nach oben

Erschienen in:

2018 | OriginalPaper | Buchkapitel

7. The Present State of Economics: Errors and Omissions Excepted

verfasst von : Dirk H. Ehnts, Fritz Helmedag

Erschienen in: Post-Crash Economics

Verlag: Springer International Publishing

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

More and more often, confidence in the professional qualifications of individuals representing certain occupational groups which formerly were held in high esteem has started to erode. Dismissing scientific evidence and ignoring expert opinion has become a feature of political discourse around alternative truth. In part this is self-inflicted as various statements that are publicized with the aura of academic certainty do not stand up to closer scrutiny. Alas, this applies particularly to economics, which is often held up as the supreme discipline of social sciences. It suffices to take a look on page one of reasonably respectable printed media to recognize how important economics is in contemporary society. In this chapter, we highlight some issues from micro- and macroeconomics that are critical.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Vorheriges Kapitel Conceptual Fossils: Why Do We Keep Teaching Irrelevant Ideas in First Year Economics?

Nächstes Kapitel Teaching with Historical Perspectives: The Case of Development Economics

The first four sections draw on a discussion conducted in German. Cf. Helmedag (2015b), Haucap (2015) and Helmedag (2015c).

Since the outbreak of the ‘Great Recession’ in 2008, quite a few disapproving assessments of mainstream economics have been published. The criticism presented here does not capture all aspects and differs in some respects from other sceptical appraisals, for instance, Weeks (2014).

See the chapter by Jones in this volume on the use and measurement of utility and the assumptions behind the ‘law of diminishing marginal utility’. Cf. also Barzilai (2014).

With regard to the following, cf. Helmedag (1994), pp. 15 ff.

Sombart (1916), p. 34, own translation from German.

Often, Adam Smith is invoked as authority for this opinion. However, in his magnum opus, the invisible hand is merely mentioned once. Cf. Smith (1976) [1776], p. 478.

Most remarkably, General Equilibrium Theory has failed to prove the ‘law of demand’ in general. Cf. Kirman (1989).

This point of criticism plays a major role in the book by Keen first published in 2001 (2011a).

In fact, full shop shelves suggest that vendors regularly set ‘production prices’ that is to say they increase costs per unit by a mark-up, whereas customers determine the quantities sold. Regrettably, a theory regarding origin and magnitude of the ‘trade margin’ is wanting in the usual assortment.

Regarding the rise of the now dominant approach, cf. Bharadwaj (1994). This has happened in spite of early warnings from the horse’s mouth: ‘… the proportion of supply to demand, or demand to supply, has become almost an axiom in political economy, and has been the source of much error in that science’. Ricardo 1970 [1817], p. 382.

For another breakdown of the profit equation that especially unveils the dependency on real unit labour costs, refer to Helmedag (2016). Section VII resumes this line of thought.

Cf. Helmedag (1994), pp. 56 ff. for a summary.

Marx (1974) [1859], p. 132, own translation from German.

Yet, the debtor will be liable not only to repay the sum borrowed at a later time from his assets or income but also interest due.

Accordingly, the central bank will be the only institution to show the circulating cash on its liabilities side. For a sketch of the history of money and a brief description of deposit money creation, refer to Helmedag (2013) or Ehnts (2016a).

Even with a reserve rate of 100% banks may create unlimited amounts of deposits. In this case, the central bank is forced either to close them or to provide the reserves necessary. Since central banks are also responsible for financial stability, they probably choose the latter alternative.

According to Keen (2011b), the exogenous money supply is the key weakness of prevailing macroeconomics.

Incidentally, a more detailed examination raises doubts about the deep-seated belief that a central bank might combat inflation either by reducing the money supply (formerly) or via hiking the interest rate (presently). Cf. Helmedag (2009a, 2009b).

See Wray (2012) for an exposition of government spending in the US and Forstater (2006) for a discussion of history of economic thought.

This was also what Keynes argued during the Great Depression. Cf. Ehnts (2016b).

Revealingly, the great classical theorists Smith, Ricardo and Marx, in conclusion, shared the view that the rate of profit declines in the course of development, and accumulation thus comes to an end sooner or later.

