoxy became the venue for science’s scum' and 'The one stone that kills orthodox and heterodox employment theory' and cross-references Heterodoxy

Failed economics: The losers’ long list of lame excuses

Comment on Lars Syll on ‘Relevance is not irrelevant’

Blog-Reference and Blog-Reference on Jan 12 and Blog-Reference on Jan 14

Economics is a failed science, that is, the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, and materially/formally inconsistent. More specifically, it is not only so that orthodox/ standard/mainstream economics is false as Heterodoxy ritually asserts, but traditional Heterodoxy, too, is false and has never provided a valid alternative. What we actually have is the pluralism of provably false theories.

As a consequence, the heap of proto-scientific garbage grows with every peer-reviewed issue of ranked quality journals. All grand debates end where they started, that is, in the swamp of conceptual confusion, undecidability, impenetrable mishmash, category mistakes, inconsistent definitions, cross-talk, and inconclusiveness. Accordingly, the scientific content of economic textbooks from Samuelson to Mankiw and Rodrik is below the level of a Donald Duck cartoon.

Neither orthodox nor heterodox economists can explain how the economy works, but they can indeed explain why economics does not work. Tell the representative economist that his approach is a scientific failure, i.e., materially/formally inconsistent #1, and you will get one of the standard excuses immediately back like a ping-pong ball. After all, economists have been playing their fruitless blame/deny game for 200+ years. It has become a Pavlovian reflex. This is the list of false/thoroughly refuted/beside-the-point answers

1. We know this. Nothing is perfect. The best and brightest are already working on the problem.
2. All theories/models are unrealistic/‘wrong’.
3. Economics is not a Science with a capital S.
4. Economics is an inexact and separate science.
5. Economics lacks the experimental method as a way of testing hypotheses.
6. The economy is extremely complex. Too many things are always happening at once.
7. Economics is more like meteorology than physics.
8. The economy is too messy to be fitted into the mold of a well-behaved, complete model.
9. The problem of model selection is that the embedded tests are inconclusive.
10. Novelty/emergence is unpredictable in principle.
11. The inferences that can be made from history are always uncertain, always disputable.
12. The ‘laws’ of behavior change and evolve.
13. Economics neither is nor can be a science and has always operated more like a church.
14. The subject matter of economics is not ergodic.
15. The assumptions are reasonable. The assumptions don’t matter. The assumptions are conservative. You can’t prove the assumptions are wrong. You have to make assumptions in order to make progress.
16. There are always differences of opinion at the cutting edge of science.
17. The critique is justified for the past, but now we use more sophisticated techniques/powerful tools or We-were-a-bit-wrong-then-but-now-we-are-vibrantly-on-the-right-track.
18. It is trivially true because it is an accounting identity; it is a vacuous accounting identity of little interest; it is just an ex-post accounting identity that has to be true by definition and has no real economic importance.
19. This is not a contradiction; it is like Schrödinger's cat, which can be both dead and alive.
20. There is no such thing as absolute truth.
21. Truth is subjective; everyone has only their own little piece of it.
22. Truth is what the majority of experts agree upon.
23. Reality is a social construct.
24. In economics, there is a pluralism of truths.
25. In economics, ‘nothing is clear, and everything is possible.’ (Keynes)
26. It is better to be roughly right than precisely wrong.
27. The issue is largely definitional and, as Lewis Carroll pointed out, everyone is entitled to their own definitions. (Blinder)
28. The axiomatic-deductive method for establishing material/logical consistency is not applicable to economics.
29. There is a trade-off between rigor and relevance.
30. Economics is more about understanding, pattern-/gestalt-recognition, quality, and nonlinearity than simple quantitative relationships.
31. Econometrics is inconclusive because its epistemological and ontological presuppositions do not apply.
32. The models aren’t totally useless. You have to do the best you can with the data.
33. Disagreement/contradiction is only on the surface. Economists do not differ with respect to fundamental principles, e.g., the effects of minimum wages, but only with regard to policy implications.
34. Economics is faced with ontological uncertainty: “We simply do not know.” (Keynes)
35. 'Nobody knows anything.' Hollywood adage
36. Economists have hitherto not sufficiently distinguished between known knowns, unknown knowns, known unknowns, and unknown unknowns.
37. Heisenberg and Gödel have proved that certain knowledge is physically and mathematically impossible.
38. Max Planck considered studying economics in his youth, but had found it “too difficult.”
39. You have to give the models the benefit of the doubt.
40. The mainstream consensus is the default, and not recognizing the mainstream consensus or mainstream definitions is failing to lean over backward and show Feynman Integrity.
41. The mainstream is superior; otherwise, it would not be the mainstream. So, by default, mainstreamers do not suffer from Dunning-Kruger, but those who say that economics is a failed/fake science.
42. Not a single one of the bright young minds that are the future of economics writes the papers that the critics claim are what all of the economic research is like today. Most critics of economics are stuck in the past.
43. The criticisms that academic economists face have little or no academic grounding. Most of the criticism is fake economics.
44. The critics should read more because, however well-intended, generalized attacks on a discipline that are not based on familiarity are pointless.
45. As the physicist Richard Wheeler put it: "Reality is defined by the questions you put to it".
46. Historically, economics has been very insular, but now it is more pluralistic.
47. The globally eminent economists are too close to G20 policymakers.
48. Economic science cannot be blamed if politicians don’t learn.
49. The public is demanding too much.
50. Economics has not failed and, as long as one does not expect soothsaying, it is remarkably successful.
51. We’re only doing what everybody else does. If we don’t do it, someone else will.
52. Credo quia absurdum = I believe because it is absurd.
53. Our approach has to be appreciated as work-in-progress; the results are promising but not yet fully established and demand further studies.
54. All models are wrong; some models are useful.
55. Whether economics is a science depends on how we define “science” in the first place.
56. So many (well-meaning/honorable/brilliant) people have put a lot of work into economics.
57. If there were a fundamental defect in economics, it would have long been detected.
58. Glomar response: the point in question can neither be confirmed nor denied. (Wikipedia)
59. All economics is woo-woo and unscientific. That's why it's an art degree. (S. Bach, Twitter)

