Economic recommendations out of the swamp between true and false

Comment on Anonymous on Noah Smith on ‘Policy recommendations and wishful thinking’

Blog-Reference

The swamp between the hard rocks of true and false is the natural habitat of quacking frogs, of which there are four species: Walrasians, Keynesians, Marxians, Austrians. These approaches contradict each other. As a matter of logic, only one can be true, but all four can be false. The latter is actually the case. This leaves economists with (i) the scientific alternative, i.e., to initiate the necessary paradigm shift, and (ii) the political alternative, i.e., to be content with the pluralism of false theories and to continue fooling around in the swamp between true and false where “nothing is clear and everything is possible.” (Keynes)

Because economics, as represented by the four failed sects, has never risen above the level of a proto-science, it has become popular among economists to question the standards, to lower them or, as Blaug aptly put it, ‘to play tennis with the net down’. When this is pointed out, economists make the Pavlovian salto mortale backward. Here is the complete list of silly excuses.

“Economics is a strange sort of discipline. The booby traps I mentioned often make it sound as it is all just a matter of opinion. That is not so. Economics is not a Science with a capital S. It lacks the experimental method as a way of testing hypotheses. . . . There are always differences of opinion at the cutting edge of a science, . . . . But they last longer in economics . . . and there are reasons for that. As already mentioned, rival theories cannot be put to an experimental test. All there is to observe is history, and history does not conduct experiments: too many things are always happening at once. The inferences that can be made from history are always uncertain, always disputable, . . . You can’t even count on a long and undisturbed run of history, because the ‘laws’ of behavior change and evolve. Excuses, excuses. But the point is not to provide excuses.” (Solow)

The bottom line of this verbiage is that economists are incompetent scientists and that economics is what Feynman called a cargo cult science. But having no idea about how the actual economy works means that economists are in NO position to give policy recommendations.

This is not a problem, though. Economists need only give up the claim that what they do is science, as explicitly expressed in the title “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”, to bring public perception in line with reality.

Science is about true/false; all else is sitcom claptrap. After more than 200 years of scientific failure, the world has had enough of brain-dead economic blather, worthless policy recommendations, and silly excuses.

Egmont Kakarot-Handtke


Related 'Why don’t economists simply shut up for a while?'

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REPLY to Kain on Apr 29

You say: ‘Of course they [profit theories] can be different and correct at the same time.’ Only in the intellectual swamp of economics, which is the preferred habitat of confused confusers and compulsive blatherers.

(i) Take notice that The Profit Theory is False Since Adam Smith.

(ii) As a consequence of (i), the concept of GDP is false, see ‘The Common Error of Common Sense: An Essential Rectification of the Accounting Approach’ and 'The GDP-death-blow for the economics profession'.

(iii) As a consequence of (i)/(ii) Walrasianism, Keynesianism, Marxianism, and Austrianism are provably false. Because profit is the pivotal concept in economics, it holds without exception: when profit is ill-defined, the whole theoretical superstructure falls apart.

(iv) Because economists do not understand profit, they do not understand how the actual monetary economy works.

(v) Because of the abysmal logical incompetence of economists since Adam Smith, economics is a failed science. There is nothing to choose between Orthodoxy and Heterodoxy. See The nothing-to-choose dilemma.

(vi) Because the axiomatic foundations of economics are provably false, economists are in NO position to give any economic policy advice. Instead, they have to do some scientific homework: “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)

Conclusion: Because the axiomatic foundations of economic theory are provably false, economic policy guidance is worthless or even counter-productive. Economists are a menace to their fellow citizens.

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REPLY to Anonymous on Apr 29

You say “... spare me the true/false bullshit.”

(i) Science is about true/false and nothing else. Scientific criteria are well-defined as formal and material consistency.

(ii) Science was there before economics was there. Economists either accept the rules/ethics of science or are not accepted as scientists.

(iii) Economics is a failed science. For the main approaches, proof of either logical or material inconsistency has already been provided.

(iv) Economists are proof-deniers: “... suppose they did reject all theories that were empirically falsified ... Nothing would be left standing; there would be no economics.” (Hands)

(iv) Proof-denial violates scientific standards. Economists violate them on a daily basis at least since 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.” (Morgenstern, 1941)

(v) Economic policy proposals have no sound scientific foundations. Thus, policy disputes resemble nothing so much as a quarrel between poultry entrails readers. Krugman’s application of IS-LM is a case in point.

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REPLY to Kain on Apr 30

(i) You insist that there are multiple ways to define profit/income. This widespread methodological hallucination is the hallmark of confused confusers and explains why economists regularly fall over their own conceptual feet. See The Humpty Dumpty Methodology.

(ii) Your advocacy of Post Keynesianism is futile because the formal foundations of Post Keynesianism are provably false. See Why Post Keynesianism Is Not Yet a Science.

(iii) Godley/Lavoie have moved farthest in the right direction, but they, too, got profit wrong. See proof in The Emergence of Profit and Interest in the Monetary Circuit.

(iv) Post-Keynesians have not realized in more than 70 years that Keynes messed up macrofoundations. See Finalizing the Keynesian Revolution.

(v) For the overdue Paradigm Shift from microfoundations to macrofoundations, see The problem with macro in two words.

(vi) Post-Keynesianism is over just like Walrasianism. Time to catch up to speed.

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REPLY to Kain on May 2

You say: “So basically you would have to refute Kalecki’s profit equation and claim your own is better than his, if you want to truly debunk the Post Keynesians.”

High time for you to catch up to speed, see What is Wrong with Heterodox Economics? Kalecki’s Profit Theory as an Example and 'The Levy/Kalecki Profit Equation is false'.

The refutation of Keynes, Marx, and Keen you could also find on SSRN if you were not too much occupied with giving silly advice.

Getting out of the economics swamp

Comment on Noah Smith on ‘Vast literatures as mud moats’

Blog-Reference and Blog-Reference adapted to context

You say: “The point is, a bunch of smart people can get very big things wrong for a very long period of time, and that period of time may include the present.”

True, this happened with geocentrism for roughly 1500 years, starting with the smart mathematician, astronomer, and geographer Ptolemy around 100 AD. It happened again with economics, starting 200+ years ago with the not-so-smart Adam Smith. As a result, it holds for economics in general that “the vast literature actually contains more misinformation than information.”

