Economics is About Human Action, not Mechanical Processes

 

It is misleading, furthermore, to say that money “circulates.” Like all metaphors taken from the physical sciences, it connotes some sort of mechanical process, independent of human will, which moves at a certain speed of flow, or “velocity.” – Murray N. Rothbard, What Has Government Done to Our Money?, pg. 33

This is one of the major problems with economics, as well as other social sciences today. By attempting to create mathematical formulas that describe human action, economists are sucked into the trap of assuming these “laws” will hold forever. Unfortunately, even if a formula describes a historical circumstance well, there is no certainty it will apply to future circumstances. Not only can expectations change, but humans can invent new ways to act or act differently due to different pieces of knowledge, different circumstances, and lastly of course, because they are completely different human beings.

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Posted on March 24, 2013, in Economics and tagged , , , . Bookmark the permalink. Leave a comment.

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