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« Spain busts EU budget treaty deal on day one | Main | Irish EU treaty vote threatens chaos »

The mechanical failure of the economy

 Hugo Salinas Price

The first requirement for successful action on the physical world is to have correct information of the facts upon which to act.

The Wright brothers realized the importance of this requirement when they began to build a machine to fly, as his first step was to develop a rudimentary but effective study of aerodynamics, then built models of wings and tested their behavior. Then proceeded to design a wing based on test results and thus achieved a historic success in 1903.

As a result of the enormous success that the industry achieved during the nineteenth and twentieth centuries, humanity has fallen in love with physics, the study of the material world. In the physical experimentation is fundamental and provides reliable results, because in the physical experiment can be repeated indefinitely and we will always get exactly the same result.

We live in a world of stunning successes: the wonderful television, billions of mobile phones, Internet, great air travel - the list is endless.

However, regarding the current status of human beings, the result is not at all pleasant. Our world is bankrupt, every day growing popular discontent with the political and economic situation, the famine began to appear in some regions, the financial world is in disarray. In short: humanity is not happy.

What happened during the past two centuries was the most prominent thinkers were seduced by the successes of physics and fell into the erroneous idea that the principles that are so successful in this area are the same principles that can solve human problems - big mistake.

If we analyze the current economy and its sister activity, politics, we find that the foundations of Keynesianism, which governs the world of today, are basically an attempt to apply the principles of physics in an area which is not governed by physics, but by the human capacity to choose : the field of choice , whose study was developed by the Austrian School of Economics, founded in the nineteenth century by Karl Menger, and now its modern version, the New Austrian School of Economics, who heads the Professor Antal E. Fekete. (See

Quantifies Physics: measures, weighs and counts time and quantity, experience and determine predictable relationships between physical causes and effects. The fatal error of Keynesian economics, which is now plunging the world, has occurred because the Keynesians have been determining economic policy based on statistics, a process of measuring, weighing and counting. And then have proceeded to experiment, as physicists do with humanity, the enormous injections of money into the U.S. economy, QE1 and QE2 called, have been publicly recognized as a simple experiment. The Keynesians have waited a dazzling success since its 'scientific approach' of the economy but, as is evident, have roundly failed.

The fact is that there are two areas which can operate on human intelligence: the realm of the material, physical world and the realm of human affairs: Austrian Economics and twin activity, politics.

Physics is the right approach to deal with the material world. But as soon as we want to influence the field of human action we entered a completely different area, because human beings can choose . There is even something of a choice in the material world, choice is an exclusive power of human beings.

Physics deals with interpreting the relationship between entities that have no ability to choose . Therefore, physical experiments show consistent and predictable results, but the physics is powerless when the object of his study can choose: if the atom had the ability to choose, physics could not have an atomic theory!

Since humans have the ability to choose, economic theory based on the laws of physics can not be successful in trying to apply to humans. Theconstants do not exist in the field of human action because people choose and, therefore, are unpredictable. The graphics are of little use because they only show us something that happened in the past but, like all successful speculators ( and the unsuccessful) know, they provide no certainty about what will happen in the future. The statistics are arbitrary selections from a huge mass of historical data, all data are historical, and that record what happened, and are inevitably tainted by value judgments of who makes the statistics, since it selects only the data you consider important . And the equations are useless and misleading because they choose has to do with differences , while the equations are related to equalities .

'Sociology'-creation of Auguste Comte, aims to reduce human behavior to a science, and placed next to the physical sciences, but as someone once said, to wit: 'the only thing that sociology has been able to discover is that some do and some do not. " What does, and why not? Nothing ...and everything!

And yet, this is the only thing is the economy of today, statistics, and constant search for graphics processing. Is the focus of physics on an area that is completely out of reach. The failure-the inability to achieve its objectives, is the guaranteed result of Keynesian mechanics apply to politics, because the objects with which the physics can be successfully treated, they have the power to choose, while humans do have a choice in every moment of your life.

Now combine the mechanistic economy with the printing and digital money that the world is forced to use, and we have enough reasons to see the collapse of civilization as we know it. Indeed it is curious that an entire civilization can fall apart so bright for taking just a couple of misconceptions.

PS: In Mexico, when proposes the idea of the silver coin to these economists, often answer, 'run model' , which perfectly illustrates the mentality mechanistic. I would reply to that:

 "You are going to marry? ...Run a model of what will be your marriage ... "

This article is by courtesy of Hugo Salinas Price spotted on his site:

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