Saturday, April 14, 2018

Roger Farmer — Standing on the Shoulders of Giants

The divergence of neoclassical economics from classical ideas does not have to do with mathematical formalism. It occurs when Walras and Pareto introduced us to homoeconomicus, a human being who springs fully formed into the world at the age of 18 with a complete understanding of his preferences over every conceivable outcome in his extensive choice set. That step enabled us to understand why markets are better ways of organizing economic activity than any other known form of social organization.…
Homoeconomicus [sic] brought understanding that was central to the neoclassical project. But his introduction to economics came at the cost of splitting economics off from sociology which retained the idea that our preferences are formed through social interaction. There is room for both ideas in the social sciences and economists and sociologists have much to learn from each other. But to engage in genuine dialogue we must first learn each other’s language.…
True to a point. But the fundamental assumptions of neoclassical economics that enable a formalistic approach to be tractable mathematically — methodological individualism, microfoundations, rational choice, preference maximization, money neutrality, and general equilibrium — are such gross oversimplifications as to make the models worthless beyond a very limited scope and at a restricted scale.

Moreover, abstraction of homo economicus from homo socialis implies that the economic system is being studied only from the perspective of the elements, ignoring the networked relations of the element.

"Economics" at the academic level now means neoclassical economics. While the neoclassical approach is useful, its usefulness is vitiated when it is dogmatized into the orthodox approach or put forward as the scientific consensus, ruling out other approaches by declaring that the methodological debate is now over. Relegating all approaches other than the neoclassical approach to the category of "heterodox" reveals foundational dogmatism, which is anti-scientific.

Roger Farmer's Economic Window
Standing on the Shoulders of Giants
Roger Farmer | Distinguished Professor of Economics at UCLA

1 comment:

AXEC / E.K-H said...

Economists: Standing on the Shoulders of Gnomes
Comment on Roger Farmer on ‘Standing on the Shoulders of Giants’

Roger Farmer maintains: “There is much that is wrong with existing economics. But to contribute to our subject, you must first understand how we got here. Neoclassical Economics was constructed by young, idealistic, smart, dedicated people, just like you, who built on the ideas of those who came before. Take a page from the book of those who preceded you. We are all standing on the shoulders of giants.”

This passage is sufficient proof of Roger Farmer’s utter confusion.#1, #2 Fact is that economics is one of the worst failures in the history of modern science. This is the actual state of economics: provably false
• profit theory, since 200+ years,
• Walrasian microfoundations (in particular equilibrium), since 140+ years,
• Keynesian macrofoundations (in particular I=S/IS-LM), since 80+ years.

The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit wrong. With the pluralism of provably false theories economics sits squarely at the proto-scientific level.

Economics is a science without scientists.#3 Feynman called this phenomenon cargo cult science: “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.”

What is missing among economists is an understanding of what science is all about. Roger Farmer is no exception. What he has not understood is that economics is NOT a so-called social science but a system science.

To recommend neoclassical economics as a worthwhile study for the aspiring economist is much like a deranged physicist recommending some pre-Copernican Flat-Earther.#4, #5

There were never “young, idealistic, smart, dedicated people” in economics, only useful political idiots. Economics started 200+ years ago with the agenda pushers, fake scientists, and intellectual gnomes of Political Economy and has never produced more than proto-scientific garbage.

Roger Farmer’s attempt to somehow associate the gnomes of economics with the giants of science is not merely a bad joke but a deception of the general public.#6

Egmont Kakarot-Handtke

#1 Economics: When the scientifically unfit blather about science

#2 When substandard thinkers dabble in science it is called economics

#3 Economics: communication without content

#4 Futile beatification and canonization of an economics Flat-Earther

#5 Economics: 200+ years of scientific incompetence and fraud

#6 The real problem with the economics Nobel