The clear-cut answer to this rhetorical question is: (i) No longer accept silly excuses. (ii) Retire the throng of superfluous economists. The crass scientific incompetence of economists is the ultimate cause of mass unemployment, deflation, depression, stagnation, and no state/society can afford the intellectual dead-weight of its economists. #2 (iii) Do the Paradigm Shift from provably false Walrasian microfoundations and provably false Keynesian macrofoundations to true systemic macrofoundations. #3 (iv) Forget the last 200+ years of proto-scientific garbage.

Egmont Kakarot-Handtke


#1 For more details and references, see
► All models are false because all economists are stupid
► Complexity and stupidity
► Economists and their silly excuses
► Methodology 101, economic filibuster, and the mother of all excuses
► Why economics is a failed science ― 24 excuses and 1 explanation
► Equilibrium is stone dead — and now?
► Heterodoxy and the re-invention of science
► A heap of scientific garbage

► Economic recommendations out of the swamp between true and false
► Postmodernism — the philosophy of scientific write-offs
► Are economists methodological retards?
► Either stupid or duplicitous
► End of confusion
► Economics: The pluralism of false theories is over
► The economist as stand-up comedian
► Economics is NOT a social science
► Economics is not a science, not a religion, but proto-scientific rubbish
► Critique of conventional economics: The well-nigh complete list
#2 As Napoleon said: don’t listen to economists
#3 From Orthodoxy to Heterodoxy to Metadoxy and True macrofoundations: the reset of economics

Related 'New Economic Thinking: the 10 crucial points' and 'How economists habitually mess it up' and 'Macro for dummies' and '10 steps to leave cargo cult economics behind for good' and 'Why is economics a total scientific failure?' and 'Do first your macroeconomic homework!' and 'The canonical macroeconomic model' and 'Your economics is refuted on all counts: here is the real thing'.

***

Source Teflon economics Lars Syll/David Freedman

Source: Lars P. Syll blog

***

For a comprehensive heterodox collection of lame excuses, see real-world economics review: Andri W. Stahel Is economics a science?

***

Graphic AXEC136g

Why not simply throw all economists under the bus?

Comment on Lars Syll on ‘Why not make macroeconomics a science?’

Blog-Reference

What a question! Economics IS a science, and this is celebrated each year with the ‘Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel’. On the other hand, the incontrovertible fact of the matter is that economics is one of the most embarrassing scientific failures of all time. How to resolve this glaring contradiction?

First, we have to remind ourselves that science is well-defined for 2300+ years: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)

Economics is a scientific failure because it is materially and formally inconsistent. So, how to get out of the mess, how to make economics a science? It’s in the news, the Bloomberg View Editorial Board has the answer: “Whenever an economist says ‘in our model’, beware. Demand to know what assumptions the model makes, and question those assumptions as severely as the theorists test for valid inference — because valid inference from bogus assumptions is useless.” (See intro)

That’s it. That is what Aristotle already said: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.”

That is what Keynes already said: “For if orthodox economics is at fault, the error is to be found not in the superstructure, which has been erected with great care for logical consistency, but in a lack of clearness and of generality in the premises.”

That is what already Hutchison said:“ For it can fairly be insisted that no advance in the elegance and comprehensiveness of the theoretical superstructure can make up for the vague and uncritical formulation of the basic concepts and postulates, and sooner or later ... attention will have to return to the foundations.”

So let us revisit the foundational assumptions. Microeconomics is based on these five hardcore propositions, a.k.a axioms: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub)

Methodologically, these premises are forever unacceptable. The axiom set contains THREE NONENTITIES: (i) constrained optimization (HC2), (ii) rational expectations (HC4), (iii) equilibrium (HC5). Every theory/model that contains a nonentity is A PRIORI false.

So, let us shred microfoundations and move on. Keynes based macroeconomics on these propositions: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63)

Unfortunately, at this critical juncture, an error slipped in 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.)

So BOTH microfoundations and macrofoundations are false. Now it holds: if the premises/ axioms are false, the whole analytical superstructure is false. As a consequence, empirical tests yield either clear-cut refutations or inconclusive results.

