Blog-Reference and Blog-Reference and Blog-Reference
Keynes has to be credited for realizing that the economics of Jevons/Walras/Menger/ Marshall was false at its core and that nothing less than a paradigm shift was needed: “The [neo-]classical theorists resemble Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight ― as the only remedy for the unfortunate collisions which are occurring. Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. Something similar is required to-day in economics.”
After Keynes, every economist who still does not see the necessity of a paradigm shift is a moron. One loudspeaker of this prevailing majority is Krugman who debunks himself with: “… most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point.”
Fact is that maximization-and-equilibrium economics has already been dead in the cradle 140+ years ago.
Keynes, though, messed up the shift from microfoundations to macrofoundations. His lethal blunder can be exactly located in the GT: “Income = value of output = consumption + investment. Saving = income - consumption. Therefore saving = investment.” (p. 63) This two-liner is conceptually and logically defective because Keynes never came to grips with profit. (Tómasson et al.)
Because profit is ill-defined, the whole analytical superstructure of Keynesianism is false.#1 Yet one of the outstanding characteristics of the cargo cult science economics is that refutation is simply ignored: “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)
As a result of the continuous violation of scientific standards, the history of economic thought boils down to a history of incompetence or/and corruption. What we have today is the indefensible pluralism of provably false theories.
After-Keynesians never realized Keynes’ foundational blunder and thereby became part of the abysmal failure of what was meant as a paradigm shift.#2 Barkley Rosser, of course, had his finger in every After-Keynesian pie but, like the rest, cannot define macroeconomic profit until this very day.#3 He concludes his synopsis of After-Keynesianism: “Anyway, probably this is all just picking at minor niggling and unimportant divisions and wrangles, but standing back from it I find it curious, both in terms of the development of these labels and controversies, as well as what the heck is going on with the Wikipedia accounts of all this.”
Every account that characterizes the history of economic non-thought as anything other than as a history of incompetence or/and fraud misleads the general public just as the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” misleads the general public year after year.
#1 How Keynes got macro wrong and Allais got it right
#2 Why Post Keynesianism Is Not Yet a Science
Heterodoxy, too, is scientific junk
The futile attempt to recycle Sraffa
For the full-spectrum refutation of MMT see cross-references
#3 Economists: scientists or political clowns?
Let us agree on the essentials:
(i) Keynes defined the macroeconomic premises in the GT as follows “Income = value of output = consumption + investment. Saving = income - consumption. Therefore saving = investment.” (p. 63)
(ii) The first proposition is provably false. By consequence, all I=S/IS-LM models are false. Worse, the whole theoretical superstructure of Keynesianism is false. Worst, the whole of After-Keynesianism is false.
(iii) The valid formal refutation of Keynes’ false premises has been given by Allais (Nobel Memorial Prize in Economics 1988)
(iv) The correct macro profit formula, inclusive distributed profit, reads according to Allais Qre=I-Sm. This formula obviously contradicts the Keynesian I=S/IS=LM.
(v) During his whole professional life as a cargo cult economist, Barkley Rosser never realized that there is something fundamentally wrong with both Walrasianism and Keynesianism. Neither did he resolve any contradictions nor rectify anything, except perhaps the family tree of the House of Sa’ud.
(vi) The significance of Barkley Rosser consists in being a living example for the scientifically degenerate state of economics.