Again, I fail to understand how that process differs from any other scientific progress. You are basically saying the entire field of economics has been data-mined like a stock algorithm looking at past results and creating spurious correlations to predict the future. In reality, I don’t know of any way to distinguish between a data-mined theory and a sound, scientific theory other than evaluating the underlying logic.

The. you need to do more reading in philosophy of science. The problems with judging a theory by its “underlying logic” have been discussed at length. Kuhn and Lakatos would be good to read on this.

The reasoning behind astrology does not make sense to this observer, whereas the economics that I’ve been taught does.

It makes no sense based on your preexisting biases. Astrology doesn’t work — no argument there. But you cannot prove from first principles that it could not have worked. We can only determine that through the scientific method — testing the predictions of astrology against empirical data. Likewise, we cannot determine from first principles whether economic theory is valid — the only way is to compare its predictions against empirical data. That’s where the problem of ad hoc elaborations comes in. Again, read Kuhn and Lakatos on this problem. Incidentally, there are plenty of examples other than astrology so the “underlying logic” critique doesn’t really help you.

On the other hand, I do believe that capitalism is rightly regarded as the main cause of the gain in wealth, techonology, and standard of living improvements that we’ve benefitted from over the past few centuries.

I disagree vehemently. First of all, I think of wealth and standard of living as being basically equivalent; second of all, I think these result largely from technological progress rather than any particular economic system, and thirdly technological progress seems to be a result of socialistic collusion between monopolistic corporations and government rather than rigid adherence to the tenets of capitalism. This last bit is based on knowledge of history rather than any theoretical preconception of mine.

I asked you to provide a startling predictive success of economic theory comparable to the discovery of Neptune and you don’t seem to have responded.

“The really important events always seem to be completely unforeseen by economists.” There are multiple components to this issue. First, economics do not really provide a crystal ball for all the world’s events. Physics can tell us properties about a meteor’s path and speed towards Earth, but we need direct observation to know when and where one is coming. Similarly, economists can rightly predict that decreases in interest rates will lead to inceased demand for housing loans, but it has a hard time predicting the effects of government actors and things like the effects of securitization which hasn’t been around long enough. Some economists did see the problem coming, but a large problem institutionally was that most people had personal incentives to ignore the coming crash and continue to cash in on the unsustainable short-term gains.

“Frankly, I think there’s entirely too much of this “rah rah capitalism” bullshit going on these days and you cheerleaders need a little wind taken out of your sails.” You mistake me. I’m not an oblivious cheerleader… there are definite deficiencies in unregulated markets that need institutional reform. On the other hand, I do believe that capitalism is rightly regarded as the main cause of the gain in wealth, techonology, and standard of living improvements that we’ve benefitted from over the past few centuries. Thus far, it’s the only system that’s produced results like this. There are potentially better ways to harness the power of individual incentives, and when I see a better way I’ll be open to it, but until then capitalism is vastly superior to any known alternatives, even if we must endure cyclical boom/bust cycles.

We would benefit by ‘broader control’ over oil FUTURES prices?  In what way?

Why don’t you explain why we’re better off with futures markets in the control of only a handful of individuals?

This is the very foundation of modern science, only you twisted up the words to make it sound devious.

Actually, no it’s not.  Philosophy of science is a huge interest of mine so I’ve paid a lot of attention to the arguments on all sides here.  “Hypothesis testing” is necessary but not sufficient.  For example, astrology features a lot of hypothesis testing — so why don’t we consider it a science?  It is exactly because failed hypotheses are explained away using ad hoc elaborations of the theory — the elaborations don’t follow from the theory but are “tacked on” after the fact to save it from refutation.  Similarly, the elasticity of demand (just as one example) doesn’t follow from basic economic theory, it has to be written into the theory after the fact to “explain” why real-world events aren’t in agreement with economic theory.  Again, this is the hallmark of pseudoscience.  Explaining what’s wrong with your comparison with Newtonian mechanics would take a few hundred words at least so I’m going to skip that.

Maybe it would be helpful if you specified what outcomes of the theory you disagree with?

