Rigour is no substitute for relevance and realism
from Lars Syll
The mathematization of economics since WW II has made mainstream – neoclassical – economists more or less obsessed with formal, deductive-axiomatic models. Confronted with the critique that they do not solve real problems, they often react as Saint-Exupéry‘s Great Geographer, who, in response to the questions posed by The Little Prince, says that he is too occupied with his scientific work to be be able to say anything about reality. Confronting economic theory’s lack of relevance and ability to tackle real probems, one retreats into the wonderful world of economic models. One goes into the “shack of tools” – as my old mentor Erik Dahmén used to say – and stays there. While the economic problems in the world around us steadily increase, one is rather happily playing along with the latest toys in the mathematical toolbox.
Paul Krugman has been having similar critical thoughts on our “queen of social science”. In a blogpost called Irregular Economics he writes:
Why, exactly, are we to have such faith in “regular economics”? What is the compelling evidence that the vision of a competitive, efficient economy allocating resources to the right uses is actually a good description of the world we live in?
I mean, it’s a lovely model, and one I, like everyone else in economics, use a lot. But I would not have said that it’s a model backed by lots of evidence. We do know that demand curves generally slope down; it’s a lot harder to give good examples of supply curves that slope up (as a textbook author, believe me, I’ve looked); and it’s a very long way from there to the vision of Pareto efficiency and all that which Barro wants us to take as the true economics. Realistically, imperfect competition, market failure, and more are everywhere.
Meanwhile, there’s actually a lot of evidence for a broadly Keynesian view of the world. Not, to be fair, for fiscal policy, mainly because clean fiscal experiments are rare. But there’s huge evidence for sticky prices, lots of evidence that monetary shocks have real effects — and it’s hard to produce a coherent model in which that’s true that doesn’t also leave room for fiscal policy.
In short, there’s no reason at all to consider microeconomics the “real” economics and macroeconomics some kind of flaky impostor. Yes, micro is a lot more rigorous — but if it’s rigorously wrong, who cares?
Instead of making the model the message, I think we are better served by economists who more than anything else try to contribute to solving real problems. And then the motto of John Maynard Keynes is more valid than ever:
It is better to be vaguely right than precisely wrong
I would add that misplaced rigour is not rigour at all. What is primarily needed is conceptual rigour not mathematical rigour.
Rigour is necessary, but not sufficient. Otherwise the rigour leads to dead ends, as in neoclassical economics: rigour mortis. Keynes had wit, but no rigour and hence sloppiness, as “we are all Keynesians now”, giving governments licence for all manners of stupidity.
You seem to have a “thing” about Keynes, Lyonwiss. Don’t forget that the guy who says “we are Keynesians now” was not a Keynesian but a fellow who had joined in the game of misinterpreting Keynes.
From my point of view, (a)during the middle years of my life we in Britain had, as Macmillan put it – so soon after the Great Slump and the Hitler War – “never had it so good” as a result of his wisdom and courage. (b) if instead of nurturing sour grapes economists had had the wit to see the relevance of post-war error-correcting logic and cybernetic control theory, they might have actually learned enough to make Keynes’s argument mathematically rigorous as well as discretely moral and (as Jeff Z is suggesting) conceptually in advance of its time.
Dave, I have a “thing” about economics of all schools, including Keynes because I took him seriously, which is more than most “Keynesians” might have done. You sound old enough to appreciate that Keynes might want to put you to death! It is happening in the UK right now: aka “economic repression”. Check out what Keynes said about this.
In the final chapter 24 of his famous book, section II, he said “there are no intrinsic reasons for the scarcity of capital”. He was confusing money with capital, which is limited as a means of production. Money can be printed and therefore “there are no reasons for scarcity”. He recommended that “saving through the agency of the State to be maintained at a level which will allow the growth of capital up to the point where it ceases to be scarce.” Witness zero interest rate policies and quantitative easing as consistent with
Keynesian economics.
Keynes said, “I am advocating, that the euthanasia of the rentier, of the functionless investor, will be nothing sudden, merely a gradual but prolonged continuance of what we have seen recently in Great Britain, and will need no revolution.” Dave, if you are living off your life’s savings, then you are a “functionless investor”, deserved to be bled to death slowly. Do you really understand Keynes?
Lack of rigor, possibly. Or he might be trying to explain ideas that do not fit well in the kind of mathematics used by the economists of the day. He might have felt that this was a necessary rhetorical choice – trying to explain how an advanced industrial economy could get stuck with massive amounts of unemployment at equilibrium. But as his target audience was his fellow economists, it is an understandable one.
He had to explain how an equilibrium could arise, still be called an equilibrium, and still be characterized by massively underused resources e.g. unemployment, something that was not acceptable to many of the economists of the day. The prevailing idea was there could be no involuntary unemployment at equilibrium.
Problems of interpretation abound in this light. One of which is the current discussion regarding the IS-LM model (on which see several previous posts on this blog). Again, this reflects the possibility that Keynesian Ideas might not fit well with the calculus of optimization used in microeconomics.
Different kinds of math are at play as well. Leontief Input Output, or Marxian Department I and II were floating around in that era. In 1946 Domar came out with the his model to explain growth in terms of savings and the productivity of capital. Harrod had done the same in 1939.
Do not equate “math” with rigor. Philosophy can be a highly rigorous discipline.
Governments had been acting stupidly without Keynes’ permission for several thousand years.
Economists would serve us better if they as human beings honestly answered questions like: “What is the primary intention of the economic and monetary systems? And: What are the primary ideas, values, purposes and experiences that same are based on? Does policy reflect this? And: Is this a good thing, or should we base them on other ideas etc. and make our policies reflect those ideas etc.?
@ Steve
As an economist, and an admittedly non-neoclassical one, I will do my best to answer for my self.
Economic and monetary systems should help human beings live their lives. Here, I draw a distinction between economics (neoclassical) and economies. Economies are real, messy, and riddled with conflict that is often resolved through the use of force. Economies involve institutions that can interact with markets (like businesses), and some economies are much less reliant on markets than others. It may also be the case that such systems evolve in response to natural and cultural conditions, and the purposes are imputed to them afterward.
Given that economics as a discipline emerged at the same time as capitalism emerged as mostly fully formed in the late 1770s, they seem to share a certain set of values and priorities. Individual freedom as conceived by classical liberals, but this involved a lot more social obligation and moral responsibility than it does now. These are (I think) based on the simple observation that human beings can and do trade. This is based on the belief that such exchanges would make the parties better off. This belief is not always confirmed after the fact. By and large, this does NOT reflect the reality that there are great disparities in power. Given that this idea of freedom is the foundation for laissez-faire, free market outlooks, current policy views the biggest threat to freedom as arising from government, so government restriction on anything that is not exchange, that does protect property is viewed with outright hostility by many economists. The experience with the arbitrary exercise of power by hereditary monarchs might play a role. The actual purpose and the purpose that people believe might be quite different – provide for the lives of people versus the raw pursuit of profit. The experience of economic growth and expansion, the increased lifespan of humans under capitalism as opposed to prior forms of economic organization, technological advancement, many economists would claim resulted from these classical liberal ideas.
For myself, it seems that it is about time to look at other ideas. Policy does not yet reflect these for the most part.
That is about as honest an answer as I can give. Does the profession as a whole have some explaining to do? Yes, but there are some concepts that come from neoclassical economics that I find dead useful and realistic. The idea of elasticity is one, but I also recognize the fact that it presumes the existence a capitalist economy with monetary exchange.
Jeff:
Excellent. I agree. I think that many of us who are skeptical of neoclassical economics are reacting to its over-reach. By which I mean it often appears that economists steeped in it ignore aspects of reality in order to avoid having to adjust, or challenge, some of its core ideas. I agree with you that its development goes hand in hand with that of capitalism. Indeed it seems as if neoclassical economics is simply an apology for capitalism rather than a study of actual economies. At the same time there are some concepts the rest of us can usefully borrow and expand upon as we try to tackle reality.
Ultimately I put neoclassical economics in a box along with other idealist systems. They are nice to play with, but dangerous if they are used to base policy upon.
Mathematics is a tool of inquiry. Physicists, using mathematics can make a discovery.
However in neoclassical economics it is impossible. I don’t believe that neoclassical economists which mathematically manipulate the same set of variables, would suddenly discover that free market is not perfect at all and government needed. They use mathematics not as a tool of inquiry, but as a tool to dogmatize their assumptions.
“Yes, micro is a lot more rigorous…”
Not even. If I call a cow’s tail a leg, it still has four legs. Rigor does not require that all the premises be realistic. But it does require a scrupulous delimitation of which premises are realistic and which are not. Practitioners of micro are in the habit of first assuming that everyone understands the tenuousness of some of their premises and then inexcusably “forgetting” that they even have made the tenuous assumptions upon which their analysis relies. The upshot of all of this pseudo-rigor is the substitution of dogma for analysis.