Science requires both formal AND material consistency. Logical consistency is secured by applying the axiomatic-deductive method, and empirical consistency is secured by applying state-of-the-art testing. The current state of economics is that neither Walrasianism, Keynesianism, Marxianism, nor Austrianism satisfies the criteria of formal/ material consistency. These approaches are PROVABLY false.

And at this point, scientific ethics kicks in. A scientist is supposed to abandon a falsified theory. Morgenstern reminded his fellow economists long ago: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.”

Walrasianism, Keynesianism, Marxianism, and Austrianism are provably false, but this scientific garbage is still around. This, in turn, means that in economics, scientific standards are violated on a daily basis. The lack of the true theory has grave practical consequences: since Adam Smith, economic policy guidance has had no sound scientific foundation. #1

Economics needs a Paradigm Shift, that is, the replacement of false Walrasian microfoundations and false Keynesian macrofoundations by entirely new and consistent macrofoundations.

So, it is pretty obvious what it takes to make economics a science. It takes (i) competent scientists, (ii) a strict commitment to well-defined scientific standards, (iii) a paradigm shift, that is, the full replacement of scientifically indefensible Walrasianism, Keynesianism, Marxianism, and Austrianism. #2

There is no place in science for the proto-scientific garbage that has hitherto been accepted as economics. And there is no place for fake scientists. The main problem of economics is how to get rid of the ‘throng of superfluous economists’ (Joan Robinson).

Egmont Kakarot-Handtke


#1 Economists and the destructive power of stupidity
#2 From Orthodoxy to Heterodoxy to Metadoxy

Related 'Economics: the simple logic of failure' and 'Economics: a science without scientists' and 'From microfoundations to macrofoundations' and ‘What Keynes really meant but could not really prove’ and 'Economics, methodology, morals ― a creepy freak-show' and 'Economists: Incompetent? Stupid? Corrupt?' and 'Delusions of useful idiots' and 'Economists’ eternal problem with methodology'. For details of the big picture, see cross-references Incompetence and cross-references Failed/Fake Scientists and cross-references The Representative Economist.

***

Graphic AXEC123d

From subjective weighing of motives to objective systemic properties

Comment on Merijn Knibbe on ‘Insider critiques of neoclassical macro models’

Blog-Reference

It is long known that DSGE is a failed approach and nobody needs the insider critique of Romer et al. which amounts to not much more than the smarter rats abandoning the sinking ship. What is needed is a constructive idea about how to switch from the degenerated neoclassical research program to a progressive paradigm.

Merijn Knibbe asks: “Do I have something to add? Yes. Of the authors above, Romer is clearest ... about the fact that a scientific paradigm does not only need theory but also needs a matching system of measurement, ...” (See intro)

Yes, indeed, this was already obvious to the ancient Greeks: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant, 1994)

Establishing material consistency requires observation and measurement. The central economic measuring device is national accounting. From this follows that economic theory must, as a necessary condition, (i) contain as a subset those variables that appear in national accounting, and (ii), the definitions of the variables must be identical in theory and in accounting. This is currently not the case (2012) and this goes a long way to explain why economics has never risen above the proto-scientific level.

The first thing to notice is that standard economics is built upon a set of axioms that do not contain measurable variables at all.* This was already clear to Jevons: “Many will object, no doubt, that the notions which we treat in this science are incapable of any measurement. We cannot weigh, nor gauge, nor test the feelings of the mind; there is no unit of labour, or suffering, or enjoyment.” (1911, pp. 7, 10, 12)

Standard economics dealt for more than 150 years with scientific NONENTITIES: “There is no such measurable quantity as ‘value’ or ‘utility’ (with all due respect to Jevons, Walras, and others) and there is no evaluation of ‘the greatest happiness for the greatest number’ or more flatly, ― there is no such thing.” (Evans, cited in Weintraub, 2002, p. 60)

Accordingly, mathiness can be defined as the formalization of NONENTITIES which is an entirely illegitimate/senseless application of mathematics.#2

From all this follows that economics must be based on premises/axioms that contain only variables that are capable of measurement by national accounting or other measuring devices.

Because of this, the Walrasian axioms#1 have to be FULLY replaced. What is required is a Paradigm Shift and this, in turn, requires the switch from behavior-centered bottom-up, i.e. subjective microfoundations#1, to structure-centered top-down, i.e. objective macrofoundations.

The most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm and is defined by these three objective structural axioms:
(A1) Yw=WL wage income Yw is equal to wage rate W times working hours L,
(A2) O=RL output O is equal to productivity R times working hours L,
(A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.

The investment goods sector comes in at a later stage. So, what we have with (A1) to (A3) is the bare-bones production-consumption economy as the most elementary economic configuration. These premises are certain, true, and primary, and therefore satisfy perfectly all methodological requirements. Note (i) that unacceptable NONENTITIES like utility, maximization, or equilibrium are absent, and (ii), that Yw and C relate to national accounting while W, L, O, R, P, X have to be measured by other devices.

Human behavior, tastes, choices, or society have no durable underlying structure, but the monetary economy has one and it is given in the most elementary case by (A1) to (A3). Economics is not a behavioral or social science but a systems science. A system can be unambiguously defined and measured. All else is proto-scientific garbage.

