3 Duality
Perhaps the best definition of economics is that it is ‘secular theology’.
Economics adopts the veneer of science, but, like theology, is based on untestable definiti
ons.
The most pervasive dualism is the equivalence between income and productivity. We have a logical problem with the productivity-income duality. Either it is correct but unnecessary, or it is both unnecessary and incorrect. Either way, the duality is unsound.
Of course, there is nothing wrong with having a hypothesis that is logically unsound. It just means that when you notice the problem, you should abandon the hypothesis. But that’s not what happened in economics. Instead, the income-productivity duality became the basis for the entire system of national accounts.
To address this logical problem, economists have invented more theology. Prices, they claim, are themselves a duality. Prices are both a monetary quantity and a measure of utility. The problem is that economists never measure utility. They infer it from prices.
And so the whole operation becomes circular — a theological definition, and nothing more. Joan Robinson nicely summarized the situation:
Utility is a metaphysical concept of impregnable circularity; utility is the quality in commodities that makes individuals want to buy them, and the fact that individuals want to buy commodities shows that they have utility.
In other words, economists propose a definition, and use this definition to justify it. That’s theology.
Assumptions
When people like Milton Friedman spout theological nonsense, they’ll try to convince you that assumptions don’t matter. Friedman notoriously claimed that if a theory gives ‘correct predictions’, that’s good enough. Don’t believe him. Assumptions are the most basic part of science. If they are wrong, the whole theory is garbage.