Perhaps I’ve been incorrect all these years about what a science any science is attempting to do. But I don’t think so. Scientists seek to first describe some phenomenon and then figure out by what process it was formed and changes in form or substance. Scientists use lots of tools in this work. Mechanical meters for finding the object, measurement devices to put numbers to the object, computers, experiments, writing tools to transfer knowledge of the object to others, and many forms of mathematics. The scientists never touch the object but assume that the tools in some ways reveal correct aspects of the object. Science is not concerned with “truth” in any ultimate sense but with revealing as fully as possible the object of study. If economics is a science this is what the work of economists would look like. My question then is this: is this what the work of economists looks like? Studying the economics discipline as one would study any other science or technology, the answer at present seems to be no, economics is not a science. So what is economics? Once we get a firmer grip on the answer to this question perhaps we will be in a better position to figure out why economics understood as a science has failed.
Ken:
Two points:
First, I am not sure the economics has ‘failed’. Not entirely. It has produced quite a few great insights into how economic relationships work. I also think that it has engendered a great deal of argument and controversy that has been useful in helping us articulate or strengthen our views on social welfare and other topics. All the various subcultures within economics – even including neoclassical economics! – can claim to have contributed something.
Second, economics is palpably not a science. Not unless you follow McCloskey et al and give a very loose definition of what science is. Jeff Z above gave a good suggestion: neoclassical economics developed largely as an explanation and defense of pure capitalism. It penalizes non-market ideas as a result. Once we accept this we can extract value from it, either by critiquing it, or by borrowing what appears useful.
Overall I think it helps if we simply stop thinking of economics as a coherent body of thought and regard it more as a set of helpful ideas to allow us to understand the economic aspects of society. But to extract that value we all need to be highly skeptical of its claims. Most economists I talk with have remarkably little knowledge of an actual economy, but, rather, are highly adept at giving logical credence to a pre-existing political point of view.
Economics is not a science. Neoclassical economics is not economics.
Proofs for your statements: 1. Economics is about humans. Economics cannot be a science, if it is defined as the discovery of universal laws, which only exist for physical objects, not humans. 2. Neoclassical economics is about robots, not humans. Hence neoclassical economics is not economics.
Thank you very much for the proofs. Absolutely agree with them. I would suggest that neoclassical economics is about gods. Gods who live in the perfect world of perfect information. Both firms, owners of resources are gods. I just wonder how can they in such perfect world maximize profits?
I would say this. Economic considerations should include the people who are in the economy. By all means let us have empirical if not scientific rigor, but the set of science is inadequate as the sole basis for economics. To think otherwise is folly. Humans being a part of and the effect of economics, good or bad,…..the totality of what it is to be human must be included in the subject. This is true for any human system. This is also Modernity’s problem/bias, that is, that truth and/or wholeness can be attained merely by means of reductionism and/or compartmentalization.
Man is many things….including, inextricably and most importantly a wisdom discerning being. Thus, how can we possibly exclude, why should we for any reason exclude wisdom and wisdom’s most potent distillations in our thinking (philosophy) and acting (policies) in regard to economics?
Man needs to include/utilize all of his tool bag. Science, yes, but Wisdom most especially. It may be hard for science or scientists to swallow, but there is a NATURAL hierarchy in the human condition…..and wisdom occupies the top of that NATURAL hierarchy. Does this mean we should all contemplate our navels and get centered before we decide what to do? Or argue forever about how many angels can dance on the head of a pin? Of course not.
What it means is that Wisdom is a higher order level of thinking AND acting than mere considerations of profit and/or employment. Or more precisely a higher order level of thinking and acting that actually includes consideration of profit and/or employment.
Whose wisdom? will be the reply of the skeptic. Well, Humanity’s! Any of the various wisdom traditions can be mined for it. And to be BOTH reductionistic AND wholistic, finding the most powerful distillations of Wisdom and using them as the PRIMARY basis for our various systems (Again, Wisdom occupying the top most NATURAL hierarchical position of the human character/condition) would set our priorities correctly and yet also include and allow for all other lesser considerations….like SUPPOSED economic/political/financial abstractions.
Wisdom IS wisdom. Bowing to it….can be the ultimate inclusiveness. I suggest we hurry up and do precisely that.
