Comment on Bill Mitchell on ‘Be careful of what parades as academic research’*
Blog-Reference and Blog-Reference
Bill Mitchell directs attention to ugly facts and top names: “Remember the 2010 film ― Inside Job ― which documented how my profession had become corrupted by the financial services sector into producing, allegedly, independent research reports extolling the virtues of deregulation etc and not admitting they were being paid for by the beneficiaries of the propaganda masquerading as research. It shows how corruption runs deep in the economics profession to accompany the incompetence that mainstream macroeconomists display. Well, I have been following an unfolding story about how Uber has decided to draw on that corrupt tendency for their own gains. It is not a pretty story.” and “I will leave it to you to check if you are interested. 1. Top names in the field ― Judd Cramer, Alan B. Krueger, Jonathan V. Hall, Peter Cohen, Robert Hahn, Steven Levitt, Robert Metcalfe, 2. Top ranked journals ― NBER Working Papers, American Economic Review.”
By pointing at an individual case of wrongdoing Bill Mitchell draws the attention away from (i) that economics as a WHOLE is a scientific fraud since the founding fathers, and (ii), that he is part of it.
The general public and the representative economist have NO proper understanding of what economics is all about. For a start, it is of utmost importance to distinguish between political and theoretical economics. 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.
A closer look at the history of economic thought shows that theoretical economics (= science) had been hijacked from the very beginning by the agenda pushers of political economics. The founding fathers were quite outspoken about their agenda: “That Political Economy is a science which teaches, or professes to teach, in what manner a nation may be made rich. This notion of what constitutes the science, is in some degree countenanced by the title and arrangement which Adam Smith gave to his invaluable work. A systematic treatise on Political Economy, he chose to call an Inquiry into the Nature and Causes of the Wealth of Nations; …” (J. S. Mill)
Political economics has produced NOTHING of scientific value in the last 200+ years. The major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism — are mutually contradictory, axiomatically false, and materially/formally inconsistent. Economics does NOT satisfy scientific standards to this day.#2
From this follows that economic policy guidance from Adam Smith/Karl Marx onward NEVER had sound scientific foundations. Left/center/right does NOT matter, ALL of the economics is proto-scientific garbage, or in other words, political propaganda in a scientific bluff package.
To point at individual wrongdoers obscures the fact that economics is failure/fake/fraud from Econ 101 to textbooks to the peer-review process of journals to the EconNobel.#3
This holds also for MMT#4 and Bill Mitchell#5. MMT claims that deficit-spending/money-creation is for the benefit of WeThePeople and the solution of almost all problems between unemployment and the survival of humanity. This is not the case, MMT is provably false as economic theory and MMT policy is ultimately for the benefit of the Oligarchy. The observable distribution of financial wealth is the result mainly of public deficit-spending. MMTers are not scientists but agenda pushers.
Bill Mitchell claims: “In fact, as a life-long educator, I clearly form the view that most of the distasteful things we read or hear from others are the result of ignorance and a lack of education. These things are clearly manipulated for ideological and political purposes by others but at the root of the problem is a lack of education. Education is the path to a more enlightened, tolerant and inclusive society. That is the driving principle I have always operated on. Which is why the relatively recent trend on social media that is variously called ― Cancel culture or Call-out culture ― is disturbing to say the least.”
True, but entirely beside the point. Bill Mitchell is NOT a teacher but a manipulator of public opinion. He is NOT a progressive fighter for WeThePeople but an agenda pusher for the Oligarchy. Like his academic colleagues, Bill Mitchell lacks the defining characteristic of a scientist: “A genuine inquirer aims to find out the truth of some question, whatever the color of that truth. ... A pseudo-inquirer seeks to make a case for the truth of some proposition(s) determined in advance. There are two kinds of pseudo-inquirer, the sham and the fake. A sham reasoner is concerned, not to find out how things really are, but to make a case for some immovably-held preconceived conviction. A fake reasoner is concerned, not to find out how things really are, but to advance himself by making a case for some proposition to the truth-value of which he is indifferent.” (Haack)#6
For economics in general and MMT, in particular, there is NO future. It holds: “Scrap the lot and start again.” (Joan Robinson)
Egmont Kakarot-Handtke
* Billy Blog
#1 For details of the big picture see cross-references Failed/Fake Scientists
#2 Failed economics: The losers’ long list of lame excuses
#3 Links on the Economics Nobel
#4 For the full-spectrum refutation of MMT see cross-references MMT
#5 Bill Mitchell’s dishonorable discharge from the sciences
#6 Circus Maximus: Economics as entertainment, personality gossip, virtue signaling, and lifestyle promotion
Related 'Economics, MMT, and the corruption of science' and '“Inhumane stupidity” ― bad economic policy as inevitable consequence of false economic theory' and 'The problem with economics as a discipline' and 'Trust in science? Yes, but economics is NOT a science' and 'Econogenics: economists pose a hazard to their fellow citizens' and 'False economic theory makes bad economic policy'. For details of the big picture see cross-references Political Economics/Stupidity/Corruption.
Showing posts sorted by relevance for query profession. Sort by date Show all posts
Showing posts sorted by relevance for query profession. Sort by date Show all posts
January 30, 2020
December 29, 2020
Occasional Tweets: Too stupid for science
A GIF is not exactly a clear argument but, to begin with, nobody ever expected anything intelligent from a guy whose main scientific achievement is a funny GIF collection.
— E.K-H (@AXECorg) December 29, 2020
The fact is: the #ProfitTheory is false since Adam Smith but W. Luther has not realized it to this day. pic.twitter.com/KqOSvFQi3r
Because you and the rest of the profession are too stupid for the elementary algebra of #Macroeconomics/#ProfitTheory, #Economics is proto-scientific garbage from peer-reviewed journals to the EconNobel.
— E.K-H (@AXECorg) December 30, 2020
The GDP-death-blow for the economics professionhttps://t.co/QJycQUh0Uj pic.twitter.com/gt0QLDGaBs
February 9, 2017
New IS-LM macro ― just another fake revolution
Comment on Larry Christiano on ‘The Great Recession: A Macroeconomic Earthquake’
Blog-Reference
For all those who thought macroeconomics has been refuted once and for all by the Great Recession Larry Christiano has a tumbler surprise: “The Great Recession is having an enormous impact on macroeconomics as a discipline, in two ways. First, it is leading economists to reconsider two theories that had largely been discredited or neglected. Second, it has led the profession to find ways to incorporate the financial sector into macroeconomic theory.”
Christiano’s claim that the profession has opened a new dimension of macroeconomics has zero reality content. In more detail the success story goes: “The return of the dynamic version of the IS-LM model is revolutionary because that model is closely allied with the view that the economic system can sometimes become dysfunctional, necessitating some form of government intervention.”
The warmed-up version of IS-LM will bring economists to nowhere because the whole approach is axiomatically false for 80 years.#1 The representative economist has not realized this until this very day. In methodological terms, axiomatically false is the death sentence for a paradigm, because when the foundational premises are false the whole analytical superstructure is false.#2
The true revolution consists in a Paradigm Shift, that is, in the full replacement of false Walrasian microfoundations and false Keynesian macrofoundations by entirely new macrofoundations.#3
Egmont Kakarot-Handtke
#1 How Keynes got macro wrong and Allais got it right
#2 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
and cross-references Refutation of I=S
#3 Macroeconomics ― dead since Keynes and The other half plus the hitherto missing true foundations of macroeconomics and Tobin, the tragedy of After-Keynesians, and the indelible mark of incompetence and From false micro to true macro: the new economic Paradigm
Blog-Reference
For all those who thought macroeconomics has been refuted once and for all by the Great Recession Larry Christiano has a tumbler surprise: “The Great Recession is having an enormous impact on macroeconomics as a discipline, in two ways. First, it is leading economists to reconsider two theories that had largely been discredited or neglected. Second, it has led the profession to find ways to incorporate the financial sector into macroeconomic theory.”
Christiano’s claim that the profession has opened a new dimension of macroeconomics has zero reality content. In more detail the success story goes: “The return of the dynamic version of the IS-LM model is revolutionary because that model is closely allied with the view that the economic system can sometimes become dysfunctional, necessitating some form of government intervention.”
The warmed-up version of IS-LM will bring economists to nowhere because the whole approach is axiomatically false for 80 years.#1 The representative economist has not realized this until this very day. In methodological terms, axiomatically false is the death sentence for a paradigm, because when the foundational premises are false the whole analytical superstructure is false.#2
The true revolution consists in a Paradigm Shift, that is, in the full replacement of false Walrasian microfoundations and false Keynesian macrofoundations by entirely new macrofoundations.#3
Egmont Kakarot-Handtke
#1 How Keynes got macro wrong and Allais got it right
#2 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
and cross-references Refutation of I=S
#3 Macroeconomics ― dead since Keynes and The other half plus the hitherto missing true foundations of macroeconomics and Tobin, the tragedy of After-Keynesians, and the indelible mark of incompetence and From false micro to true macro: the new economic Paradigm
June 21, 2016
How to get rid of the silly Queen
Comment on Lars Syll on ‘Economics — spending time doing silly things’
Blog-Reference and Blog-Reference
Currently, economists are in the mode of thorough self-critique. Yes, we have done too much math, yes, our reduction of multi-dimensional homo sapiens to one-dimensional homo oeconomicus has been rather one-sided, yes, the Chicago free market philosophy has gone over the top, yes, there has been too much abstract model building and too little empirics and, yes, we have done all these silly things because “the profession” has told us so. Economics, it seems, has all these years not at all been about the economy but about signaling: “So DSGE might be an expensive way of proving that you’re willing to spend a lot of time and effort doing silly stuff that the profession tells you to do.” (See intro)
Why are the once-proud heralds of the famous Queen of the so-called social sciences all of a sudden so conspicuously back-pedaling, ducking, and discounting relevance? This question opens a wide field for speculation and second-guessing. But, clearly, to enter this playground of storytellers, gossipers, and wish-washers would be beyond silly. The very practical point is to take the opportunity and to get people who have disqualified themselves by doing silly things and talking nonsense, finally out of science.
Economics is a failed science. Let us briefly spot the causal blunders. These are NOT located in the theoretical superstructure: “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.” (Hutchison 1960)
Standard economics is built upon this set of foundational 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 1985)
Methodologically, these premises are forever unacceptable, but economists swallowed them hook, line, and sinker from Jevons/Walras/Menger onward. The failure of methodological individualism and all other psycho/socio-approaches can be stated as an impossibility theorem: NO way leads from the explanation of human nature/behavior/action to the explanation of how the economic system works.
Keynes, as the other main protagonist, defined his set of foundational propositions in the General Theory as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.”
This elementary syllogism is conceptually defective because Keynes never came to grips with profit. As a result, all I=S models and the Keynesian multiplier are false.
Conclusion: The one silliness of economists consists of the inability to spot the errors/mistakes in their respective axiom sets and to blindly build their respective theoretical edifices higher and higher upon unsuitable foundations. This also holds for Marxianism and Austrianism. The other silliness consists of the repetitive critique of well-known defects: “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 1998)
And here is how to transcend the silliness of Orthodoxy and Heterodoxy: the forever unacceptable microfoundations have to be replaced by macrofoundations. This is achieved with this set of objective-structural foundational propositions. (A0) The objectively given and most elementary configuration of the (world-) economy consists of the household and the business sector, which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
The investment goods sector and more and more individual firms come in at a later stage. This increases complexity step by step. So, what we initially have with (A1) to (A3) is the pure consumption economy as the most elementary economic configuration. These premises are certain, true, primary, entirely free of green cheese behavioral assumptions, and therefore perfectly suited as the foundations of an “edifice that one wishes to expand and to build higher while preserving its stability.” (Hilbert 2005)
Human behavior, tastes, choices, or society have no durable underlying structure, but the monetary economy has, and it is given in the most elementary case by (A1) to (A3). A system can be unambiguously defined.
Economics has to step down as Queen of the so-called social sciences in order to eventually become King of the systems sciences. This Paradigm Shift, clearly, is beyond the means of the silly folks of traditional orthodox and heterodox economics.
Egmont Kakarot-Handtke
You write: “As sociologist Edward Ross pointed out to the AEA in 1889, ignorance of custom, tradition and authority left economists ill-equipped to carry out their analysis of trade. It’s my view Ross hit the error of economists today on the head.”
The fundamental error of Ross and you is to assume that economics is about ‘how society works’. No! This is the subject matter of sociology. Economics is about ‘how the economy works.’ Society and economy are intertwined but must be separated analytically.
Since Adam Smith, economics claims to be a science. Methodologically, it started as a mixture of sociology and political science: “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, ...” (J. S. Mill, 1874, V.39)
With respect to the subject matter, there is no difference between Mill and Marx “My stand-point, from which the evolution of the economic formation of society is viewed as a process of natural history, ...” (Marx, 1906, M.9)
With Jevons/Walras/Menger, the focus shifted to methodological individualism, and economics became a mixture of dilettantish psychology, sociology, and political science. This approach has failed abysmally.
Economics is NOT a science of Human Nature or individual/social/political behavior, but of the behavior of the monetary economy. Accordingly, the correct definition of the subject matter is objective/structural/systemic: “Economics is the science which studies how the monetary economy works.”
As a consequence, the overdue Copernican turn in economics consists in the methodological switch from behavior-centered bottom-up, i.e., subjective microfoundations, to structure-centered top-down, i.e., objective macrofoundations of the world economy. All Human-Nature issues are the subject matter of other disciplines (psychology, sociology, anthropology, biology/Darwinism/evolution theory, political science, social philosophy, etcetera) and are taken in from these by way of multidisciplinary cooperation, IF NEEDED.
Economics is NOT a science of behavior (Hudík, 2011). #1 Economics is not a so-called social science like psychology/sociology, and not a natural science like physics, but a systems science.
By the way, it seems to have escaped your attention that Luhmann has defined sociology as a systems science (1995), and this, indeed, is the common methodological platform of sociology and economics (2014). With Edward Ross of 1889, you are way behind the curve.
References
Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL
Luhmann, N. (1995). Social Systems. Stanford: Stanford University Press.
Marx, K. (1906). Capital: A Critique of Political Economy, Vol. I. The Process of Capitalist Production. Library of Economics and Liberty. URL
Mill, J. S. (1874). Essays on Some Unsettled Questions of Political Economy. On the Definition of Political Economy; and on the Method of Investigation Proper To It. Library of Economics and Liberty. URL
#1 See also cross-references
For somebody with a small horizon, the earth is, for all practical purposes, flat, and all empirical evidence is so convincing that it is almost impossible to transcend this commonsensical worldview and ever get out of the tiny box. All the more so because science is, as a rule, counterintuitive and requires the emancipation from small-scale idiosyncratic personal experience.
Because of this, nothing seems more commonsensical than your assertion: “All that happens, I repeat, ALL is created via interactions (relationships) among a number of actors.” As a matter of fact, this view ― let us call it the Science-of-Man fallacy ― is as old as the hills. It goes back to Hume.
“And as the science of man is the only solid foundation for the other sciences, so the only solid foundation we can give to this science itself must be laid on experience and observation.” (2012, Introduction)
It reappears with the Austrian sect.
“Mises’ contribution was very simple and at the same time extremely profound. He pointed out that the whole economy is the result of what individuals do.” (Foreword, von Mises, 2007, p. v)
And it is the tenet of Orthodoxy.
“It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals.” (Arrow, 1994, p. 1)
The common denominator of all Science-of-Man approaches is that they are scientific failures. Not much profound insight about how the economy works has come from them. Until this day the representative economist cannot even tell the difference between income and profit.
Consistent with the low performance of flat-earthers in general, you have not put forward one single testable proposition about an important economic relationship. This is rather odd for a person who claims to apply the right methodology. In science, claims and opinions do not count for much; only proof counts.
References
Arrow, K. J. (1994). Methodological Individualism and Social Knowledge. American Economic Review, Papers and Proceedings, 84(2): 1–9. URL
Hume, D. (2012). A Treatise of Human Nature. Project Gutenberg EBook. URL
von Mises, L. (2007). Human Action. A Treatise on Economics, Vol. I. Indianapolis: Liberty Fund. (1949).
(i) You say: “The entire structure of western (but not all sciences) rests on the assumption that’s possible to go from an observation to conclusions about that observation.”
False. This holds only for the proto-scientific stage. For details, see the chart Graphic AXEC77.
The scientific stage starts with a well-articulated theory that is based on axioms. Axioms, in turn, are NOT DIRECTLY based on naive observation/experience but are a sophisticated logical construct: “If then it is the case that the axiomatic basis of theoretical physics cannot be an inference from experience, but must be free invention, have we any right to hope that we shall find the correct way?” (Einstein, 1934, p. 167)
As we know from history, scientists have found the correct way. You definitively do not understand the specific characteristics of science and mess it up with observationism: “The Baconian dogma I have in mind asserts the supreme merits of observation and the viciousness of theorizing speculation. I shall call this dogma, briefly, by the name ‘observationism’.” (Popper, 1994, p. 84)
(ii) You say: “Putting forth testable propositions about economic interactions is not my job. I’m not an economist. Rather, it’s your job as an economist. As a historian, I don’t test propositions, I examine the stories of how humans live together.”
True. Historians are storytellers and second-guessers, but not scientists. Because of this, they have NOTHING useful to say about methodology. Psychologists, too, have not much to say because economics is NOT about human psychology/behavior but about the behavior of the economic system. Economics is NOT a so-called social science but a systems science. For more about the cargo-cult science psychology, see Feynman on Wikipedia or YouTube.
(iii) You say: “Finally, following this dictum, if you can find some other variables to measure and test except relational ones let me know. That would change everything. A brand new universe would emerge.”
Yes, indeed. Here you have the First Economic Law (Graphic AXEC06), which defines the measurable and testable economic relations for the elementary consumption economy, which in turn are entirely FREE of green cheese psychological/behavioral assumptions. #1 If you think this equation is false, you can try to empirically refute it. This is how science works.
References
Einstein, A. (1934). On the Method of Theoretical Physics. Philosophy of Science, 1(2): 163–169. URL
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality, Ch. Science: Problems, Aims, Responsibilities, 82–111. London, New York: Routledge.
Science is well-defined by material AND formal consistency and scientists judge and are judged according to these criteria. Genuine scientists have NO problem with these methodological essentials but the so-called social scientists have. Their persistent attempts to redefine science are understandable but pointless: either one plays according to the rules of science or one is OUT. Your view “that science is the study of the relationships among all the things, forces, thoughts, etc. that make the world and are made by it” is simply irrelevant.
Blog-Reference and Blog-Reference
Currently, economists are in the mode of thorough self-critique. Yes, we have done too much math, yes, our reduction of multi-dimensional homo sapiens to one-dimensional homo oeconomicus has been rather one-sided, yes, the Chicago free market philosophy has gone over the top, yes, there has been too much abstract model building and too little empirics and, yes, we have done all these silly things because “the profession” has told us so. Economics, it seems, has all these years not at all been about the economy but about signaling: “So DSGE might be an expensive way of proving that you’re willing to spend a lot of time and effort doing silly stuff that the profession tells you to do.” (See intro)
Why are the once-proud heralds of the famous Queen of the so-called social sciences all of a sudden so conspicuously back-pedaling, ducking, and discounting relevance? This question opens a wide field for speculation and second-guessing. But, clearly, to enter this playground of storytellers, gossipers, and wish-washers would be beyond silly. The very practical point is to take the opportunity and to get people who have disqualified themselves by doing silly things and talking nonsense, finally out of science.
Economics is a failed science. Let us briefly spot the causal blunders. These are NOT located in the theoretical superstructure: “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.” (Hutchison 1960)
Standard economics is built upon this set of foundational 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 1985)
Methodologically, these premises are forever unacceptable, but economists swallowed them hook, line, and sinker from Jevons/Walras/Menger onward. The failure of methodological individualism and all other psycho/socio-approaches can be stated as an impossibility theorem: NO way leads from the explanation of human nature/behavior/action to the explanation of how the economic system works.
Keynes, as the other main protagonist, defined his set of foundational propositions in the General Theory as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.”
This elementary syllogism is conceptually defective because Keynes never came to grips with profit. As a result, all I=S models and the Keynesian multiplier are false.
Conclusion: The one silliness of economists consists of the inability to spot the errors/mistakes in their respective axiom sets and to blindly build their respective theoretical edifices higher and higher upon unsuitable foundations. This also holds for Marxianism and Austrianism. The other silliness consists of the repetitive critique of well-known defects: “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 1998)
And here is how to transcend the silliness of Orthodoxy and Heterodoxy: the forever unacceptable microfoundations have to be replaced by macrofoundations. This is achieved with this set of objective-structural foundational propositions. (A0) The objectively given and most elementary configuration of the (world-) economy consists of the household and the business sector, which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
The investment goods sector and more and more individual firms come in at a later stage. This increases complexity step by step. So, what we initially have with (A1) to (A3) is the pure consumption economy as the most elementary economic configuration. These premises are certain, true, primary, entirely free of green cheese behavioral assumptions, and therefore perfectly suited as the foundations of an “edifice that one wishes to expand and to build higher while preserving its stability.” (Hilbert 2005)
Human behavior, tastes, choices, or society have no durable underlying structure, but the monetary economy has, and it is given in the most elementary case by (A1) to (A3). A system can be unambiguously defined.
Economics has to step down as Queen of the so-called social sciences in order to eventually become King of the systems sciences. This Paradigm Shift, clearly, is beyond the means of the silly folks of traditional orthodox and heterodox economics.
Egmont Kakarot-Handtke
***
REPLY to Ken Zimmerman on Jun 24You write: “As sociologist Edward Ross pointed out to the AEA in 1889, ignorance of custom, tradition and authority left economists ill-equipped to carry out their analysis of trade. It’s my view Ross hit the error of economists today on the head.”
The fundamental error of Ross and you is to assume that economics is about ‘how society works’. No! This is the subject matter of sociology. Economics is about ‘how the economy works.’ Society and economy are intertwined but must be separated analytically.
Since Adam Smith, economics claims to be a science. Methodologically, it started as a mixture of sociology and political science: “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, ...” (J. S. Mill, 1874, V.39)
With respect to the subject matter, there is no difference between Mill and Marx “My stand-point, from which the evolution of the economic formation of society is viewed as a process of natural history, ...” (Marx, 1906, M.9)
With Jevons/Walras/Menger, the focus shifted to methodological individualism, and economics became a mixture of dilettantish psychology, sociology, and political science. This approach has failed abysmally.
