Totally schizo ― MMT and policy

Comment on Bill Mitchell on ‘The European Union once again reveals why it should be dissolved’

Blog-Reference and Blog-Reference

Bill Mitchell, the MMT loudspeaker, does not get tired of claiming that MMT is a scientific lens for seeing economic reality as it is and not a policy: “There is no MMT program!”. And all this is under the headline “Seize the Means of Production of Currency.”#1 Schizo!

Next, he flagellates the ECB and the europhile Left: “Yet, meanwhile, over in Frankfurt, the ECB is merrily funding government deficits ― totally in contravention of the European law, if was properly interpreted by the courts ― and they all turn a blind eye and create loopholes in the rules that allow them to do anything they want. And the Europhile progressives blithely carry on as if a few reforms are all that is needed to make this monstrosity a progressive paradise.”

However, last week he flagellated Mr. Weidmann for declaring that he intends to respect the law that defines the ECB’s mandate: “… we have to ensure that the prohibition of monetary financing is respected.”#2 Schizo!

It is pretty evident that MMT is NOT a lens for seeing how the monetary economy works but a cover for political agenda pushing. As Tom Hickey reveals: “The Left is hopelessly lost, and that leaves the field to the Right to deal with neoliberalism. I am seeing less on economics and finance per se, and more on the political fight going on among different camps, including those that are promoting the MMT POV as the optimal way to approach policy. While I am encouraged by the strides that MMT has made in breaking into the political ring, with the highly competent Stephanie Kelton as public face, the MMT position is as yet far from strong, since it is mostly allied with a Left that is fractured and largely incompetent.”

The problem is that the MMT policy guidance of deficit-spending/money-creation has NO sound scientific foundations#3 and that the “highly competent Stephanie Kelton” and other MMT academics are not Friends-of-the-People but stupid/corrupt agenda pushers for the Oligarchy.#4 Schizo!

Egmont Kakarot-Handtke


#1 MMT’s true program
#2 MMT: The communicative war on budget-balancers
#3 For the full-spectrum refutation of MMT see cross-references MMT
#4 Stephanie Kelton’s legendary Plain-Sight-Ink-Trick

Related 'Is MMT good for WeThePeople or for the Oligarchy?' and 'How the MMT fraud works' and 'The MMT fraud in slow motion, so that even economists can get it' and 'The MMT fraud hides behind the false "We"' and 'The Kelton-Fraud' and 'Very busy, those Wall Street propaganda folks' and 'Political fraud and the silence of academia'.

Occasional Tweets: Economics ― still trapped in micro-macro schizo

 

There is NO choice between micro- & macroeconomics. BOTH are proto-scientific garbage. The way forward is a #ParadigmShift from false micro- & macrofoundations to axiomatically true #MacroFoundations.

The miracle cure of economists’ micro-macro schizohttps://t.co/EkQwt9rmYE pic.twitter.com/h9B1yACBTA

— E.K-H (@AXECorg) January 5, 2023

Occasional Tweets: To become an economist it is helpful to be schizo

 

#Economics#FailedFakeScience#Economists' alleged “Struggle for a Better World” contradicts their own behavioral #Axiom of INDIVIDUAL #UtilityMaximization. Economics is methodologically self-contradictory since Adam Smith. See cross-referenceshttps://t.co/MzGiF9gpXa

— E.K-H (@AXECorg) January 16, 2023

For more about schizo see AXECquery. 

Heterodox schizo

Comment on Asad Zaman on ‘The Veil of Money’

Blog-Reference

In his post, The Education of an Economist Asad Zaman argues: “I don't support having a ‘science’ of economics — I have argued in my paper on Deification of Science that scientific methods cannot be applied to study of human societies because we have free will, agency, can choose our destinies, and our actions are not subject to mathematical laws.”

Now he accuses standard economics of NOT being a science: “Many leading economists have come to agree with Nobel Laureate Stiglitz that modern economic theory represents the triumph of ideology over science.”