At #11: With respect, Ken, I think you may have “been incorrect all these years”. There are different understandings of science, and the one you describe (which “is not concerned with truth in any absolute sense”) derives not from scientists but from a sceptical (as against critical) 1740′s philosopher, David Hume.
Two thousand years earlier Aristotle had advanced science from Platonic intuition to objective classification in terms of visible forms, functions and family tree logic. Bacon, over a hundred years before Hume, created modern science for the purpose of developing new trades in which workers left destitute by changes in agriculture: not by more accurate classification but by “taking things to bits to see how things work”. His physician, William Harvey, did just that in discovering the circulation of the blood (“absolute” in the sense that at any given time it does or it doesn’t). Hume looked at how Newton measured invisible motion and gravitational forces, but denied his explanation in terms of cause and effect (and with it the basis of Aristotle’s logic), reducing it (and his understanding of scientific method) to reproducible mathematical classification and deduction. This reveals spiralling paths rather than the existence (or not) of orbits at a given time. In the nineteenth century the accidental discovery of electrical circulation and resultant magnetism eventually led not just to transformation of communication, control and computational technology and maths but to the evolution of sub-atomic physical science. In the twentieth century, likewise, another unexpected discovery – that electrical “on-off” switching circuits were performing Aristotelian logic – led to a sub-linguistic information science offering better [Baconian] understanding of how multi-layer communication systems, languages, mathematics and brains “work” and what to do with them if they don’t. In this period Popper saw science as weeding out what “doesn’t work”, Kuhn as there being two types of science (roughly pure science, seeking overviews at a lower level, and applied science which can go wrong in detail), and Lakatos reflecting my own experience as a scientist: working within a “research programme” which advances by deeper understanding of details which don’t work, and is ripe for Kuhn’s Copernican revolutions only when it ceases to be fruitful. Such widening of perspectives usually comes from outsiders who perforce are able to see what’s “outside the box”.
In relation to economics, of course, the point is that its current research programme, based on Maxwell’s mathematical approach to thermodynamics, has ceased to be fruitful, if it ever was. As an outsider it is obvious to me (but apparently not to economists and social scientists generally) that society “works” by means of communication, control, computation and “science” in its original sense of knowledge (as against a process) acquired from previous generations of scientists and internalised by codification in habit-triggering language. So habit-forming has been Humean positivism that Information Science has failed to be recognised as a science – never mind understood – by scientists generally. We still have economists looking to chaos theory to make beer out of froth instead of looking to Information Science (or Marx’s despised Religion of the Word) to avoid stirring up froth on the beer.
At #12: I’m afraid I find your comments unhelpful. Peter. What great insights has marginal economics produced? Its insights into how to make money (chrematistic) have been perversely unhelpful about how to correct their economic (household) side-effects.
At #13, I agree entirely, BFWR, that economic considerations should include people, i.e. not be about abstractions like supply and demand, profit and employment, which don’t take account of the differences we find between people and with in their traditions.
Your “hierarchy” model, though, doesn’t work: every path in a hierarchy is different. What I have found works is a “system” model more like a compass, with which an equator and a line through Greenwich distinguish four basic areas which (whatever their content) we can subdivide as necessary. We have four different types of logic in our brain, imperfections in which leave us with differing types as well as levels of talent. We all born human, in maturity have different biological functions as male and females, and all grow old (though not all wiser).
Just what “wiser” means is quite hard to pin down. Following up what I’ve been saying about the insight into error correction which led to Information Science and made reliable communications, control and computing possible (in folk tradition “a stitch in time saves nine”; in Christian tradition “confession, forgiveness and a firm purpose of amendment”), may I suggest Wisdom is willingness to learn from our mistakes and limitations, to accept help and correction from others and to avoid doing what may go wrong in ways we are going to be unable to correct. (Building nuclear power stations by the sea in an earthquake prone region comes to mind, but so does killing people: read this extraordinarily moving testimony by a wise Jewish mother: http://www.countercurrents.org/elhanan140610.htm).
Another bit of folk wisdom (given the NIH Syndrome) is “least said, soonest mended”. I’d better shut up and rejoice inwardly at the prospect of a new Pope who wants to live more simply, in the spirit of St Francis.
Dave,
“Your “hierarchy” model, though, doesn’t work: every path in a hierarchy is different.”
Except that Wisdom is the quintessence of the systems model because it in fact IS the ethical integration of ALL human thinking and acting. Otherwise it wouldn’t be Wisdom.
And the reason it must be recognized as the pinnacle of the hierarchy is for that very reason.
