Saturday, December 31, 2016

Steve Keen — Teaching Economics the Pluralist Way

This is a talk I gave in Amsterdam to launch the Amsterdam Rethinking Economics critique of the current state of economics “education” in the Netherlands. The text of my slides is reproduced below.
Steve Keen's Debtwatch
Teaching Economics the Pluralist Way
Steve Keen | Professor and Head Of School Of Economics, History & Politics, Kingston University, London

16 comments:

AXEC / E.K-H said...

Science is binary=true/false. NO pluralism of false theories. See
http://axecorg.blogspot.de/2014/12/pluralism-cross-references.html

Bob said...

Science gets trampled by politics. Like the proverbial village ransacked by a herd of drunken elephants.

AXEC / E.K-H said...

Bob

Most people/economists have no proper understanding of what economics is all about. Therefore it is, first of all, of utmost importance to distinguish between political 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.

Political economics has produced NOTHING of scientific value in the last 200+ years. The four majors approaches — Walrasianism, Keynesianism, Marxianism, Austrianism — are mutually contradictory and materially/formally inconsistent. Economic policy guidance never had sound scientific foundations.

What we have at the moment is the pluralism of provable false theories. Instead of teaching the true economic theory Steve Keen is “Teaching Economics the Pluralist Way”.

It is high time to take away from ALL orthodox and heterodox failures their fake scientific diplomas and to sue them for damages.

Egmont Kakarot-Handtke

Bob said...

In practice, there is no such thing as theoretical economics. As for the actual economy, it can be changed. Guess who gets in the way of changing the economy... economists, politicians, the wealthy.

Bob said...

Produced nothing of scientific value, yet priceless in preserving wealth and inequality.

AXEC / E.K-H said...

Bob

I said that there is political economics (= agenda pushing) and theoretical economics (= science). Science is supposed to give us the true mental representation of reality.

You said: “In practice, there is no such thing as theoretical economics.” In other words, economics is not or cannot be a science.

Obviously, you are not familiar with the definition of economics: “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” (Robbins, 1935, p. 16) Economists repeat this claim once a year very publicly with a prize which explicitly says: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.

Either you are not familiar with the definition of economics or with the definition of science.*

Egmont Kakarot-Handtke

* See also ‘A political stench is in the air’
http://axecorg.blogspot.de/2016/12/a-political-stench-is-in-air.html
and ‘The real problem with the economics Nobel’
http://axecorg.blogspot.de/2016/09/the-real-problem-with-economics-nobel.html

Bob said...

That definition for economics doesn't exist in practice. It is "lip service".

Bob said...

In other words, economics is not or cannot be a science.

It may become a science one funeral at a time.

Bob said...

Seriously, how does one get politics out of science?

AXEC / E.K-H said...

Will economics ever become a science?
Comment on Mathew Kahn on ‘2007 Krugman on Milton Friedman’*

The current state of economics is that of a cargo cult#1 or fake science. Walrasianism, Keynesianism, Marxianism, Austrianism do not satisfy the scientific criteria of formal and material consistency. The four main approaches are PROVABLE false.

Economics is a failed science. Since the founding fathers economics has been political economics and political economics has produced NOTHING of scientific value in the last 200+ years.

Both Friedman and Krugman are part of the failure. Faced with this indisputable fact Mathew Kahn looks the other way and concludes: “... what the world needs now, I’d argue, is a counter-counterreformation.”

This is the wrong conclusion. The right conclusion is: “So we really ought to look into theories that don’t work, and science that isn’t science." (Feynman). Or, as Joan Robinson put it: “Scrap the lot and start again.” Neither Friedman nor Krugman can be taken seriously. There is no such thing as a reformation or counterreformation or counter-counterreformation of an axiomatically false theory. There is only the waste basket.

Accordingly, what the world needs first of all is the public clarification that economics is actually not a science. This is realized by deleting the word Sciences from the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.#2

The logically next step is to institutionally end the nuisance that is economics by expelling it officially from the sciences and by throwing the ‘throng of superfluous economists’ (Joan Robinson) out of the scientific community. It should be pretty obvious that Smith, Ricardo, Malthus, Marx, Keynes, Hayek, Friedman were political agenda pushers and NOT scientists, and the same applies to Orthodoxy’s Krugman and Heterodoxy’s Varoufakis and the rest of political clowns in the Circus Maximus.