The situation in economics is special insofar as there are TWO economixes: political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, and the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics, anything goes; in theoretical economics, scientific standards are observed.

Political economics as a whole is scientifically worthless. The proper place for this “vast literature” is the wastebasket. Political economics is easily recognizable by its swampiness. Swampiness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) Therefore, the political economist is mainly occupied with producing a methodological smoke screen that consists of vague concepts, anything goes, pluralism of false theories, alleged complexity, ontological uncertainty, unreliable data, the faux humility of ‘I know that I know nothing’, and the post-modern replacement of true theory by an emotional narrative. #1

The beauty of the swamp, ‘where nothing is clear, and everything is possible’ (Keynes), is that logical and empirical failure is inconsequential. #2 What you call the mud moat has indeed saved the life of the representative economist for 200+ years.

The other part of the “crappy vast literature” consists of methodological blunders, i.e. stuff that does not satisfy the scientific criteria of material and formal consistency. This holds for everything that comes under the banner of Walrasianism, Keynesianism, Marxianism, Austrianism, and Pluralism. These approaches are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL got the pivotal economic concept of profit wrong.

There are the hard rocks of true or false and the swamp between them. The swamp is the natural habitat of agenda pushers, confused confusers, incompetent scientists, political economists, status-quo inertionalists, commonsensers, and anti-scientists. The very characteristic of science is to relentlessly drive the question under discussion to the point of a clear-cut decision between true or false, in other words, to get out of the swamp: “We are lost in a swamp, the morass of our ignorance. … We have to find the roots and get ourselves out! … Braids or bootstraps are necessary for two purposes: to pull ourselves out of the swamp and, afterwards, to keep our bits and pieces together in an orderly fashion.” (Schmiechen)

The braids or bootstraps of science are material and formal consistency. Formal consistency is established by the axiomatic-deductive method, and material consistency by state-of-the-art testing.

The very characteristic of economics is that the “vast literature” consists of inconsistent and inconclusive blather or politics dressed up as science. So, perhaps 90 per cent of the content of peer-reviewed quality journals consists of models/theories that are axiomatically false. Axiomatically false means based on false Walrasian microfoundations or false Keynesian macrofoundations or ad hoc, plucked out of thin air. Therefore, the one and only interesting question in the given situation is how to achieve the paradigm shift from defective microfoundations and macrofoundations to materially and formally consistent macrofoundations. #3

Accordingly, the straightforward criterion for disposing of the “crappy vast literature” speedily into the wastebasket is: If it isn’t macro-axiomatized, it isn’t economics.

Egmont Kakarot-Handtke


#1 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#2 The political economist and incompetent scientist Keynes was one of the loudest defenders of conceptual vagueness: “Another danger is that you may ‘precise everything away’ and be left with only a comparative poverty of meaning. ... Such a problem was avoided, said Keynes, by Marshall who used loose definitions but allowed the reader to infer his meaning from ‘the richness of context’.” (Coates)
#3 True macrofoundations: the reset of economics

Related 'Macroeconomics: Drain the scientific swamp' and '#DrainTheScientificSwamp' and 'What is so great about cargo cult science? or, How economists learned to stop worrying about failure' and 'Solving Mill’s starting problem' and 'A new curriculum for swampies?' and 'It is better to be precisely right than roughly wrong' and 'Economic recommendations out of the swamp between true and false' and 'And the answer is NCND ― economics after 200+ years of Glomarization' and 'Marshall and the Cambridge School of plain economic gibberish' and 'Why J. S. Mill had no friendly word for the bigots and votaries of common sense' and 'Mental messies and loose losers'.

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REPLY to Barkley Rosser & other swampies on May 21

Noah Smith’s post has been titled “Vast literatures as mud moats” and deals with the use of cargo cult science for agenda pushing. Mud moats are just another term for the phenomenon which I call swampiness.

Noah Smith’s argument does not only apply to the production of scientifically worthless papers but a fortiori to blog posts.#1 It is pretty obvious that EconoSpeak is in the business of swampification. The proof is in Barkley Rosser’s recent posts about Trump, Putin, populism etcetera which do not contain one single atom of valid economics.

When Barkley Rosser occasionally turns to economics, swampiness goes into hyperdrive. To recall, Noah Smith’s argument has been: “If you and your buddies have a political argument, a vast literature can help you defend your argument even if it’s filled with vague theory, sloppy bad empirics, arguments from authority, and other crap.”

This is the actual situation in economics: economic policy arguments and proposals have NO sound scientific foundation. How does Barkley Rosser counter this argument, which applies to Walrasianism, Keynesianism, Marxianism, Austrianism, and Pluralism alike? With the recommendation to read good review essays. This is off the point, like recommending not to drink leaded water but to take the lead in the more convenient pill form.

Good review essays, of course, are NOT the way to get rid of the “crappy vast literature” that has been produced by incompetent scientists and agenda pushers. Good review essays only preserve the swamp. Harcourt’s review of the capital controversy is a case in point.

The ambition of science is, of course, to drain the swamp of mere opinion and to eventually reach the firm ground of true theory. Lifelong swampies who see their natural habitat in jeopardy quite naturally defend it.#2 This is why Walrasians, Keynesians, Marxians, and Austrians are currently so busy producing even more mud in the econblogosphere. Barkley Rosser and his buddies, in their utter scientific incompetence, are setting up new records in mud production.


#1 Feynman Integrity, fake science and the econblogosphere
#2 Failed economics: The losers’ long list of lame excuses

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Graphic AXEC121g

What is so great about cargo cult science? or, How economists learned to stop worrying about failure

Comment on David Glasner on ‘What’s so Great about Science? or, How I Learned to Stop Worrying and Love Metaphysics’

Blog-Reference and Blog-Reference

Everybody who has ever used a knife and fork or a wheelbarrow or a cooking spoon somehow understands the concept of the lever and can apply it successfully in everyday situations. Science, though, goes beyond the endless multitude of concrete instantiations of the lever and tries to figure out the common denominator of ALL variants of levers past, present, and future. Science abstracts from the superficial reality of the Here and Now and tries to figure out the underlying fundamental reality, which has been found to be Fb/Fa=a/b: “This is the law of the lever, which was proven by Archimedes using geometric reasoning.” (Wikipedia) #1

The characteristic of the Law of the Lever is that it is abstract and universal. The fact is that about ninety-nine per cent of people simply cannot go beyond the concrete and space-time particular. For an explanation of what happens in the world around them, they are perfectly satisfied with a plausible story and cannot understand the fuss about generality, rigour, and proof. All the more so, because it happened, again and again, that science demonstrated the absurdity of common-sense intuition. #2 For the ninety-nine percenters, science produces only cognitive dissonance.

