Unless someone wants me to believe that black holes, antimatter or the closed timelike curve can be explained by the arguments of Philosophiae Naturalis Principia Mathematica, published by Sir Isaac Newton in 1687, I find it difficult to understand the sometimes blinded defence of an economic theory developed by a sect of liberalism in the 19th century.

At the end of the 19th century, space was measured in terms of the time it took to travel it. The train was the fastest device developed by human talent, reaching fabulous speeds of 60 km per hour.

But time changed. Now time is “faster”.

Immediately after the beginning of the 20th century, the airplane appeared. Everything became “faster”. The zeitgeist changed at the same pace. It was possible to travel anywhere in hours, not weeks or months.

There appeared a genius of economic science, Sir John Maynard Keynes, whose phrase “in the long run we will all be dead” was not by any means accidental. Suddenly, the long-term promised solutions by the worshippers of the invisible hand (black hand?), believing that in the long term the markets would balance, were completely out of date. The problems that had to be solved were short-term ones. Who the hell cared that in 40 years the markets would balance?

Besides, which markets? The monopolistic ones? The oligopolistic ones? The ones with “perfect competition”?

The problem has definitely worsened in the 21st century, and it is already surpassing the greatest exponents of any discipline. Now everything is instantaneous. TikTok and AI “solve” problems immediately. There is no need to wait for the train, or take a plane. Today everything is solved with a small device in hand.

The spirit of the times and the subjectivity of time shape and build a culture by themselves.

In the 19th century, intellectual culture was shown in shows like the Opera. An Opera lasted about four hours. The 20th century brought us cinema. A film lasted an hour and a half or two hours. The 21st century brought us Netflix with series that last thirty minutes, and TikTok that builds a story in a minute and a half, establishing a new communication concept.

In this context, who is interested in a deductive (not empirical) theory of human action instituted 150 years ago?

Six companies own most of the data transmission on the Internet. Alphabet, Meta, Netflix, Apple, Amazon and Microsoft. Almost 60% of data transmission is emitted by these six companies and received by all of humanity. So the dream we had that the Internet was going to decentralize access to information has fallen for the moment. We can probably solve them with the Web3 ecosystem.

Today we are in the hands of a corporate nest, believing that we are free, as liberalism, of which the Austrian sect is a part, tries to make us believe.

With the advent of the cryptocurrency ecosystem about a decade ago, many defenders of the Austrian school have appeared, which has resurrected it from a cemetery where it was only visited by some lunatic, fanatic of extreme liberalism (libertarianism) and wild capitalism. Showing a great lack of knowledge about the theories of Munger, von Mises, Hayek and their most accredited disciples, these new acolytes of the far right are shouting that there is no other possibility to solve world hunger than the intellectual implementation of the concepts of Human Action, a famous book by the undoubtedly talented von Mises. In other words, cryptocurrencies equals Austrian school, this new oversimplification of reality tells us.

One trait that I particularly detest in many followers of the Austrian school is their fanaticism and stubbornness. They tend to think that they have the absolute truth, and that they are warrior monks (Templars) who fight bravely and tirelessly against evil, feeling morally superior, feeling like “heroes,” never recognizing a mistake, not conceding anything to those who think differently, feeling sure that in their analysis there is nothing important that they could have overlooked. If they’d recognized a mistake, they would seem unintelligent, and that would be unacceptable.

But I am not interested in intellectualizing about individual preferences, consumer actions, purchasing psychology, praxeology and the things that individuals, supposedly “free,” do intentionally or without planning and automatically, issues that the Austrian school has been theoretically analyzing for 150 years.

I am not interested in delving into whether the issue of methodological individualism is right or wrong, undoubtedly more justifiable a century ago than now, when social networks have created a swarm of spider webs that nullify the individual as a rational being in decision-making. I am not interested in talking about subjective value, which is a non-negotiable mantra for the Austrian school. Unlike classical and Marxist economists, Austrians maintain that value is not an intrinsic quality of goods or services, but a subjective attribute determined by the perceptions and preferences of individuals interacting with each other. How can this be said today, when any idiot on Twitter can say any stupid thing and alter and influence the value of any product or service with his/her stupidities? Influencers are a cancer of these times that did not exist in the era of opera and trains. Subjective value is so influenced today by informal communication generated by thousands of illiterates on social networks, that it cannot be said that people value anything, or, rather, that the subjective value that people value is the subjective value that some idiot gave them through a post.