There is no place in science for the rubbish that has hitherto been labeled economics. The economists that Mathew Kahn hypes as public intellectuals have to be correctly called political agenda pushers and fake scientists.

Egmont Kakarot-Handtke

#1 Feynman’s term, see Wikipedia
https://en.wikipedia.org/wiki/Cargo_cult_science
#2 See ‘The real problem with the economics Nobel’
http://axecorg.blogspot.de/2016/09/the-real-problem-with-economics-nobel.html
* Economist’s view
http://economistsview.typepad.com/economistsview/2016/12/2007-krugman-on-milton-friedman.html

Bob said...

Accordingly, what the world needs first of all is the public clarification that economics is actually not a science. This is realized by deleting the word Sciences from the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.#2

Can the UN do this?

The logically next step is to institutionally end the nuisance that is economics by expelling it officially from the sciences and by throwing the ‘throng of superfluous economists’ (Joan Robinson) out of the scientific community.

If that were to be done, funding for the remaining sciences might dry up.

AXEC / E.K-H said...

A rough business plan for science
Comment on Bob on ‘Steve Keen — Teaching Economics the Pluralist Way’

The problem of economics is that political economics (= agenda pushing) has hijacked and dominated theoretical economics (= science) since the founding fathers. To get out of the current pluralism of provable false theories (Walrasianism, Keynesianism, Marxianism, Austrianism) requires that theoretical economics emancipates itself from political economics. Or, more generally, that science emancipates itself from politics or any other conceivable other-directedness. Other-directedness — this is rather trivial — takes mostly the form of money. As Bob reminds everybody in his post above: “If that were to be done [ejection of political economists from the scientific community], funding for the remaining sciences might dry up.”

The proper separation of politics/business on the one hand and science on the other presupposes the solution of the funding problem. Obviously, there can be no full scientific independence without full financial independence.

The curious thing is that what we call material wealth/innovative products/civilization/culture/knowledge has for the most part been created by science but scientists have to go begging for funds and are de facto continuously threatened with the withdrawal of funds. As a result, science is leveraged where government, the military, the corporations, Wall Street, and wealthy individuals pour money in and it is de-leveraged elsewhere.

How the relationship between science and politics/business gradually developed over time can be gleaned from the following episodes.

“At one point in that 100 years, Lord Ernest Rutherford was visited by a minister of the Queen. He proudly and busily demonstrated what he had learned about radio. The minister said, that’s all very good, but what is it good for. Lord Rutherford replied that he did not know, but he guaranteed that at some point the government would tax it.”#1

“The investors showed little interest in Tesla’s ideas for new types of motors and electrical transmission equipment. They were more interested in developing an electrical utility than inventing new systems. They eventually forced Tesla out, leaving him penniless. He even lost control of the patents he had generated, since he had assigned them to the company in lieu of stock. He had to work at various electrical repair jobs and as a ditch digger for $2 per day.”#2

“In the mid-1890s the conglomerate General Electric, backed by financier J. P. Morgan, was involved in takeover attempts and patent battles with Westinghouse Electric. A patent-sharing agreement was signed between the two companies in 1896, but Westinghouse was still cash-strapped from the financial warfare. To secure further loans, Westinghouse was forced to revisit Tesla’s AC patent, which bankers considered a financial strain on the company. ... In 1897, Westinghouse explained his financial difficulties to Tesla in stark terms, saying that, if things continued the way they were, he would no longer be in control of Westinghouse Electric and Tesla would have to ‘deal with the bankers’ to try to collect future royalties. Westinghouse convinced Tesla to release his company from the licensing agreement over Tesla’s AC patents, in exchange for Westinghouse Electric purchasing the patents for a lump sum payment of $216,000. This provided Westinghouse a break from what had turned out to be an overly generous $2.50 per AC horsepower royalty, due to alternating current’s rapid gain in popularity.”#2

See part 2

Bob said...