Clearly, for all practical purposes between cradle and grave, nobody needs to know the Law of the Lever. Strictly speaking, the criterion of usefulness does NOT apply at all to science: “True science is distinctively the study of useless things. For the useful things will get studied without the aid of scientific men. To employ these rare minds on such work is like running a steam engine by burning diamonds.” (Peirce)

A second misunderstanding relates to the concept of prediction. Since time immemorial, prediction has been used either for decision-making under uncertainty or for religious/ political brainwashing. Against widespread commonsensical preconceptions, it has, therefore, to be emphasised that science does NOT predict the future. #3

Although the results of scientific research can be useful and have indeed been useful beyond the wildest dreams, this is NOT the criterion to judge the results of scientific research. The SOLE criterion to judge a theory, which is the embodiment of scientific knowledge, is the binary true/false, with truth defined as material and formal consistency. #4 This has been known for 2300+ years ― except among economists.

Economics is a failed science. The fact is that 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. After 200+ years, economics is still at the level of a proto-science or what Feynman called a cargo cult science. #5

However, from Adam Smith to the Faux Nobel economists consistently claimed to do science. #6 So, there is a blatant contradiction between the claim and the definitive failure after 200+ years. To paper over the contradiction, economists habitually resort to J. S. Mill’s characterization of economics as ‘inexact and separate’ science. To be sure, there is NO such thing; there are only science and non-science.

Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). The distinction between science and non-science corresponds to the ancient Greeks’ distinction between episteme (= knowledge) and doxa (= opinion).

The fact is that about ninety-nine per cent of people are satisfied with opinion, and only one per cent is devoted to episteme. Economists do NOT belong to the latter group. Economics is a cargo cult science, and economists are fake scientists.

The state of economics is this: there is political economics and theoretical economics. The founding fathers called themselves political economists; that is, they left no doubt that their main business was agenda pushing. Economists never got out of political economics. In other words, theoretical economics (= science) ultimately could not emancipate itself from political economics (= agenda-pushing). This is why economics never rose above the level of a proto- or cargo cult science.

There are the hard rocks of true or false and the swamp between them. The swamp is the natural habitat of morons, agenda pushers, confused confusers, incompetent scientists, political economists, status-quo inertionalists, commonsensers, and anti-scientists.

Political economists are natural-born swampies. In marked contrast to scientists who drive the question under discussion to the point of a clear-cut decision between true or false, neither the orthodox nor the heterodox swampy has a genuine interest in a definite outcome but seeks to keep matters in the swamp of inconclusiveness.

Swampiness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) Therefore, the cargo cult scientist is mainly occupied with producing a methodological smoke screen that consists of vague concepts, #7 anything-goes, pluralism of false theories, alleged complexity, ontological uncertainty, unreliable data, faux humility, the post-modern replacement of true theory by political narrative, and a veritable artillery barrage of silly excuses. #8 The beauty of the swamp is that logical and empirical failure is inconsequential.

David Glasner argues, “… there is almost nobody out there that is openly and explicitly campaigning against science.” True, but this is NOT the problem. What is out there is cargo cult science, and cargo cult science is much worse than anti-science.

The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are provably false, i.e. materially/formally inconsistent. Whoever calls himself a Walrasian, Keynesian, Marxian, Austrian, or Pluralist is either an incompetent scientist or a political fraudster. #9

David Glasner asks: What’s so great about science? What is so great about science is that it satisfies the well-defined criteria of scientific truth for 2300+ years. What is so pathetic about economics is that the dull creatures who call themselves economists sell their sitcom garbage for 200+ years in the bluff package of science.

Egmont Kakarot-Handtke


#1 How to look at reality
#2 Economics, too, has been almost ruined by the bigots of common sense
#3 Science does NOT predict the future
#4 No trade-off, Kant said
#5 “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.”
#6 Economics’ lack of scientific legitimacy
#7 The political economist and incompetent scientist Keynes has been one of the loudest defenders of conceptual vagueness: “Another danger is that you may ‘precise everything away’ and be left with only a comparative poverty of meaning. ... Such a problem was avoided, said Keynes, by Marshall who used loose definitions but allowed the reader to infer his meaning from ‘the richness of context’.” (Coates)
#8 Economists and their silly excuses
#9 Feynman Integrity, fake science, and the econblogosphere

Related 'Economics has arrived at the bottom of the proto-scientific shithole' and 'Beware of the moralizing economist'. For details of the big picture, see cross-references Failed/Fake Scientists and cross-references Scientific Incompetence.

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Twitter Cargo Cult

Better precisely right than roughly wrong (II)

Comment on Lars Syll on ‘Why it is better to be roughly right than precisely wrong’

Blog-Reference

Scientists know it, but economists do not: “The chief demerit is inconsistency, including inconsistency with the results of experiments that a competing theory can explain.” (Popper, 1994)

Scientists know it, but economists do not: “Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant, 1994)

So, science is about formal AND material consistency ― BOTH simultaneously, NOT either/or. It is all simple and clear.

But in all walks of life, there is always the original and a look-alike. Accordingly, there is science and cargo cult science. Feynman characterized the look-alikes: “they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”

What is missing is an understanding of what science is all about. Science is digital = binary = true/false and NOTHING in between. There is NO such thing in science as roughly right or roughly wrong; it is only materially/formally true/false. All the rest is storytelling, gossip, sitcom, and blather.

Vague blather, untestable wish-wash, inconclusive either-or, and storytelling have always been the hallmark of political economists. Political economics is the look-alike of theoretical economics. Walrasianism, Keynesianism, Marxianism, and Austrianism are political economics.

So, there are the hard rocks of true and false and the bottomless swamp between them where “nothing is clear and everything is possible” (Keynes). The swamp is the natural habitat of morons, agenda pushers, confused confusers,#1 trolls, and incompetent scientists.

Economists are natural-born swampies. This explains why economics is a failed science. Walrasianism, Keynesianism, Marxianism, and Austrianism are mutually contradictory, and the proponents fight each other. But this does not go very deep, and it never goes to the final refutation of one approach or the other. Every swampie respects the other swampie's wish to fool around in the swamp.