Economics is NOT a science of Human Nature or individual/social/political behavior, but of the behavior of the monetary economy. Accordingly, the correct definition of the subject matter is objective/structural/systemic: “Economics is the science which studies how the monetary economy works.”
As a consequence, the overdue Copernican turn in economics consists in the methodological switch from behavior-centered bottom-up, i.e., subjective microfoundations, to structure-centered top-down, i.e., objective macrofoundations of the world economy. All Human-Nature issues are the subject matter of other disciplines (psychology, sociology, anthropology, biology/Darwinism/evolution theory, political science, social philosophy, etcetera) and are taken in from these by way of multidisciplinary cooperation, IF NEEDED.
Economics is NOT a science of behavior (Hudík, 2011). #1 Economics is not a so-called social science like psychology/sociology, and not a natural science like physics, but a systems science.
By the way, it seems to have escaped your attention that Luhmann has defined sociology as a systems science (1995), and this, indeed, is the common methodological platform of sociology and economics (2014). With Edward Ross of 1889, you are way behind the curve.
References
Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL
Luhmann, N. (1995). Social Systems. Stanford: Stanford University Press.
Marx, K. (1906). Capital: A Critique of Political Economy, Vol. I. The Process of Capitalist Production. Library of Economics and Liberty. URL
Mill, J. S. (1874). Essays on Some Unsettled Questions of Political Economy. On the Definition of Political Economy; and on the Method of Investigation Proper To It. Library of Economics and Liberty. URL
#1 See also cross-references
***
REPLY to Ken Zimmerman on Jun 27For somebody with a small horizon, the earth is, for all practical purposes, flat, and all empirical evidence is so convincing that it is almost impossible to transcend this commonsensical worldview and ever get out of the tiny box. All the more so because science is, as a rule, counterintuitive and requires the emancipation from small-scale idiosyncratic personal experience.
Because of this, nothing seems more commonsensical than your assertion: “All that happens, I repeat, ALL is created via interactions (relationships) among a number of actors.” As a matter of fact, this view ― let us call it the Science-of-Man fallacy ― is as old as the hills. It goes back to Hume.
“And as the science of man is the only solid foundation for the other sciences, so the only solid foundation we can give to this science itself must be laid on experience and observation.” (2012, Introduction)
It reappears with the Austrian sect.
“Mises’ contribution was very simple and at the same time extremely profound. He pointed out that the whole economy is the result of what individuals do.” (Foreword, von Mises, 2007, p. v)
And it is the tenet of Orthodoxy.
“It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals.” (Arrow, 1994, p. 1)
The common denominator of all Science-of-Man approaches is that they are scientific failures. Not much profound insight about how the economy works has come from them. Until this day the representative economist cannot even tell the difference between income and profit.
Consistent with the low performance of flat-earthers in general, you have not put forward one single testable proposition about an important economic relationship. This is rather odd for a person who claims to apply the right methodology. In science, claims and opinions do not count for much; only proof counts.
References
Arrow, K. J. (1994). Methodological Individualism and Social Knowledge. American Economic Review, Papers and Proceedings, 84(2): 1–9. URL
Hume, D. (2012). A Treatise of Human Nature. Project Gutenberg EBook. URL
von Mises, L. (2007). Human Action. A Treatise on Economics, Vol. I. Indianapolis: Liberty Fund. (1949).
***
REPLY to Ken Zimmerman on Jun 28(i) You say: “The entire structure of western (but not all sciences) rests on the assumption that’s possible to go from an observation to conclusions about that observation.”
False. This holds only for the proto-scientific stage. For details, see the chart Graphic AXEC77.
The scientific stage starts with a well-articulated theory that is based on axioms. Axioms, in turn, are NOT DIRECTLY based on naive observation/experience but are a sophisticated logical construct: “If then it is the case that the axiomatic basis of theoretical physics cannot be an inference from experience, but must be free invention, have we any right to hope that we shall find the correct way?” (Einstein, 1934, p. 167)
As we know from history, scientists have found the correct way. You definitively do not understand the specific characteristics of science and mess it up with observationism: “The Baconian dogma I have in mind asserts the supreme merits of observation and the viciousness of theorizing speculation. I shall call this dogma, briefly, by the name ‘observationism’.” (Popper, 1994, p. 84)
(ii) You say: “Putting forth testable propositions about economic interactions is not my job. I’m not an economist. Rather, it’s your job as an economist. As a historian, I don’t test propositions, I examine the stories of how humans live together.”
True. Historians are storytellers and second-guessers, but not scientists. Because of this, they have NOTHING useful to say about methodology. Psychologists, too, have not much to say because economics is NOT about human psychology/behavior but about the behavior of the economic system. Economics is NOT a so-called social science but a systems science. For more about the cargo-cult science psychology, see Feynman on Wikipedia or YouTube.
(iii) You say: “Finally, following this dictum, if you can find some other variables to measure and test except relational ones let me know. That would change everything. A brand new universe would emerge.”
Yes, indeed. Here you have the First Economic Law (Graphic AXEC06), which defines the measurable and testable economic relations for the elementary consumption economy, which in turn are entirely FREE of green cheese psychological/behavioral assumptions. #1 If you think this equation is false, you can try to empirically refute it. This is how science works.
References
Einstein, A. (1934). On the Method of Theoretical Physics. Philosophy of Science, 1(2): 163–169. URL
Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality, Ch. Science: Problems, Aims, Responsibilities, 82–111. London, New York: Routledge.
***
REPLY to Ken Zimmerman on Jun 29Science is well-defined by material AND formal consistency and scientists judge and are judged according to these criteria. Genuine scientists have NO problem with these methodological essentials but the so-called social scientists have. Their persistent attempts to redefine science are understandable but pointless: either one plays according to the rules of science or one is OUT. Your view “that science is the study of the relationships among all the things, forces, thoughts, etc. that make the world and are made by it” is simply irrelevant.
October 2, 2023
Occasional Xs: Economics ― just disinfotainment and self-hype (XVIII)
#Econ#Walrasianism, #Keynesianism, #Marxianism, #Austrianism etc. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. Economic #PolicyGuidance has NEVER had sound scientific foundations. There is NO such thing as #GreatMinds in the profession. pic.twitter.com/2OiAghklyV
— E.K-H (@AXECorg) October 2, 2023
May 14, 2019
Economists’ silly kindergarten games
Comment on Barkley Rosser on ‘Robert J. Samuelson Denounces Economists’
Blog-Reference
Barkley Rosser refers to a Washington Post article: “However, today he [Robert Samuelson] has written on ‘What economists don’t know,’ which comes across as a pretty big spanking for economists, among whom he does not make much differentiation. We are all pretty much as ignorant as each other and just plain not willing to admit it, given that we are also all (actually here he admits not all) trying to ‘gain and retain political relevance and power’.” and “Indeed, we like to think that we have exposed this Establishment for its high crimes and misdemeanors, at least on a few occasions, even if we ourselves sometimes make erroneous remarks as well on various matters (and, of course, we get visited by good old Egmont from time to time, whose denunciations of all economists except for himself and maybe one or two others makes Samuelson’s complaints look like high praise).”
Under the headline ‘What economists don’t know’, Robert Samuelson criticizes the profession for bad forecasting performance. This, indeed, is a silly game that economists play with great enthusiasm in order to entertain their audience. This only proves that economists do not understand what science is all about. Genuine scientists do not participate in the prediction game because they know “The future is unpredictable”. (Feynman) Prophesy, the forerunner of pseudo-scientific forecasting, is known since time immemorial to be a tool of social programming/manipulation/psycho-terror.
Scientific ‘prediction’ does not predict the future but the observable empirical consequence of a theory.#1, #2, #3 If successful, the theory is corroborated, otherwise, it is refuted. The bottom line of the prediction brouhaha is: scientists do not predict the future, only charlatans do, and only morons take them seriously.
The second point to note is that Egmont does NOT denunciate economists but refutes their approaches. More specifically, he proves that Walrasianism, Keynesianism, Marxianism, Austrianism, and MMT are axiomatically false, materially/formally inconsistent, mutually contradictory and that all approaches get the foundational concept of the subject matter ― profit ― wrong. In brief, it is demonstrably true that economics is proto-scientific garbage and that economists are scientifically incompetent.#4, #5, #6 This includes, of course, the political agenda pushers Robert Samuelson and Barkley Rosser.
Egmont Kakarot-Handtke
#1 Scientists do not predict
#2 Prediction does not work? Try retrodiction first
#3 Predictably confused
#4 Economists: scientists or political clowns?
#5 Economics a science? Surely you're joking, Mr. Cochrane
#6 Economics: The greatest scientific fraud in modern times
Related 'Economics debate ― just another variant of hardcore wrestling' and 'Economics ― nothing but claptrap, twaddle, drivel, slip-slop, wish-wash, waffle, and proto-scientific garbage' and 'Economics: ‘a tale told by an idiot ... signifying nothing’'.
Barkley Rosser is pleased about Robert Samuelson’s civility: “Also, it must be admitted that RJS does say complimentary things about most economists he deals with as being ‘extremely smart’ and ‘public spirited’ and ‘generous with their time,’ albeit ‘with a few exceptions’.”
Another silly kindergarten game economists play is the peer-recommendation/reciprocal-hype/self-congratulation game. Reality is different: economists are either stupid or corrupt or both. For details see There is NO such thing as “smart, honest, honorable economists”.
You ask: “Does this absolute statement you make that there are ‘no’ smart or honest or honorable economists apply to you as well? Or are you not an economist?”
When I deal with how the economy works and prove that Keynes’ macroeconomic proposition I=S is false because Keynes got macroeconomic profit wrong, I am an economist. When I deal with how the economics profession works I am a sociologist.
You are right in pointing out that absolute statements may lead to paradoxes. An issue that has been dealt with under the heading of auto-reference by Luhmann and recursion/self-reference by Hofstadter and Russel’s Paradox by mathematicians.#1 Not to forget this ‘extremely smart’ Crete philosopher Epimenides. The finer points of logic, though, are a moot point among the confused confusers of economics.
To this day, both the microfoundations and macrofoundations of economics are provably false but economists have not realized it. So, Robert Samuelson’s self-referential characterization of economists as ‘extremely smart’ and ‘public spirited’ and ‘generous with their time’ only confirms what is long known, i.e. that economists are not scientists but stand-up comedians in the political Circus Maximus who senselessly repeat their ridiculous prophesy stunts.
If Robert Samuelson (and the rest of his ilk including Barkley Rosser) is an economist I am NOT an economist and vice versa. There is nothing paradoxical here.
#1 “In the foundations of mathematics, Russell’s paradox (also known as Russell’s antinomy), discovered by Bertrand Russell in 1901, showed that some attempted formalizations of the naïve set theory created by Georg Cantor led to a contradiction. The same paradox had been discovered in 1899 by Ernst Zermelo but he did not publish the idea, which remained known only to David Hilbert, Edmund Husserl, and other members of the University of Göttingen.” (Wikipedia)
You proudly present your ancestors: “As a matter of fact this is a family specialty, with me writing papers on these, such as ‘On the Foundations of Mathematical Economics’ that appeared a few years ago in New Mathematics and Natural Computation, with a couple more in the publication pipeline (with yours probably still empty I gather).”
