November 13, 2015


Comment on Peter Radford on ‘Republican Pseudo-Economics’


You criticize the outcome of the recent presidential debate: “In other words the answers were given to questions that did not reference the real economy, but only the make-believe economy that Republicans now inhabit.”

A presidential debate is about politics, isn’t it? So, strictly speaking, it is not about the real economy at all. And, to be sure, nobody expects a scientifically correct depiction of the economy. It is not such a great revelation that politics is about interests and just because of this the outcome of the debate with regard to the economy is hardly surprising: “So the holy trinity of tax cuts, smaller government, and deregulated business are trotted out over and over even if they are not solutions to what ails us.” (See intro)

Let us agree on the obvious: in a political debate economic theory and economic data are used for driving home a political point. It is about the-goodies-for-us-the-badies-for-them and this is legitimate in the given institutional framework. The search for truth is supposed to happen elsewhere. The real embarrassment begins when the economist comes in.

“Apologetics may be a laudable objective. Its practical importance is unquestioned. People need to be shown that the institutions of their own society are good, those of others bad. But there is no place for apologetics in science. Scientific economics inquires only into the How and Why, not into the Good or Bad, of what is. From the scientific point of view preoccupation with Good and Bad is worse than useless since it not only fails to illumine anything but keeps the lightbeam of inquiry from being turned in directions where answers to significant questions can be found. (Murad, 1953, p. 2)

What the good/bad moralizing member of the economics profession, here Peter Radford, is suggesting is that he — in marked contrast to the presidential candidates and the sheeple audience — really knows how the economy works. But this is not the case, and exactly this is the embarrassment.

Both, orthodox and heterodox economics is defective, that is, both miss the scientific criteria of material and formal consistency. The fact of the matter is that the representative economist in his manifest incompetence has not yet managed to exactly determine the difference between the pivotal concepts of his trade — income and profit.*

Therefore, both the professional economist and the layperson, and both the defenders and attackers of the current economic order, have one property in common: they have no idea of what they are talking about.

The ignorance of politicians and the lay audience is, of course, unsatisfactory but it can be forgiven. Yet, there is no excuse whatever available to the economist.

“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum, 1991, p. 30)

Walrasianism and Keynesianism are provable false (2015; 2014). These economists are not in the possession of the true theory. They do not know what profit is and therefore miss the essence of the market economy. The representative economist has no ‘solutions to what ails us’, his problem-solving track record is disappointing — to say the least, he has nothing to tell that could command more interest than the opinion of any practiced journalist. After more than 200 years of scientific failure the member of the economics profession is left with a last choice: voluntary retirement or dishonorable discharge.

Republican pseudo-economics is a political side issue, the real problem is that economics is a pseudo-science.

Egmont Kakarot-Handtke

Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
Murad, A. (1953). Questions for Profit Theory. American Journal of Economics and Sociology, 13(1): 1–14. URL
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge, MA: MIT Press.

* For heterodox profit theory see ‘Heterodoxy, too, is scientific junk