Thursday, May 2, 2019

Ikonoclast — Mathematics and the constructions and emergent outcomes of socioeconomic phenomena

Digging into systems. Not as wonkish as it may sound.

Real-World Economics Review Blog
Mathematics and the constructions and emergent outcomes of socioeconomic phenomena

Also at RWER

Ecological limits and hierarchical power
from Blair Fix, Shimshon Bichler and Jonathan Nitzan


AXEC / E.K-H said...

Economics: The greatest scientific hoax in modern times
Comment on Ikonoclast on ‘Mathematics and the constructions and emergent outcomes of socioeconomic phenomena’

Taking Isaac Newton and Adam Smith as roughly simultaneous reference points, no one can fail to notice that economics has in the last 200+ years not risen above the proto-scientific level.

Needless to emphasize that economists do not run out of arguments to explain their obvious scientific failure. This is the classic excuse: “Years ago I heard Mr. Cobden say at a League Meeting that ‘Political Economy was the highest study of the human mind, for that the physical sciences required by no means so hard an effort.’” (Bagehot, 1885)#1 In other words, physics and the natural sciences are kids’ stuff but economics is the real challenge. Taken this into account, economists are second to none.

Ikonoclast reiterates the old refrain of economics as “separate and inexact science” (J. S. Mill): “When we are dealing with physical phenomena, the fundamental laws of the cosmos are independent of human understanding or modelling of them. No matter what you or I or any human thinks of the Laws of Thermodynamics or even whether we are ignorant of them, the fundamental phenomena follow a course which can be well modeled by those laws when those laws are mathematicized to permit accurate descriptions and empirically verifiable predictions. However, when it comes to socioeconomic phenomena, what we think and believe enter into the constructions and emergent outcomes of socioeconomic phenomena themselves (along with fundamental law effects also entering into the constructions and outcomes). At this level, any theory of the system enters into the system as a compounding or complicating element. Thence meta-theory (theory of the impact of theories on the system) will also enter into the system.”

In short, complexity, reflexivity, and ontological uncertainty are the ultimate reasons why economists have not produced much, if anything, of scientific value.

This, of course, is plain methodological nonsense. The simple fact of the matter is that economists are scientifically incompetent. The four major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong. Economics is the mutual acceptance and stubborn repetition of provably false theories.#2, #3, #4 Economic policy guidance NEVER had sound scientific foundations. Fidgetting with false theories in the public space, economists are a menace to their fellow citizens.

Let us just pick macroeconomics as pertinent example.#5 Keynes stated the formal foundations in the General Theory as follows: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

This mathematically simple two-liner (Y=C+I, S=Y−C) is conceptually and logically defective because Keynes did not come to grips with profit.

“His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)

Let this sink in: the economist Keynes NEVER understood the foundational concepts of his subject matter, i.e. profit and income.#6, #7

But it is worse: neither Keynesians nor Post-Keynesians nor New Keynesians nor Anti-Keynesians nor orthodox economists nor heterodox economists spotted Keynes’ blunder to this day.#8 Economists are simply too stupid for the elementary mathematics that underlies macroeconomics. Because the foundations are false the whole analytical superstructure of economics is proto-scientific garbage.

See part 2

AXEC / E.K-H said...

Part 2

What economists do not understand to this day is that economics is NOT a social science and that they have to change the definition of their subject matter:
• Old definition, subjective-behavioral: Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.
• New definition, objective-systemic: Economics is the science which studies how the monetary economy works.

Since the founding fathers, economics claims to be a science. It is NOT, it is what Feynman called a cargo cult science.#9 Economists are NOT scientists but merely useful political idiots.#10 Fact is that there is NO greater hoax in the history of modern science than economics.

Egmont Kakarot-Handtke

#1 Failed economics: The losers’ long list of lame excuses

#2 How the representative economist gets it wrong big time

#3 Economic recommendations out of the swamp between true and false

#4 There is no soft science only soft brains

#5 Macroeconomics: Economists are too stupid for science

#6 The correct relationship reads in the elementary case Qm=I−Sm with Qm as monetary profit.

#7 Except Allais see How Keynes got macro wrong and Allais got it right

#8 Marshall and the Cambridge School of plain economic gibberish

#9 The economics Cargo Cult Prize

#10 Throw them out! Orthodox and heterodox economists are unfit for science