Obviously, you still have not realized that the foundations of mathematical economics are false. See Barzilai and the crumbling of the unsafe citadel. See, in particular, the Open Letter to the President of the American Economic Association.
For proof that people who call themselves economists are too stupid for the elementary mathematics that underlies macroeconomics see #DrainTheScientificSwamp.
There are political economics and theoretical economics. Political economists are agenda pushers, and theoretical economists are scientists. Political economists are fake scientists and have to be expelled from economics. See Who is really a scientist?
There is no contradiction. You are a P-economist and I am a T-economist. It is absolutely correct to say that an [T-] economist is NOT an [P-] economist and vice versa. It sounds only paradoxical for people who have not realized that economics has been captured long ago by useful political idiots and is a cargo cult science since Adam Smith/Karl Marx.
Why don’t you simply read the post There is NO such thing as “smart, honest, honorable economists”?
Excerpt: The fact of the matter is that the four major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal concept of the subject matter ― profit ― wrong.
For 200+ years now, economists do not know what profit is. Because of this foundational blunder, economics is scientifically worthless. And because of this, economic policy guidance NEVER had sound scientific foundations. And because of this, economists are the major cause of economic crises. By default, every economic mess is econogenic unless proven otherwise.
Economics is for 200+ years at the proto-scientific level. What is long overdue is a Paradigm Shift. This cannot happen with the given personage. Economists’ modus operandi is to simply ignore scientific standards and to imperturbably recycle falsified theories: “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.” (Morgenstern)
Krugman, for example, who is on the list of “smart, honest, honorable economists” has not realized to this day that Keynes’ I=S is false for 80+ years and still recommends IS-LM as a useful model.
Economists are not smart because they have not figured out to this day what profit is and how the monetary economy works. They are neither honest nor honorable because what they are doing for 200+ years now is NOT science but political agenda-pushing.
Blog-Reference
Barkley Rosser refers to a Washington Post article: “However, today he [Robert Samuelson] has written on ‘What economists don’t know,’ which comes across as a pretty big spanking for economists, among whom he does not make much differentiation. We are all pretty much as ignorant as each other and just plain not willing to admit it, given that we are also all (actually here he admits not all) trying to ‘gain and retain political relevance and power’.” and “Indeed, we like to think that we have exposed this Establishment for its high crimes and misdemeanors, at least on a few occasions, even if we ourselves sometimes make erroneous remarks as well on various matters (and, of course, we get visited by good old Egmont from time to time, whose denunciations of all economists except for himself and maybe one or two others makes Samuelson’s complaints look like high praise).”
Under the headline ‘What economists don’t know’, Robert Samuelson criticizes the profession for bad forecasting performance. This, indeed, is a silly game that economists play with great enthusiasm in order to entertain their audience. This only proves that economists do not understand what science is all about. Genuine scientists do not participate in the prediction game because they know “The future is unpredictable”. (Feynman) Prophesy, the forerunner of pseudo-scientific forecasting, is known since time immemorial to be a tool of social programming/manipulation/psycho-terror.
Scientific ‘prediction’ does not predict the future but the observable empirical consequence of a theory.#1, #2, #3 If successful, the theory is corroborated, otherwise, it is refuted. The bottom line of the prediction brouhaha is: scientists do not predict the future, only charlatans do, and only morons take them seriously.
The second point to note is that Egmont does NOT denunciate economists but refutes their approaches. More specifically, he proves that Walrasianism, Keynesianism, Marxianism, Austrianism, and MMT are axiomatically false, materially/formally inconsistent, mutually contradictory and that all approaches get the foundational concept of the subject matter ― profit ― wrong. In brief, it is demonstrably true that economics is proto-scientific garbage and that economists are scientifically incompetent.#4, #5, #6 This includes, of course, the political agenda pushers Robert Samuelson and Barkley Rosser.
Egmont Kakarot-Handtke
#1 Scientists do not predict
#2 Prediction does not work? Try retrodiction first
#3 Predictably confused
#4 Economists: scientists or political clowns?
#5 Economics a science? Surely you're joking, Mr. Cochrane
#6 Economics: The greatest scientific fraud in modern times
Related 'Economics debate ― just another variant of hardcore wrestling' and 'Economics ― nothing but claptrap, twaddle, drivel, slip-slop, wish-wash, waffle, and proto-scientific garbage' and 'Economics: ‘a tale told by an idiot ... signifying nothing’'.
***
ADDENDUM on May 16Barkley Rosser is pleased about Robert Samuelson’s civility: “Also, it must be admitted that RJS does say complimentary things about most economists he deals with as being ‘extremely smart’ and ‘public spirited’ and ‘generous with their time,’ albeit ‘with a few exceptions’.”
Another silly kindergarten game economists play is the peer-recommendation/reciprocal-hype/self-congratulation game. Reality is different: economists are either stupid or corrupt or both. For details see There is NO such thing as “smart, honest, honorable economists”.
***
REPLY to Barkley Rosser on May 16You ask: “Does this absolute statement you make that there are ‘no’ smart or honest or honorable economists apply to you as well? Or are you not an economist?”
When I deal with how the economy works and prove that Keynes’ macroeconomic proposition I=S is false because Keynes got macroeconomic profit wrong, I am an economist. When I deal with how the economics profession works I am a sociologist.
You are right in pointing out that absolute statements may lead to paradoxes. An issue that has been dealt with under the heading of auto-reference by Luhmann and recursion/self-reference by Hofstadter and Russel’s Paradox by mathematicians.#1 Not to forget this ‘extremely smart’ Crete philosopher Epimenides. The finer points of logic, though, are a moot point among the confused confusers of economics.
To this day, both the microfoundations and macrofoundations of economics are provably false but economists have not realized it. So, Robert Samuelson’s self-referential characterization of economists as ‘extremely smart’ and ‘public spirited’ and ‘generous with their time’ only confirms what is long known, i.e. that economists are not scientists but stand-up comedians in the political Circus Maximus who senselessly repeat their ridiculous prophesy stunts.
If Robert Samuelson (and the rest of his ilk including Barkley Rosser) is an economist I am NOT an economist and vice versa. There is nothing paradoxical here.
#1 “In the foundations of mathematics, Russell’s paradox (also known as Russell’s antinomy), discovered by Bertrand Russell in 1901, showed that some attempted formalizations of the naïve set theory created by Georg Cantor led to a contradiction. The same paradox had been discovered in 1899 by Ernst Zermelo but he did not publish the idea, which remained known only to David Hilbert, Edmund Husserl, and other members of the University of Göttingen.” (Wikipedia)
***
REPLY to Barkley Rosser on May 17You proudly present your ancestors: “As a matter of fact this is a family specialty, with me writing papers on these, such as ‘On the Foundations of Mathematical Economics’ that appeared a few years ago in New Mathematics and Natural Computation, with a couple more in the publication pipeline (with yours probably still empty I gather).”
Obviously, you still have not realized that the foundations of mathematical economics are false. See Barzilai and the crumbling of the unsafe citadel. See, in particular, the Open Letter to the President of the American Economic Association.
For proof that people who call themselves economists are too stupid for the elementary mathematics that underlies macroeconomics see #DrainTheScientificSwamp.
There are political economics and theoretical economics. Political economists are agenda pushers, and theoretical economists are scientists. Political economists are fake scientists and have to be expelled from economics. See Who is really a scientist?
There is no contradiction. You are a P-economist and I am a T-economist. It is absolutely correct to say that an [T-] economist is NOT an [P-] economist and vice versa. It sounds only paradoxical for people who have not realized that economics has been captured long ago by useful political idiots and is a cargo cult science since Adam Smith/Karl Marx.
***
REPLY to Barkley Rosser on May 18Why don’t you simply read the post There is NO such thing as “smart, honest, honorable economists”?
Excerpt: The fact of the matter is that the four major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal concept of the subject matter ― profit ― wrong.
For 200+ years now, economists do not know what profit is. Because of this foundational blunder, economics is scientifically worthless. And because of this, economic policy guidance NEVER had sound scientific foundations. And because of this, economists are the major cause of economic crises. By default, every economic mess is econogenic unless proven otherwise.
Economics is for 200+ years at the proto-scientific level. What is long overdue is a Paradigm Shift. This cannot happen with the given personage. Economists’ modus operandi is to simply ignore scientific standards and to imperturbably recycle falsified theories: “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.” (Morgenstern)
Krugman, for example, who is on the list of “smart, honest, honorable economists” has not realized to this day that Keynes’ I=S is false for 80+ years and still recommends IS-LM as a useful model.
Economists are not smart because they have not figured out to this day what profit is and how the monetary economy works. They are neither honest nor honorable because what they are doing for 200+ years now is NOT science but political agenda-pushing.
November 13, 2015
Pseudo-voodoo-moron-proto-mumbonomics
Comment on Peter Radford on ‘Republican Pseudo-Economics’
Blog-Reference
You criticize the outcome of the recent presidential debate: “In other words, the answers were given to questions that did not reference the real economy, but only the make-believe economy that Republicans now inhabit.”
A presidential debate is about politics, isn’t it? So, strictly speaking, it is not about the real economy at all. And, to be sure, nobody expects a scientifically correct depiction of the economy. It is not such a great revelation that politics is about interests and just because of this the outcome of the debate with regard to the economy is hardly surprising: “So the holy trinity of tax cuts, smaller government, and deregulated business are trotted out over and over even if they are not solutions to what ails us.” (See intro)
Let us agree on the obvious: in a political debate economic theory and economic data are used for driving home a political point. It is about the-goodies-for-us-the-badies-for-them and this is legitimate in the given institutional framework. The search for truth is supposed to happen elsewhere. The real embarrassment begins when the economist comes in.
“Apologetics may be a laudable objective. Its practical importance is unquestioned. People need to be shown that the institutions of their own society are good, those of others bad. But there is no place for apologetics in science. Scientific economics inquires only into the How and Why, not into the Good or Bad, of what is. From the scientific point of view preoccupation with Good and Bad is worse than useless since it not only fails to illumine anything but keeps the lightbeam of inquiry from being turned in directions where answers to significant questions can be found. (Murad, 1953, p. 2)
What the good/bad moralizing member of the economics profession, here Peter Radford, is suggesting is that he — in marked contrast to the presidential candidates and the sheeple audience — really knows how the economy works. But this is not the case, and exactly this is the embarrassment.
Both, orthodox and heterodox economics is defective, that is, both miss the scientific criteria of material and formal consistency. The fact of the matter is that the representative economist in his manifest incompetence has not yet managed to exactly determine the difference between the pivotal concepts of his trade — income and profit.#1
Therefore, both the professional economist and the layperson, and both the defenders and attackers of the current economic order, have one property in common: they have no idea of what they are talking about.
The ignorance of politicians and the lay audience is, of course, unsatisfactory but it can be forgiven. Yet, there is no excuse whatever available to the economist.
“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, 1991, p. 30)
Walrasianism and Keynesianism are provably false (2015; 2014). These economists are not in the possession of the true theory. They do not know what profit is and therefore miss the essence of the market economy. The representative economist has no ‘solutions to what ails us’, his problem-solving track record is disappointing — to say the least, he has nothing to tell that could command more interest than the opinion of any practiced journalist. After more than 200 years of scientific failure, the member of the economics profession is left with the last choice: voluntary retirement or dishonorable discharge.
Republican pseudo-economics is a political side issue, the real problem is that economics is fake science.
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
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Murad, A. (1953). Questions for Profit Theory. American Journal of Economics and Sociology, 13(1): 1–14. URL
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge, MA: MIT Press.
#1 For heterodox Profit Theory see Heterodoxy, too, is proto-scientific garbage.
Blog-Reference
You criticize the outcome of the recent presidential debate: “In other words, the answers were given to questions that did not reference the real economy, but only the make-believe economy that Republicans now inhabit.”
A presidential debate is about politics, isn’t it? So, strictly speaking, it is not about the real economy at all. And, to be sure, nobody expects a scientifically correct depiction of the economy. It is not such a great revelation that politics is about interests and just because of this the outcome of the debate with regard to the economy is hardly surprising: “So the holy trinity of tax cuts, smaller government, and deregulated business are trotted out over and over even if they are not solutions to what ails us.” (See intro)
Let us agree on the obvious: in a political debate economic theory and economic data are used for driving home a political point. It is about the-goodies-for-us-the-badies-for-them and this is legitimate in the given institutional framework. The search for truth is supposed to happen elsewhere. The real embarrassment begins when the economist comes in.
“Apologetics may be a laudable objective. Its practical importance is unquestioned. People need to be shown that the institutions of their own society are good, those of others bad. But there is no place for apologetics in science. Scientific economics inquires only into the How and Why, not into the Good or Bad, of what is. From the scientific point of view preoccupation with Good and Bad is worse than useless since it not only fails to illumine anything but keeps the lightbeam of inquiry from being turned in directions where answers to significant questions can be found. (Murad, 1953, p. 2)
What the good/bad moralizing member of the economics profession, here Peter Radford, is suggesting is that he — in marked contrast to the presidential candidates and the sheeple audience — really knows how the economy works. But this is not the case, and exactly this is the embarrassment.
Both, orthodox and heterodox economics is defective, that is, both miss the scientific criteria of material and formal consistency. The fact of the matter is that the representative economist in his manifest incompetence has not yet managed to exactly determine the difference between the pivotal concepts of his trade — income and profit.#1
Therefore, both the professional economist and the layperson, and both the defenders and attackers of the current economic order, have one property in common: they have no idea of what they are talking about.
The ignorance of politicians and the lay audience is, of course, unsatisfactory but it can be forgiven. Yet, there is no excuse whatever available to the economist.
“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, 1991, p. 30)
Walrasianism and Keynesianism are provably false (2015; 2014). These economists are not in the possession of the true theory. They do not know what profit is and therefore miss the essence of the market economy. The representative economist has no ‘solutions to what ails us’, his problem-solving track record is disappointing — to say the least, he has nothing to tell that could command more interest than the opinion of any practiced journalist. After more than 200 years of scientific failure, the member of the economics profession is left with the last choice: voluntary retirement or dishonorable discharge.
Republican pseudo-economics is a political side issue, the real problem is that economics is fake science.
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
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Murad, A. (1953). Questions for Profit Theory. American Journal of Economics and Sociology, 13(1): 1–14. URL
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge, MA: MIT Press.
#1 For heterodox Profit Theory see Heterodoxy, too, is proto-scientific garbage.
March 27, 2019
Love and hate in economics: the PsySoc shell game
Comment on Randy Wray on ‘A Must Read: Why does everyone hate MMT?’*
Blog-Reference
James Montier summarizes: “Modern Monetary Theory (MMT) seems to provoke a visceral reaction amongst the ‘great and the good’ such as Rogoff, Krugman, and Summers. However, when reading their criticism I am often left with the impression that they haven’t actually bothered reading anything on the subject of their critique.” and “Sadly, the behaviour of the great and the good is far from exemplary in terms of economic debate. Terms like mess, foolish, fringe, nonsense, and voodoo alongside fear-mongering mentions of hyperinflations may make for an exciting story but they do little to advance the debate. In fact, the use of these words and the generally dismissive (but thoroughly unsubstantiated) nature of these articles appear to be typical of the output of those suffering from groupthink.”#1
To complain about economists’ ceaseless blather is either naive or insincere. Economics claims to be a science since Adam Smith/Karl Marx but has never been anything else than political propaganda. In the political sphere, nobody cares about scientific truth. The point of political communication is to engage the audience and the tools are well-known since the ancient Sophists: rhetoric/storytelling/lying, empty promises, fear-mongering, and smearing.
It is no secret how politics works and there would be no problem at all if the political sphere and the scientific sphere were strictly kept apart. However, this is not the case with economics. Economists claim to do science but instead push a political agenda. Economics is the worst scientific failure of modern times. So, the profession’s claim to do science as expressed in the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a fraud. Economists are not scientists but useful political idiots.#2
The scientific mission of economics is to figure out how the monetary economy works. Economists have failed at this task. Instead of figuring out the mechanics of the economic system, they have exhausted themselves with pointless speculation about Human Nature/motives/behavior/action. The point is, though, that Human Nature/motives/ behavior/action is the subject matter of Psychology, Sociology, Anthropology etcetera. That is, economists have never understood what their subject matter is. The scientific fact of the matter is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and that all get the foundational concept of the subject matter ― profit ― wrong. MMT is no exception.#3
And this makes it inevitable that economic debates degenerate in the shortest possible time into folk-psychological sitcom blather. Explanations do not consist of the identification of objective economic relationships but of speculation about subjective motives/emotions which, in turn, boil down to hate, revenge, resentment, greed, imperiousness, and other psychological/social pathologies. Thus, economics leaves the scientific sphere and ends in PsySoc blather.
The current Mainstream vs MMT debate is no exception. Each side accuses the other of stubborn groupthink. This psychological explanation is beside the point. Each side pushes a political agenda. The lethal defect of economics is not cognitive impairment but political corruption.
In order to get out of the mess, the first thing to do is to proceed from PsySoc blather to science. MMT has to be rejected because it is materially/formally inconsistent. The lethal blunder of MMT is located in the foundational sectoral balances equation (I−S)+(G−T)+(X−M)=0. Because there is a crack in the foundations the whole analytical superstructure of MMT is scientifically untenable. #4, #5
MMT has not to be flushed down the drain because some random moron hates it or because some academic loudspeakers suffer from groupthink but because MMT is provably false, i.e. does not satisfy the scientific criteria of material/formal consistency. This is how science works. Economists, though, are to this day NOT guided by the principles of science.#6
No one hates MMT but everyone despises stupid/corrupt economists.
Egmont Kakarot-Handtke
* GMO, James Montier Why does everyone hate MMT.
#1 Fake surveys and Groupthink in the economics profession.
#2 For details of the big picture see cross-references Political Economics.
#3 MMT is better than mainstream economics but still not good enough.
#4 Refuting MMT’s Macroeconomics Textbook.
#5 For the full-spectrum refutation of MMT see cross-references MMT.
#6 For details of the big picture see cross-references Failed/Fake Scientists.
Related 'Economics: the honeypot for know-nothingers' and 'MMT vs WSJ: Another futile exercise in moron bashing' and 'Meet the MMT smart arses' and 'The retirement of a fake scientist and real agenda pusher' and 'The clock runs down on economics' and 'Too much ado about deficit spending' and 'MMT-Refutation for Dummies'. For details of the big picture see cross-references Not a Science of Behavior.
Blog-Reference
James Montier summarizes: “Modern Monetary Theory (MMT) seems to provoke a visceral reaction amongst the ‘great and the good’ such as Rogoff, Krugman, and Summers. However, when reading their criticism I am often left with the impression that they haven’t actually bothered reading anything on the subject of their critique.” and “Sadly, the behaviour of the great and the good is far from exemplary in terms of economic debate. Terms like mess, foolish, fringe, nonsense, and voodoo alongside fear-mongering mentions of hyperinflations may make for an exciting story but they do little to advance the debate. In fact, the use of these words and the generally dismissive (but thoroughly unsubstantiated) nature of these articles appear to be typical of the output of those suffering from groupthink.”#1
To complain about economists’ ceaseless blather is either naive or insincere. Economics claims to be a science since Adam Smith/Karl Marx but has never been anything else than political propaganda. In the political sphere, nobody cares about scientific truth. The point of political communication is to engage the audience and the tools are well-known since the ancient Sophists: rhetoric/storytelling/lying, empty promises, fear-mongering, and smearing.
It is no secret how politics works and there would be no problem at all if the political sphere and the scientific sphere were strictly kept apart. However, this is not the case with economics. Economists claim to do science but instead push a political agenda. Economics is the worst scientific failure of modern times. So, the profession’s claim to do science as expressed in the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a fraud. Economists are not scientists but useful political idiots.#2
The scientific mission of economics is to figure out how the monetary economy works. Economists have failed at this task. Instead of figuring out the mechanics of the economic system, they have exhausted themselves with pointless speculation about Human Nature/motives/behavior/action. The point is, though, that Human Nature/motives/ behavior/action is the subject matter of Psychology, Sociology, Anthropology etcetera. That is, economists have never understood what their subject matter is. The scientific fact of the matter is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and that all get the foundational concept of the subject matter ― profit ― wrong. MMT is no exception.#3
And this makes it inevitable that economic debates degenerate in the shortest possible time into folk-psychological sitcom blather. Explanations do not consist of the identification of objective economic relationships but of speculation about subjective motives/emotions which, in turn, boil down to hate, revenge, resentment, greed, imperiousness, and other psychological/social pathologies. Thus, economics leaves the scientific sphere and ends in PsySoc blather.
The current Mainstream vs MMT debate is no exception. Each side accuses the other of stubborn groupthink. This psychological explanation is beside the point. Each side pushes a political agenda. The lethal defect of economics is not cognitive impairment but political corruption.
In order to get out of the mess, the first thing to do is to proceed from PsySoc blather to science. MMT has to be rejected because it is materially/formally inconsistent. The lethal blunder of MMT is located in the foundational sectoral balances equation (I−S)+(G−T)+(X−M)=0. Because there is a crack in the foundations the whole analytical superstructure of MMT is scientifically untenable. #4, #5
MMT has not to be flushed down the drain because some random moron hates it or because some academic loudspeakers suffer from groupthink but because MMT is provably false, i.e. does not satisfy the scientific criteria of material/formal consistency. This is how science works. Economists, though, are to this day NOT guided by the principles of science.#6
No one hates MMT but everyone despises stupid/corrupt economists.
Egmont Kakarot-Handtke
* GMO, James Montier Why does everyone hate MMT.
#1 Fake surveys and Groupthink in the economics profession.
#2 For details of the big picture see cross-references Political Economics.
#3 MMT is better than mainstream economics but still not good enough.
#4 Refuting MMT’s Macroeconomics Textbook.
#5 For the full-spectrum refutation of MMT see cross-references MMT.
#6 For details of the big picture see cross-references Failed/Fake Scientists.
Related 'Economics: the honeypot for know-nothingers' and 'MMT vs WSJ: Another futile exercise in moron bashing' and 'Meet the MMT smart arses' and 'The retirement of a fake scientist and real agenda pusher' and 'The clock runs down on economics' and 'Too much ado about deficit spending' and 'MMT-Refutation for Dummies'. For details of the big picture see cross-references Not a Science of Behavior.
