Mainstream economics — an obscurantist waste of time

30 Nov, 2017 at 12:54 | Posted in Economics | 4 Comments

One may perhaps, distinguish between obscure writers and obscurantist writers. The former aim at truth, but do not respect the norms for arriving at truth, such as focusing on causality, acting as the Devil’s Advocate, and generating falsifiable hypotheses. The latter do not aim at truth, and often scorn the very idea that there is such a thing as the truth …

obscurant-1The authors I have singled out are far from marginal, and in fact are at the core of the profession. Their numerous awards testify to this fact.

These writings have in common a somewhat uncanny combination of mathematical sophistication on the one hand and conceptual naiveté and empirical sloppiness on the other. The mathematics, which could have been a tool, is little more than toy. The steam engine was invented by Hero of Alexandria in the first century A. D., but he considered it mainly as a toy, not as a tool that could be put to productive use. He did apparently use it, though, for opening temple doors, so his engine wasn’t completely idling. Hard obscurantist models, too, may have some value as tools, but mostly they are toys.

I have pointed to the following objectionable practices:

2. Adopting huge simplifications that make the empirical relevance of the results essentially nil …

3. Assuming that the probabilities in a stochastic process are known to the agents … or even in some sense optimal …

7. Assuming that agents can choose optimal preferences …

11. Adhering to the instrumental Chicago-style philosophy of explanation, which emphasizes as-if rationality and denies that the realism of assumptions is a relevant issue.

Jon Elster

It’s hard not to agree with Elster’s critique of mainstream economics and its practice of letting models and procedures become ends in themselves, without considerations of their lack of explanatory value as regards real-world phenomena. For more on modern mainstream economics and this kind of wilfully silly obscurantism, yours truly self-indulgently recommend reading this article on RBC or this article on mainstream axiomatics.

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 for an economist or social scientist that wants to understand, explain, or predict real-world phenomena, the pure theory has to be ‘interpreted’ — it has to be ‘applied’ theory. An economic theory that does not go beyond proving theorems and conditional ‘if-then’ statements — and do 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.

Mainstream theoretical economics has no empirical content whatsoever. And it certainly has no relevance whatsoever to a scientific endeavour of expanding real-world knowledge. This should come as no surprise. 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.

austerity22For 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 autistic mainstream neoclassical theories and models cannot be the right way to develop a relevant and realistic economic science.

Much 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.


  1. I meet a Young econometric doctoral student in Gothenburg Uni.that not read a single line of Keynes!! it´s true!! He known the name ,but did know anything about him. God all Mighty, is this the future!! Lucas-idioated-robots that handle our Money?? I am sincerely scared i must admit!!

    • And lay to that i as young undergraduate in economic history Gothenburg,walked up to the headmaster Bertil Andersson, Herlitz the old and the Young one ,I should have some paper underwritten, and all the lectures profs. etc where gathered. They where smashed! I thought some have died, so i asked whats happened. “No it´s worse than that, Jan, we have been transmitted to Gothenburg Buissnes School, so now on we have to wright silly deductive nonscense curves all day long, to our pension”! Sad indeed!!

  2. To: Director General,
    International Bureau for Licensing Economic Theories
    Dear Prof. Syll,

    Urgent Application for Export License for the “General Theory” of J. M. Keynes
    Keynes’ “General Theory” was published in 1936 without any export license.
    A license is required now because of your directive that: “Without a warranted export certificate to the real world, model explanations are an empty exercise in formalism without real scientific value”.
    The requested license will be first ever export license, so it will set a precedent illustrating best practice to be followed henceforth by all economists.
    You have specified two requirements for an export license:
    (1) All of a theory’s assumptions and conclusions must be realistic. This must be established without any econometric analysis, randomized controlled trial (RCT) or Bayesian statistics. This is because social and economic systems are “unstable” over time and space. In a non-ergodic world full of genuine uncertainty, the relationships and probabilities that ruled in the past or at one location are not those that will rule in the future or at another location.
    (2) A valid theory cannot be merely a description of observed empirical regularities. Rather it must reveal a “deeper reality”. It must “get under the surface to reveal the deeper underlying structures and mechanisms that essentially constitute the social system”.
    Keynes’ “General Theory” satisfies these requirements with flying colours.
    Keynes’ cornerstone assumption is that the marginal propensity to consume is fairly stable, positive and less than unity. This eminently realist because:
    (a) “Psychological characteristics of human nature and social practices and institutions … are unlikely to undergo a material change over a short period of time except in abnormal or revolutionary circumstances.” (Chapter 8, Part I).
    (b) There is “a fundamental psychological law, upon which we are entitled to depend with great confidence both a priori from our knowledge of human nature and from the detailed facts of experience, that men are disposed, as a rule and on the average, to increase their consumption as their income increases, but not by as much as the increase in their income” (Chapter 8, Part III).
    (c) “Experience shows that some such psychological law must actually hold…[otherwise] … there would be a violent instability in the price-level” (Chapter 18, Part III (i)).
    Keynes’ also resoundingly validated his conclusion that investment spending multiplies the equilibrium level of income. Using “precarious” national accounts data for the USA in the 1930s, disregarding some contrary computations, and averaging over a few carefully selected years, Keynes estimated that the multiplier was “probably fairly stable in the neighbourhood of 2.5” (Chapter 10, Part V). The adjective “probably” indicates that there is no fundamental uncertainty about this matter.
    Regarding “deeper reality”, Keynes revealed that capitalist economies are driven by the interplay of spirituality and hedonism, namely the unpredictable “spontaneous urge” of “animal spirits” (Chapter 12, Part VII), coupled with the psychological law that governs human proclivities for “Enjoyment, Short-sightedness, Generosity, Miscalculation, Ostentation and Extravagance” (Chapter 9, Part I).

  3. “Mainstream economics — an obscurantist waste of time”! Yep! Better read this for exampel: Functional Finance and Full Employment:
    Lessons from Lerner for Today? by Mathew Forstater

    Click to access 41717b71eb9f0c429884209b1791315b6b94.pdf

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