This is manifest methodological schizo. The actual fact of the matter is that NEITHER Orthodoxy NOR Heterodoxy satisfies the well-defined criteria of science, i.e. formal and material consistency.

So, we have the following situation with regard to the Quantity Theory:
• Keynes’ critique of the QTM, the neutrality of money, in particular, is valid.
• Keynes’ own theory of money is provably false (2011).

It is of utmost importance to distinguish between political and theoretical economics. The main differences are: (i) The goal of political economics is to push an agenda, and the goal of theoretical economics is to explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, scientific standards are observed.

Neither orthodox nor heterodox monetary theory satisfies scientific standards. BOTH Friedman and Keynes were political economists, that is, agenda pushers but NOT scientists. The same holds for Stiglitz and, of course, for the outspoken opponent of the ‘Deification of Science’ Asad Zaman.

Economics is a science without scientists. Something has gone badly wrong.

Egmont Kakarot-Handtke


References
Kakarot-Handtke, E. (2011). Reconstructing the Quantity Theory (I). SSRN Working Paper Series, 1895268: 1–28. URL

Related 'Refutation of Asad Zaman’s heterodox methodology: all arguments you ever need'

Scientific Incompetence: cross-references

Posts

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• Bang — the representative economist and supply-demand-equilibrium are dead   here
• The tragedy of economics: stupid/corrupt economists   here
• No False-Hero Memorials (II)   here
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• Still behind the curve   here
• Humpty Dumpty is back again   here
• Getting out of moronomics   here
• Stop knowing nothing, start knowing something   here
• Moronomics   here
• Is Keynes acceptable?   here
• The irrelevance of economics   here
• How to be a good scientist   here
• Exponentially growing garbage   here
• Trapped in false alternatives   here
• Disoriented and lost in folk psychology   here
• The philosophy of know-nothingers   here
• Whatever it is, let's call it conservatism   here
• Much change, no progress   here
• How to stop idiot-breeding   here
• No future for the representative economist   here
• Secular intellectual stagnation   here
• Economics: the honeypot for know-nothingers   here
• Worthwhile Canadian filibuster?   here
• Economics as scientific South Seas   here
• The Hicks drive   here
• The Phillips curve as intelligence test   here
• Modern Moronomic Theory   here
• Back at Keynes' problem    here
• How to save the economy from storytelling economists   here
• Oh no! How could this happen?   here
• The end of storytelling    here and here
• Stubbornly in the wrong research program    here
• How to consistently start off on the wrong foot   here
• Cartoon science    here
• Mental messies and loose losers    here
• All economists together now: Solow’s Swan Song   here
• More than two centuries of waffling in the dark    here
• Flight of ideas and the dead end of all econtalk    here
• McCloskey and the lizard's tail    here
• Sloppiness as economic methodology    here
• Ditch it all    here
• Methiness    here
• Sitcom economics    here
• From one roadside ditch straight into the other    here
• The science that never was    here
• Market blunder    here 
• No license for drivel    here 
• Science and travesty    here
• What economics is not about    here 
• The epic ping-pong of empty problem and vacuous solution    here 
• Economics is not what most economists think it is    here
• Walrasian double-blunder    here 
• Unfit in all dimensions    here
• Mortifying scientific headstands    here 
• Science or Circus Maximus?    here
• The intelligent student's predicament    here
• Methodology as Force Majeure    here
• Bygones are bygones    here 
• Angels-on-a-pinpoint scholasticism    here
• MIT dilettantes    here  

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

"Economics of the last 200+ years is the most embarrassing failure in the history of modern science." For explanation and proof see here

Meta references

The miracle cure of economists’ micro-macro schizo

Comment on Nick Rowe on ‘Micro Profs teaching Intro Macro’