In marked contrast, scientists drive the question under discussion to the point of a clear-cut decision between true and false. And they do not touch questions that cannot be decided by the accepted means, that is, by logic and testing.

The swamp cronies have no genuine interest in a definite true/false outcome but seek to stay, for whatever reasons, in the status quo swamp. Swampies subscribe to a common methodological hallucination: it is better to be roughly right than precisely wrong, anything goes, truth is subjective and relative, reality is a social construct; nobody has the truth with a big T, everybody has some truth with a small t, and finally, to the pluralism of provably false theories. Swampies have produced the gigantic heap of toxic scientific waste that is called economics.

Swampies simply do not understand what science is all about. As Feynman put it: “The first principle is that you must not fool yourself ― and you are the easiest person to fool. So you have to be very careful about that. After you’ve not fooled yourself, it’s easy not to fool other scientists. You just have to be honest in a conventional way after that.”

Neither orthodox nor heterodox economists fit this description of a scientist. But BOTH orthodox and heterodox economists fit the description of lookalike scientists, political agenda pushers, and self-foolers. And this is exactly why it is best to throw BOTH now speedily out of the scientific community.

Egmont Kakarot-Handtke


#1 Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist

Related 'There is NO such thing as an economic expert' and 'The father of modern economics and his imbecile kids' and 'How Keynes got macro wrong and Allais got it right' and 'From false micro to true macro: the new economic paradigm' and 'New Economic Thinking: the 10 crucial points' and 'There is NO such thing as “smart, honest, honorable economists”' and 'Your economics is refuted on all counts: here is the real thing'.

Macroeconomics: Economists are too stupid for science

Comment on Noah Smith on ‘Beware of Economic Theories Claiming to Explain Everything’*

Blog-Reference and Blog-Reference (Link) and Blog-Reference (Link)

“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)

The goal of science is the true theory. The true theory is the human's best mental representation of reality. Science has been defined for 2300+ years by material and formal consistency. Logical consistency is secured by applying the axiomatic-deductive method, and empirical consistency is secured by applying state-of-the-art testing.

According to the criteria of material/formal consistency, economics is a failed science. Economists do not possess a true theory. The fact of the matter is that the 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.

Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). This corresponds approximately to Noah Smith’s mistaken idea of science: “What it [orthodox macroeconomics] is, is science. Not the clean, idealized lab science of physics or chemistry, or the simple, convincing studies of microeconomics. But as messy and limited as it is, empirical macro represents a real, honest, ongoing attempt by dedicated researchers to explore the ins and outs of a hideously complex and hard-to-measure system. Someday, thanks to their modest, diligent efforts, we will probably understand the phenomena of booms and busts much better than we do now.”

Noah Smith thinks that Orthodoxy has a communication problem: “But elected politicians looking for a bold policy program and asset managers looking for a bold investment thesis are frequently tempted by heterodox economic theories claiming to have simple, sweeping solutions. Two examples are Austrian economics and modern monetary theory.” And: “The boldness and confidence of these predictions — and the comparative lack of math — makes these theories much more attractive to politicians and investors compared to the turgid scribblings of professors.”

No, communication is neither the problem of Orthodoxy nor of Heterodoxy. Scientific content is the problem. Both Orthodoxy and Heterodoxy are proto-scientific garbage. Both orthodox and heterodox economists are scientifically incompetent. As a consequence, Noah Smith’s conclusion misses the point: “In other words, both policy makers and politicians should be reluctant to embrace the sweeping claims of unconventional theorists. Instead, a cautious approach, relying on judgment, data, and an eclectic mix of theories, seems best.”

There is no way around it: economics does NOT need an “eclectic mix” of provably false theories but the true theory. After 200+ years, economics has to get out of the swamp of what Feynman called cargo cult science. In methodological parlance, economics has to abandon false Walrasian microfoundations#1 and false Keynesian macrofoundations#2 and move to true macrofoundations.#3 Economics needs a Paradigm Shift. The materially/ formally inconsistent orthodox and heterodox models have to be buried at the Flat-Earth Cemetery. All orthodox and heterodox economists have to be expelled from the scientific community.

To this day, the axiomatic foundations of economics are provably false. This holds for Walrasianism, Keynesianism, Marxianism, Austrianism, and also for MMT.#4 MMT has the methodological advantage that it is based on a clearly defined sectoral balances equation. This enables the straightforward application of the scientific method. Accordingly, the question is which of the two foundational macroeconomic equations is true, i.e., materially and formally consistent:

• the MMT sectoral balances equation (I−S)+(G−T)+(X−M)=0 or
• the axiom-based equation (I−S)+(G−T)+(X−M)−(Q−Yd)=0.

Both equations consist of measurable variables and are testable with the precision of two decimal places. This is a clear-cut true/false question that can be unambiguously decided according to well-established scientific criteria.

The MMT equation is logically/mathematically false. Economists are too stupid for the elementary mathematics that underlies macroeconomics.#5 Because of this, the whole analytical superstructure of MMT is false. Because the theory is false, MMT policy guidance has NO sound scientific foundations ― just like Walrasianism, Keynesianism, Marxianism, and Austrianism.

Right policy depends on true theory. To this day, economists do NOT have the true theory. There is no escape: false theory becomes political fraud#6 and incompetent scientists become useful political idiots. This is the state of present-day economics.

