Blog-Reference and Blog-Reference on Aug 9 adapted to context
Economics is a cargo cult science because economists never understood what science is all about. Proof No 1: like the average commonsenser, economists maintain that science is about predicting the future.
John Kay explains why this does not work in economics: “Big data can help us understand the past and the present but it can help us understand the future only to the extent that the future is, in some relevant way, contained in the present. That requires a constancy of underlying structure that is true of some physical processes but can never be true of a world … in which important decisions or discoveries are made by processes that are inherently unpredictable and not susceptible to quantitative description.”
This so trivial that it hurts and, above all, it is beside the point. It is not a specific failure of economics that it cannot predict the future because — as a matter of principle — science is NOT AT ALL in the business of prediction because it is long known among scientists: “The future is unpredictable.” (Feynman)#1
Only charlatans predict the future, and only morons take them seriously. The silly game, who predicted the last crash of the stock market or the real estate market, is the proper stuff for the Circus Maximus.
The first thing to understand is that science is NOT about prediction but about knowledge. So, to begin with, things that are not knowable are a priori OUT of science. Scientific knowledge satisfies two criteria: material and formal consistency. Everything else is storytelling, sitcom blather, and clueless filibuster about unknown unknowns.
Scientific knowledge is embodied in the true theory. The true theory is the best possible mental representation of reality.
Proof No 2: the representative economist does not realize that the four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and that ALL got the pivotal economic concept profit wrong.
The identifier of the representative economist is that he is content with the pluralism of provably false theories and that he tries to explain/excuse manifest failure away.#2
The final proof of scientific incompetence is that neither orthodox nor heterodox economists have gotten the foundational concepts of their subject matter ― profit and income ― right. Because of this economics stagnates since 200+ years at the proto-scientific level.
The study of economics is an intelligence test. Who does not realize until his final exam that supply-demand-equilibrium does NOT explain how the actual economy works, that DSGE and Post Keynesianism is provably false, that Marxiansim, Austrianism or Pluralism is NO alternative, that the scientific content of economics textbooks from Samuelson to Mankiw is zero, and who becomes himself an economics teacher without any serious idea of how to get out of the swamp proves only a complete lack of scientific knack.
#1 Scientists do not predict
#2 Failed economics: The losers’ long list of lame excuses
Related 'The myth of economics knowledge' and 'Why economists have not been effective in economics' and 'There is NO such thing as an economic expert' and 'Economics: a science without scientists' and 'Lucas: Confession of a scientific write-off' and 'Milton Friedman, fake scientist' and 'How Arrow pushed economics over the cliff' and 'The father of modern economics and his imbecile kids' and 'In search of new economists' and 'First Lecture in New Economic Thinking' and cross-references Incompetence
The representative economist has no idea of what science is all about. What is called prediction in science is categorically different from the commonsensical meaning of ‘predicting the future’.
Scientists do not predict when the next apple will fall from the tree. What they indeed predict is position and velocity at any point in time once the apple has started to fall. The commonsenser’s view of reality is entirely DIFFERENT from the scientist’s view. The commonsenser’s view is practical, trivial, and false but utterly convincing for other commonsensers.
Each falling apple is a unique historical event. There are arbitrary many proximate causes for an apple to fall: a hailstorm, playing children, an exploding meteorite, material fatigue, an earthquake, and so on. In almost all cases the singular event is uncertain and unpredictable. That is so OBVIOUS that no physicist ever lost many words about the historicity and uncertainty of falling apples.
A SCIENTIFIC prediction is a conditional proposition which presupposes: (i) the exact knowledge of initial conditions, (ii) the knowledge of one or more universal laws, (iii) the absence of disturbances. (Popper, 1994)
The idiocy of economists consists in running around and warning of the next crash and making policy proposals without having the true economic theory, that is, without knowing how the economic system works, that is, without having figured out the objective systemic laws of the monetary economy, for example, the Profit Law. The idiocy of economists consists in not knowing after 200+ years what profit is. And this includes MMT.
There are, of course, economic laws but they do NOT, of course, relate to human behavior.
When the apple fell on his head, Newton suddenly understood how gravitation works and he wrote down one of the most profound physical laws which enabled the precise calculation of planetary trajectories.
When the apple fell on his head, Matt Franko predicted that the next apple harvest will take place in the first two weeks in October.
Here you have the difference between a scientist and an imbecile economist in a nutshell.