Egmont Kakarot-Handtke


References
Jevons, W. S. (1911). The Theory of Political Economy. London, Bombay, etc.: Macmillan, 4th edition. URL
Kakarot-Handtke, E. (2012). The Common Error of Common Sense: An Essential Rectification of the Accounting Approach. SSRN Working Paper Series, 2124415: 1–23. URL
Weintraub, E. R. (2002). How Economics Became a Mathematical Science. Durham, London: Duke University Press.

#1 Standard economics is defined by these six hardcore propositions/axioms:
HC1 There exist economic agents.
HC2 Agents have preferences over outcomes.
HC3 Agents independently optimize subject to constraints.
HC4 Choices are made in interrelated markets.
HC5 Agents have full relevant knowledge.
HC6 Observable economic outcomes are coordinated, so they must be discussed
with reference to equilibrium states. (Weintraub, 1985)

#2 See Barzilai On the Mathematical Foundations of Economic Theory.

***

REPLY to Ken Zimmerman

“People who say it cannot be done should not interrupt those who are doing it.” G. B. Shaw

You can constructively contribute to the success of Heterodoxy simply by stopping to reiterate notorious methodological nonsense. Science is about logical/empirical proof/refutation. Empirical proof/refutation presupposes measurement. A central measuring device in economics is national accounting and it works with the precision of two decimal places.

In economics, the problem is NOT that measurement is hard or impossible. In fact, it is much easier and cheaper than building a measuring device like CERN. The problem is that economists of ALL colors are quite happy in the swamp between true and false where “nothing is clear and everything is possible” (Keynes). Walrasian, Keynesian, Marxian, and Austrian proto-scientists are pleased with the inconclusiveness of their debates and the pluralism of false theories. What they fear more than hellfire is a clear-cut empirical test and a definitive refutation of their inconsistent models. Both, orthodox and heterodox economists know very well that they cannot survive serious testing: “... suppose they did reject all theories that were empirically falsified ... Nothing would be left standing; there would be no economics.” (Hands, 2001)

In fact, there is NO economics, only cargo cult economics, and inconclusive blather.

There is no soft science only soft brains

Comment on Lars Syll on ‘Hard and soft science — a flawed dichotomy’

Blog-Reference and Blog-Reference

When economists are ridiculed for not having achieved anything of scientific value since Adam Smith they retort with the Cobden excuse: “Years ago I heard Mr. Cobden say at a League Meeting that ‘Political Economy was the highest study of the human mind, for that the physical sciences required by no means so hard an effort.’” (Bagehot, 1885)

Nothing has changed since 1885, economics is still a failed science, and the excuses are still the same: “The distinctions between hard and soft sciences are part of our culture … But the important distinction is really not between the hard and the soft sciences. Rather, it is between the hard and the easy sciences. Easy-to-do science is what those in physics, chemistry, geology, and some other fields do. Hard-to-do science is what the social scientists do and, in particular, it is what we educational researchers do. In my estimation, we have the hardest-to-do science of them all! We do our science under conditions that physical scientists find intolerable. We face particular problems and must deal with local conditions that limit generalizations and theory building-problems that are different from those faced by the easier-to-do sciences …” (Berliner)#1

The simple fact is that economists ― orthodox or heterodox do not matter ― are either stupid or corrupt or both. Take note:

(i) Economics is not a science but what Feynman called a cargo cult science.#2
(ii) To maintain that economics is a social science is a foundational blunder. Economics is a systems science.#3
(iii) Economists have not figured out to this day how the price and profit mechanism works.#4
(iv) Economists have not figured out what profit is.#5
(v) Economists are too stupid for the elementary mathematics of macroeconomic accounting.#6
(vi) Walrasian Micro and Keynesian Macro are both built upon false premises/axioms. Because of this, the whole analytical superstructure is scientifically worthless. The same holds for Marxianism and Austrianism.
(vii) Economic policy guidance has no sound scientific foundations since Adam Smith/Karl Marx.
(viii) Economists have been political agenda pushers/useful political idiots from day one and nothing has changed since.

Soapbox economics is easy, but science is hard. So, why should a utility-maximizing economist do science: “If the real world is fuzzy, vague and indeterminate, then why should our models build upon a desire to describe it as precise and predictable?” (Syll)

The first rule for soapbox economists is to never leave the swamp where “nothing is clear and everything is possible” (Keynes). Every half-witted agenda pusher knows that “With enough fog emitted, almost anything becomes possible.” (Mirowski) The foggy swamp of political economics is the natural habitat of confused confusers. And Lars Syll is obviously one of them.#7

Egmont Kakarot-Handtke


#1 Failed economics: The losers’ long list of lame excuses
#2 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#3 For details of the big picture see cross-references Not a Science of Behavior
#4 For details of the big picture see cross-references Failed/Fake Scientists
#5 Profit: after 200+ years, economists are still in the woods
#6 Wikipedia and the promotion of economists’ idiotism (II)
#7 Cryptoeconomics ― the best of Lars Syll’s spam folder

Related 'And the answer is NCND ― economics after 200+ years of Glomarization' and 'Econ 101: Economists flunk the intelligence test at the first hurdle' and 'Economics: The greatest scientific fraud in modern times' and 'The dirty secret of Capitalism: Economists have NO idea how the Capitalism works'.

