I often wonder whether other subjects suffer as much from textbook writers. (Hahn, 1980, p. 127)

 

***

 

We all teach our students about optimization, equilibrium, and market efficiency. (Mankiw, 2006, p. 35)

 

That is, economists have persisted with a model that is theoretically flawed and systematically contradicted by the empirical evidence. (Kirman, 2010, p. 512)

 

It may be distasteful for recently trained economists to admit that there is a lot of silly philosophy underlying ordinary neoclassical economics, but I think such is the case. (Boland, 1992, p. 203)

 

This is the type of economist that 150 years ago Carlyle caricatured as parrots that only knew the words demand and supply. (Beker, 2012, p. 115)

 

The existing profit literature is riddled with problems and inconsistencies that have troubled every recent observer; one need only consult any standard text to find the self-contradictory smorgasbord that is served up to students of economics to understand the dimensions of the problem. (Obrinsky, 1981, pp. 491-492), for details see Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist   URL

 

To be quite blunt, all existing ‘lessons’ taught in standard economics texts should be either abandoned or tested empirically, but should never be accepted as a basis for modeling. (McCauley, 2006, pp. 6-7)

 

If we honestly told students that these are the underlying stories behind the analysis, most of them would ask, "Why are you teaching us this? This is not the way the economy works." (Colander, 1995, p. 178), for the correct account see How to get rid of Supply-Demand-Equilibrium  URL or The Structural Price Mechanism  URL

 

A story about Adam Smith, the invisible hand, and the merits of markets pervades introductory textbooks, classroom teaching, and contemporary political discourse. The intellectual foundation of this story rests on general equilibrium, not on the latest mathematical excursions. (Ackerman, 2004, p. 21)

 

The fact that it has not been possible to build a process for the formation of equilibrium prices is disastrous when it is recalled that the fundamental task of theory is precisely to make coordination in the market intelligible. (Benetti and Cartelier, 1997, p. 213), for error correction see The Ideal Economy  URL

 

At long last, it can be said that the history of general equilibrium theory from Walras to Arrow-Debreu has been a journey down a blind alley, and it is historians of economic thought who seem to have finally hammered down the nails in this coffin.  (Blaug, 2001, p. 160)

 

The standard textbook introduces macroeconomic concepts via the national income identity. Thus total production, or gross domestic product (GDP), is defined as the sum of all expenditures on goods and services or, alternatively, as the sum of all incomes paid for the production of goods and services. (Godley and Lavoie, 2007, p. 4), for the correction see The Common Error of Common Sense  URL

 

To this day, the IS-LM model remains the interpretation of Keynes offered in the most widely used intermediate-level macroeconomics textbooks. (Mankiw, 2006, p. 31), for error correction see Why Postkeynesiansim is not Yet a Science  URL and Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It  URL

    

This dynamic adjustment story may or may not be true; in its simple form, it is believed by only a few economists. We taught it nonetheless because, given the assumptions, it is a logically consistent story, and for most students, it meets the "Yeah, it makes sense" criterion. (Colander, 1995, pp. 169-170)

 

Even "dirty pedagogy" should be internally consistent. It can be exceedingly vague, but it should not be logically wrong as the standard AS/AD model is. Teaching the standard inconsistent model discourages students from questioning the workings of the model. That may not bother those students who are interested in getting their grade and getting out of the course. But it decidedly turns off the good students, the ones we all want to encourage. (Colander, 1995, p. 179)

 

What is sadly lacking from all these articles ... is theory. Indeed, most of the analyses would presumably flunk any macroeconomics principles class. In any case, they would flunk mine. Given that most of the articles were written by notable economists, one wonders what on earth is being taught by the less notable in macro courses. (Wray, 1991, p. 952)

 

So the textbooks are wrong. (Keen, 2011, p. 19)

 

What is now taught as standard economic theory will eventually disappear, no trace of it will remain in the universities or boardrooms because it simply doesn’t work: were it engineering, the bridge would collapse. (McCauley, 2006, p. 17)

 

..., before accepting the conclusions of any economist’s model as applicable to the real world, the careful student should always examine and be prepared to criticize the applicability of the fundamental postulates of the model; for, in the absence of any mistake in logic, the axioms of the model determine its conclusions. (Davidson, 2002, p. 41)

 

Standard economics textbooks are explicitly or implicitly based on indefensible behavioral axioms. From Samuelson's 1948 textbook onwards there has not been one with a correct profit theory.

 

Rather surprisingly, therefore, the nature of profits remains something of a mystery in contemporary economics; indeed, in the realm of "advanced"  theory —namely the perfectly competitive general equilibrium models — profits have disappeared altogether. This is clearly an unsatisfactory situation. (Obrinsky 1981, p. 491)

 

***

 

Standard textbooks, including the neo- and new-variants,  reflect and reinforce the stagnation of contemporary economics at the proto-scientific level. Supply-demand-equilibrium is the counterpart of an epicycle. Whether it meets for most students the "Yeah, it makes sense" criterion is a matter of indifference. Whether there has been thorough peer review, proofreading and quality control is of secondary importance. The criteria that are ultimately decisive in theoretical economics are material and formal consistency. Economic textbooks miss these primary criteria. The student is therefore at some point in his education confronted in earnest with the true/false question. This, not the exam, is the crucial test. Students of economics, teachers, and textbook writers fail in unison even to see the task that is before them.

 

The canonical textbook is still to be written (see Coming soon: the canonical economics textbook). New as of June 2020 Sovereign Economics.

 

 

References
Ackerman, F. (2004). Still Dead After All These Years: Interpreting the Failure of General Equilibrium Theory. In F. Ackerman, and A. Nadal (Eds.), The Flawed Foundations of General Equilibrium, pages 14–32. London, New York: Routledge.

Beker, V. A. (2012). Rethinking Macroeconomics in the Light of the U.S. Financial Crisis. real-world economics review, 60: 120–138. URL

Benetti, C., and Cartelier, J. (1997). Economics as an Exact Science: the Persistence of a Badly Shared Conviction. In A. d’Autume and J. Cartelier (Eds.), Is Economics Becoming a Hard Science?, pages 204–219. Cheltenham, Brookfield, VT: Edward Elgar.

Blaug, M. (2001). No History of Ideas, Please, We’re Economists. Journal of Economic Perspectives, 15(1): 145–164.

Boland, L. A. (1992). The Principles of Economics. Some Lies my Teacher Told Me. London, New York: Routledge.
Colander, D. (1995). The Stories We Tell: A Reconstruction of AS/AD Analysis. Journal of Economic Perspectives, 9(3): 169–188. URL
Davidson, P. (2002). Financial Markets, Money, and the Real World. Cheltenham, Northampton, MA: Edward Elgar.
Godley, W., and Lavoie, M. (2007). Monetary Economics. An Integrated Approach to Credit, Money, Income, and Wealth. Houndmills, Basingstoke, New York: Palgrave Macmillan.
Hahn, F. H. (1980). General Equilibrium Theory. Public Interest. Special Issue: The Crisis in Economic Theory, pages 123–138.

Keen, S. (2011). Debunking Economics. London, New York: Zed Books, rev. edition.

Kirman, A. (2010). The Economic Crisis is a Crisis for Economic Theory. CESifo Economic Studies, 56(4): 498–535. DOI
Mankiw, N. G. (2006). The Macroeconomist as Scientist and Engineer. Journal of Economic Perspectives, 20(4): 29–46. URL
McCauley, J. L. (2006). Response to "Worrying Trends in Econophysics". EconoPhysics Forum, 0601001: 1–26. URL
Obrinsky, M. (1981). The Profit Prophets. Journal of Post Keynesian Economics, 3(4): 491–502. URL

Wray, L. R. (1991). Saving, Profits, and Speculation in Capitalist Economies. Journal of Economic Issues, 25(4): 951–975. URL

 

***

 

See also Political economics and  Objective Principles of Economics  URL. What first of all has to be rewritten is the pivotal chapter of any economic textbook — the chapter that deals with the elementary price mechanism; see The Law of Supply and Demand: Here It Is Finally  URL. 

 

© 2013_11 EKH, except original quotes                                                                                                                                                                                                         up