Economics, particularly finance, is probably the most elaborate form of fraud I have ever seen. The idea being that if you formalize something with mathematics, then it must be more rigorous is an absolute joke. The reason is in fact very simple: if your assumptions are insanely detached from reality, then none of your results hold up in the real world, no matter how "elegant" your formulas are.
It's a bit like how people delude themselves that they've built a perpetual motion machine in physics: by building something so complicated in their mind that they can no longer track where it fails. In the case of economics, supposedly smart people have no problem whatsoever assuming that we can maintain exponential growth, for the centuries to come, on a finite planet. You would think that it would be the kind of statement that a child would make - more, more more! - and that adults would kindly remind them that the world doesn't work that way, but no. Our very serious system run by very intelligent people - supposedly - can keep getting better forever, no matter what the underlying ecological constraints have to say about it.
The difference between physics and economics is that is that society's version of the perpetual motion machine works for a while because mimetics isn't as hard-cut as physics. We can delude ourselves for a bit, live above the carrying capacity for a short while - a few decades or maybe centuries for us, but which is nothing relative to the human race or the planet at large - but it won't last long. 1
In my experience, the main point of economics and finance is to justify to other humans beings the activity of the technological system. It is that system which is in charge of where we are headed, not conscious human decisions.
Economics is sometimes described as the study of wealth, how it is created and how it distributes over time. I would argue that it is the study of scarcity, because the mindset of competition and game theoretical analysis show up all over the place in that field. I mean, would someone who is genuinely content in life aim to maximize their utility, whatever that word means is? This obsession with looking at the world as filled with scarce resources to compete over leads to, for instance:
1 In Ishmael by Daniel Quinn, he uses the excellent analogy that no civilization has managed to reproduce the equivalent of flight - living sustainably - but delude themselves into thinking that because they hover in the air for a bit - manage to build things for a while - they’re on the verge of discovering flight. In reality, all the past civilizations, as well as ours, are all doing the equivalent of jumping off a high cliff.
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2024-03-30