***
Twitter Nov 22, 2021
July 1, 2019
MMT and the woes of useful political idiots
Comment on Bill Mitchell on ‘Why the financial markets are seeking an MMT understanding’
Blog-Reference and Blog-Reference
“One of the shifts I have observed in the last year or so in the way that Modern Monetary Theory (MMT) is being discussed in the public domain and the type of speaking invitations I am receiving is a growing interest from large financial market entities, who have not bought into the visceral, knee-jerk attacks from the populist academic type economists (Krugman, Summers, Rogoff, and all the rest that have jumped on their bandwagon).”
First of all, academic economists like Krugman, Summers, Rogoff, et tutti quanti are failed/fake scientists and cannot be taken seriously. Fighting these folks and mainstream economics as a whole delay only their burial at the Flat-Earth-Cemetery.#1
Mainstream economics is cargo cult science and the representative economist is not a scientist but a political agenda pusher. The pivotal issue of science is the truth/falsity of the theory in question, the pivotal issue of agenda-pushing is how effective the propaganda is and how the number of followers can be increased. Success is measured in likes and has no relation whatsoever to scientific content but depends alone on the political narrative.
MMT’s critique of mainstream economics is fully justified. The claim of MMTers that their approach is superior is justified. The reason is that MMT is macrofounded while mainstream economics is microfounded which is the lethal methodological defect. Unfortunately, from all this does NOT follow that MMT is scientifically true, i.e. materially/formally consistent, and it does NOT follow that MMT policy is, as claimed, for the benefit of WeThePeople.#2 MMT policy is clearly for the benefit of the Oligarchy. So, what holds for loudspeakers of the mainstream holds also for Bill Mitchell and other loudspeakers of MMT: economists are either stupid or corrupt or both.
There cannot be the slightest doubt that the policy of deficit-spending/money-creation benefits the Oligarchy because it increases macroeconomic profit according to the Profit Law which entails Public Deficit = Private Profit. Thus the Oligarchy’s financial wealth and public debt (currently $22 trillion) grow in lockstep.
Bill Mitchell’s core message is: “… we will learn how to understand how fiscal deficits impact on the non-government sector and expand the net financial assets in that sector and how fiscal surpluses do exactly the opposite.” What Bill Mitchell does not explain is that alone the financial assets of the Oligarchy are expanded and that WeThePeople are left with an expanding public debt that will eventually cause insoluble problems.#3
MMT is a communicative success among big money: “In September, I will be talking with some of the largest investment funds in Europe and Britain (and the Globe). I know some of my American MMT colleagues are doing similar presentations.”
This poses a slight problem because Bill Mitchell has to dispel the impression that he and other MMTers are in bed with the Oligarchy. How does he get around that?
“I think there is something to be said for people of influence being educated in a sound MMT understanding ― which is not to say I support the sort of influence they exert. However, on the other hand, I realise their motivation is not purely benign ― a thirst for knowledge etc. These entities are about profit making and will seek out anything that helps them achieve those goals. So for me, as an educator, the challenge is avoiding becoming another paid consultant in that process. I want them to understand our work but I don’t want to be part of their profit-making process. It is not an easy task. … But I see an advantage in fostering dissonance within the mainstream economics profession ― to expose the myths that are pumped out by the dominant paradigm in my profession, which undoubtedly leads to poor policy outcomes that damage the well-being of so many people.”
So, everyone can see that those mainstreamers are the bad guys and MMTers are the good guys: “We immediately perceive that the ideas that mainstream economics pump out that our governments are financially constrained are false and if this new awareness becomes the norm, then our democracies become enriched ― politicians have to defend their positions more transparently and their ideologies (who they want to transfer riches to) become more exposed and obvious.”
What is indeed obvious is that the MMT policy of deficit-spending/money-creation transfers riches to the Oligarchy and that the chief propagandist Bill Mitchell tells WeThePeople that this enriches democracy. That is after he has educated the intellectual slackers of Wall Street first: “An MMT understanding does not lead to conclusions that deficits from currency-issuing, national government do not matter. This is one of those popularised myths that the attackers are propagating because they think it will finish MMT off forever. The smartest operators in the financial markets are those who know otherwise. Only the less educated financial market players have bought the spin from the mainstream economists that ranges from deficits are typically not desirable to they should be avoided at all costs. Financial market operators should never be joining lobbies that proclaim the deficits are bad and should be avoided. Quite the contrary.”
The contrary is Public Deficit = Private Profit. Even the dullest Wall Streeter understands this equation.
Egmont Kakarot-Handtke
#1 For details of the big picture see cross-references Failed/Fake Scientists
#2 For the full-spectrum refutation of MMT see cross-references MMT
#3 How to pay for the war and to be bamboozled by economists
Related 'Dear idiots, MMTers are Wall Street’s agenda pushers' and 'Very busy these days: Wall Street’s agents' and 'Hype does not help: MMT is toast' and 'How MMT enlightens Washington' and 'MMT, Warren Mosler, and the little helpers from Wall Street and Academia' and 'Stephanie Kelton and the self-destructive stupidity of the super-rich' and 'Totally schizo ― MMT and policy' and 'Why the MMT benefactors of humanity never talk about profit' and 'Is MMT good for WeThePeople or for the Oligarchy?'
Blog-Reference and Blog-Reference
“One of the shifts I have observed in the last year or so in the way that Modern Monetary Theory (MMT) is being discussed in the public domain and the type of speaking invitations I am receiving is a growing interest from large financial market entities, who have not bought into the visceral, knee-jerk attacks from the populist academic type economists (Krugman, Summers, Rogoff, and all the rest that have jumped on their bandwagon).”
First of all, academic economists like Krugman, Summers, Rogoff, et tutti quanti are failed/fake scientists and cannot be taken seriously. Fighting these folks and mainstream economics as a whole delay only their burial at the Flat-Earth-Cemetery.#1
Mainstream economics is cargo cult science and the representative economist is not a scientist but a political agenda pusher. The pivotal issue of science is the truth/falsity of the theory in question, the pivotal issue of agenda-pushing is how effective the propaganda is and how the number of followers can be increased. Success is measured in likes and has no relation whatsoever to scientific content but depends alone on the political narrative.
MMT’s critique of mainstream economics is fully justified. The claim of MMTers that their approach is superior is justified. The reason is that MMT is macrofounded while mainstream economics is microfounded which is the lethal methodological defect. Unfortunately, from all this does NOT follow that MMT is scientifically true, i.e. materially/formally consistent, and it does NOT follow that MMT policy is, as claimed, for the benefit of WeThePeople.#2 MMT policy is clearly for the benefit of the Oligarchy. So, what holds for loudspeakers of the mainstream holds also for Bill Mitchell and other loudspeakers of MMT: economists are either stupid or corrupt or both.
There cannot be the slightest doubt that the policy of deficit-spending/money-creation benefits the Oligarchy because it increases macroeconomic profit according to the Profit Law which entails Public Deficit = Private Profit. Thus the Oligarchy’s financial wealth and public debt (currently $22 trillion) grow in lockstep.
Bill Mitchell’s core message is: “… we will learn how to understand how fiscal deficits impact on the non-government sector and expand the net financial assets in that sector and how fiscal surpluses do exactly the opposite.” What Bill Mitchell does not explain is that alone the financial assets of the Oligarchy are expanded and that WeThePeople are left with an expanding public debt that will eventually cause insoluble problems.#3
MMT is a communicative success among big money: “In September, I will be talking with some of the largest investment funds in Europe and Britain (and the Globe). I know some of my American MMT colleagues are doing similar presentations.”
This poses a slight problem because Bill Mitchell has to dispel the impression that he and other MMTers are in bed with the Oligarchy. How does he get around that?
“I think there is something to be said for people of influence being educated in a sound MMT understanding ― which is not to say I support the sort of influence they exert. However, on the other hand, I realise their motivation is not purely benign ― a thirst for knowledge etc. These entities are about profit making and will seek out anything that helps them achieve those goals. So for me, as an educator, the challenge is avoiding becoming another paid consultant in that process. I want them to understand our work but I don’t want to be part of their profit-making process. It is not an easy task. … But I see an advantage in fostering dissonance within the mainstream economics profession ― to expose the myths that are pumped out by the dominant paradigm in my profession, which undoubtedly leads to poor policy outcomes that damage the well-being of so many people.”
So, everyone can see that those mainstreamers are the bad guys and MMTers are the good guys: “We immediately perceive that the ideas that mainstream economics pump out that our governments are financially constrained are false and if this new awareness becomes the norm, then our democracies become enriched ― politicians have to defend their positions more transparently and their ideologies (who they want to transfer riches to) become more exposed and obvious.”
What is indeed obvious is that the MMT policy of deficit-spending/money-creation transfers riches to the Oligarchy and that the chief propagandist Bill Mitchell tells WeThePeople that this enriches democracy. That is after he has educated the intellectual slackers of Wall Street first: “An MMT understanding does not lead to conclusions that deficits from currency-issuing, national government do not matter. This is one of those popularised myths that the attackers are propagating because they think it will finish MMT off forever. The smartest operators in the financial markets are those who know otherwise. Only the less educated financial market players have bought the spin from the mainstream economists that ranges from deficits are typically not desirable to they should be avoided at all costs. Financial market operators should never be joining lobbies that proclaim the deficits are bad and should be avoided. Quite the contrary.”
The contrary is Public Deficit = Private Profit. Even the dullest Wall Streeter understands this equation.
Egmont Kakarot-Handtke
#1 For details of the big picture see cross-references Failed/Fake Scientists
#2 For the full-spectrum refutation of MMT see cross-references MMT
#3 How to pay for the war and to be bamboozled by economists
Related 'Dear idiots, MMTers are Wall Street’s agenda pushers' and 'Very busy these days: Wall Street’s agents' and 'Hype does not help: MMT is toast' and 'How MMT enlightens Washington' and 'MMT, Warren Mosler, and the little helpers from Wall Street and Academia' and 'Stephanie Kelton and the self-destructive stupidity of the super-rich' and 'Totally schizo ― MMT and policy' and 'Why the MMT benefactors of humanity never talk about profit' and 'Is MMT good for WeThePeople or for the Oligarchy?'
May 6, 2017
Feynman Integrity, fake science, and the econblogosphere
Comment on Jason Smith on ‘You’re wrong because I define it differently’
Blog-Reference
The state of economics is this: there are political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, and the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics, anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.
The state of economics is this: theoretical economics (= science) had been hijacked from the very beginning by political economics (= agenda pushers). Political economics has produced NOTHING of scientific value since Adam Smith. As a result of the utter scientific incompetence of political economists, economics is a failed science.
The state of economics is this: economics needs a Paradigm Shift because the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal economic concept of profit wrong: “... suppose they did reject all theories that were empirically falsified ... Nothing would be left standing; there would be no economics.” (Hands)
Economics is indefensible, but economists either do not realize it, do not admit it, excuse it, #1, or have no idea how to get out of the mess: “… most economists neither seek alternative theories nor believe that they can be found.” (Hausman)
Accordingly, economists defend the status quo and thereby ― knowingly or unknowingly does not matter ― actually violate scientific standards. As Morgenstern reminded his colleagues already in the 1940s: “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.”
