Political economics: At wits' end

Political economics is defined as either not to understand, not to accept, or not to live up to the standards of both material and formal consistency. It is the very opposite of theoretical economics.




A genuine inquirer aims to find out the truth of some question, whatever the color of that truth. (Haack, 1997, p. 1)


Apologetics may be a laudable objective. Its practical importance is unquestioned. People need to be shown that the institutions of their own society are good, those of others bad. But there is no place for apologetics in science. Scientific economics inquires only into the How and Why, not into the Good or Bad, of what is. From the scientific point of view preoccupation with Good and Bad is worse than useless since it not only fails to illumine anything but keeps the lightbeam of inquiry from being turned in directions where answers to significant questions can be found. (Murad, 1953, p. 2)


However much economists may evoke their purity, they want to change the world. They want to contribute to the solution of urgent practical  problems. (Klant, 1988, pp. 112-113), original emphasis


... homini oeconomici  are never trustworthy when they pretend to serve some interests which are not those of themselves. (Bonilla, 2002, p. 357)


Indeed, when pressed, most economic theorists admit that they do economics because it is fun. (Varian, 1997, p. 109)


Problems of means and ends are not solved by romancing about them, or moralizing, in whatever pretty or edifying phrases. Better let them alone, since bad policies are worse than none. (Knight, 1949, p. 1274)


Economists, like other human beings, live under the institutions of a historic society and under the standards of its civilization. They share in its beliefs and values, prejudices and interests, horizons and limitations. They depend for their living, advancement, and recognition on the institutions of the society in which they live, e.g. on universities, research institutes, publishers, press, government, and business establishments. Most of this institutions have other, more important, objectives than the “untrammeled pursuit of truth,” and even those which have this objective are dependent on the rest of society and must make their adjustments and compromises. (Lange, 1946, p. 23)


A science is an integrated body of knowledge, and it is pursued and developed by a group of interacting practitioners called scientists. The validation and extension of that body of knowledge is the intellectual goal of the scientists, although of course the pursuit of that goal in turn serves whatever personal goals – such as prestige, reputation, and income – the scientists seek. (Stigler, 1983, p. 529)


Ironically, economists have entangled themselves in an idiosyncratic version of the Epimenides paradox. From the behavioral axiom that all rational agents promote their self-interest follows that whatever proposal economists make must either be in the self-interest of economists or irrational.


The leading economists, considered as a group, generally gave (and give) the impression of reasonably happy people, well trained for their research, satisfied with their careers, enjoying academic discourse, and well able to cope with their personal problems. (Niehans, 1994, p. 317)


There remains only the vocational problem: where is the integrated body of knowledge that defines science?



A paradigmatic specimen:

... when it is a matter of finding the cause of general changes in the price of commodities, and especially the influence on those of credit and the institutions regulating credit, some maintain that cheap and easy credit, in other words, a low rate of interest, will tend to increase the amount of means of payment in circulation and the demand for goods and this will tend to increase the general level of prices; while others maintain the contrary, that cheap credit means the same things as cheaper costs of production and so tends to lower the level of prices, not to raise it; and naturally ... there is no lack of more moderate opinion between the two extremes, eclectics who say that the influence of credit on prices is sometimes in one direction, sometimes in another and is sometimes nil. (Wicksell, quoted in Deane, 1983, p. 8)


In contrast to scientists, the group of interacting practitioners called economists produces much opinion and little knowledge.




... a theory is to be preferred which is accepted by an academic community, i.e. which has proved to be most persuasive. (Dow, 1997, p. 79)


By supplanting material and logical consistency with a social criterion economics deliberately opts out of science. A majority of academics as such never was and never will be a truth criterion. This holds also for other social or political criteria. Politicans in particular have no voice in scientific matters; their acceptance/ nonacceptance is a non-issue.


That government activism was doomed to failure was exactly what politicians, central bankers and business leaders of the Thatcher and Reagan periods wanted to hear. (Kaletsky, 2009, p. 154)


But in the introduction to Book IV we read that Political Economy ‘proposes to enrich both the people and the sovereign,’ and it is this definition which expresses both what Smith wanted above everything and what interested his readers more than anything else. (Schumpeter, 1994, p. 186)


It has been well said by M. Say that it is not the province of the Political Economist to advise – he is to tell you how you may become rich, but he is not to advise you to prefer riches to indolence, or indolence to riches. (Ricardo, quoted in Redman, 1997, p. 303)


A scientific observer or reasoner, merely as such, is not an adviser for practice. (Mill, 2006, p. 950)


Marx  defined political economy’s task as being “to lay bare the economic laws of motion of modern society.”  (Hudson, 2010, p. 12)


