Occasional Xs: The futile attempt to recycle Sraffa (I)

 

#Econ

The history of economic thought is the history of scientific failure. The major approaches are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. #Sraffa was no exception.

The futile attempt to recycle Sraffa.https://t.co/OCpV0E40e5

— E.K-H (@AXECorg) December 21, 2023

The futile attempt to recycle Sraffa

Comment on Ajit Sinha on ‘Sraffa’s Revolution in Economic Theory’

Blog-Reference and Blog-Reference-Link and Blog-Reference on Jan 10

Sraffa realized that there is something fundamentally wrong with neoclassical marginalism. Up to this point, he was right, of course. But, like all other heterodox economists, he failed to produce a valid replacement. Because Sraffa, too, produced merely proto-scientific garbage, it is misleading to characterize his approach as a “revolution in economic theory”. Economic theory is false since Adam Smith, and Sraffa is part of the overall scientific failure.

The lethal blunder of economics is the theory of profits. As the Palgrave Dictionary puts it: “A satisfactory theory of profits is still elusive.” (Desai, 2008). Economists have NO idea of the pivotal concept of their subject matter, and because of this, ALL orthodox and heterodox approaches are fundamentally flawed. #1

Sraffa starts with an “extremely simple society” which produces wheat and iron #2, p. 3. In other words, he starts with a real model just like Ricardo #3, and this is the fundamental methodological error/mistake/blunder. Real models cannot capture profit, and this fact is obscured by Sraffa’s false assertion that surplus (a real magnitude) is the same as profit #2, p.6.

Methodologically, Keynes was a bit more sophisticated than Sraffa because he clearly recognized that economic theory has to start with the “monetary theory of production”. The economy constitutes itself through the interaction of real AND nominal variables. From this follows that ALL real models are a priori false.

Sraffa defines the rate of profit without a prior definition of profit #2, p.6. To clearly see the conceptual blunder, Sraffa’s elementary real economy has to be replaced by the elementary production-consumption economy.

In the elementary production-consumption economy, #4 three configurations are logically possible: (i) consumption expenditures are equal to wage income, (ii) consumption expenditures are less than wage income, (iii) consumption expenditures are greater than wage income.

In case (i), wage income is assumed to be Yw=100 monetary units (e.g., trillion dollar/euro/yuan) and consumption expenditures are assumed to be C=100 monetary units. Then, the monetary saving of the household sector Sm≡Yw−C is zero, and the monetary profit of the business sector Qm≡C−Yw, too, is zero.

In case (ii), wage income is assumed to be Yw=100 monetary units and consumption expenditures are assumed to be C=90 monetary units. Now, monetary saving is Sm=10, and the business sector makes a loss Qm=−10. The whole output is sold, i.e., O=X, and the market-clearing price P is now lower than in case (i).

In case (iii), wage income is assumed to be Yw=100 monetary units and consumption expenditures are assumed to be C=110 monetary units. Now, monetary saving is Sm=−10=dissaving, and the business sector makes a profit Qm=10. The whole output is sold, i.e. O=X, and the market-clearing price P is now higher than in case (i).

It always holds Qm≡−Sm, in other words, loss is the counterpart of saving and profit is the counterpart of dissaving. This is the most elementary form of the macroeconomic Profit Law for the economy as a WHOLE.

It holds in particular

• Overall profit does not depend upon the agents’ personal qualities, motives, their ideas about what profit is, nor on profit-maximizing behavior. These subjective factors are IRRELEVANT. Profit for the economy as a whole is OBJECTIVELY determined.
• Profit/loss of the business sector is, in the simplest case, determined by the increase/ decrease of the household sector’s debt.
• Wage income is the factor remuneration of labor input. Profit is NOT a factor income.
• There is no relation at all between profit, capital, marginal or average productivity.
• Profit has NO real counterpart in the form of a piece of the output cake. Profit has a monetary counterpart. As a logical consequence, profit cannot appear in a real model.

Sraffa’s definition of the profit rate is utter methodological dilettantism. As a consequence, his entire analytical superstructure falls apart. The proper place of Sraffa’s book has always been the wastebasket. It is a pointless exercise to recycle it as an alternative to the neoclassical approach. To fully replace Neoclassics requires the shift from false microfoundations to true macrofoundations. This, obviously, is absolutely beyond the horizon of incompetent scientists like Sinha.

Egmont Kakarot-Handtke


#1 The Profit Theory is False Since Adam Smith
#2 Sraffa, Production of Commodities by Means of Commodities
#3 When Ricardo Saw Profit, He Called It Rent: On the Vice of Parochial Realism
#4 The correct macrofoundations are given for a start with three systemic equations: (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.

