Oleg Komlik quotes Adorno: “My thesis is quite simply that the strict division between economics and sociology, the consequence of which is unquestionably to dismiss the Marxian theory ante portas, causes the decisive social interests of both disciplines to disappear; and that precisely through this separation they both fail to assert their real interests, what really matters in them.”
All confusion about economics derives from the fact that 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, 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.
In the beginning, there was Political Economy. J. S. Mill defined it clearly as a social science: “The fundamental problem, therefore, of the social science, is to find the laws according to which any state of society produces the state which succeeds it and takes it place.” Or, a bit more specific with regard to economics: “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.”
Economics started as a hodgepodge of sociology, history, folk psychology, and folk philosophy, which came under the heading of utilitarianism.
Classical Political Economy was carried one step further with methodological individualism: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.” (Arrow)
Methodological individualism is clearly defined by this set of behavioral axioms: “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)
Axiomatization is not only laudable but methodologically indispensable: “We should also like to underline Debreu’s effective reference to Bacon when he says that ‘citius emergit veritas ex errore quam ex confusione.’ It would be a mistake to lower the level of analysis and clarification. The only way possible is a thorough reexamination of the theory’s basic hypotheses, i.e., a true paradigmatic revolution.” (Ingrao et al.)
Orthodox economics remains firmly rooted in the social sciences because it is defined by behavioral axioms. Yet, orthodox economics is widely considered as scientific failure. To replace Orthodoxy requires the replacement of HC1-HC5 by an entirely new set of axioms. This is what a true paradigmatic revolution is all about.
What is true for Walrasianism holds for the rest of economics. The current state is this: the four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal economic concept profit wrong. How could this happen? 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. As a result of the utter scientific incompetence of political economists economics is a failed science.
There is no way around this: economists need the one true theory and not the pluralism of false theories: “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)
Everybody knows: the so-called social sciences in general and political economics in particular NEVER got anything off the ground. Feynman called them cargo cult sciences: “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 is needed is a strict SEPARATION between the so-called social sciences and economics.#2 Separation of the subject matter, of course, does NOT exclude cooperation and the exchange of knowledge. Economics has to be clearly redefined as system science:
- Old definition, subjective-behavioral: Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.
- New definition, objective-systemic: Economics is the science which studies how the monetary economy works.
Adorno never understood what profit is#4, whether his understanding of sociology was much better is doubtful.
#1 See also ‘What is so great about cargo cult science? or, How economists learned to stop worrying about failure’
#2 See ‘Economics is NOT about Human Nature but the economic system’
#3 For the axiomatically true theory see ‘True macrofoundations: the reset of economics’
#4 See ‘Proﬁt for Marxists’