Economists simply ignore formal or empirical refutation and carry on “as if nothing had happened.” The major approaches agree on one ― methodologically incorrect but politically convenient ― point: the pluralism of false theories. What is in dispute between the orthodox majority and the heterodox minority is merely the partitioning of the academic trough/curriculum between the schools.
Economics is axiomatically false; that is, it is beyond repair. Accordingly, there is no progress at all in orthodox economics for 150+ years, only the senseless multiplication of silly models which are based on the maximization-and-equilibrium axiom set.
Feynman called economics a cargo cult science and characterized it thus: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... So I call these things cargo cult science because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”
What is missing is the 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)
Because economists lack the true theory their policy guidance has never had sound scientific foundations. For 200+ years, economics is model bricolage, soapbox blather, inconclusive debate, or agenda pushing. More often than not, economic policy advice worsens the situation.
Paul Romer reminded Lucas and the DSGE crowd that by clinging to their intransparent mathiness, they violate Feynman Integrity. #2 The absurdity of Romer’s convoluted argument is that not only DSGE but ALL of economics, including his own, violates Feynman Integrity.
What Feynman had to say about cargo cult science was this: “So we really ought to look into theories that don’t work, and science that isn’t science.” With regard to economics, this means that nothing less than a Paradigm Shift will do.
In very practical terms, this means the promotion of fundamentally new approaches (non-Walrasian, non-Keynesian, non-Marxian, non-Austrian) and the elimination of the falsified approaches (Walrasian, Keynesian, Marxian, Austrian) and all their pseudo-innovative variants. What can be observed in the econblogosphere is the very opposite.
The loudspeakers of the profession play the scratch-my-back-and-I-scratch-yours recommendation and reputation game, peppered occasionally with a piece of tangential critique. This Zombie wrestling is what the public sees and enjoys. What the public does not see is that the loudspeakers of the profession actively push/censor/purge/retrofit their blogs in order to perpetuate the status quo of the pluralism of provably false theories.
The result is that the public regularly sees a Top 10 list of the most popular blogs/bloggers but never a Top 10 list of the worst violators of Feynman Integrity‡.
Egmont Kakarot-Handtke
#1 Failed economics: The losers’ long list of lame excuses
#2 Paul Romer ‘Feynman Integrity’
Related 'Macro imbeciles' and 'IS-LM ― a crash course for EconoPhysicists' and 'Economics, Plato’s Cave and the Silver Blaze Case' and 'Economics ― worse than fake' and 'When fake scientists call out on fake politicians' and 'Pre-truth and post-truth in economics' and 'Humpty Dumpty is back again' and 'Economics: a hereditary mental disease with scientific incompetence as father and political fraud as mother' and 'Economists: Incompetent? Stupid? Corrupt?' and 'Needed: The Worst of the Worst of economics blogs' and 'Economists, stupid or corrupt or both?' and 'The real problem with the economics Nobel'.
Blog-Reference
The state of economics is this: there are political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, and the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics, anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.
The state of economics is this: theoretical economics (= science) had been hijacked from the very beginning by political economics (= agenda pushers). Political economics has produced NOTHING of scientific value since Adam Smith. As a result of the utter scientific incompetence of political economists, economics is a failed science.
The state of economics is this: economics needs a Paradigm Shift because the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal economic concept of profit wrong: “... suppose they did reject all theories that were empirically falsified ... Nothing would be left standing; there would be no economics.” (Hands)
Economics is indefensible, but economists either do not realize it, do not admit it, excuse it, #1, or have no idea how to get out of the mess: “… most economists neither seek alternative theories nor believe that they can be found.” (Hausman)
Accordingly, economists defend the status quo and thereby ― knowingly or unknowingly does not matter ― actually violate scientific standards. As Morgenstern reminded his colleagues already in the 1940s: “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.”
Economists simply ignore formal or empirical refutation and carry on “as if nothing had happened.” The major approaches agree on one ― methodologically incorrect but politically convenient ― point: the pluralism of false theories. What is in dispute between the orthodox majority and the heterodox minority is merely the partitioning of the academic trough/curriculum between the schools.
Economics is axiomatically false; that is, it is beyond repair. Accordingly, there is no progress at all in orthodox economics for 150+ years, only the senseless multiplication of silly models which are based on the maximization-and-equilibrium axiom set.
Feynman called economics a cargo cult science and characterized it thus: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... So I call these things cargo cult science because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”
What is missing is the 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)
Because economists lack the true theory their policy guidance has never had sound scientific foundations. For 200+ years, economics is model bricolage, soapbox blather, inconclusive debate, or agenda pushing. More often than not, economic policy advice worsens the situation.
Paul Romer reminded Lucas and the DSGE crowd that by clinging to their intransparent mathiness, they violate Feynman Integrity. #2 The absurdity of Romer’s convoluted argument is that not only DSGE but ALL of economics, including his own, violates Feynman Integrity.
What Feynman had to say about cargo cult science was this: “So we really ought to look into theories that don’t work, and science that isn’t science.” With regard to economics, this means that nothing less than a Paradigm Shift will do.
In very practical terms, this means the promotion of fundamentally new approaches (non-Walrasian, non-Keynesian, non-Marxian, non-Austrian) and the elimination of the falsified approaches (Walrasian, Keynesian, Marxian, Austrian) and all their pseudo-innovative variants. What can be observed in the econblogosphere is the very opposite.
The loudspeakers of the profession play the scratch-my-back-and-I-scratch-yours recommendation and reputation game, peppered occasionally with a piece of tangential critique. This Zombie wrestling is what the public sees and enjoys. What the public does not see is that the loudspeakers of the profession actively push/censor/purge/retrofit their blogs in order to perpetuate the status quo of the pluralism of provably false theories.
The result is that the public regularly sees a Top 10 list of the most popular blogs/bloggers but never a Top 10 list of the worst violators of Feynman Integrity‡.
Egmont Kakarot-Handtke
#1 Failed economics: The losers’ long list of lame excuses
#2 Paul Romer ‘Feynman Integrity’
Related 'Macro imbeciles' and 'IS-LM ― a crash course for EconoPhysicists' and 'Economics, Plato’s Cave and the Silver Blaze Case' and 'Economics ― worse than fake' and 'When fake scientists call out on fake politicians' and 'Pre-truth and post-truth in economics' and 'Humpty Dumpty is back again' and 'Economics: a hereditary mental disease with scientific incompetence as father and political fraud as mother' and 'Economists: Incompetent? Stupid? Corrupt?' and 'Needed: The Worst of the Worst of economics blogs' and 'Economists, stupid or corrupt or both?' and 'The real problem with the economics Nobel'.
‡ YouTube Jul 1, 2021 Alexander Unzicker summarized: "Feynman was a character you simply cannot dislike. Yet, the theory on which his fame is based turns out to be bogus ― a symptom of the superficiality with which he tackled fundamental questions of physics." How this reflects back on Feynman Integrity is a question that has to be answered by physicists, not economists.
August 6, 2020
Economics is a disgrace ― now more than ever
Comment on Claudia Sahm on ‘Economics is a disgrace’ * ‡
The true disgrace of economics is that it has been a failed/fake/cargo cult science for 200+ years. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the foundational economic concept of profit wrong. #1 As a consequence, economic policy guidance has never had sound foundations. This applies to left/center/right policy. Economists are a hazard to their fellow citizens. #2
This is why economics has to be burnt down to the ground. However, Claudia Sahm demands “Burn it down: economics failed us.” This is upside-down thinking. In the scientific realm, the question is, what have you done for science and not what has science done for you? However, economists are not scientists, and science is the last thing Claudia Sahm cares about.
Claudia Sahm is “privileged enough to hold a PhD” but has not realized to this day that economics is failed/fake science. #3 That means that she is part of it.
What she cares about primarily is to make the story of her martyrdom in a toxic institutional culture (painful appears 7 times in her post) and her psychic condition (bipolar disorder) as widely known as possible. She does this for herself and on behalf of other victims, in particular vulnerable students and women of color, but does not forget to mention the recent deaths of Krueger, Weitzman, Sandholm, and Farhi as proof of the psychological toxicity of economics.
Everybody knows that something is rotten in economics as a scientific discipline. However, Claudia Sahm does not deliver a material/formal refutation of mainstream economics but sends a letter to Janet Yellen, Ben Bernanke, and Peter Rosseau complaining about the toxic culture of the profession.
This, of course, is a farce. You cannot be an economist without realizing at some point that academic economics is not committed to the advancement of objective scientific truth but that it is a crucial propaganda outlet of the Oligarchy.
This is no secret. Arrow defined the rules of the game in his famous AEA address: “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.”
So, either you subscribe to the ideology of methodological individualism and the peer-review gatekeepers let you in and thus help you to get on a financially attractive trajectory with the Bank of Sweden Nobel at the end of the rainbow, or you get problems ― psychological or otherwise.
All this is really old stuff. Economics started as Political Economy and J. S. Mill was on the payroll of the East India Company. Economics has, from the beginning, been the Oligarchy’s heavily promoted queen of the so-called social sciences.
The disgrace of economics is that economists have not produced much of genuine scientific value for 200+ years: “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)
Worse, economists still do not understand profit ― the foundational concept of their subject matter.#4 Worse, MMTers with academic credentials apply a provably false macroeconomic balances equation to camouflage that public deficit-spending/money-creation is to the disadvantage of WeThePeople and a free lunch for the Oligarchy.
Claudia Sahm does not address any scientific issues or the role of economists as useful idiots; she instead accuses academic economics of psychological cruelty, well knowing that this emotional issue will bring her immediate attention and the approval of the general public.
No doubt, the economics profession in the incarnation of the AEA will pledge guilt and promise betterment and reform, and rework their code of conduct.
This, of course, is the usual farce. Claudia Sahm wittingly or unwittingly helps to cover the real disgrace of economics. Economics ― orthodox and heterodox alike ― needs to be condemned for the corruption of science. The condemnation of toxic culture is justified but entirely beside the point. It is like a sociopathic mobster getting off cheaply by pleading guilty to having stolen a candy bar.
Egmont Kakarot-Handtke
* macromom
‡ Twitter
Related 'Economists can hardly wait for their burial at the Flat-Earth-Cemetery' and 'Disgrace again ― is economics really that bad?'. For details of the big picture, see cross-references Political Economics/Stupidity/Corruption and cross-references Failed/Fake Scientists and cross-references Paradigm Shift.
***
Graphic AXEC106l
Graphic AXEC121i
November 4, 2020
The GDP death blow for the economics profession
“Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period.” And “GDP can be determined in three ways, all of which should, theoretically, give the same result. They are the production (or output or value added) approach, the income approach, or the speculated expenditure approach.” and “The second way of estimating GDP is to use ‘the sum of primary incomes distributed by resident producer units’. If GDP is calculated this way it is sometimes called gross domestic income (GDI), or GDP (I). GDI should provide the same amount as the expenditure method described later. By definition, GDI is equal to GDP. In practice, however, measurement errors will make the two figures slightly off when reported by national statistical agencies. This method measures GDP by adding incomes that firms pay households for factors of production they hire ― wages for labour, interest for capital, rent for land, and profits for entrepreneurship. The US ‘National Income and Expenditure Accounts’ divide incomes into five categories:
- Wages, salaries, and supplementary labour income
- Corporate profits
- Interest and miscellaneous investment income
- Farmers' incomes
- Income from non-farm unincorporated businesses
These five income components sum to net domestic income at factor cost”. (Wikipedia) #1
To reduce matters to the core, the list 1-5 is condensed to the straightforward formula National Income = Wages (1) + Profits (2). This formula looks plausible, but, in fact, constitutes the foundational blunder of economics to this day. The conceptual blunder invalidates Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism. #2-#6
The fact of the matter is that economists are too stupid for the elementary algebra that underlies macroeconomics. With regard to scientific incompetence, there is NO difference between Orthodoxy and Heterodoxy ― it is the whole of academic economics.