Blog-Reference and Blog-Reference on Jul 3 and Blog-Reference Link EV

“Could it be that there is something deeply wrong with mainstream economics … ?” (Blaug, 1984) Sooner or later, the intelligent student of economics arrives at this critical juncture. Starting with Samuelson’s prototype of 1948, economics textbooks consist of micro and macro, and it is obvious that the two parts do not fit together. #1 The cognitive dissonance is usually dispelled as follows: “Micro is a solid, cogent set of ideas that was carefully developed over several centuries. Macro was a desperate and doomed attempt to explain the Depression. Bad theories, inconsistent with micro and not even internally consistent, spouting nonsense like Y=C+I+G, AS/AD, IS/LM, and MV=PY.” (Sproul)

This is one of the many delusions of the representative economist. The fact is that microeconomics is proto-scientific garbage and macroeconomics is proto-scientific garbage, and the synthesis of the two is proto-scientific garbage squared. This is state-of-the-art economics, and teachers teach it, and students swallow it. #2 Economics has been for 200+ years now what Feynman called a cargo cult science.

This is the methodological core problem: “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)

Clearly, economists lack the true theory. It is pretty obvious that these cargo cult scientists never understood what methodology is all about. Aristotle put it thusly: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.”

Here are the premises for everyone to evaluate. The (Walrasian) microfoundations approach is defined by this verbalized axiom set: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub) The (Keynesian) macrofoundations approach is defined by this set of foundational propositions: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63)

Because both the microfoundations approach and the macrofoundations approach are axiomatically false, a Paradigm Shift is imperative. Who accepts Walrasian micro or Keynesian macro is forever outside of science.

The microfoundations approach is bottom-up and runs with necessity into the Fallacy of Composition. The macrofoundations approach is top-down and proceeds by successive differentiation until one arrives at the individual agent. Differentiation is the opposite of bottom-up or aggregation. Keynes was right in moving from microfoundations to macrofoundations, but due to his scientific incompetence, he ultimately messed up the Paradigm Shift. #3

This is the starter set of the correct macrofoundations approach. (A0) The objectively given and most elementary systemic configuration of the economy consists of the household and the business sector, which in turn consists initially of one giant fully integrated firm. (A1) Y_w=WL wage income Y_w 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.

These premises are certain, true, and primary, and therefore satisfy all methodological requirements. The set of premises is minimalistic; that is, it cannot be reduced further, only expanded. The graphical representation of the elementary production-consumption economy is given under the label of Graphic.  #4, #5, #6

Under the condition of market-clearing X=O and budget-balancing C=Y_w follows the macroeconomic Law of Supply and Demand P=W/R.

From the definition of monetary saving/dissaving S_m≡Y_w−C and of monetary profit/loss Q_m≡C−Y_w follows Q_m≡−S_m, i.e., the most elementary form of the macroeconomic Profit Law.

The average stock of transaction money is M=κY_w under the condition of budget balancing.

Given the minimalist core propositions (A1) to (A3), one has now to proceed top-down by successive differentiation, i.e., two firms ― one market, two firms ― two markets, and so on to n firms ― m markets.

It is important to realize that macroeconomic axioms are composed of measurable variables. This is the precondition for testing the derived complex relationships, i.e., the systemic economic laws, and this, in turn, is the precondition of final corroboration or refutation, as the case may be.

The behavior-free objective-systemic macrofoundations fully replace the false Walrasian microfoundations and the false Keynesian macrofoundations. Economics leaves the proto-scientific stage and becomes ― what it falsely has claimed for more than two centuries ― a science.

Egmont Kakarot-Handtke


#1 The father of modern economics and his imbecile kids
#2 Fact of life: your econ prof is scientifically incompetent
#3 How Keynes got macro wrong and Allais got it right
#4 Graphic AXEC31 Elementary production-consumption economy
#5 Geometrical Exposition of Structural Axiomatic Economics
#6 Economics for Economists

Related 'Cryptoeconomics ― the best of Nick Rowe’s spam folder' and 'Is Nick Rowe stupid or corrupt or both?' and 'It has been said before but economists still don’t get it' and 'Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist' and 'Yes, economics is a bogus science' and 'Schizonomics' and 'The Logical Interface Between Objective Macrofoundations and Subjective Valuations' and 'Your economics is refuted on all counts: here is the real thing'. For details of the big picture, see cross-references Axiomatization.