Wisdom and its distillations, i.e. Faith as in Confidence, Hope, Love and Grace, or their cultural equivalents, integrated into the thinking and acting of his various systems, is all and everything Mankind needs to survive the converging crises it faces.
OK! BUT – from the methodological point of view – it seems to me that we should also follow Egmont Kakarot-Handtke, Why Post Keynesianism is not yet a Science, Economic Analysis and Policy, March 2013.
I have a hard time buying economics as a science, like the natural sciences, especially as a practitioner. The first thing to note is that as it is taught today, the assumption about human behavior (goal – maximize utility/pleasure, and there is debate over these terms as well) is ETHICAL. It was borrowed from Jeremy Bentham through JS Mill, and then into the Walras, Menger, Jevons “marginal revolution.” “Let’s assume this entity, utility, is measurable,” even though its origins were as a way to organize thinking about right and wrong action (if I have my intellectual history right – I might not). That means the ideas of utility, pleasure, happiness were floating about in the world of the time, as guides to ethical action before they crystallized into the foundation for modern neoclassical economics. I note also that Marxian claims about exploitation have much the same character – there is an inescapable ethical dimension, and it is for that reason that many don’t classify Marx as a scientific thinker.
I am not totally enamored of the move toward “understanding” as opposed to “explanation.” (I rely heavily on Hollis, The Philosophy of Social Science, for this. But I still would like to have some guide for policy – either for a government, or for a business. But here, I make ontological commitments to institutions (government, business) that help guide (and foster) human behavior. When we commit to some policy, we make ethical judgments in addition to ‘scientific’ ones. A will bring about B, and this is a good thing. C will bring about D, and this is a bad thing. (With this, we step into the area of causality and prediction.)
I guess I would suggest the word “practice” akin to medicine and law. Insofar as we are talking about what science is and whether economics meets that standard, I supposed my preferred analogy would be medicine. It may not matter that much. In medicine you have a base knowledge that you can draw on, but each patient is different – symptoms, allergies, age, sex, etc., so that the base knowledge must be customized to each situation. I might argue that economics is similar to this, but I am not certain.
I am in basic agreement with Peter @#8 and #12. Claims are tentative and limited, or in economics should be treated as such. Neoclassical claims about universal applicability seem to me to amount to imperial overreach, but not all neoclassical economists make these claims.
Sergio, Lyonwiss, I somewhat agree. But humans are physical as well as psychological / mental / religious. Strictly speaking, your proof rests on the unstated assumption that humans are not physical. The idea that humans need to eat, breathe,drink, and procreate (as all life forms) is pretty close to as universal a claim about humans as I can think of. As a result, economics as a discipline is concerned with how humans go about eating, drinking, living and procreating. HOW we do these things is far from universal.
Physical needs you mentioned are universal in an abstract sense. But preferences in how those needs are met are not universal. A true scientist would attempt to classify needs and preferences. A systematic study might reveal regularities, which may lead to universal laws.
Unless economics accepts human diversity to some extent, it cannot even begin to discover universal laws, which must have precisely stipulated conditions for certain classes of phenomena. For example, only when certain conditions are met, do we have laws of physics and chemistry which are valid universally, at all places and for all time.
Economists have announced many “laws” or economic relationships, with the rider “ceteris paribus”. These laws are useless, because all else are never equal. The key part of any scientific discovery is to specify exactly what else must be equal for a particular law to hold. Economists have done no such thing and hence there are no universal laws in economics.
Economic theories are logical-deductive systems, based on “laws”, which have no universal validity. When these theories have been proven wrong frequently and significantly, they blame humans for being irrational and not behave predictably like robots.
The real danger for humanity is that there are signs that governments are taking repressive measures to force people to behave predictably like robots, through market manipulation, expectation formation and coercion, in the false hope that people’s perception becomes the reality.
Neoclassical economics uses absolutely no methods of science. Some would argue that using mathematics is scientific. But mathematics can be applied to describe an illusion. And that is what neoclassical economists do.
Economics does not uses systematization and classification as fundamental methods of science. And that is why it is very hard to apply laws of logic to it. That is why they substitute logic with mathematics, and naively believe that mathematics is logic.
Neoclassical economics has no foundation. It describes only capitalist system, not even real. It describes nothing.
If there is no capitalism, there is no neoclassical economics.
and of course it is ideologically biased to capitalism.
I repeat it again and again. Science discovers laws, but neoclassical economics create those laws. And imposes them on us, rather tries to understand OUR laws, unique for every culture, if not individual.
Its desire to be physics of society is wrong. It should use at least methods of biology, logic and philosophy.
Jeff, I too have a hard time buying economics AS IT IS NOW TAUGHT as a science AS IT IS NOW TAUGHT. In fact I don’t. Falsehoods are not science (knowledge) and chrematistic (as it seems Aristotle insisted millenia ago) is not economics, i.e. money making is not household management.
You are right, too, on ideas of utility etc floating around the world at the time of the “marginal revolution”. My reference to Hume, Adam Smith’s mentor, was about that, but a quick look in the index of Hobbes’s infamous “Leviathan” (1651) led me to this:
“That which men desire, they are also sayd to Love: and to Hate those things, for which they have Aversion. So that Desire and Love are the same thing, save that by Desire we always signify the absence of the object … But whatsoever is the object of any man’s Desire; that it which he for his part calls Good. …”
That inverts and signals rejection of the Christian concepts of love and morality, summed up in Christ’s prophetic words: “Greater love than this no man has, that he lay down his life for his friend”. So I don’t buy the utility of chrematistics either. Economics is about managing our self-sacrifices so they decently provide for our families and communities. (With apologies: even more than normally I’m struggling here to find words adequate to the occasion).
Sergio,
By and large, I happen to agree with you and Lyonwiss regarding the status of economics, and the status of neoclassical economics in particular.
Classification is problematic, because that would depend on observation of actual economies. With a few exceptions, people who do this kind of work are not accorded the status they should probably have within the profession. Take two examples: Classification of groups of people based on race, and based on division of property. Classification based on race is important to be able to discuss the possibility of racial discrimination in capitalist labor markets. Here I have in mind the U.S. in particular. There are two levels of interpretation that are operating here. One – the self-identification of the individual. Two, if I look at Census Bureau data, I have no choice but to accept the self classification of the people who respond to those surveys. I am also dependent on the preconceived notions in the minds of the people who put together the surveys as well. That actually is a third level of interpretation. Even thought race has virtually not biological basis, it is an operative category in peoples minds that affects their behavior. Thus, it becomes even more important from an observational point of view.
Classification based on property ownership,and the type of property, is also tremendously important when it comes to forms of economic organization. In feudalism, landed estates were generally passed down to the first born son. In some areas of Africa, land is divided equally among the children, with different implications for the operations of each of these economies. Is property mostly privately held, or is it held in common? Here, most economists would do well to pay more attention to anthropology, but I admit that I fall short on this score. At least JS Mill pointed out the problems for a largely capitalist economy (19 century England) that resulted from the restrictions placed on the transfer of title to land.
The disputes regarding the definition of ‘capital’ as an operational concept fall under the heading of property ownership. I personally agree with Marx who held that ‘capital’ was really a term that embodied the right of ownership to the factory and its output and the income that resulted from its sale, that was vested in the person of the factory owner/capitalist.
To claim that neoclassical economics engages in “no scientific endeavor whatever” I do not think is true. Daniel Hausman as argued that developing new concepts and exploring their implications is a tremendously important for the progress of any scientific discipline. He also points out that very often this step occurs before empirical investigation begins. (Hausman, Philosophy of Economics: An Anthology, 3rd Edition, Introduction) A few scientists are exclusively engaged in this, yet we don’t generally accuse them of not being scientists – theoretical vs. applied physics. I would agree that many neoclassical economists have gotten much too wrapped up in this, to the exclusion of looking at the way the world works and classifying and exploring the relationships among the phenomena. Thus, neoclassical economics, and possibly other forms are not yet ‘scientific’ in the sense that there in an imbalance between abstraction and observation.
Important breaking news. Further to my citation at #4 of Keynes’ idea of “euthanasia of savers” and my comments at #21 about increasingly repressive measures of governments, incontrovertible evidence is provided yesterday by the action of the Cyprus government.
At the behest of the ECB and IMF, Cyprus is confiscating 9.9 per cent of all large bank deposits, and 6.75 per cent of smaller ones. Keynesian euthanasia of savers is no longer “nothing sudden, merely a gradual but prolonged continuance” of stealthy expropriation through economic repression of negative real interest rates and money debasement. It is now sudden, violent and coercive, on the “Road to Serfdom”.
The engineered failure of market economics through the scientific pretence of the neoclassical scam has paved way for the repressive governments of central planners. Any popular protests will be quashed with police brutality.