November 19, 2015

The utter senselessness of political economics

Comment on Peter Radford on ‘Disbelief as Belief’


Keynes famously remarked that ‘if economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid.’

Keynes, as we know, did not follow his own advice but became a better known member of the species of political economists, that is, a busy agenda pusher but incompetent scientist.

Economists are natural born schizophrenics. They cannot make up their mind whether their proper subject matter is society or the economy or something in between. J. S. Mill positioned economics as follows: "The science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object." (Mill, 1874, V.39)

This is a rather coarse delineation and as a consequence economists did not hesitate to dabble in psychology, sociology, political sciences, history, anthropology, law, ethics, philosophy, pedagocis, etcetera. What got entirely lost was that the focus of economics should be on the economy.

The present state of economics is that neither Orthodoxy nor Heterodoxy has an idea how the economy we happen to live in works. J. S. Mill defined economics as science and what we actually have — a hodgepodge of incoherent modls and verbiage — does not satisfy the scientific criteria of material and formal consistency.

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, 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.

The fact of the matter is that theoretical economics has been hijacked by the agenda pushers of political economics. Smith and Ricardo defined themselves as political economists, Marx and Keynes were agenda pushers, so were Hayek and Friedman, and so are Krugman and Varoufakis.

Political economists speak in the name of economics as a science but derive their arguments, advice and policy guidance from theories that are provable false. What the public has not yet realized is that economics is a failed science.

“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)

Economists have no true theory, only opinions. This is bad enough. Things, however, become abysmal when economics degenerates to pure politics. Frankly, the last thing an economist qua scientist is interested in is a sitcom about funny presidential candidates that compete for the privilege to execute the volonté générale of a borderline society.

This brings us back to the ideal of economists as competent people, on a level with dentists, or as J. S. Mill had it: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.” (Mill, 2006, p. 950)

This presupposes that economists in fact know how the economy works — which is not the case. Could it be that economists have been too much occupied with agenda pushing in the last 200 years?

It is high time for economists to get out of politics and to do their scientific homework.

Egmont Kakarot-Handtke

Mill, J. S. (1874). Essays on Some Unsettled Questions of Political Economy. On the Definition of Political Economy; and on the Method of Investigation Proper To It. Library of Economics and Liberty. URL
Mill, J. S. (2006). A System of Logic Ratiocinative and Inductive. Being a Connected View of the Principles of Evidence and the Methods of Scientific Investigation, volume 8 of Collected Works of John Stuart Mill. Indianapolis, IN: Liberty Fund.
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge, MA: MIT Press.

Related 'Profit and the poverty of economics' and 'Free the academy from economics' and 'How to be a good scientist' and 'PsySoc — the scourge of economics' and 'Confounding Is and Ought: the economist as moralist' and 'The case for pure economics' and 'Separation of politics and economics'