I am not interested either, and finally, in going into depth about the invisible hand, the role of the market, and Hayek's spontaneous order, which sees prices not only as numerical indicators, but as complex mechanisms of information transmission that result from countless individual interactions and decisions. How can you talk to me about free individual decisions, when you are bombarded every minute at your phone by price offers, discounts, promotions, treating yourself like an idiot if you don't take advantage of the offer they are making you now, which is only valid for 3 minutes? Act now!

What the hell are you going to talk to me about, invisible hands and spontaneous orders? Do you think we're all idiots?

Instead, what I'm interested in is pointing out that all these issues were analyzed and developed in the form of aprioristic deductive theory by the so-called Austrian school, at a time when life was at a different speed, and when the international exchange system was based on the gold standard. Time is faster now and the gold standard has been dead since 1971. And worst of all, as if unionized corporatism weren't enough, we now also have the super-ghost that appeared without anyone calling it, the AI, a kind of apocalyptic monster that has nothing to lose when it says things on social networks at the speed of light.

If we want to explain 21st century economies with interpretations of human action, we must at least admit that human action was very different when the train was the fastest way to travel.

Wanting to explain the functioning of fractional reserves in the 21st century banking industry, where there is no gold standard as there was in the time of the theoretical hallucinations of the Austrian school, is almost funny.

The Austrian school was born when economic science became interested in abandoning the classical theory of value followed by Ricardo and Marx, to arrive at the neoclassical theory of marginal value. Mises says that the market is a dynamic process driven by human action, highlighting the need to understand the economy from the perspective of the individual. Menger, with his theory of subjective value, argues that the value of goods and services depends on individual perception and the need to satisfy specific desires. Hayek argues that prices in a free market act as a mechanism for communicating vital information for the efficient allocation of resources. But who among you knows a “free market”? In a corporate world like ours, where global corporations, whether food, pharmaceutical, energy, transportation, entertainment, mass media, are totally concentrated and decide global prices, in oligopolistic cartels, is there anyone who can tell me that Hayek's assumption is valid, almost 100 years after he first put it forward?

Hayek's concept of spontaneous order - the ordered state that arises from the decentralized plans of individuals -  tells us that the market process is interpreted as "results of human action, but not designed by humans." Precisely, what happens today is exactly the opposite. There may not be state planning as the Austrians dream of, but there is centralized corporate planning that is a thousand times worse than the worst state planning. Spontaneous order was a very valuable theoretical idea 100 years ago, but almost ridiculous in the 21st century. The market process seen as an information exchange mechanism is ridiculous nowadays, with that information being totally controlled by a handful of corporations trading territories with each other to maximize the profitability of their shareholders.

The other big target of Austrian theory is central banks, which we can probably all agree on. The attacking argument is that too low an interest rate sends wrong price signals to businessmen, leads to bad investments and, in the long term, to a bubble. But it is funny, Austrians are scared of the wrong signals sent by central banks, and applaud the “accurate” signals sent by corporations to the markets (and supermarkets). It is, at the very least, a joke, unless you are very much in favor of corporate action, of course.

Conclusion

Personally, I do not accept a theory that denies empiricism, such as the Austrian school. That is because I am a critical rationalist.

Karl Popper argues that an empirical observation that contradicts the theory is enough to prove that the theory is wrong. The most famous illustration of this reasoning is that the observation of a black swan refutes the theory that all swans are white. The Austrian school is based on the superiority of the deductive method and does not trust empiricism.

Truth exists, but not in a deductive form.

Furthermore, there is not just one truth, but several. For a hydraulic engineer, the river is a source of energy, for a fisherman it is a source of income, for a hotelier it is an attraction to attract tourists to his/her business, for a lover of nautical activities it is the playing field.

Truth is a consequence of the consensus of the time, in which the different actors reach a coordinated agreement to resolve the conflicts that arise, without a doubt, from human action.

The mistake is, IMO, trying to explain the functioning of a black hole with Newton's theories, which, without a doubt, were very valuable for the consensus of the time, and served as a basis for later scientific development. Today, string theory shows us a model in which an object in space is made up of the confluence of several harmonic strings that live in several dimensions.

According to Marx's analysis, the infrastructure modifies the superstructure. The infrastructure has changed dramatically in the last 100 years. We sleep eight hours, work eight hours and have fun for eight hours. Time is still the most important thing, and it is immutable. Companies today compete for those eight hours of fun that we have. They all sell time. Micro-specialization is the consensus of the time.

Do you want to explain price formation with theoretical formulas from 150 years ago based on deduction and not on empiricism?

Thank you for visiting!