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Economics is the science of complex and organic systems

The below linked article is a fine piece from Being Libertarian. It describes the science of economics. “When we look at the science of economics, the heat we measure is undoubtedly prosperity. Just like how cold is the absence of heat, poverty is simply the natural state of things in the absence of prosperity. If we take a group of individuals and place them on an island, their starting point would be a state of abject poverty. To change this requires the addition of an observable amount of prosperity.”

Ants and Cars in traffic, complex and organic

I have often said that an economy is a complex organic system. It is to be thought of in the same scientific manner as other complex organic systems are to be thought of. One thing we know of such systems is that they tend to operate more on chaos theory (which really isn’t chaos at all) than any other property. What that means is simple, such systems have a natural ebb and flow to them. Such systems in nature strive to grow and do so in a natural way that tends to reach a sort of equilibrium. No amount of socialism, anarchism, corporatism, or communism, or other forms of economic fixing can ever change that. It must be allowed to operate.

An economy is like a car pushing on its breaks in rush hour traffic. It has a ripple effect that is seen miles down the road. The number of cars that must adjust to the change is staggering. Because each car is operated by a human being each one is able to determine, for itself, the proper distance to stop, or even if stopping is required or just a slight let up on the gas pedal. Each driver knows his or her own car and the unique breaking requirements of it.

Like much of science we know the fundamental principles of economics. They really aren’t, in and of themselves, all that complicated. Neither is gravity when you get down to it, but it is enough to have the earth, the moon, the solar system, the galaxy, the galactic cluster, well, you get the idea, all rotating and orbiting in magnificent fashion. The core of good economics is that of trading. Like the author of the article states, trading heat for cool. Lets say I have a pot and my neighbor needs one. He has a puppy that I want. We both have a certain level of heat. We can trade them and the heat remains. It’s only when the dog or the pot are destroyed that the “heat” is lost. A craftsman can make a new pot. The heat that pot represents, unlike actual heat, cannot be measured consistently. I and my neighbor might value that pot at the level of one dog, but the chef down the road might value it more. People in this system know, individually, what they are willing to trade.

No government can understand this because if you have a billion people you have a billion valuations. Many will be close enough to that a ketchup maker knows what price point to set the bottle at but not everyone will buy that brand. It’s not just price that goes into valuation. It’s need, want, personal likes and dislikes, and much more. How can a government ever think they can manage that? How can some college kid with a sickle and hammer shirt actually think communism can function in such a system of a billion choices? That’s why all such systems must limit choice. They can only limit choice by force.

In capitalism the man who says no is free to say no. In what other system does a man maintain that freedom? That freedom, by the way, is just as important as them all. The freedom NOT to do something. Not to be forced, not be coerced. The freedom to choose. Only capitalism offers that – ONLY capitalism.

 

money on fire

We must stop believing politicians when they tell us they can give us what we want by operating outside the laws of science. We’ll no sooner see real growth from a trillion-dollar infrastructure plan then we will jump out of a plane and float away into space. Like it or not, economics is a science, and if we choose to only recognize economic realities when they align with our political aspirations, we’ll see the continued loss of heat from our economy, and our prosperity along with it.

Source: Economics is a Science, and Capitalism is its Greatest Experiment – The Lowdown on Liberty – Being Libertarian

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