Related 'Putting the production function back on its feet' and 'The solemn burial of marginalism' and 'The CCC ― a monument of economists’ utter scientific incompetence'.

***

NOTE on Barkley Rosser on Jan 8

Heterodoxy is as dead as Orthodoxy. For details, see The futile attempt to recycle Sraffa.

***

Lars P. Syll Blog Mar 14, 2021

Occasional X: The futile attempt to recycle Austrianism (CXXXIV)

“You haven’t exposed an Austrian deception. …First, Mises never claimed that markets operate like parliamentary democracies.” (Roaldcs) Already false: “The statement (“The market is a democracy. Capitalism is the consummation of the self-determination of consumers.”) is found in Ludwig von Mises's book Omnipotent Government: The Rise of the Total State and Total War (first published in 1944).” (Google AI) It is one of the tenets of Austrianism that a free-market economy and democracy are necessary complements. More precisely, the political concept of democracy is taken as the main selling proposition of an allegedly scientific theory. Logically, the free-market system should be justified as a superior economic system, not as the twin brother of freedom and democracy. Austrians have never done this. The Austrian approach has been proto-scientific garbage from the beginning. People buy the package, not the content. The package is shiny, the content is cheap crap. The Austrian package is freedom and democracy. Austrian economics is proto-scientific garbage. Austrian arguments have already been refuted one-by-one. For details, see the AXECquery The futile attempt to recycle Austrianism https://t.co/netz8fcVyf Austrians simply violate the foundational scientific principle: “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) Austrianism is the senseless repetition of long refuted arguments. It's a treadmill of stupidity. Their dumbest phrase is: That's only an accounting identity. Yes, accounting identities are systemic laws, and they are the logical precondition of testing. None of the behavioral hallucinations of Austrianism is testable. Austrians do not understand the difference between science and a quasi-religious Wahnsystem. Human-Nature economists in general, and Austrians in particular, are scientifically incompetent imbeciles and methodologically in the darkest woods. Economists never had a political mandate, as J. S. Mill already knew (AXEC166a ⇓).

— AXEC (@EgmontHandtke) October 30, 2026

Occasional X: The futile attempt to recycle Kalecki (VII)

 

#Economics#FailedFakeScience#Keynes got macroeconomic #Profit wrong because he was too stupid for elementary #Algebra. Same with #Kalecki. #MacroEconomics is scientifically worthless to this day. All one needs to know about Kalecki in particular is to be found here ⇒…

— E.K-H (@AXECorg) September 16, 2024

Occasional Tweets: The futile attempt to recycle Austrianism (X)

 

#Economics cannot be based on a behavioral #Axiom. #Praxeology is methodologically unacceptable. Because the axiomatic foundations of #Austrianism are false the whole analytical superstructure is scientifically worthless.

Austrianism ― axiomatically falsehttps://t.co/luMh1CLitk pic.twitter.com/Fz4yzf4lRZ

— E.K-H (@AXECorg) November 2, 2022

Occasional Xs: The futile attempt to recycle MMT (LXXXI)

 

#MMT#BadScienceBadPolicyBadPeople

MMT's foundational #BalancesEquation is provably false, so the whole approach is scientifically worthless.

The page where Stephanie Kelton gets macroeconomics wrong https://t.co/CNFDkXM1Ki

The fact that MMT is heavily promoted by #Movies /… pic.twitter.com/EhhA8zKogP

— E.K-H (@AXECorg) March 15, 2024

Occasional Tweets: The futile attempt to recycle IS-LM (I)

 

#LearnEconomics

All IS-LM models are axiomatically false.

Cross-references Refutation of I=Shttps://t.co/TGGYpnS9sG pic.twitter.com/XcgoaUGWSN

— E.K-H (@AXECorg) May 7, 2022

Occasional Xs: The futile attempt to recycle Adam Smith (XXXVI)

 

#Economics#JustDisInfoTainment

The history of economic thought is the history of scientific failure. #AdamSmith NEVER understood what #Profit is and how the economic #System works. Economic #PolicyGuidance has NEVER had sound scientific foundations. pic.twitter.com/7L3NiBYNXP

— E.K-H (@AXECorg) September 14, 2023

Occasional X: The futile attempt to recycle Milton Friedman (XXXIV)

 

#Economics#AllYouNeedToKnow

“The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.” (Milton Friedman)

Economics claims to be science but is NOT. The major…

— AXEC (@EgmontHandtke) April 8, 2025

Occasional X: The futile attempt to recycle Keynesianism (LXI)

 

#Economics#FailedFakeScience

For 200+ years, economics has claimed to be #Science but still is NOT. #Walrasianism, #Keynesianism, #Marxianism, #Austrianism, and their derivatives are mutually contradictory & axiomatically false & materially/formally inconsistent & ALL got… pic.twitter.com/jTG7g8pQJD

— E.K-H (@AXECorg) October 14, 2024

Related 'Complexity, scientific incompetence, and the art of asking the right questions'

“Years ago I heard Mr. Cobden say at a League Meeting that ‘Political Economy was the highest study of the human mind, for that the physical sciences required by no means so hard an effort.’” (Bagehot, 1885)

This topos is the standard excuse when economists are confronted with the fact that, compared to genuine sciences, economics as a Cargo Cult (Feynman's term) has achieved virtually nothing in 200+ years. 

