The following extended excerpt is from a post by Bill Bonner at LewRockwell.com titled “The Fatal Flaw at the Heart of Modern Economics.” The title above is the subheading for what follows:
First, an economy is a “complex adaptive system.” It has lots of moving parts, in other words, and each of these parts has information and desires of its own.
The farmer in Mississippi may know that his bottom 40 acres are too wet to plow. The Department of Agriculture has no idea. The plumber in Milwaukee may know that his business is slowing down. But how would [NYTimes columnist Paul] Krugman know?
What machine has intelligent parts… each responding to its own information base, more or less independently?
Second… and perhaps more importantly… the parts have desires of their own. You build a machine to accomplish the desires of the designer. An economy, on the other hand, is merely a way for the constituent parts to achieve their own ends.
Imagine an automobile that goes where the steering wheel wants to go! Imagine a motor that runs faster when the carburetor feels frisky… and slows down when the valves get tired.
You can see that this is like no machine ever created. The parts want to go in different directions… at different speeds… for different reasons. The economy is much more like a flock of birds than a Boeing 747.
In today’s America, real (inflation-adjusted) wages are lower today than they were 10 years ago. Depending on how you adjust for inflation, they may be as low as they were at the end of the second Eisenhower administration.
With so little in earnings, people are naturally careful with their money. They go to giant discount shops… in order to get as much for their money as possible. They want low prices.
What is an economy for, if not to satisfy the hopes and desires of the people who live in it? And what is the goal of activist economics, if not to help people get what they want?