Occasional X: The foul spirit of political economics (CCCLXXVIII)

“'That great cosmic principle of becoming': elucidating Ludwig von Mises’s multifaceted account of the origin, development and function of the division of labour, by Jonathan Cole.” (Economic thought) Ludwig von Mises never understood profit, and by logical consequence, how the economic system works. The 'great cosmic principle of becoming' didn't help him much. Like other approaches, Austrianism has defined itself as a social science and accordingly has been based on subjective/behavioral assumptions/axioms. This is the methodological ur-mistake. Actually, economics is a genuine systems science. The free-market economy runs on profit. Macroeconomic profit is given by the axiomatically correct Profit Law Qm≔(I−Sm)+(G−T)+(X−M)+Yd. The Law implies PublicDeficit-Is-PrivateProfit Qm≔(G−T)>0, i.e., macroeconomic profit is (co-)produced by deficit-spending/money-creation, i.e., the growth of public debt. In free-market economies, public debt has increased with minor interruptions for over 200 years. Therefore, Qm≔(G−T)>0 is a critical element of the economy's survival. The minimum requirement of a free-market economy is that macroeconomic profit is greater than zero, i.e., Qm≥0. If Qm<0, recession/depression/breakdown results. This is the main economic principle; all other explanations of how the economy works are secondary. Utility/profit maximization or free people on free markets or competition or hard work or innovation or the entrepreneur do not keep the economy above the zero-profit cutoff. Scientifically, it's rather simple: no macroeconomic profit, no economy. But economists are only look-alike scientists. They have never had enough brains to understand the objective, systemic facts, i.e., the existential preconditions. Free-market economies are continuously saved from breakdown by the deficit-spending/money-creating duo of Treasury/Central Bank, i.e., the State. This means that the Austrian premise that the unfettered free-market economy is a self-adjusting, self-stabilizing, and self-optimizing system is axiomatically false. Austrianism is failed/fake science. Neither von Mises nor the sorry bunch of followers ever understood what keeps the economy going. The History of Economic Thought is the mindless repetition of economists' intrinsic scientific incompetence. It is driven by the cosmic principle of stupidity.

— AXEC (@EgmontHandtke) October 9, 2026