Macroeconomics has to be based on a set of objective and consistent axioms.#7 This is the correct core of premises
(A0) The objectively given and most elementary systemic configuration of the economy consists of the household sector and the business sector, which in turn consists initially of one giant fully integrated firm.
(A1) YW=WL wage income YW is equal to wage rate W times working hours. L,
(A2) O=RL output O is equal to productivity R times working hours L,
(A3) EC=PX consumption expenditure EC is equal to price P times quantity bought/sold X.
The price P follows as the dependent variable under the conditions of budget-balancing, i.e., EC=YW, and market-clearing, i.e., X=O, as P=W/R, i.e., the market-clearing price is, for a start, equal to unit wage costs. This is the most elementary form of the macroeconomic Law of Supply and Demand.
By lifting the condition of budget-balancing, one gets the saving/dissaving of the household sector as S≡YW−EC and the profit/loss of the business sector as Q≡EC−YW. S and Q are the balances of two flows. It holds Q≡−S, that is, the profit of the business sector is equal to dissaving/deficit-spending of the household sector, and loss of the business sector is equal to saving of the household sector. This is the most elementary form of the macroeconomic Profit Law. #8-#10
Profit Q is a balance, i.e., the difference of flows, and NOT a flow like wage income YW. So, profit is NOT income. Economists not only confuse stocks and flows but also balances and flows. The Flow-Balance Inconsistency makes the whole of established economics proto-scientific garbage.
It is obvious that the business sector’s loss is something quite different from income. Wage income is a flow from the business sector to the household sector. Loss is the difference between the two flows EC and YW. So it is inadmissible to speak of loss as a type of income. This conceptual blunder is called a category mistake. Wage income and profit are NOT two different forms of income. The inexcusable blunder of the representative economist consists of confusing balances and flows.
This blunder carries over to the concept of National Income as given above, with 1-5, and thus ruins National Accounting and the concept of GDP. In technical terms, according to standard economics, GDI and GDP should be identical. Because the foundational concepts of macroeconomics ― profit and income ― are ill-defined, the whole analytical superstructure of macroeconomics is provably false. Economics is a failed science for 200+ years now. #11
The inescapable Paradigm Shift consists of the move from false microfoundations and false macrofoundations to the true macrofoundations (A1) to (A3).
Egmont Kakarot-Handtke
#1 Wikipedia Gross domestic product
#7 “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)
#10 Profit
#11 See Ch. 13, The indelible scientific disgrace of economics, in Sovereign Economics
Related 'MIT dilettantes (I)' and 'Wikipedia, economics, scientific knowledge, or political agenda pushing?' and 'Macroeconomics is proto-scientific garbage just like microeconomics' and 'Too stupid for the elementary algebra of macrofoundations' and 'Economists’ scientific incompetence is worse than the plague' and 'Your economics is refuted on all counts: here is the real thing'. For details of the big picture see cross-references Profit and cross-references Accounting and cross-references Refutation of I=S.
For more about Flow-Balance (In-)Consistency, see AXECquery.
For more about the economics profession, see AXECquery.
For more about GDP, see AXECquery.
For more about (material/formal) consistency, see AXECquery.
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Graphic AXEC109i
Graphic AXEC121i For a start, the distributed profit DN can be set to zero
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Twitter Aug 25, 2022 GDP and GDI are supposed to be identical ― the lethal blunder
Twitter Apr 20, 2023 Roughly speaking, since according to the macroeconomic Profit Law #PublicDeficitIsPrivateProfit and profit are mistakenly subsumed under total income there is a close "correlation" between GDP and debt which is the numerical integral of deficits
March 17, 2021
Bill Mitchell says that economists are fake scientists ― true, but MMTers are NOT different
Comment on Bill Mitchell on ‘Why economists kept getting the policies right!’
Bill Mitchell gives an inside report of academic economics: “But if you have been inside the profession all your life, as I have, then you get a pretty good feel for what is going on. And it is not what the rest of you think.”
“Economists are not fellow travellers ‘on a mission from god to do god’s work’ …” … “They are part of the capitalist establishment designed to safeguard capital and its profits and keep the working class in its place so that challenges are confined to disputes about wages and conditions around the margin, but, never question the basis of the system ― the ownership of the material means of production and the capacity of those unequal ownership relations to extract surplus value as profits from forcing workers to work longer than they have to to produce their (social) subsistence.” … “the development of neoclassical economics, from which the modern day Monetarism and New Keynesian economics emerged was no accident ― no scientific event.”
True, since the founding fathers, economists were not so much scientists as political agenda pushers: “Economists were hired by industrialists to come up with a body of work that made capitalism appear fair. It was in the second half of the C19th when Marxist thought was spreading among workers and the intellectual class and manifesting into social and political instability as evidenced by the ― Revolutions of 1848 ― and later, the ― 1871 Paris Commune ― among other uprisings.”
And he concludes: “Economists were part of that conspiracy to obfuscate the inner workings of capitalism. And it has been that way ever since.”
Except …
“Me, I was an aberration. A black sheep. That got through this system because my mathematics and mathematical statistics was first-rate and I could jump their hoops with ease.”
And now it turns out that Bill Mitchell and the MMTers got it right: “The author notes how everyone is jumping on the big deficits bandwagon now and no-one is talking much about the public debt issue any more.” #1
This is true; MMT has now become official doctrine. #2, #3, #4
While Bill Mitchell asserts that economists have always been “… part of the capitalist establishment designed to safeguard capital and its profits …” he tries to make the impression that he and MMTers and Progressives are different.
This is NOT the case.
The 3-sector macroeconomic Profit Law Q≡(G−T)+(I−S)+Yd implies Public Deficit = Private Profit. So, the MMT policy of deficit-spending/money-creation is a free lunch for the Oligarchy. Private financial wealth grows in lockstep with public debt. For public debt holds: #OligarchyOwnsIt and #WeThePeopleOwesIt. Public debt as interest cash cow produces perpetual income for the Oligarchy that is taxed from WeThePeople.#5
COV19 is a godsend for the Oligarchy: more deficit-spending/money-creation produces a profit explosion. Best of all, it can be propagandized as a benefit for WeThePeople. Fact is, though, that in real terms, WeThePeople pay for the economic relief package through stealth taxation.
If anything, Bill Mitchell/MMTers/Progressives are “part of the capitalist establishment”. #6, #7 Like the rest of economists from Adam Smith onward, economists are NOT on a “mission from god to do god’s work”. Economics is failed/fake science. Economists are NOT scientists but clowns and useful idiots in the political Circus Maximus. MMTers are NO exception.
Egmont Kakarot-Handtke
#5 Twitter, CRFB.org Mar 17, 2021, Federal Government Spending On Interest Payments
For more about stealth taxation, see AXECquery.
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REPLY to Matt Franko on Mar 17
The deficiency of MMTers in literal language is that they are too stupid for the elementary algebra that underlies macroeconomics: Proof of MMT's inconsistency.
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REPLY to Matt Franko on Mar 18
I said that MMTers (the social media trolls, the academics in general, and Bill Mitchell, in particular) are too stupid for the elementary algebra that underlies macroeconomics and that the MMT sectoral balances equation is provably false. Every MMTer can check the proof.#1-#4
You argue: “Bill is well trained in Mathematics....”
If so, he knows that science is about material/formal consistency and proof. So, he should be able to understand the proof of the inconsistency of the foundational MMT sectoral balances equation. And, as an academic, he should know that science defines itself by the high standards of scientific ethics.
According to these standards, he is obliged to check the proof of the inconsistency of MMT as soon as it comes to his notice and to either point to the exact location where the proof is faulty or to openly confirm the refutation of MMT so that others are no longer misled.
Neither Bill Mitchell nor any other MMTer has done the right thing to this day. MMTers have disqualified themselves and therefore have to be expelled with shame and disgrace from the scientific community.#5
#1 Wikipedia, economics, scientific knowledge, or political agenda pushing? ⇒ Section Provably False/MMT
#5 AXEC144f
Related 'MMT-Refutation for Dummies'.
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REPLY to Peter Pan on Mar 18
You ask: “Bill has never addressed your critique on his blog?”
Obviously, you still do not understand how economics works, although Bill Mitchell has given you a clear description. Economics does not work according to the principles of science. And this is long known: “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.” (Morgenstern, 1941)
Economists violate scientific standards from Adam Smith/Karl Marx onward and this is why Walrasianism, Keynesianism, Marxianism, Austrianism, and other long-refuted proto-scientific garbage is still around.#1 What we have is the pluralism of false theories.
Bill Mitchell knows this but claims that MMT is different. That is NOT the case. MMT is refuted but MMTers push it “as if nothing had happened”. Academic economics is politically corrupted and MMT is an integral part of it.#2
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REPLY to Dean on Mar 22
Answers/continuing links to your 3 questions.
1 Capitalists' consumption
Profit follows from the Profit Law. It can be distributed or not. So one gets distributed profit Yd as a part of total income Y=Yw+Yd. Distributed profit, in turn, splits into consumption expenditures and saving of “capitalists”. See section 7 of Essentials of Constructive Heterodoxy: Profit.
2 Cash
You assume “cash on hand to begin with”. In a fiat money system, things start with zero cash. Money is created ex nihilo by the central bank for the financing of the wage bill.
3 Investments
You say “investments create fixed capital” and “Investments only create profits because of a time lag between borrowing and repaying”. For the exact relationship of investment expenditures and profits see Squaring the Investment Cycle.
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NOTE on Barkley Rosser on Mar 31
You take toilet paper shortages in Venezuela as proof that they are “corrupt and incompetent”. These two keywords bring us immediately to the current state of economics.
Bill Mitchell gives an inside report of academic economics:#1 “But if you have been inside the profession all your life, as I have, then you get a pretty good feel for what is going on. And it is not what the rest of you think.”
“Economists are not fellow travellers ‘on a mission from god to do god’s work’ …” … “They are part of the capitalist establishment designed to safeguard capital and its profits and keep the working class in its place so that challenges are confined to disputes about wages and conditions around the margin, but, never question the basis of the system ― the ownership of the material means of production and the capacity of those unequal ownership relations to extract surplus value as profits from forcing workers to work longer than they have to to produce their (social) subsistence.” … “the development of neoclassical economics, from which the modern day Monetarism and New Keynesian economics emerged was no accident ― no scientific event.”
True, since the founding fathers, economists were not so much scientists as political agenda pushers and disinfotainment clowns in the political Circus Maximus.#2
The temporary shutdown of the Suez Canal may trigger physical toilet paper shortages in Western markets. Due to the superiority of Capitalism over Saint-Simonianism, though, this does not affect the production of intellectual toilet paper in US academia.#3
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