Thirty years after Laplace wrote this apotheosis of mechanics, something happened that tended to prove that mechanics has the power over existence as he described it. In 1846 a French astronomer, Urbain Leverrier, at the end of some calculations in which he confronted the astronomical observations of the known planets with the results of an appropriate mechanical system, was led to proclaim that there existed a still unknown planet, which, moreover, must be visible in a certain region of the sky. Direct observation of that region soon confirmed the existence of that planet, now called Neptune. Neptune, therefore, was discovered not by scanning the firmament with telescope, but "at the tip of a pencil." We can very well imagine the dream that this feat must have inspired in all social scientists, especially in economists. It is the dream of being able to predict the location of any share on the firmament of the Stock Exchange Market, whether tomorrow or one year from now, by solving certain equations that govern the motion of that market. Undoubtedly, the essence of that dream must still be nursed in the subconscious of many modern economists. The role of such a hope in the founding of the Cowles Commission is evidenced by several articles in the early volumes of Econometrica. (Georgescu-Roegen, 1979, pp. 319-320)


The performance of economic research programmes is partly dependent on the social hullabaloo. (Klant, 1994, p. 44)




In short, it is no longer the reasoning which determines what the conclusion shall be, but it is the conclusion which determines what the reasoning shall be. This is sham reasoning. (Peirce, 1931, 1.57)


A pseudo-inquirer seeks to make a case for the truth of some proposition(s) determined in advance. There are two kinds of pseudo-inquirer, the sham and the fake. A sham reasoner is concerned, not to find out how things really are, but to make a case for some immovably-held preconceived conviction. A fake reasoner is concerned, not to find out how things really are, but to advance himself by making a case for some proposition to the truth-value of which he is indifferent. (Haack, 1997, p. 1)


So we really ought to look into theories that don't work, and science that isn't science. (Feynman, 1974, p. 11)




One is led to conclude that economics as a scientific discipline is still somewhat hanging in the air. There is no harm in this admission. (Koopmans, 1957, p. 141)


The claim to the scientific nature of economics is prey to suspicion the moment that it fails to be self-evident. (Benetti and Cartelier, 1997, p. 211)


New Economic Thinking is hard to win. (Mirowski, 2013, p. 4)


I think that the discipline is in need of a major overhaul. (Hausman, 1992, p. 263)


Economics as a discipline therefore has a choice: It can retain the neoclassical core of its theory or, alternatively, it can one day become a science. It cannot have it both ways. (Eichner, 1983, p. 518)


Economics today is a discipline that must either die or undergo a paradigm shift ... (Kaletsky, 2009, p. 156)


Changing paradigms is not easy. Too many have invested too much in the wrong models. Like the Ptolemaic attempts to preserve earth-centric views of the universe, there will be heroic efforts to add complexities and refinements to the standard paradigm. The resulting models will be an improvement and policies based on them may do better, but they too are likely to fail. Nothing less than a paradigm shift will do. (Stiglitz, 2010)


Nothing is more difficult than to turn an entire discipline around, asking in effect to jettison its own history over the last 200 years. (Blaug, 1990, p. 205)


In fact, nothing is simpler, as soon as a superior alternative has been developed. Since Newton, physicists have done a lot of paradigm shift while economists spent their time complaining that it is not easy. Yes, it is nowhere easy. Yet, it is the new thinking  that is the tough part and economists have not been particularly successful at it.


Few people, and least of all we economists ourselves, are prone to offer us congratulations on our intellectual achievements. Moreover our performance is, and always was, not only modest but also disorganized.  (Schumpeter, 1994, p. 6)


As Joan Robinson put it: Scrap the lot and start again. Both, critique and advocacy of conventional economics, are pointless excercises.


Paradigm shift means in practical terms to establish a superior axiomatic basis. Superior relates to material and logical consistency. All social and political criteria are irrelevant.




A method of obtaining accurate premises is needed because science can only be true if its premises are true. (Redman, 1997, p. 328)


Political economics starts with subjective-behavioral premises and serves diverse purposes. Behavior logically implies intentionality. By consequence, inquiry turns to second-guessing the intentions of dimly known or assumed agents, e.g. the invisible hand. This kind of knowledge, though, is essentially different from scientific knowledge. Invisible hand explanations quite naturally merge with suggestive speculations about benevolent/malevolent hidden agents or forces. In the final analysis, any talk about market forces is a mixture of storytelling and animism. In marked contrast, theoretical economic starts with objective-structural premises. The sole task of theoretical economics is to explain how the actual economy works. The sole criteria of theory assessment are material and formal consistency.