***

AXEC139f

Economics: The Battle of Frogs and Mice is over

Comment on Lars Syll on ‘Paul Krugman — nothing but a die-hard neoclassical economist’ and on some beside-the-point comments on the parallel thread (large overlap with preceding version)

Blog-Reference

The Battle of Frogs and Mice,#1 a.k.a. Heterodoxy vs. Orthodoxy, has become rather stagnant, so let us shorten the agony with some clear-cut arbitral awards.

Syll: “Despite all his radical rhetoric, Krugman is — where it really counts — nothing but a die-hard neoclassical economist.”

Krugman says on his blog “... most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point.”

Judgment:* Krugman is a neoclassical economist, always was, and always said so, and everybody got it. However, the decisive point is not that Krugman is a bad person because he is a Neoclassical but that his starting point, i.e. the neoclassical axiom set, is FALSE. This invalidates the neoclassical approach as a whole. Not to realize the blatant blunder is the very fault of ALL neoclassical economists.

Krugman: “... this is exactly the kind of situation in which words alone can create an illusion of logical coherence that dissipates when you try to do the math.” In other words, formalization and modeling can be helpful to clarify the issue.

Georgescu-Roegen: “Lest this position is misinterpreted again by some casual reader, let me repeat that my point is not that arithmetization of science is undesirable. Whenever arithmetization can be worked out, its merits are above all words of praise. My point is that wholesale arithmetization is impossible, that there is valid knowledge even without arithmetization, and that mock arithmetization is dangerous if peddled as genuine.”

Syll: “That’s a methodological reductionist straightjacket.”

Judgment: Krugman and Georgescu-Roegen are right. Lars Syll is wrong. From the fact that formal neoclassical models are indeed false does NOT follow that formalization is wrong, only that economists in general and Neoclassicals, in particular, are incompetent formalizers and model builders.

Syll: “The only economic analysis that Krugman and other mainstream economists accept is the one that takes place within the analytic-formalistic modeling strategy that makes up the core of mainstream economics.”

Krugman on several occasions to Syll: “where’s your model?” and “what’s your alternative?”

Judgment: Neither Heterodoxy in general nor Lars Syll, in particular, has ever presented a viable alternative, a.k.a. progressive research program, as a replacement for the degenerated orthodox program. This is why economics is stuck in the proto-scientific swamp.

Syll: “That isn’t pluralism.”

Judgment: Science is about clear-cut true/false and the very opposite of the pluralism of false theories. Either Orthodoxy is true or Heterodoxy is true, then either Orthodoxy is thrown out of science or Heterodoxy. Except both are false, then both are thrown out of science.

Syll: “Validly deducing things from patently unreal assumptions — that we all know are purely fictional — makes most of the modeling exercises pursued by mainstream economists rather pointless.”

Aristotle: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.”

Judgment: Lars Syll and Aristotle are right. Economics is currently based upon false axioms. Both Walrasian and Keynesian axioms have to be fully REPLACED in order to produce scientific knowledge of the economy. After more than 200 years of churning out scientific garbage, this task has top priority. Concrete proposals are urgently needed. Lars Syll has none. Without sound heterodox axioms, no Paradigm Shift can ever happen.

Hickey: “There is nothing wrong with using a simple IS-LM approach in some cases as a gadget.”

Judgment: IS-LM has been already dead in the cradle 80 years ago. I=S is false since Keynes but neither Krugman nor Post Keynesians have gotten it until this day (2014).

Syll: “No matter how many thousands of ‘technical working papers’ or models mainstream economists come up with, ... they will not take us one single inch closer to giving us relevant and usable means to further our understanding and explanation of real economies.”

Judgment: True, but neither will repetitive heterodox critique of the Swedish ilk further our understanding of how the actual economy works.

The Battle of Frogs and Mice is over. From the standpoint of science BOTH Krugman and Syll lost. So, forget them and start NOW doing REAL science.

Egmont Kakarot-Handtke


References
Kakarot-Handtke, E. (2014). Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It. SSRN Working Paper Series, 2392856: 1–19. URL

#1 Wikipedia
#2 All judgments are backed in greater detail. In case of doubt, see blog or working papers before jumping to silly conclusions/comments

Links on Lars P. Syll’s ‘Wren-Lewis insults medical science’

Blog-Reference

Fact is that economics is one of the worst failures in the history of modern science.

Stop beating mainstream economics ― it is long dead
Economics: 200+ years of scientific incompetence and fraud
Heterodoxy and Pluralism, too, are proto-scientific garbage
Where economics went wrong
Reverse Alchemy: from scientific gold to political shit
Lars Syll, fake scientist
Cross-references NOT a Science of Behavior

Egmont Kakarot-Handtke


#Economics #FailedScience #FakeScience #CargoCultScience #ScientificIncompetence  #Economists #OrthodoxEconomics #HeterodoxEconomics #Pluralism #MicroFoundations #MacroEconomics #ProfitTheory #DeleteEconomics #NewEconomicThinking #ParadigmShift #NewParadigm #Science #MacroFoundations #Axiomatization

***

REPLY to Matt Franko on Oct 25

Matt Franko cites Lars Syll: “'Laws' in economics only hold ceteris paribus. That fundamentally means that these laws/regularities only hold when the right conditions are at hand for giving rise to them.” and concludes “This is simply the definition of the Liberal Art methodology....”

