Friday, August 16, 2013

Why Isn't There A Demonstrably Correct Economic Theory?

Although economics doesn't recognize it, the operative phrase here is systemic injustice.
Correspondent C.G.D. recently asked what I consider a very profound question: why isn't there demonstrably correct economic theory?
"My wife has asked me a 'simple' question that I can not answer. After 2000 years, why do we not know which economic theory is correct: Keynesian or Hayek-Friedman? Surely, there is a demonstrably, statistically correct answer."
Let's add Marxism to the short list of contenders, and then consider why we have cargo-cult faiths (Keynesianism) instead of demonstrably correct models of economic behavior.