Egmont Kakarot-Handtke


* BloombergOpinion
#1 Microfoundations are given with this 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) Accepting these axioms has always been a reliable indicator of idiocy.
#2 How Keynes got macro wrong and Allais got it right
#3 True macrofoundations are given with this axiom set: (A0) The most elementary configuration of the economy consists of the household and the business sector, which in turn consists initially of one giant fully integrated firm. (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.
#4 Hooray! The formalization issue is finally settled
#5 Wikipedia and the promotion of economists’ idiotism (II)
#6 MMT: How mathematical incompetence helps the Kelton-Fraud

Related 'Economists: too stupid for counting' and 'Knowledge is attainable ― even in economics' and 'How economists murdered the economy and got away with it' and 'Economics is locked in idiocy: How could this happen?' and 'Dani Rodrik, fake scientist' and 'Still beyond the reach of economists: The Holy Grail of Science' and 'Are economists natural born scientific failures?' and 'Confused Orthodoxy vs. confused Heterodoxy' and 'Eclecticism, anything goes, and the pluralism of false theories' and 'The creative destruction of Wren-Lewis' and 'The biggest scientific mistake of the last centuries, and it has much to do with academic economists' and 'Why is economics a total scientific failure?' and 'Economists: Either stupid or corrupt or both' and 'From Keynes’ fatal blunder to the true economic model' and 'Mad but true: 200+ years after Adam Smith economists still have no idea what profit is' and 'Smart young empirically-minded economists: another vain hope' and 'Media-fake-farce-fraud-storytelling-macro' and 'Economists: Either stupid or corrupt or both' and 'Proving Bill Mitchell wrong ― burying MMT for good' and 'The canonical macroeconomic model' and 'There is NO such thing as “smart, honest, honorable economists”' and 'Profit' and 'Your economics is refuted on all counts: here is the real thing'.

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Graphic AXEC118d

A new curriculum for swampies?

Comment on Lars Syll on ‘The need for a new economics curriculum without the present suicidal formalism’

Blog-References and Blog-Reference and Blog-Reference on Nov 18 and Blog-Reference on Apr 25, 2017, adapted to context

A new economics curriculum is needed, no doubt about this. But why exactly? Some say because there is too much mathematics. Others say there is not enough history/ psychology/ sociology/ philosophy/ ethics. Still, others demand that heterodox economists like Schumpeter or Marx should be given more weight.

There is some superficial plausibility in all of this, but these popular arguments miss the crucial point. The fact of the matter is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism ―  are provably false. What economics needs is a scientifically valid curriculum, but there is none because there is no scientifically valid economic theory. After 200+ years, economics is still at the level of what Feynman called a cargo cult science.

So, when Keynesian and Marxian economists argue that the Walrasian curriculum is false, unrealistic, or biased, then one can readily agree. The problem is that Keynesian or Marxian economics is not one iota better; it is only false in a different way. Actually, both Keynesian and Marxian profit theories are provably false (2013; 2014), just like Walrasian profit theory.

To mix a new curriculum of Walrasian, Keynesian, Marxian, and Austrian contents is an idea of unsurpassable idiocy. The true theory does not emerge from a mixture of provably false theories.

The state of economics is this: there are political economics and theoretical economics. The founding fathers called themselves political economists; that is, they left no doubt that their main business was agenda-pushing. Economists never got out of political economics. In other words, theoretical economics (= science) ultimately could not emancipate itself from political economics (= agenda-pushing). And this is how economics became a failed science.

What is entirely missing among economists is an understanding of what science is all about. Science is digital = binary = true/false and NOTHING in between. There is NO such thing in science as roughly right or roughly wrong; there is only materially/formally true/false. All the rest of human communication is storytelling, gossip, sitcom, rhetoric, and opinion. Vague blather, untestable wish-wash, inconclusive either-or, plain inconsistency, moralizing, and preaching have always been the hallmark of political economists.

So, there are the hard rocks of true and false and the swamp between them where “nothing is clear and everything is possible” (Keynes). The swamp is the natural habitat of morons, agenda pushers, confused confusers, trolls, and incompetent scientists.

Economists are natural-born swampies. In marked contrast, scientists drive the question under discussion to the point of a clear-cut decision between true and false. And they do not touch questions that cannot be decided by the accepted means, that is, by logic and testing.

The fraternity of orthodox and heterodox swampies has no genuine interest in a definite true/false outcome but seeks to stay in the swamp. Their common enemy is science. Swampies have produced the gigantic heap of toxic scientific waste that is called economics.

Have swampies learned anything from their abysmal failure? Only this that they want more than ever to stay in the swamp: “Economics should not be taught as if it were about the discovery of timeless laws. Those who champion the discipline must remember that, at its core, it is about human behaviour, with all the messiness and disorder that this implies.” (Financial Times)

Economists never understood what their subject matter is. Economics is NOT a social science that deals with the behavior of people, but a systems science that deals with the behavior of the economic system. #1 Human behavior does not follow timeless laws, but the economic system does. The fact of the matter is that neither orthodox nor heterodox economists have figured out the fundamental systemic laws (the Profit Law, for example) to this very day.

More than two hundred years of failure are enough. Time to expel the swampies from the scientific community. And, of course, high time to install a scientifically valid economics curriculum. #2

Egmont Kakarot-Handtke


References
Kakarot-Handtke, E. (2013). Why Post Keynesianism is Not Yet a Science. Economic Analysis and Policy, 43(1): 97–106. URL or URL
Kakarot-Handtke, E. (2014). Profit for Marxists. SSRN Working Paper Series, 2414301: 1–25. URL

#1 For details, see cross-references Not a Science of Behavior
#2 For details, see cross-references Old Curriculum/New Curriculum

Related 'There is NO such thing as an economic expert' and 'The father of modern economics and his imbecile kids' and 'To this day, economists have produced NOT ONE textbook that satisfies scientific standards' and 'The economist as stand-up comedian' and 'How to make economics a science'. For more details of the big picture, see cross-references Econ 101/Old Curriculum/New Curriculum and cross-references New Curriculum.

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Graphic AXEC121f

MMT vs The Rest of Economics ― a Punch and Judy show

Comment on Brian Romanchuk on ‘Why Are MMT Critiques Generally Terrible?’

Blog-Reference and Blog-Reference

There is the political sphere where, in principle, everybody is admitted. The currency in the political sphere is opinion. Opinion is different from knowledge, and the fact of the matter is that it is most of the time false or merely commonsensically true.

“There are always many different opinions and conventions concerning any one problem or subject-matter... This shows that they are not all true. For if they conflict, then at best only one of them can be true. Thus it appears that Parmenides ... was the first to distinguish clearly between truth or reality on the one hand, and convention or conventional opinion (hearsay, plausible myth) on the other ...” (Popper)

The discourse in the political sphere has not much to do with truth or reality but with myth, storytelling, gossip, second-guessing, propaganda, belief, paranoia, disinformation, and entertainment.

The very opposite of opinion is knowledge. Science is about knowledge. Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false, where ‘nothing is clear and everything is possible’ (Keynes). The distinction between science and non-science corresponds to the ancient Greeks’ distinction between episteme (= knowledge) and doxa (= opinion).