Not exactly, it is more PsySoc methodology. To recall, Orthodoxy/Walrasianism is based on behavioral axioms.#1 This leads necessarily to behavioral “laws” like the supply-curve, the demand-curve and the microeconomic “law” of supply and demand. This, of course, is proto-scientific garbage. There is NO such thing as “laws” of behavior.#2, #3

However, there are systemic laws, e.g. the Profit Law and the Employment Law.#4

So, both Orthodoxy and Heterodoxy’s Lars Syll fail to adapt the scientific concept of law to economics.

As a matter of fact, Lars Syll ruined heterodox methodology and with it the once leading Swedish School of Economics. His pupil Asad Zaman does the same now in Pakistan.#5


#1 The problem with macro in two words
#2 PsySoc — the scourge of economics
#3 For details see cross-references NOT a Science of Behavior
#4 Go! ― test the Profit and Employment Law
#5 Heterodox economics: When stupidity becomes a public danger

Occasional Tweets: Economics ― the pluralism of idiotism (VI)

 

#Econ#Walrasianism, #Keynesianism, #Marxianism, #Austrianism, #MMT, & #Pluralism are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. The representative #Economist is NOT a #Scientist but an #AgendaPusher / #Clown in the political #CircusMaximus. pic.twitter.com/OKYbISB1oB

— E.K-H (@AXECorg) April 16, 2023

For details of the big picture see cross-references Pluralism. 

Pluralism and the long shadow of Bentham

Comment on Geoff Davies on 'Pluralism is not enough'

Blog-Reference

Utility is good enough for engineering but not for science. The methodological problem with the truth was that one can arrive at the truth, but can never be sure because it is always possible that someone else finds a better theory that contains one's theory as a limiting case. Because of this, Popper developed the concept of verisimilitude.

Newtonian physics was considered true and corroborated beyond a reasonable doubt until Einstein showed that things become very un-Newtonian at high speeds. So Newton became the limiting case for low speeds of General Relativity Theory. Relativity Theory is closer to the truth. It can be taken as the truth until somebody else comes up and shows that the Theory of Relativity is a limiting case of the Theory of Everything.†

Your conclusion: “The Newton-Einstein comparison also shows that science is not about proof or Truth.” is absolutely false. What do you think physicists are doing at CERN? For genuine scientists, it is all about proof.††

A well-known irony in the history of science was that Ptolemy's theory was even superior for the purpose of navigation in comparison to the newly developed Copernican theory. Despite its practical usefulness, Ptolemy's theory is false according to scientific criteria.

To replace truth with usefulness is exactly what Blaug characterized as playing tennis with the net down.

It is surrealistic when economists discuss truth because after 200+ years, they still cannot tell the difference between profit and income (see 2014).

Egmont Kakarot-Handtke


References
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL

†  For a revision see Alexander Unzicker, Einsteins verlorener Schlüssel: Warum wir die beste Idee des 20. Jahrhunderts übersehen haben; Einstein's Lost Key: How We Overlooked the Best Idea of the 20th Century, Kindle.

†† Alexander Unzicker, Auf dem Holzweg durchs Universum: Warum CERN & Co. der Physik nicht weiterhelfen

