Another Numerologist Gets the Idiot Award
[Editor’s Note: The following post is by Ed Bugos, TDV Senior Analyst]
Witness the latest economist to win the Nobel Prize from the Swedes, who I’m certain lead the world in economic nonsense, for allegedly solving the unsolvable knowledge and calculation problems of central planners.
Rather than explaining all that is wrong in their problem solving, in the interest of brevity let me just ask: did you mean you didn’t know Ludwig von Mises showed that this kind of thing was impossible almost 100 years ago?
He warned them:
“Nothing could by more mistaken than the now fashionable attempt to apply the methods and concepts of the natural sciences to the solution of social problems.”
The Nazis didn’t listen. Neither did the commies. They were all so excited by the scientific advances in the laws of motion and mechanics that they wanted to apply them to everything everywhere, and in the process they even narrowed the definition of science to the positivist form that we know of today—where anything that cannot be observed under a controlled lab setting, and consequently repeated, is excluded from the definition of “science”.
You know what? Mises even had an insight on this:
“Mechanicalism proves to be so satisfactory a principle of conduct that people finally believe it capable of solving all the problems of thought and scientific research. Materialism and panphysicalism proclaim mechanicalism as the essence of all knowledge and the experimental and mathematical methods of the natural sciences as the sole scientific mode of thinking. All changes are to be comprehended as motions subject to the laws of mechanics.” (Human Action, Scholars Edition)
Whoa! Heh? But we diverge.
Essentially what these social engineers want is to control prices and influence your preferences.
But don’t take my word for it, takes Mises’ again:
“It is customary nowadays to speak of ‘social engineering.’ Like planning, this term is a synonym for dictatorship and totalitarian tyranny. The idea is to treat human beings in the same way in which the engineer treats the stuff out of which he builds his bridges, roads, and machines. The social engineer’s will is to be substituted for the will of the various people he plans to use for the construction of his utopia.”
Double “whoah, heh?” That’s right, go take another hit off your bong and come back.
One could put together a book just with his quotes alone (mises.org already publishes something like that) – he has written more than 25 books and countless essays. Funny how he is still so well buried by the establishment that most economists aren’t even familiar with his main theories. At any rate, generally, modern day economists still don’t understand the market; they still want to “play market” instead of letting the market be a market; they underestimate the complexity of society as a living organism, and the market as a discovery mechanism; they have no idea how to make sense of the entrepreneur; and they prefer to look at human society as a mechanic would look at a car engine, all the while not realizing that if the market were free of the state’s not so invisible hands, freely fluctuating prices are the very thing meant to match demand and supply and clear imbalances!
I’ve already spent too much time on this. If you would like to understand why socialism is theoretically impossible in the absence of a market (price), it is right here: The End of Socialism and the Calculation Debate Revisited, written by Murray Rothbard in 1991 as an addendum to Mises’s original essay “Economic Calculation in the Socialist Commonwealth”, from 1920. Mises’s original essay converted many socialists, including Hayek, to whom the Swedes gave the Nobel Prize in 1975 for Mises’s business cycle theory. Still, some simply converted to “market socialism.” Rothbard had to emphasize the market exists not only for consumer goods, but also for capital goods in order to point out that the central planner didn’t simply need to anticipate consumer preferences (which they think they can do through surveys and computer algorithms), but also, he/she had to figure out how to prioritize the scarce capital and resources at his disposal in order to solve for the over-riding economic problem.
Mises put it this way:
“The art of engineering can establish how a bridge must be built in order to span a river at a given point and to carry definite loads. But it cannot answer the question whether or not the construction of such a bridge would withdraw material factors of production and labor from an employment, which could satisfy needs more urgently felt. It cannot tell whether or not the bridge should be built at all, where it should be built, what capacity for bearing burdens it should have, and which of the many possibilities for its construction should be chosen.” (Human Action)
Doh! I never thought of that. But before you plug that into your own algorithm, note especially that:
“The problem is not the allocation of known scarce resources to satisfy known wants of known consumers based on a known lowest cost method of production for each known good and/or service. These ‘knowns’ are not given, but are the elements that must and can only be discovered through a market process.”
Go take another hit.
I sincerely hope that if they ever award this stupid prize to a real economist that tells them to keep it. The continued aggrandizement of dangerous Keynesians and communists in the economic world tells me that I am right to continue owning gold and that these deranged central planners will likely soon ignite a bubble in the junior gold stocks we cover at TDV Premium. I’ll continue to hold gold and a significant amount of these juniors until people like Paul Krugman and Ben Bernanke are seen as the confused, dangerous shills that they are.
— Ed Bugos
Ed Bugos, with a strong background in Austrian economics, is one of the world’s most sought after and respected mining analysts. Based out of the global epicenter for gold mining exploration and financing, Vancouver, Canada, he has been writing publicly since the late ‘90s and is a well known critic of government interventions, central banking and the Federal Reserve since 2000, starting as the original contributing editor for Safehaven.com. Ed founded goldenbar.com in 2001, a website publishing his gold & currency digest portending the collapse of the strong dollar policy and the rise of the secular bull market in gold and commodities. He was one of the first to make the call for $2,000 gold (he now is calling for $5,000-$10,000 gold), back when it was still struggling with $300 per ounce and it was a sin to own it.