Science has been defined for 2000+ years by material and formal consistency. Logical consistency is secured by applying the axiomatic-deductive method, and empirical consistency is secured by applying state-of-the-art testing.

“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)

What the general public cannot see is that economists do not have the true theory. The fact of the matter is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the pivotal concept of the subject matter ― profit ― wrong. MMT is NO exception.

The lethal critique of MMT is that its macroeconomic foundations are provably false. So, the gigantic opinion/critique/polemic/disinformation bubble about MMT’s deficit-spending/money-creation, inflation, taxation, the debt burden, the Job Guarantee, etc. boils scientifically down to the question of which of the two foundational macroeconomic equations is true, i.e., materially and formally consistent:
• the MMT sectoral balances equation: (I−S)+(G−T)+(X−M)=0 or
• the axiom-based balances equation: (I−S)+(G−T)+(X−M)−(Qm−Yd)=0.#2

Note that this is NOT a question about opinion or political preferences but a clear-cut true/false question that can be unambiguously decided according to well-established scientific criteria.

The answer is that the MMT equation is logically/mathematically false. Because of this, the whole analytical superstructure of MMT is false.#3, #4, #5, #6, #7 This settles the matter. MMT is dead and buried at the Flat-Earth-Cemetery just like Walrasianism, Keynesianism, Marxianism, and Austrianism.

This, though, does not stop Brian Romanchuk, MMTers, and the rest of the economists from blathering as if there were no tomorrow. In order to understand this phenomenon, one has to drop the presumption that economics has anything to do with science or that economists are scientists. For 200+ years now, economics is a fake science and economists are either clowns or fraudsters in the political Circus Maximus.

Egmont Kakarot-Handtke


#1 The economist as stand-up comedian
#2 Wikipedia and the promotion of economists’ idiotism (II)
#3 MMT: How to get out of the infinite meta-communication loop
#4 Brian Romanchuk’s Post-Keynesian idiocy
#5 Economics as tireless production of proto-scientific garbage: inflation theory as an example
#6 Truth by definition? The Profit Theory has been axiomatically false for 200+ years
#7 MMT: How mathematical incompetence helps the Kelton-Fraud

Dialectic: the swampies’ methodology of choice

Comment on Matt Franko on ‘Dialectic Method’

Blog-Reference

Matt Franko observes: “Probably 99.99% of the Economics discipline is operating under the Dialectic Method and accordingly the material result is the manifest shit-show we are watching every day … a moron-fest goat rodeo … Its NOT the discipline of Economics that is the problem, we often can see the discipline taking a lot of heat … imo its unfair criticism of a discipline … its rather the dominant dialectic methodology commonly used within that discipline that is fucking everything all up.”

Matt Franko is not the first to realize that economics has a methodology problem. What he does not realize, though, is that this is not a bug but a feature. Economics has firmly established itself in the dialectical impasse of political economics 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. The fact is that theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, and materially/formally inconsistent.

The dialectical impasse consists of the manifest contradiction between the claim that economics is a science and the fact that it is a political agenda pushing.

Science is digital=binary=true/false and NOTHING in between. There is NO such thing in science as roughly right or roughly wrong; it is only materially/formally true/false. The swamp between true/false, where “nothing is clear and everything is possible” (Keynes), is the natural habitat of morons, agenda pushers, confused confusers, blatherers, fraudsters, trolls, and incompetent scientists. #1, #2, #3, #4

Swampies euphemize their inability/unwillingness to resolve inconsistencies as dialectic method: “According to Kant … the ancient Greeks used the word ‘dialectic’ to signify the logic of false appearance or semblance. To the Ancients, ‘it was nothing but the logic of illusion. It was a sophistic art of giving to one’s ignorance, indeed even to one’s intentional tricks, the outward appearance of truth, by imitating the thorough, accurate method which logic always requires, and by using its topic as a cloak for every empty assertion.'” #5

The philosophical father of modern dialectics is Hegel. Schopenhauer had not much good to say about him: “If I were to say that the so-called philosophy of this fellow Hegel is a colossal piece of mystification which will yet provide posterity with an inexhaustible theme for laughter at our times, that it is a pseudo-philosophy paralyzing all mental powers, stifling all real thinking, and, by the most outrageous misuse of language, putting in its place the hollowest, most senseless, thoughtless, and, as is confirmed by its success, most stupefying verbiage, I should be quite right.” #6

In marked contrast to swampies, scientists drive the question under discussion to the point of a clear-cut decision between true and false: “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)

Formal consistency is secured by applying the axiomatic-deductive method, and empirical consistency is secured by applying state-of-the-art testing.

The profession of useful political idiots has no genuine interest in a clear-cut true/false outcome of research and debate but seeks to keep everything and everybody in the status quo swamp. Swampies subscribe to dialectical inconclusiveness, i.e., anything goes, truth is subjective and relative, reality is a social construct, nobody has the truth with a big T, everybody has some truth with a small t, and to the pluralism and peaceful coexistence of provably false theories.

As Popper summarized it: “Hegel’s intention is to operate freely with all contradictions. ‘All things are contradictory in themselves’, he insists, in order to defend a position which means the end not only of all science, but of all rational argument. And the reason why he wishes to admit contradictions is that he wants to stop rational argument, and with it scientific and intellectual progress.” #7

Political economists prevent scientific progress to this day. Economics is still at the proto-scientific stage, which is characterized by material/formal inconsistency.

Egmont Kakarot-Handtke


#1 It is better to be precisely right than roughly wrong
#2 Marshall and the Cambridge School of plain economic gibberish
#3 Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist
#4 Finally, the embarrassment of economics is over
#5 Wikipedia
#6 Goodreads
#7 A Free Left Blog

Related 'Profit: after 200+ years, economists are still in the woods' and 'A new curriculum for swampies?' and 'Getting out of the economics swamp' and 'Economics: The greatest scientific fraud in modern times' and 'Opinion, conversation, interpretation, blather: the economist’s major immunizing stratagems' and 'Economics, too, is pre-truth' and 'Links on capital-T Truth, stupidity, corruption' and 'Economics is locked in idiocy: How could this happen?' and 'Economists: scientists or political clowns?' and 'Economics as storytelling and entertainment for the masses' and 'And the answer is NCND ― economics after 200+ years of Glomarization'.