Pluralism: cross-references

Posts

• The GDP-death-blow for the economics profession   here
• Economists: at the end of the wrong track   here
• Wikipedia, economics, scientific knowledge, or political agenda pushing?   here
• Your economics is refuted on all counts: here is the real thing   here
• Profit   here
• Master of MMT ― Master of proto-scientific garbage   here
• Mindfuck or the Eternal Return of dead economic theories   here
• There are NO crank scientists in economics because economics is NOT a science   here
• Economics: Not a pretty story   here
• Economics, MMT, and the corruption of science   here
• Bill Mitchell, MMT, Progressives: economists as Oligarchy hacks   here
• The problem with economics as a discipline   here
• Lars Syll, MMT, and the other failures of New Economic Thinking   here
• “Inhumane stupidity” ― bad economic policy as inevitable consequence of false economic theory   here
• The objective reality of economics   here
• Economic narratives are for the scientific garbage dump   here
• Microfoundations have been dead for 150+ years: high time to move on   here
• Trust in science? Yes, but economics is NOT a science   here
• Economics ― the science that never was   here
• New Economic Thinking ― the definitive results   here
• Links on the Economics Nobel   here
• Links on Diane Coyle   here
• Links on Asad Zaman’s ‘Defining Islamic Economics’   here
• What it takes to become a great economist   here
• Economics as storytelling and entertainment for the masses   here
• Links on Lars P. Syll’s ‘Wren-Lewis insults medical science’   here
• Both Mainstreamer and MMTer are either stupid or corrupt or both   here
• #DeleteKeynes #ExpelAllKeynesians   here
• Economics: Math is NOT the problem, scientific incompetence is   here
• Real-World Economics: The sanctuary of stupidity and corruption   here
• What’s the use of economists?   here
• There is no soft science only soft brains   here
• Is Lars Syll’s stupidity really infinite?   here
• Cryptoeconomics ― the best of Real-World Economics Review’s spam folder   here
• Again and again: economists are incompetent scientists   here
• Freedom for fake scientists?   here
• Heterodoxy and Pluralism, too, are proto-scientific garbage   here
• This is New Economic Thinking? Give me a break!   here
• Economists: only good at excuses   here
• Economics is not a science, not a religion, but proto-scientific rubbish   here
• Does Asad Zaman fly with POL or SCI Airlines?   here
• True macrofoundations: the reset of economics   here
• How Heterodoxy became the venue for science’s scum   here
• The Law of Economists’ Increasing Stupidity   here
• From the pluralism of false models to the true economic theory   here
• Review of the economics troops   here
• Economic policy guidance NEVER had sound scientific foundations   here
• The non-existence of economics   here
• Why not simply throw all economists under the bus?   here
• Failed economics: The losers’ long list of lame excuses   here
• Economics: The pluralism of false theories is over   here
• A rough business plan for science   here
• The futile synthesis of neoclassical rubbish and Keynesian garbage   here
• Economics ― a Zombie wrestling show   here
• It is better to be precisely right than roughly wrong   here
• Go, Heterodoxy, move on!   here
• Prediction/Forecasting   here
• Heterodoxy’s scientific self-deception   here
• All models are false because all economists are stupid   here
• From subjective weighing of motives to objective systemic properties   here
• Nothing to choose between Orthodoxy and traditional Heterodoxy   here
• Eclecticism, anything goes, and the pluralism of false theories   here
• Economics: The Battle of Frogs and Mice is over   here
• Enough! Economists, retire now!   here
• The economist as second-guesser, mind reader, and folk psychologist   here
• Ending the economic Froschmäusekrieg a.k.a. Batrachomyomachia   here
• The scientific self-elimination of Heterodoxy   here
• History delivers the questions but not the answers   here
• From proto-science to science   here
• Yes, orthodox economics is poor science, but can Heterodoxy raise hope?   here
• The pluralism of nonsense is still nonsense  here
• Pluralism and the thickness of confusion  here
• Pluralism and truth  here
• Pluralism and the long shadow of Bentham  here
• EconoPhysics and pluralism  here

Debate

• Reforming economics: Pluralism is not enough  here

Related

• Cross-references Political Economics/Stupidity/Corruption   here
• Cross-references New Economic Thinking   here

Meta references

Nothing to choose between Orthodoxy and traditional Heterodoxy

Comment on Noah Smith on ‘Heterodox macro ― a reply to some replies’

Blog-Reference and Blog-Reference on Aug 22, adapted to context, and Blog-Reference on Sep 17

All that has to be said about formalization/mathiness has already been said by the great heterodox economist Georgescu-Roegen: “Lest this position is misinterpreted again by some casual reader, let me repeat that my point is not that arithmetization of science is undesirable. Whenever arithmetization can be worked out, its merits are above all words of praise. My point is that wholesale arithmetization is impossible, that there is valid knowledge even without arithmetization, and that mock arithmetization is dangerous if peddled as genuine.” (1971, p. 15)

There are heterodox AND orthodox economists who cannot get their heads around this still-valid summary. These are the retarded folks who do not understand that there is an essential difference between science and non-science. The former is the realm where the criterion true/false applies and NOTHING else (= theoretical economics), and the latter is the vast realm of storytelling where anything goes (= political economics). So there are TWO kinds of Orthodoxy and TWO kinds of Heterodoxy which have to be kept apart. For an overview of current economics, see (2016b) plus description (2016a).

True/false in turn has TWO inseparable aspects: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant, 1994, p. 31)

Logical consistency is methodologically secured by the axiomatic-deductive method. This method presupposes firm ground to start with or, as Aristotle put it, “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.”

The fact of the matter is that BOTH orthodox microfoundations and heterodox macrofoundations are false. Because of this, traditional Heterodoxy is not an acceptable replacement for Orthodoxy. The current state of economics is this: Walrasianism, Keynesianism, Marxianism, and Austrianism are materially/formally inconsistent. Economics is a failed/fake science. This calls for a Paradigm Shift.

Heterodox macro has been formalized. This is praiseworthy. The problem is that there are different versions of heterodox macro, e.g., Keynes, Kalecki, Minsky, and Keen, which are INCONSISTENT. So traditional macrofounded Heterodoxy is formal garbage (2015) (2016c) just as microfounded Orthodoxy. Because there cannot be a pluralism of false theories BOTH approaches have to be replaced with the correct macrofoundations. Nothing less will do. Inconsistency is lethal in science. Game over for Orthodoxy and traditional Heterodoxy.

Egmont Kakarot-Handtke


References
E.K-H (2015). Heterodoxy, too, is proto-scientific garbage. Blog post. URL
E.K-H (2016a). From Orthodoxy to Heterodoxy to Metadoxy. Blog post. URL
E.K-H (2016b). From proto-science to science. Graphic AXEC83.
E.K-H (2016c). Where advanced Heterodoxy — represented by Steve Keen — took the wrong turn. Blog post. URL
Georgescu-Roegen, N. (1971). The Entropy Law and the Economic Process. Cambridge: Cambridge University Press.
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield: Edward Elgar.