Barzilai, J. (2014). Demand theory is founded on errors. Real-World Economic Review, 68, 62–65.

Bharadwaj, K. (1994). Classical political economy and rise to dominance of supply and demand theories (3rd ed.). Hyderabad: Orient Longman.

Ehnts, D. (2016a). Modern monetary theory and European macroeconomics. Abingdon: Routledge.

Ehnts, D. (2016b). The Eurozone crisis: What would John Maynard do? IPE Berlin Working Paper No. 72.

Ehnts, D. (2017). The balance sheet approach to macroeconomics—A new paradigm for the 21st century. In W. Elsner (Ed.), Teaching economics in the 21st century. Abingdon: Routledge. Forthcoming.

Felipe, J., & McCombie, J. (2013). The aggregate production function and the measurement of technical change: ‘Not even wrong’. Cheltenham and Northampton: Edward Elgar.CrossRef

Forstater, M. (2006). Tax-driven money: Additional evidence from the history of economic thought, economic history and economic policy. In M. Setterfield (Ed.), Complexity, endogenous money and macroeconomic theory—Essays in honour of Basil J. Moore. Cheltenham and Northampton: Edward Elgar.

Goodhart, C. (1998). The two concepts of money: Implications for the analysis of optimal currency areas. European Journal of Political Economy, 14, 407–432.CrossRef

Haavelmo, T. (1945). Multiplier effects of a balanced budget. Econometrica, 13, 311–318.CrossRef

Haucap, J. (2015). Fritz Helmedags vermeintlich trügerisches Wirtschaftswissen anderer Ökonomen. List Forum für Wirtschafts- und Finanzpolitik, 41, 303–306.CrossRef

Helmedag, F. (1994). Warenproduktion mittels Arbeit, Zur Rehabilitation des Wertgesetzes (2nd ed.). Marburg: Metropolis.

Helmedag, F. (1995). Geldfunktionen. das wirtschaftsstudium (wisu), 24, 711–717.

Helmedag, F. (1999). Ohne Werte und kreislaufschwach: Zum Status der Allgemeinen Gleichgewichtstheorie. In F. Helmedag & N. Reuter (Eds.), Der Wohlstand der Personen, Festschrift zum 60. Geburtstag von Karl Georg Zinn (pp. 43–68). Marburg: Metropolis.

Helmedag, F. (2009a). Getrennt marschieren, vereint schlagen: Nationale Geldpolitik im Euro-Raum. In R. Ohr (Ed.), Internationalisierung der Wirtschaftspolitik (pp. 39–51). Berlin: Duncker & Humblot.

Helmedag, F. (2009b). Europäische Geldpolitik in der Krise. In G. Chaloupek & J. Kromphardt (Eds.), Finanzkrise und Divergenzen in der Wirtschaftsentwicklung als Herausforderung für die Europäische Währungsunion (pp. 108–121). Marburg: Metropolis.

Helmedag, F. (2012a). Individuelle und kollektive Gewinnmaximierung auf vollkommenen Märkten. In P. Oberender (Ed.), Private und öffentliche Kartellrechtsdurchsetzung (pp. 9–38). Berlin: Duncker & Humblot.

Helmedag, F. (2012b). Wohlstandsmehrung durch Konsumverzicht: Leere Versprechungen und falsche Ratschläge. In A. Wagner & U. Heilemann (Eds.), Empirische Makroökonomik und mehr, Festschrift zum 80. Geburtstag von Karl Heinrich Oppenländer (pp. 55–70). Stuttgart: Lucius & Lucius.

Helmedag, F. (2013). Monetäre (Un-)Ordnung als Ursache von Finanzmarktkrisen. In U. Busch & G. Krause (Eds.), Theorieentwicklung im Kontext der Krise (pp. 179–193). Berlin: Trafo-Verlag.

Helmedag, F. (2014). Mit der Schuldenbremse zum Systemcrash. In D. Gesman-Nuissl, R. Hartz, & M. Dittrich (Eds.), Perspektiven der Wirtschaftswissenschaften (pp. 123–137). Wiesbaden: Springer Gabler.

