The "scientific method" is the ONLY way yet discovered for discovering truth amid a world of lies and delusion. The simple version looks something like this:

a. Observe some aspect of the universe.

b. Invent a theory that is consistent with what you have observed.

c. Use the theory to make predictions.

d. Test those predictions by experiments or further observations.

e. Modify the theory in the light of your results.

Go to step c. http://home.xnet.com/~blatura/skep_1.html

Did I ever tell you about my cat? I have a cat that can predict the stock market!!!!!

I got this cat about ten years ago from an old lady who said that it could predict the stock market. She said that if the cat "meowed," the stock market would go up on that day. I didn't believe it at first, but sure-enough it was true. Over the last nine years the cat was right more than it was wrong -- I made millions.

About a year ago, a car killed my cat. I really loved that cat so I had it stuffed and put on the wall. You know what? The cat doesn't meow anymore, but the stock market doesn't go up anymore either. So I am beginning to think that the cat actually CAUSED the stock market to go up or down. Numbers don't lie do they?

Now I am not sure whether the meow was cause or effect... I am sure I can find out which by studying economics. (Although some say there are virtually an infinite number of explanations for the same observation, and only the "scientific method" can separate fact from fiction.)

What do you think? Was the meow cause or effect? Or both? Or neither? Economists run into this problem all the time...

Any ONE fundamental error in neoclassical theory should be sufficient reason to reject conclusions based upon that theory. Here are five fundamental errors in the theory:

#1  A fundamentally incorrect "method"
the economist uses "correlation" and "post hoc, ergo propter hoc" (after-the-fact) reasoning, rather than the "scientific method."

#2  A fundamentally inverted worldview
the economist sees the environment as a subsystem of the economy, rather than the other way around. In other words, economists are trained to believe that natural resources come from "markets" rather than the "environment". The corollary is that "man-made capital" can substitute for "natural capital". But the First Law of thermodynamics tells us there is no "creation" -- there is no such thing as "man-made capital". Thus, ALL capital is "natural capital", and the economy is 100% dependent on the "environment" for everything.

#3  A fundamentally incorrect view of "money"
The economist sees "money" as nothing more than a medium of exchange, rather than as social power -- or "political power". But even the casual observer can see that money is social power because it "empowers" people to buy and do the things they want -- including buying and doing other people: politics.

If employers have the freedom to pay workers less "political power", then they will retain more political power for themselves. Money is, in a word, "coercion", and "economic efficiency" is correctly seen as a political concept designed to conserve social power for those who have it -- to make the politically powerful, even more powerful, and the politically weak, even weaker.

#4  A fundamentally incorrect view of his raison d'etre
The economist sees "Homo economicus" as a "Bayesian utility maximizer", rather than "Homo sapiens" as a "primate". In other words, contemporary economics and econometrics is WRONG from the bottom up -- and economists know it. The entire discipline of economics is based on a lie -- and economists know it. Moreover, if human behavior is not the result of mathematical calculation -- and it isn't -- then in principle, economists will NEVER get it right.

"One of the peculiarities of economics is that it still rests on a behavioral assumption -- rational utility maximization -- that has long since been rejected by sociologists and psychologists who specialize in studying human behavior. Rational individual utility (income) maximization was the common assumption of all social science in the nineteenth century, but only economics continues to use it.

"Contrary behavioral evidence has had little impact on economics because having a theory of how the world "ought" to act, economists can reject all manner of evidence showing that individuals are not rational utility maximizers. Actions that are not rational maximizations exist, but they are labeled "market imperfections" that "ought" to be eliminated. Individual economic actors "ought" to be rational utility maximizers and they can be taught to do what they "ought" to do. Prescription dominates description in economics, while the reverse is true in the other social sciences that study real human behavior."

#5  A fundamentally incorrect view of economic élan vital
The economist sees economic activity as a function of infinite "money creation", rather than a function of finite "energy stocks" and finite "energy flows". In fact, the economy is 100% dependent on available energy -- it always has been, and it always will be. See a synopsis of the current energy situation at http://dieoff.com/synopsis.htm.

Economic students are taught that banks "create" money every time they make a loan, and that the economy is powered by money instead of energy. The juxtaposition of these two data (the first is true, the second is false) leads even Nobel Prize-winning economists to conclude they have discovered a perpetual-motion machine:

"Should we be taking steps to limit the use of these most precious stocks of society's capital so that they will still be available for our grandchildren? Economists ask, Would future generations benefit more from larger stocks of natural capital such as oil, gas, and coal or from more produced capital such as additional scientists, better laboratories, and libraries linked together by information superhighways? ... in the long run, oil and gas are not essential." [p. 328, ECONOMICS, Nobel Laureate Paul Samuelson and William Nordhaus; McGraw-Hill, 1998; http://www.amazon.com/exec/obidos/ASIN/0070579474/brainfood.a]

No person has had a greater influence on the thinking of experts who have become government regulators of the world's oil and gas industries than economist Morris Adelman: "There are plenty of fossil fuels and no limit to potential electrical capacity. It is all a matter of money." [p. 483, THE ECONOMICS OF PETROLEUM SUPPLY, by M. A. Adelman; MIT, 1993; http://www.amazon.com/exec/obidos/ASIN/0262011387/brainfood.a]

But of course, economists like Samuelson, Nordhaus, and Adelman are wrong. The First and Second Laws of thermodynamics tells us there is a limit to potential electrical capacity -- it's not all a matter of "money", it's all a matter of "energy."

The sudden -- and surprising -- end of the fossil fuel age will stun everyone -- and kill billions. Once the truth is told about gas and oil (it's just a matter of time), your life will change forever...

Envision a world where freezing, starving people burn everything combustible -- everything from forests (releasing CO2; destroying topsoil and species); to garbage dumps (releasing dioxins, PCBs, and heavy metals); to people (by waging nuclear, biological, chemical, and conventional war); and you have seen the future.

RESOURCES

• This version at http://www.dieoff.org/page240.htm

• long version at http://www.dieoff.org/page241.htm

• Also check Economic Eficiency at http://www.dieoff.org/page242.htm