Tuesday, November 12, 2019

Bill Mitchell — The evidence from the sociologists against economic thinking is compelling

One of the stark facts about the academic economics discipline is its insularity and capacity to deliver influential prognoses on issues that affect the well-being of millions with scant regard to the actual consequences of their opinions and with little attention to what other social scientists have to say. The mainstream economists continually get things wrong but take no responsibility for the damage they cause to the well-being of the people. A 2015 paper – The Superiority of Economists– published in the Journal of Economic Perspectives (Vol 29, No. 1) by Marion Fourcade, Etienne Ollion and Yann Algan is scathing in its assessment of the economics discipline. They say that mainstream economists largely ignore contributions by other social scientists and consider them inferior in technological sophistication, have a “predilection for methodological and theoretical precision over real-world accuracy”, largely ignore”the basic premise of much of the human sciences, namely that social processes shape individual preferences”, and parade an arrogance and superiority that masks the sterility of their analysis. In this context, I thought the 2015 Report from the Joseph Rowntree Foundation – Sociological perspectives poverty – was a breath of fresh air in its approach to understanding poverty. The empirical base it presents refutes most of the major assumptions and conclusions of economists who work in the field of poverty. A mainstream professor who was supervising my economics graduate program once said to me: “Bill you are a bright boy but you should be doing sociology”, which was an example of the negative control mechanism designed to weed out dissidents (like me). It didn’t work. But I always considered the disciplines of sociology and anthropology (not to mention psychology, political science, social welfare etc) to be important in my journey to become ‘well read’. Most economists, however, do not think that. Perhaps that is why I was able to be part of the development of Modern Monetary Theory (MMT)....
There's word for it — "insularity." In jargon, it is "silo-thinking."

Bill Mitchell – billy blog
The evidence from the sociologists against economic thinking is compelling
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

2 comments:

Bob said...

Ivory towers and angels dancing on pins.

AXEC / E.K-H said...

Econogenics: economists pose a hazard to their fellow citizens
Comment on Bill Mitchell on ‘The evidence from the sociologists against economic thinking is compelling’*

Bill Mitchell summarizes: “One of the stark facts about the academic economics discipline is its insularity and capacity to deliver influential prognoses on issues that affect the well-being of millions with scant regard to the actual consequences of their opinions and with little attention to what other social scientists have to say. The mainstream economists continually get things wrong but take no responsibility for the damage they cause to the well-being of the people.”

And this is how it is done: “So we get a formulaic approach to publications in macroeconomics that goes something like this:
• Assert without foundation ― so-called micro-foundations ― rationality, maximisation, RATEX.
• Cannot deal with real world people so deal with one infinitely-lived agent!
• Assert efficient, competitive markets as optimality benchmark.
• Write some trivial mathematical equations and solve.
• Policy shock ‘solution’ to ‘prove’, for example, that fiscal policy ineffective (Ricardian equivalence) and austerity is good. Perhaps allow some short-run stimulus effect.
• Get some data ― realise poor fit ― add some ad hoc lags (price stickiness etc) to improve ‘fit’ but end up with identical long-term results.
• Maintain pretense that micro-foundations are intact ― after all it is the only claim to intellectual authority.
• Publish articles that reinforce starting assumptions. Knowledge quotient ― ZERO ― GIGO.”

Not only mainstream economics, though, is proto-scientific garbage. The major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism — are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept profit wrong. With their provably false theories economists post a hazard to their fellow citizens. However, the same holds for MMT, the approach Bill Mitchell represents.#1-#13

Bill Mitchell is right in his critique of what passes as economics but he has drawn the wrong conclusion from obvious scientific failure: “A mainstream professor who was supervising my economics graduate program once said to me: ‘Bill you are a bright boy but you should be doing sociology’, which was an example of the negative control mechanism designed to weed out dissidents (like me). It didn’t work. But I always considered the disciplines of sociology and anthropology (not to mention psychology, political science, social welfare etc) to be important in my journey to become ‘well read’.”

The correct conclusions from the lethal methodological blunders of economists are:
• Leave sociology to the sociologists and psychology to the psychologist.
• Take their findings whenever needed.
• Focus instead on how the economic system works.
• Economics is NOT a social science but a system science.#14, #15

From this follows that economics needs nothing less than a full-blown Paradigm Shift. In concrete terms, this means that false Microfoundations#16 have to be replaced by true Macrofoundations#17.

Walrasianism, Keynesianism, Marxianism, Austrianism, and Bill Mitchell’s MMT have to be buried at the Flat-Earth-Cemetery.#18

Egmont Kakarot-Handtke

References
https://axecorg.blogspot.com/2019/11/econogenics-economists-pose-hazard-to.html