Political economics is definitively on the wrong side of the line that demarcates science and nonscience. To recall, political economists never came to grips with the fundamental economic concepts income and profit. This is not a basis for making strong assertions about the functioning of the market system. Lacking a correct profit theory, the elaborate corpus of conventional market theory is expendable.


But it is all a matter of chance: in order to solve a difficult problem one needs not only understanding but also luck. (Popper, 1994, p. 99)


Political economists lack both, therefore the method of obtaining accurate premises eludes them.



Benetti, C., and Cartelier, J. (1997). Economics as an Exact Science: the Persistence of a Badly Shared Conviction. In A. d’Autume, and J. Cartelier (Eds.), Is Economics Becoming a Hard Science?, pages 204–219. Cheltenham, Brookfield,VT: Edward Elgar.

Blaug, M. (1990). Economic Theories, True or False? Aldershot, Brookfield, VT: Edward Elgar.

Bonilla, J. P. Z. (2002). Economists: Truth-Seekers or Rent-Seekers? In U. Mäki (Ed.), Facts and Fiction in Economics, pages 356–375. Cambridge: Cambridge
University Press.

Deane, P. (1983). The Scope and Method of Economic Science. Economic Journal, 93(369): 1–12. URL

Dow, S. C. (1997). Mainstream Economic Methodology. Cambridge Journal of Economics, 21: 73–93.

Eichner, A. S. (1983). Why Economics Is Not Yet a Science. Journal of Economic Issues, 17(2): 507–520. URL

Georgescu-Roegen, N. (1979). Methods in Economic Science. Journal of Economic Issues, 13(2): 317–328. URL

Feynman, R. P. (1974). Cargo Cult Science. Engineering and Science, 37(7): 10–13. URL or URL

Haack, S. (1997). Science, Scientism, and Anti-Science in the Age of Preposterism. Skeptical Inquirer, 21(6): 1–7. URL
Hausman, D. M. (1992). The Inexact and Separate Science of Economics. Cambridge: Cambridge University Press.

Hudson, M. (2010). The Use and Abuse of Mathematical Economics. real-world economics review, (55): 2–22. URL

Kaletsky, A. (2009). Goodbye, Homo Economicus. real-world economics review, 50: 151–156. URL

Klant, J. J. (1988). The Natural Order. In N. de Marchi (Ed.), The Popperian Legacy in Economics, pages 87–117. Cambridge: Cambridge University Press.

Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield, VT: Edward Elgar.

Knight, F. H. (1949). Truth and Relevance at Bay. American Economic Review, 39(6): 1273–1276. URL
Koopmans, T. C. (1957). Three Essays on the State of Economic Science. New York, NY, Toronto, London,: McGraw-Hill.
Lange, O. (1946). Scope and Method of Economics. Review of Economic Studies, 13(1): 19–32. URL

Mankiw, N. G. (2006). The Macroeconomist as Scientist and Engineer. Journal of Economic Perspectives, 20(4): 29–46. URL

Mill, J. S. (2006). A System of Logic Ratiocinative and Inductive. Being a Connected View of the Principles of Evidence and the Methods of Scientific Investigation, volume 8 of Collected Works of John Stuart Mill. Indianapolis, IN: Liberty Fund. (1843).

Mirowski, P. (2013). Never Let a Serious Crisis Go to Waste. London, New York, Ny: Verso.

Murad, A. (1953). Questions for Profit Theory. American Journal of Economics and Sociology, 13(1): 1–14. URL

Niehans, J. (1994). A History of Economic Theory. Baltimore, MD, London: Johns Hopkins University Press.

Peirce, C. S. (1931). Collected Papers of Charles Sanders Peirce, volume I. Cambridge, MA: Harvard University Press.

Popper, K. R. (1994). The Myth of the Framework. In Defence of Science and Rationality., chapter Science: Problems, Aims, Responsibilities, pages 82–111. London, New York, Ny: Routledge.

Redman, D. A. (1997). The Rise of Political Economy as Science. Methodology and the Classical Economists. Cambridge, MA, London: MIT Press.

Schumpeter, J. A. (1994). History of Economic Analysis. New York, Ny: Oxford University Press.

Stigler, G. J. (1983). The Process and Progress of Economics. Journal of Political Economy, 91(4): 529–545. URL

Stiglitz, J. (2010a). Needed: A New Economic Paradigm. Financial Times. URL

Varian, H. R. (1997). What Use is Economic Theory? In A. d’Autume, and J. Cartelier (Eds.), Is Economics Becoming a Hard Science?, pages 108–119. Cheltenham, Brookfield, VT: Edward Elgar.



Refers to  The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment  URL and Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist  URL 



© 2013_11 EKH, except original quotes                                                                                                                                                                                                         up