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Graphic AXEC137b Extended macrofoundations. Behavior is formally integrated as the Propensity Function (last line)

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REPLY to Nick Rowe on Jun 2

You say: “Nobody knows what is going on!”

Walrasian microeconomists and Keynesian macroeconomists never had any clue, indeed, but economics is in the process of replacing them. See The miracle cure of economists’ micro-macro schizo.

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REPLY to Avraam Jack Dectis on Jul 5

You say: “Plenty of good Econ 101 textbooks out there.”

This is one of the many delusions of the representative economist. The fact is that microeconomics is proto-scientific garbage and macroeconomics is proto-scientific garbage, and the synthesis of the two is proto-scientific garbage squared. #1 This is state-of-the-art economics, and teachers teach it, and students swallow it. Economics has been, for 200+ years now, what Feynman called a cargo cult science.

#1 The father of modern economics and his imbecile kids

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REPLY to Nick Rowe on Jul 12

The microfoundations approach has been methodologically defined as follows: “As with any Lakatosian research program, the neo-Walrasian program is characterized by its hardcore, heuristics, and protective belts. Without asserting that the following characterization is definitive, I have argued that the program is organized around the following propositions: HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states. By definition, the hard-core propositions are taken to be true and irrefutable by those who adhere to the program. ‘Taken to be true’ means that the hard-core functions like axioms for a geometry, maintained for the duration of study of that geometry.” (Weintraub, 1985, Joan Robinson’s Critique of Equilibrium: An Appraisal, p. 147)

In order to be applicable, HC2 requires a lot of auxiliary assumptions, most prominently a well-behaved/differentiable production function. #1

HC2 introduces marginalism, which is the all-pervasive principle of Orthodoxy. HC2, though, and HC4 and HC5 are plain NONENTITIES, that is, they have no more reality content than the Easter Bunny, dancing angels on a pinpoint, the Tooth Fairy, or Pegasus.

The methodological fact of the matter is that ALL models that take just one NONENTITY into the premises are a priori false. And methodology tells us that if the premises are false, the whole analytical superstructure is false. Therefore, the standard microfoundations approach with all its variants and derivatives from Jevons/Walras/Menger up to DSGE is methodologically false.

To put NONENTITIES into the premises is the defining characteristic of fairy tales, science fiction, theology, Hollywood movies, politics, propaganda, cargo cult science, and microfounded economics.

Not only constrained optimization, i.e., HC2, has to be dismissed, but the whole set of behavioral axioms. Microfoundations have to be fully replaced by objective-systemic macrofoundations. This is called a paradigm shift. #2

Teaching/studying behavioral optimization, just like teaching/studying epicycles, is a thing of the proto-scientific past.

#1 Putting the production function back on its feet

#2 New Economic Thinking: The 10 crucial points

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REPLY to Nick Rowe on Jul 16

Not only is the microfoundations approach axiomatically false, but also the macrofoundations approach. For the lethal methodological blunder, see Wikipedia and the promotion of economists’ idiotism (II).

Teaching/studying Walrasian Micro and Keynesian Macro is a thing of the proto-scientific past.

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REPLY to Livio de Matteo on Jul 23

Both the Walrasian microfoundations approach and the Keynesian macrofoundations approach are provably false. Economists are failed/fake scientists.#1 To this day, they do not know how the economy works. Since Adam Smith, they do not know what profit is #2, but they filibuster about the Russia-America CoDominium: an issue that is NOT AT ALL their business. #3

Time to end the shrunken heads perversity called economics.

#1 Economics: a science without scientists

#2 The profit theory is false since Adam Smith

#3 Economics: a “science” from suckers for suckers