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Graphic AXEC176b  Economics, Communication, Disinfotainment

Twitter/X May 12, 2026 Adrián Ramírez, LIBERALISM AND THE RISE OF ERISTICISM or the application of Schopenhauer's Die Kunst Recht zu behalten

And the answer is NCND ― economics after 200+ years of Glomarization

Comment on Lars Syll on ‘What are axiomatizations good for?’

Blog-Reference

Gilboa, Postlewaite, Samuelson, and Schmeidler ask: “What have these axiomatizations done for us lately?” Wrong question, of course. The right question economists have to ask themselves is: what have WE done for the proper axiomatization of economics lately?

The fact is, to begin with, that economic methodologists do not understand to this day what axiomatization is all about. Lars Syll even maintains that it is a kind of mental body-building: “Studying mathematics and logic is interesting and fun. It sharpens the mind.”

It is not at all a surprise, therefore, that economics is a failed science. Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives are mutually contradictory, axiomatically false, and materially/formally inconsistent. As a result, economic policy guidance has NO valid scientific foundations since Adam Smith/Karl Marx.

This pluralism of provably false theories is pretty strange. How could it happen that economics is still at the proto-scientific level while science has made such incredible advances? The answer is that economics had been captured from the very beginning by political agenda pushers. Agenda-pushers, though, have no truck with science except for building Potemkin facades.

Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false where “nothing is clear and everything is possible” (Keynes). Vagueness/ inconclusiveness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) While scientifically this is a bad thing, politically it is a good thing.

Because economists are not scientists but swamp creatures, they see to it that no analysis and no debate ever leave the swamp. This is achieved by the tried and tested method of Glomarization. #1 For example, to the central question, Does a General Economic Equilibrium exist? The answer is: “We can neither confirm nor deny the existence of a General Equilibrium.” And so on with NCND for any other question. #2, #3, #4

Accordingly, if a clear-cut refutation occasionally happens, it is simply filibustered away: “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)

Glomarization is the communicative modus operandi in the political sphere. Science is the exact opposite of the political swamp. Science aims for a clear-cut true/false answer with truth well-defined as material and formal consistency. The methodological tool to achieve this is the axiomatic-deductive method. As Aristotle put it 2000+ years ago: “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.” This is why axiomatization is of overriding importance.

Neither orthodox nor heterodox economists know how to apply the axiomatic-deductive method correctly. #5 This is why their economic policy proposals have no valid scientific foundation. To the question What have economists ever done for their fellow citizens? The clear-cut answer is nothing but vacuous political blather.

Egmont Kakarot-Handtke


#1 Wikipedia, Glomar response
#2 How the representative economist gets it wrong big-time
#3 Economic recommendations out of the swamp between true and false
#4 Failed economics: The losers’ long list of lame excuses
#5 For details of the big picture, see cross-references Axiomatization

Related 'Clueless about money and profit' and 'Keynesianism ― the economists’ senile dementia' and 'Buridan’s ass economics' and 'Knowledge is attainable ― even in economics' and 'Failed critique of failed economics' and 'Stop knowing nothing, start knowing something' and 'The scientific self-elimination of Heterodoxy' and 'Prophets of Preemptive Vanitizations' and 'Economics as fool’s paradise' and 'A heap of proto-scientific rubbish' and 'Truth by definition? The Profit Theory has been axiomatically false for 200+ years' and 'Real-World Economics: The sanctuary of stupidity and corruption' and 'The inexorable paradigm shift in economics'.

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AXEC121i

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REPLY to John Vertegaal on Jul 15

You say: “Lars and Asad, great minds but still groping after all these years… All reasoning starts from assumptions, but in order to be valid in the real world, those assumptions require empirical confirmation. All economists, as far as I know, assume that the present is complete and we live within our economy. Hence, they come up with assumed points of departure like the accounting identity: Y=C+I, blissfully unaware that accounting itself is based on unprovable assumptions.”

Scientific analysis starts with premises, and these have to be clearly stated. This is the minimum requirement. #1 Otherwise, things end after a few steps in confusion and blather. This happened with economics in general, and this happens every day in the econblogosphere.

The current state of economics is that neither Orthodoxy nor Heterodoxy nor Lars Syll nor Asad Zaman nor Craig nor Dave Marsay nor the rest has gotten the foundational concepts of profit and income right. #2

Economists are swampies. Economics is a failed science. All microfounded (Walrasian) and macrofounded (Keynesian) models are provably false. Economists do not know how the economy works. Economics is a cargo cult science. The “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a fraud.

“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) Economics needs a Paradigm Shift, and the expulsion of the scientifically incompetent or the “throng of superfluous economists” as Joan Robinson called them. #3

#1 United in the social science delusion

#2 Wikipedia and the promotion of economists’ idiotism (II)

#3 Joan Robinson and the ‘throng of superfluous economists’

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REPLY to Asad Zaman on Jul 16

Since Adam Smith/Karl Marx, economics claims to be a science, but is NOT. Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years. #1

The fact is that economics is a failed science and that Heterodoxy has been complicit in the failure. #2 Whether this outcome was unintended/intended by individual economists does not matter. What counts is the collective effect, which is the perfect Glomarization of economics. There is not one policy proposal drawn from employment theory to monetary theory that embodies valid scientific knowledge about how the economy works, it is just opinion: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

Economists do not have the true theory. For every opinion, there is an equally plausible counter-opinion, and that is Glomarization ― hailed as pluralism and anything goes. #3

The political beauty of Glomarization is that it is paralyzing and therefore secures the status quo. Hayek, for one, instrumentalized this effect by arguing that just because of the lack of knowledge of economists and politicians about how the economy works, there is NO such thing as economic policy. For this epistemological reason, everything has to be left to the market as an information processor and knowledge producer.

To say economics needs a Paradigm Shift is to say that traditional Heterodoxy, too, has to be buried at the Flat-Earth-Cemetery. #4 This applies also to Asad Zaman, who has been refuted on all methodological counts. #5

By denying that, in principle, axiomatization produces logical consistency, and that state-of-the-art econometrics produces material consistency, heterodox methodologists in effect prevent scientific progress and indirectly support the political status quo.