I like this idea. It formalizes the role of science, recognizes what it has contributed, values what it has yet to offer, and spells out how it is to be sustained.

How would the New Academy function internally?
What sort of culture would develop?
Can lessons be learned from the institution known as academia?

Tom Hickey said...

@ E. K-H

Good one. I didn't know that about Tesla, only about Edison, who made his work pay.

Bucky Fuller suggested federally funded institutions like Bell Labs that would gather top minds, pay them to play with each other and provide all the toys they requested. He estimated that even one such lab would produce returns to society so great as to dwarf all expenses.

The US now does that only with military R&D. But there is still a big spill over.

I agree that econ should be separated into theoretical, practical, and political economy.

It is informally, but the lines are blurred and that is creating issues.

Academic econ is supposedly largely theoretical, and business school is mostly practical.

This is no discipline of political economy for policy formulation and that is mostly done by academically trained theoretical economists working in public institutions and think tanks.

Because the lines are blurred, econ is heavily infected with ideology and that is a reason that econ is less scientific than it should be ideally.

But there is also a difficulty in doing science where the agents operate under large degrees of freedom and there are many alternatives, institutions matter, and reflexivity is operative.

What's happening now in econ is the mainstream is trying to force a normal paradigm in Kuhn's sense on the profession, but the paradigm is flawed as an explanatory system and predictive device.

AXEC / E.K-H said...

Economics: The pluralism of false theories is over
Comment on Tom Hickey on ‘Steve Keen — Teaching Economics the Pluralist Way’

You say: “Because the lines are blurred, econ is heavily infected with ideology and that is a reason that econ is less scientific than it should be ideally.”

This is obviously beside the point. Economics is not less scientific than it should be but economics is a failed science. From this in turn follows that economics as we know it cannot be repaired with some institutional quick fixes but that it has to be completely abandoned.

The problem of economics as science has two dimensions: an economic and an ethical dimension.

In strictly economic terms economics itself has not produced value: “Thousands upon thousands of scholars, as well as thousands of statesmen and men of affairs, have contributed their efforts to the attempt to understand the course of events of the economic world. And today this field of investigation is being cultivated more extensively, than ever before. How is it, then, that in all these years, and with all the undoubted talent that has been lavished upon it, the subject of economics has advanced so little?” (Schoeffler, 1955)

Translated into Tayloristic terms, the scientific productivity of economics has been zero. Translated into business school terms, economics has been a losing deal of epic proportions.

In addition to burning money, economics has caused enormous social devastations because mass unemployment is ultimately the result of false economic theory, more specifically, of defective labor market theory.#1

The ethical bottom line is even worse. Economists violate scientific standards on a daily basis. One of the fundamental principles of the self-regulation of science is that falsified theories have to be dropped and replaced. Morgenstern reminded his fellow economists already in 1941: “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.”

As Hausman summarized the situation: “Yet most economists neither seek alternative theories nor believe that they can be found.”

Walrasianism, Keynesianism, Marxianism, Austrianism is provable false, i.e. materially and formally inconsistent, but economists do not only stick to their scientific crap but advertise it each year to the general public as genuine science: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.

Exactly at this point scientific failure turns into fraud. Political economics (= agenda pushing) has not only crowded out theoretical economics (= science) but, as a collateral damage, also tarnished the reputation of science in general with its fake Nobel.

To put it metaphorically: Economics is not a house with a hole in the roof that can be repaired but a termite infested ramshackle hut that must be burned to the ground in order to clear the site for an entirely new state-of-the-art construction. In methodological terms this is called a paradigm shift.

A paradigm shift is not to be confused with the ongoing infighting of political economists (Walrasians, Keynesians, Marxians, Austrians) for a better place at the political pig trough. A paradigm shift puts an end to the pluralism of false theories.

Egmont Kakarot-Handtke

#1 See ‘The one stone that kills orthodox and heterodox employment theory’
http://axecorg.blogspot.de/2016/12/the-one-stone-that-kills-orthodox-and.html

AXEC / E.K-H said...

See also: Failed economics: The losers’ long list of lame excuses
http://axecorg.blogspot.de/2017/01/failed-economics-losers-long-list-of.html