***

Graphic AXEC83a

Related 'New Economic Thinking: the 10 crucial points' and 'How to restart economics' and 'If it isn’t macro-axiomatized, it isn’t economics' and 'Economics: The greatest scientific fraud in modern times' and 'Economists: “a bevy of camp-following whores”'. For details of the big picture, see cross-references Failed/Fake Scientists and cross-references Heterodoxy and cross-references Political Economics/Stupidity/Corruption and cross-references Paradigm Shift.

***

COMMENT on Barkley Rosser on Aug 22

Georgescu-Roegen said: “What particular reality is described by a given theory can be ascertained only from that theory’s axiomatic foundation.” (1966, p. 361)

And: “In fact, the history of every science, including that of economics, teaches us that the elementary is the hotbed of the errors that count most.” (1970, p. 9)

Georgescu-Roegen was well aware that the axiomatic foundations of economics are defective. Neither Orthodoxy nor Heterodoxy has gotten this pivotal methodological point until this day.

Georgescu-Roegen was also well aware of his fellow economists’ utter scientific incompetence: “Knight lamented that there are many members of the economics profession who are ‘mathematicians first and economists afterwards.’ The situation since Knights' time has become much worse. There are endeavors that now pass for the most desirable kind of economic contributions, although they are just plain mathematical exercises, not only without any economic substance but also without mathematical value. Their authors are not something first and something else afterwards; they are neither mathematicians nor economists.” (1979, p. 317)

This is the very definition of economics as cargo cult science. The situation since Georgescu-Roegen’s time has become even worse.


References
Georgescu-Roegen, N. (1966). Analytical Economics, chapter Economic Theory and Agrarian Economics, 359–397. Cambridge: Harvard University Press.
Georgescu-Roegen, N. (1970). The Economics of Production. American Economic Review, Papers and Proceedings, 60(2): 1–9. URL
Georgescu-Roegen, N. (1979). Methods in Economic Science. Journal of Economic Issues, 13(2): 317–328. URL

***

COMMENT on Frances Coppola on Aug 22

Your argument is entirely beside the point because Science does NOT predict the future.

***

REPLY to Barkley Rosser on Aug 23

You write: “First of all, lots of economists, even including some fairly mainstream ones, are aware that a lot of the axioms of economics are flawed.”

Famously, Keynes was very aware of this 80 years ago. “The classical theorists resemble Euclidean geometers in a non-Euclidean world ...” (1973, p. 16). And he knew that the fault was in what today is called microfoundations: “For if orthodox economics is at fault, the error is to be found not in the superstructure, ... but ... in the premises. (1973, p. xxi)

Consequently, Keynes started the macrofoundations research program in the General Theory formally as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (1973, p. 63)

These formal foundations are conceptually and logically defective because Keynes never came to grips with profit and therefore “discarded the draft chapter dealing with it.” (Tómasson et al., 2010, p. 12).

This was how Heterodoxy started in earnest. The original task of Heterodoxy is NOT to criticize Orthodoxy and to improve it here and there, but to REPLACE indefensible scientific garbage and to become the legitimate Orthodoxy. As we know today, Heterodoxy messed up the necessary Paradigm Shift.

Keynes’ original blunder kicked off a chain reaction of errors/mistakes: (i) all I=S/IS-LM models are false since Keynes and Hicks, (ii) Keynes’ profit conundrum has not been solved by After-Keynesians, (iii) employment and monetary theory is still false.

On the other hand, Orthodoxy went on with its flawed axioms. As Krugman nicely put it, “most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point.”

This is the current state of economics: the orthodox microfoundations have been flawed for 150+ years, and the heterodox macrofoundations have been flawed for 80+ years. As a consequence, all models that contain maximization-and-equilibrium or I=S/IS-LM are a priori false, and together this is roughly 90 percent of the content of peer-reviewed economic quality journals and 100 percent of textbooks. Economic policy guidance has NO sound scientific foundations but is plucked from thin air.

From this follows, firstly, that the word ‘sciences’ has to be eliminated from the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”. The general public has to be informed that the 200-year-old claim and the actual state of economics do not match. It follows, secondly, that incompetent scientists have to be expelled from economics regardless of their affiliation to either Walrasianism, Keynesianism, Marxianism, Austrianism, or any other failed approach. It follows, thirdly, that the pathetic cargo cult ping-pong between brain-dead Orthodoxy and silly Heterodoxy ends: “So we really ought to look into theories that don’t work, and science that isn’t science.” (Feynman)

And this is what one REALLY sees: The orthodox microfoundations are flawed. The heterodox macrofoundations are flawed. Economics is a failed science. Economists are incompetent scientists.


References
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. London, Basingstoke: Macmillan.
Tómasson, G., and Bezemer, D. J. (2010). What is the Source of Profit and Interest? A Classical Conundrum Reconsidered. MPRA Paper, 20557: 1–34. URL

***

Graphic AXEC106n