#1The myth of economics knowledge

#2 Both orthodox and heterodox economists are cargo cult scientists

#3 The philosophy of know-nothingers

#4 Throw them out! Orthodox and heterodox economists are unfit for science

#5 Refutation of Asad Zaman’s heterodox methodology: all arguments you ever need

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REPLY to davetaylor1, Prof Dr James Beckman, Germany, on Aug 2

davetaylor1 argues: “According to my dictionary the word ‘axiom’ can refer either to a self-evident truth or a universally accepted principle. Economists seem to be assuming the first of these and forgetting about the importance of the second, as exemplified in the ways of denoting sounds and numbers.”

And Prof Dr James Beckman, Germany, asks: “Self-evident to whom?”

This shows only that both heterodox blatherers have NO idea what axiomatization is all about. “Self-evidence” is NOT a criterion of axioms; this has always been popular BS.

Note that Newton, under the title of Axiomata Sive Leges Motu, states (in modern language): “In an inertial frame of reference, an object either remains at rest or continues to move at a constant velocity, unless acted upon by a force.”

This is NOT self-evident but an abstraction/idealization of observable motion on earth where an object does NOT move at a constant velocity.

All this is long known among people with more than two brain cells: “We may, therefore, agree with Ernst Mach, who very wisely pointed out that the law of inertia could hardly be ‘obvious’ or ‘self-evident’ since throughout most of recorded history men believed in a quite different law and would have denied the Cartesian-Newtonian inertial principle.” (Cohen, 1977)

The point of axiomatization is to clearly state the premises. As long as this is not done, any analysis and discussion will produce only proto-scientific garbage. Heterodox economists have never stated their axioms, and this is why Heterodoxy has never produced anything of scientific value. #1, #2, #3

#1 Don Lars and the axiomatic windmill

#2 For details of the big picture, see cross-references Axiomatization

#3 If it isn’t macro-axiomatized, it isn’t economics

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REPLY to davetaylor1, John Vertegaal, Craig on Aug 10

The elementary production-consumption economy is, for a start, defined by three macroeconomic axioms (Y_w=WL, O=RL, C=PX), two conditions (X=O, C=Y_w), and two definitions (Q_m≡C−Y_w, S_m≡Y_w−C). #1

#1 For details of the big picture, see cross-references Axiomatization

Economists and the destructive power of stupidity

Comment on Lars Syll on ‘Krugman and Stiglitz — nothing but neoliberal alibis’

Blog-Reference and Blog-Reference on Feb 16 adapted to context

That economists are demolition men was already obvious to Napoleon: “Late in life ... he claimed that he had always believed that if an empire were made of granite the ideas of economists if listened to, would suffice to reduce it to dust.” Nothing has changed in the meantime.

Since Adam Smith, economists have failed to rise above the proto-scientific level. Economics is still what Feynman called a cargo cult science, that is: “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, ...” #1

What follows from all this? “So we really ought to look into theories that don’t work, and science that isn’t science.” And what do we realize when we look into economics? The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, and ALL got profit wrong. #2 In methodological terms, axiomatically false is the death sentence for a paradigm because when the foundational premises are false, the analytical superstructure is false.

In general terms, a theory is the mental representation of reality. Logically and empirically hardened theory is the highest form of knowledge that is humanly possible.

Why cannot everybody immediately recognize a false theory? (To recall, it took the physicists 1500+ years to realize that geocentrism is false.) A theoretical superstructure is never 100 percent false but every falsity or half-truth is sandwiched between two trivialities or common-sense truths to which everybody can readily agree. These realistic or commonsensical or intuitively convincing elements are narrative additives to the abstract theoretical core in order to make it palatable to the intended audience. This sandwiching of false propositions between commonsensical trivialities makes it forever impossible for the commonsenser to detect the fatal error/mistake/blunder of a theory. #3

Because of this, commonsensers or realists or practical men are de facto the worst impediments to science, as every economist knows from John Stuart Mill’s damnation: “People fancied they saw the sun rise and set, the stars revolve in circles around the pole. We now know that they saw no such thing; what they really saw was a set of appearances, equally reconcilable with the theory they held and with a totally different one. It seems strange that such an instance as this, ... , should not have opened the eyes of the bigots of common sense, and inspired them with a more modest distrust of the competency of mere ignorance to judge the conclusions of cultivated thought.”

False theories are effectively protected by the sheer presence and the all-pervasive blather of the stupid majority and they thrive in the intellectual swamp between true and false where “nothing is clear and everything is possible.” (Keynes) In the swamp, the subjective truth of like/dislike prevails, and objective truth is nothing but an unfriendly disturbance of a casual sitcom.

By clinging to the pluralism of false theories, both orthodox and heterodox economists have trapped themselves at the proto-scientific level. After 200+ years, they are still groping in the dark about the two most important features of the market economy: the profit mechanism and the price mechanism. #4

The lack of true theory has grave consequences: since Adam Smith, economic policy guidance has NO sound scientific foundations. Two examples suffice:

• Because economists do not understand how the price mechanism works, in particular, concerning the labor market. They are ultimately responsible for mass unemployment, deflation, depression, and stagnation. #5
• Because economists do not understand how the profit mechanism works, they have unintentionally produced, with well-meant deficit-spending/money-creation, the extremely biased income and wealth distribution most people regard now as a ticking social time bomb. #6

For all practical purposes, the scientifically incompetent economists of the major schools are a greater hazard to the population of a country than all natural disasters taken together.

The general public always sees and discusses the policy proposals of economists, but never the underlying theory; it fails to see that there is a disconnect between the two. The economists’ proposals do not follow from a scientifically valid theory because there is none. Qualitatively, there is not much difference between the policy proposals of the representative economist and the soapbox propagandist. Political economics is proto-scientific blather. Political economists are fake scientists. Whether they are right-wing/center/left-wing is a matter of indifference.

To get out of failed economics requires nothing less than a full-blown Paradigm Shift from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations. Everything else is a continuation of cargo cult science and economic self-destruction.

Egmont Kakarot-Handtke


#1 Wikipedia
#2 Profit and the collective failure of economists
#3 Misled by ordinary intuition and common sense
#4 Traditional Heterodoxy’s paradigmatic impotence
#5 Unemployment ― the fatal consequence of economists’ scientific incompetence
#6 Why Bernie Sanders is unintentionally a godsend for the one-percenters

Related 'Paul the Menace'. For details of the big picture, see cross-references Scientific Incompetence and cross-references Failed/Fake Scientists and cross-references The Representative Economist.

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Graphic AXEC117