Occasional X: The futile attempt to recycle MMT (CLXXIV)

#Economics#AllYouNeedToKnow

“If I see this f****ing bullshit video one more time I'll explode!” (Malcolm Reavell)

Much political emotion, zero scientific brain.

For details, seehttps://t.co/dgf8iJ6gbg

— AXEC (@EgmontHandtke) November 26, 2025

Occasional X: The futile attempt to recycle MMT (CXXXIX)

 

#Economics#AllYouNeedToKnow

“Uncle Sam’s red ink is our black ink!” (Stephanie Kelton)

No! The government sector’s red ink is the business sector's black ink i.e. deficit spending is a free lunch for the Oligarchy. The deception is in the word “our” which seems to refer to… pic.twitter.com/aELQSAbvoq

— AXEC (@EgmontHandtke) March 7, 2025

Occasional Tweets: The futile attempt to recycle Adam Smith (XXI)

 

#Economics#FailedFakeScience

The history of economic thought is the history of scientific failure. Adam Smith NEVER understood what #Profit is and how the economic #System works. Economic policy guidance NEVER has had sound scientific foundations. ⇒https://t.co/s3zlXjwArK pic.twitter.com/WhRLtR9yEZ

— E.K-H (@AXECorg) March 25, 2023

Occasional X: The futile attempt to recycle Milton Friedman (XLIV)

#Economics#AllYouNeedToKnow

“There is no justification for military conscription.” (Milton Friedman)

There is no justification for economists.

Milton Friedman never understood profit and, by consequence, how the economic system works. That's rather bad for an economist.

When…

— AXEC (@EgmontHandtke) November 1, 2025

Occasional X: The futile attempt to recycle Marx (XXXVII)

 

#Economics#FailedFakeScience

Economics claims to be #Science but is NOT. The major approaches (Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives) are mutually contradictory & axiomatically false & materially/formally inconsistent & ALL got #Profit…

— AXEC (@EgmontHandtke) December 27, 2024

Occasional Tweets: The futile attempt to recycle behavioral economics (I)

 

Economics is NOT a social sciencehttps://t.co/zJHeQboYGH

and NOT about human behaviorhttps://t.co/MzGiF9gpXa#Economics is about how the economic #System works. That, #Economists have still NOT figured out because they are too stupid for #Science. pic.twitter.com/v9SlZ51K0x

— E.K-H (@AXECorg) March 16, 2022

For details of the big picture see cross-references Not a Science of Behavior 

Occasional Tweets: The futile attempt to recycle 'famous economists' (I)

 

#Econ#NoFalseHeroMemorials

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

'Irving Fisher who is most famous for his #equation: MV=PT' NEVER understood how the #Economy works.

For the correct average-stock-of-transaction-money equation see pic.twitter.com/hGg0YSTMcD

— E.K-H (@AXECorg) January 23, 2023

Occasional Tweets: The futile attempt to recycle Post Keynesianism (I)

 

#Economics#FailedScience#FakeScience

The history of economic thought is the history of scientific failure.

Keynes and Post Keynesians ― too stupid for sciencehttps://t.co/f5O5J8bmWI

— E.K-H (@AXECorg) May 7, 2022

For more about Post Keynesianism see AXECquery. 

Occasional Xs: The futile attempt to recycle Ricardo (VI)

 

#Economics#FailedFakeScience#Profit

The history of economic thought is the history of scientific failure and it goes from #DavidRicardo onward to the clueless folks at the #OnlineLibraryOfLiberty.

Ricardo, too, got profit theory wronghttps://t.co/hAbgvDcx17

— E.K-H (@AXECorg) February 18, 2024

Occasional X: The futile attempt to recycle Adam Smith (LXIX)

 

#Economics#FailedFakeScience

Since the founding fathers, #Economists have claimed to be doing science but they did NOT. What they really did was to disguise political #AgendaPushing as #Science or #EnlightenedPhilosophy or #ProgressiveEthics or #EducationOfTheMasses or… pic.twitter.com/b76bUB6hwS

— E.K-H (@AXECorg) July 16, 2024