I don’t disagree with the outcomes because as I’ve already explained the theory is inevitably modified to fit the data.  Postdiction is not an impressive hurdle to get over — Freudianism accomplishes it quite well, accommodating just about any set of facts with the theory, even completely contradictory facts.  Again, this is the hallmark of pseudoscience, not science.  The question is whether economic theory provides a model with enough verisimilitude to make useful predictions…and it doesn’t.  Nassim Taleb points out that most of the DJIA’s current value is the result of just a few high-volume days.  That’s why it’s interesting that you should bring up how economic theory handles “equilibrium” — equilibrium is the boring condition that can be predicted using sheer common sense.  The question is how important equilibrium really is to the market.  And it doesn’t seem to be too important.  The really important events always seem to be completely unforeseen by economists.

Frankly, I think there’s entirely too much of this “rah rah capitalism” bullshit going on these days and you cheerleaders need a little wind taken out of your sails.  Four years ago there was a major financial crisis that was foreseen only by critics of mainstream economic theory.  That tells me your theory has some serious deficits with regard to predicting important economic events.  Since you don’t “even know where to begin” how about you start with what you think is the greatest predictive success of economic theory.  Comparing to Newtonian mechanics again, what’s the economic equivalent of the discovery of Neptune?

There is a spectrum of capitalism, from crazy, corrupt and dysfunctional – see above – to a more sane, people-oriented version like the Nordic model, for example – which many on the right consider ‘socialism’ because it values people over property. There may develop a new model of digitally-empowered direct democracy that supplants the imperatives of capital with the imperatives of citizens living what they consider good lives. It wouldn’t be called ‘subservient capitalism,’ it would be called neo-democracy. Still a capitalism, but 1000 times better.

Maybe it would be helpful if you specified what outcomes of the theory you disagree with?

“Right, the underlying theory is demonstrably incorrect so economists resort to ad hoc elaborations to protect that theory from empirical refutation.” This is the very foundation of modern science, only you twisted up the words to make it sound devious. The scientific method requires hypothesis, testing, and then revisions to the hypothesis; this is exactly what is done in economics. The basics of micro-econ hold up to reality very well and aren’t really disputed, even when rationality is violated. Macro-econ has two main schools of thought which are very contentiously disputed by each opposing side. The matter hasn’t been settled yet, but some day we’ll understand with more certainty based on those “ad hoc elaborations” you deplore.

Empirically, it does this extremely well.

Well then supply me with some empirical evidence that it does that extremely well.  Your say so doesn’t really do it for me.

Obviously, the perfect competition assumption is violated all the time, so economists then came up with a model based on a monopoly.

Right, the underlying theory is demonstrably incorrect so economists resort to ad hoc elaborations to protect that theory from empirical refutation.  This is exactly how Freudian psychoanalysis, Intelligent Design Creationism, 9/11 truthism, and all other varieties of pseudoscience and religious apologetics maintain coherence despite a distinct lack of empirical support.

Economic theory presuming rationality and self-interest are merely abstractions to help simplify an extremely complex world into a simpler model that can be used to approximate real world behavior. Empirically, it does this extremely well. The violation of the basic assumptions do not serve to shoot down the basic theories, but represent departures from the norm which can then be modeled on a piecemeal basis. For example, in basic theory, economists assume perfect competition (meaning that no indidual consumer or supplier has the power to dictate prices). Obviously, the perfect competition assumption is violated all the time, so economists then came up with a model based on a monopoly. Once understood, they then filled in the gap with theories about oligarchies. One need not accept rationality as truth in order to accept basic economic theory, it’s just a simplified model. Kinda like how newtonian physics is incomplete without relativity, but it does a damn good job of approximating reality in the orders of magnitude for most practical applications.

The reality, of course, is whatever your feelings may be about the current system, it is not what anyone imagined in the 18th or 19th centuries when the concept was forged. 

Following an official investigation Perkins admitted to having a drink problem, had his trading license revoked for five years, and was given a fine of £72,000 ($116,878).

And with a firm slap on the wrist, justice was served.

A temporary overnight blip in a commodity market is irrelevant to the broader economy.

Unless people start explaining rising oil prices as a result of peak oil, in which case speculation in the futures market is the major determinant of prices.

Will you guys make up your minds already?