Helmedag, F. (2015a). Schulden dulden, Kredit genießen: Zur Beständigkeit und Bedeutung von Budgetdefiziten. Wirtschaftsdienst, 95, 347–349.CrossRef

Helmedag, F. (2015b). Trügerisches Wirtschaftswissen: Akademische Fehlurteile und populäre Irrtümer im Überblick. List Forum für Wirtschafts- und Finanzpolitik, 41, 291–302.CrossRef

Helmedag, F. (2015c). Schattenboxen mit Scheuklappen: Haucaps Verteidigung trügerischen Wirtschaftswissens. List Forum für Wirtschafts- und Finanzpolitik, 41, 307–310.CrossRef

Helmedag, F. (2016). Nur mehr Stundenlohn oder auch weniger Arbeits-stunden? Gewerkschaftsforderungen im Widerstreit. In H. Hagemann & J. Kromphardt (Eds.), Wachstum, Wohlfahrt und Verteilung, Keynes und Schumpeter. Marburg: Metropolis.

Keen, S. (2011a). Debunking economics—Revised and expanded edition: The naked emperor dethroned? London and New York: Zed Books.

Keen, S. (2011b). Debunking macroeconomics. Economic Analysis & Policy, 41, 147–167.CrossRef

Kirman, A. (1989). The intrinsic limits of modern economic theory: The emperor has no clothes. The Economic Journal, 99, 126–139.CrossRef

Lee, F. (1998). Post Keynesian price theory. Cambridge: Cambridge University Press.

Marx, K. (1974) 1859. Grundrisse der Kritik der Politischen Ökonomie (2nd ed.). Berlin: Dietz.

Michaelis, J. (2013). Und dann werfen wir den Computer an—Anmerkungen zur Methodik der DSGE-Modelle. In A. Eschbach et al. (Eds.), Nach der Wirtschafts- und Finanzkrise: Ansätze für eine erfolgreiche Geld-, Finanz- und Immobilienpolitik, Festschrift für Hans-Hermann Franke zum 70 (pp. 67–82). Berlin: Geburtstag.

Minsky, H. (1982). Can “it” happen again?: Essays on instability and finance. Armonk, NY: M.E. Sharpe.

Minsky, H. (1986). Stabilizing an unstable economy. New Haven: Yale University Press.

Mosler, W. (2014, January 11). Talk in Chianciano, Italy. Retrieved from http://neweconomicperspectives.org/2014/01/beyond-euro-left-crisis-alternative.html

Piketty, T. (2014). Capital in the twenty-first century. Cambridge and London: Harvard University Press.CrossRef

Ricardo, D. (1970) 1817. On the principles of political economy and taxation. In P. Sraffa (Ed.), The works and correspondence of David Ricardo (Vol. I). Cambridge: Cambridge University Press.

Schumpeter, J. A. (1934) 2008. The theory of economic development: An inquiry into profits, capital, credit, interest and the business cycle. New Brunswick and London: Transaction Publishers

Smith, A. (1976)1776. An inquiry into the nature and causes of the wealth of nations (Vol. I & II). Chicago: University of Chicago Press.

Sombart, W. (1916). Der moderne Kapitalismus., Bd. 1 (2nd ed.). München and Leipzig: Duncker and Humblot.

Weeks, J. F. (2014). Economics of the 1%, how mainstream economics serves the rich, obscures reality and distorts policy. London and New York: Anthem.

Wray, L. R. (2012). Modern monetary theory: A primer on macroeconomics for sovereign monetary systems. London: Palgrave Macmillan.

Titel: The Present State of Economics: Errors and Omissions Excepted
verfasst von: Dirk H. Ehnts
Fritz Helmedag
Verlag: Springer International Publishing
Buch: Post-Crash Economics
Print ISBN: 978-3-319-65854-4

Electronic ISBN: 978-3-319-65855-1

Copyright-Jahr: 2018
DOI: https://doi.org/10.1007/978-3-319-65855-1_7