Monday, December 12, 2016

Peter Cooper — The Monetary Circuit & Compatibility of Marx, Kalecki and Keynesian Macro

There appears to be a considerable degree of compatibility between Marx and various Kalecki- and Keynes-influenced approaches to macroeconomics. Compatibility, of course, does not imply that all these theoretical approaches stand or fall together. It simply suggests, to the extent that the compatibility exists, that it is possible to see them all as fitting within an overarching, open analytical framework. In this post, the compatibility is considered in relation to the private-sector monetary circuit of a capitalist economy.
The compatibility flows partly from the following three similarities in analytical approach….
The Monetary Circuit & Compatibility of Marx, Kalecki and Keynesian Macro
Peter Cooper


AXEC / E.K-H said...

The magic circuit and how economists got it wrong
Comment on Peter Cooper on ‘The Monetary Circuit & Compatibility of Marx, Kalecki and Keynesian Macro’

The heteconomist Peter Cooper says: “There appears to be a considerable degree of compatibility between Marx and various Kalecki- and Keynes-influenced approaches to macroeconomics.” (See intro)

The compatibility consists in the fact that all these approaches are provable false. In other words, until this day neither orthodox nor heterodox economists have manged to give a formally consistent description of the monetary circuit. The blatant incompetence of economists is the ultimate reason of why economics is a failed science.

The current state of economics is that the four main approaches Walrasianism, Keynesianism, Marxianism, Austrianism are mutually contradictory and axiomatically false.

For the short refutation of Kalecki, Keynes, Minsky and Keen see ‘Heterodoxy, too, is scientific junk’#1 The complete formal proofs are given in separate papers.#2

Debunking is necessary but insufficient. As Blaug put it: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” What is needed is to move on from falsified approaches to the materially and formally correct theory. In methodology this is called a paradigm shift.#3 The opus magnum consists in replacing false Walrasian microfoundations and false Keynesian/Marxian macrofoundations by entirely new macrofoundations.#4 Nothing less will do.

The true theory does not emerge from a mixing of failed approaches. The true theory satisfies the well-defined criteria of material and formal consistency. What heteconomist offers is as inconsistent as one can get.

Both, Orthodoxy and Heterodoxy never came to grips with science, with the pivotal concept of profit, and with the working of the monetary circuit we happen to live in.

Egmont Kakarot-Handtke

#1 Link to post
#2 See ‘Profit for Marxists’
and ‘Debunking Squared’
#3 See ‘The Emergence of Profit and Interest in the Monetary Circuit’
#4 See ‘From Orthodoxy to Heterodoxy to Sysdoxy’

AXEC / E.K-H said...


You compare Marx, Kalecki, and Keynes. The first thing a logically talented person notes is that the three authors use different definitions of profit and income. Now, a logically talented person knows (i) only one approach can be true, or (ii), all are false. This is known since more than 2000 years: “There are always many different opinions and conventions concerning any one problem or subject-matter .... This shows that they are not all true. For if they conflict, then at best only one of them can be true. Thus it appears that Parmenides ... was the first to distinguish clearly between truth or reality on the one hand, and convention or conventional opinion ... on the other.” (Popper, 1994)

The intellectual Lumpenproletariat has no problem with scrambling an arbitrary number of contradictions in their confused brains but for a scientist this is unacceptable: “[economists] pursue the consistency of the theories they make, for he who contradicts himself proves nothing.” (Klant, 1988)

Because the definitions of income and profit of Marx, Kalecki, Keynes are inconsistent these three authors prove NOTHING. You can find the proof of inconsistency elsewhere.#1 From this proof follows that the widely used definition Income = Wages + Profits is false. And since Kalecki starts with this definition he, too, is false and his whole analytical superstructure falls apart. It is as simple as that.

You say: “You can start from your own definitions, but this doesn’t really have a bearing on Kalecki, who did not share the same starting position.”

It is a widespread self-delusion among the intellectual Lumpenproletariat that everybody is entitled to make his own definitions. This is NOT the case.#2 It should be pretty obvious that all physicists apply the SAME definitions of energy, work, velocity, potential/kinetic energy etcetera and that these fundamental concepts are CONSISTENTLY defined. And this explains why physics is a success while economics never rose above the level of incoherent blather.#3

What is known since 2000+ years ― except to economists ― is: “The only way to arrive at coherent languages is to set up axiomatic systems implicitly defining the basic concepts.” (Schmiechen, 2009)

So what has to be done instead of comparing the rubbish of Marx, Kalecki, Keynes is to move from their false macrofoundations to entirely new and CONSISTENT macrofoundations.

Egmont Kakarot-Handtke

#1 For example in ‘Debunking Squared’
#2 See ‘Humpty Dumpty is back again’
#3 See ‘Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist’