Economics — a dismal and harmful science
from Lars Syll
It’s hard not to agree with DeMartino’s critique of mainstream economics — an unethical, irresponsible, and harmful kind of science where models and procedures become ends in themselves, without consideration of their lack of explanatory value as regards real-world phenomena.
Many mainstream economists working in the field of economic theory think that their task is to give us analytical truths. That is great — from a mathematical and formal logical point of view. In science, however, it is rather uninteresting and totally uninformative! The framework of the analysis is too narrow. Even if economic theory gives us ‘logical’ truths, that is not what we are looking for as scientists. We are interested in finding truths that give us new information and knowledge of the world in which we live.
Scientific theories are theories that ‘refer’ to the real world, where axioms and definitions do not take us very far. To be of interest to an economist or social scientist who wants to understand, explain, or predict real-world phenomena, the pure theory has to be ‘interpreted’ — it has to be an ‘applied’ theory. An economic theory that does not go beyond proving theorems and conditional ‘if-then’ statements — and does not make assertions and put forward hypotheses about real-world individuals and institutions — is of little consequence for anyone wanting to use theories to better understand, explain or predict real-world phenomena.
Building theories and models on unjustified patently ridiculous assumptions we know people never conform to, does not deliver real science. Real and reasonable people have no reason to believe in ‘as-if’ models of ‘rational’ robot imitations acting and deciding in a Walt Disney world characterised by ‘common knowledge,’ ‘full information,’ ‘rational expectations,’ zero transaction costs, given stochastic probability distributions, risk-reduced genuine uncertainty, and other laughable nonsense assumptions of the same ilk. Science fiction is not science.
For decades now, economics students have been complaining about the way economics is taught. Their complaints are justified. Force-feeding young and open-minded people with unverified and useless mainstream economic theories and models cannot be the right way to develop a relevant and realistic economic science.
Most work done in mainstream theoretical economics is devoid of any explanatory interest. And not only that. Seen from a strictly scientific point of view, it has no value at all. It is a waste of time. And as so many have been experiencing in modern times of austerity policies and market fundamentalism — a very harmful waste of time.
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Real-World Economics Review Blog 
This is why mainstream economics is described as “stomach pain for biologists.”
For me Wealth of Nations explained everything one needed to know long ago. Since then ‘economists’ have just been dedicated to finding more and more sophisticated, and unintelligible to the uninitiated, smoke screens to hide the truth, so that the rich can go on grabbing all the Earth’s riches for themselves, until they destroy the planet’s ability to maintain a climate that can support human life.
The politicians don’t care; the political parties only exist to maintain the status quo for the rich and their immortal corporations, and to keep introducing more and more measures to make uprising and change ever more impossible.
I’m very lucky to have been one of the few generations, in the right place at the right time, to have been able to live a relatively comfortable life in peace and to have seen blue skies and experienced days when the only sounds were the hum of a trillion insect wings and the singing of birds.
Thoughts worth thinking about. But better “real-world” assumptions do not avoid the problem in principle. Positivism (Lawson’s deductivism) remains even with a (heterodox) economics that is not based on “unjustified patently ridiculous assumptions”. The problem is rather the complete lack of sensitivity for normativity in economics, especially where economists believe themselves to be “value-free” on the basis of empiricism, abstractness, mathematics, etc. and banish these questions to the realm of nescience. The fact is that much more should be sensitised to the structure of normativity and the normative deep structure of economic thinking (i.e. in models, empirical methods, etc.). The ethical problems caused by economics also exist, for example, at an inconspicuous, abstract methodological level, where trade-offs are considered and issues are subjected to marginal analysis: Where there should be an ethical or legal deliberation of values (moral goods), this is simply replaced by a cost-benefit comparison of the marginal analysis. This is not only a serious misunderstanding, but can also constitute a blatant violation of human rights standards if, for example, economic interests are weighed up against human dignity in a marginal analysis. (And no: there is no such thing as more or less human dignity, human dignity is absolute and indivisible!) In this respect, too, economics is harmful. That is why the reference above to the ‘correct’ (real-world) assumptions does not go far enough for me.