Occasional X: Clueless economists / Profit (CLXVIII)

“Murray Rothbard took Mises's price theory and drove it to a destination Mises never reached.” (Handre) von Mises never understood profit. Murray Rothbard never understood profit. Handre never understood profit. Consequently, they never understood how the economic system works. The same holds for the rest of Austrians. In Chapter 8.1 of Man, Economy, and State, Murray Rothbard writes: “In the evenly rotating economy, there are only two ultimate categories of producers’ prices and incomes: interest (uniform throughout the economy), and 'wages'—the prices of the services of various labor factors. In a changing economy, however, wage rates and the interest rate are not the only elements that can change. Another category of both positive and negative income appears: entrepreneurial profit and loss.” (Rothbard, p. 509, Kindle Version) 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 Profit Law implies that profit appears if Qm:=(I−Sm)>0, if there is a public deficit Qm:=(G−T)>0, and if there is profit distribution Yd and an expenditure ratio of ρE=1. Needless to emphasize, that neither Murray Rothbard nor Handre have ever heard of the Profit Law. The Law refutes Austrianism. Part of the formula has already been explained; see Clueless economists / Profit (CLXVI) https://t.co/9m7wYiHvr4 In the following, it is explained how the free-market economy creates free lunches for WeTheOligarchy with profit distribution Yd. The derivation is summarized in the table below ( ⇓ AXEC245). The elementary production-consumption economy is given with the axiomatically correct macroeconomic axioms in lines 1-3. They are systemic, not behavioral. The price follows in lines 5 and 8. In the elementary production-consumption economy, i.e., in the evenly rotating simple economy, the market-clearing and budget-balancing price is equal to unit wage costs W/R. The workers get the entire product O. The business sector's profit Qm is zero. Profit of the business sector (line 12) and the differentiated income/consumption of the household sector (lines 13, 14) define the interrelationship of balances. One limit case is ρECW=1 and ρECD=1, with the result Qm=Yd. In the evenly rotating economy, profit is equal to distributed profit. That means that WeTheOligarchy can make profit and full consumption of distributed profit to repeat themselves in all eternity. Profit distribution (co-)produces the free lunches of the free-market economy. Profit is recreated by profit distribution, i.e., there is no productive contribution of WeTheOligarchy to the real product O that justifies distributed profit income. The price adapts analogous to line 5. The price mechanism redistributes the real product O between the receivers/consumers of wage income and the receivers/consumers of distributed profit. In essence, Austrians are the promoters of the free-market economy as a free-lunch system for the Oligarchy. The free-market economy has not so much to do with the efficient use of resources but with the distribution of the real product O between WeThePeople and WeTheOligarchy. The distributional trick is done by the Invisible Hand of the price system. Austrians are either stupid or corrupt or both.

— AXEC (@EgmontHandtke) October 21, 2026

Occasional X: Clueless economists / Science (CCCXCI)

“Do you find yourself wondering… ‘What is economics?’, ‘How did economics become language of power and its practitioners, the gatekeepers?’, ‘How do you do economics?’, ‘Can economics help serve people and planet?’” (Rethinking Economics) “Once we learn that different economic theories say different things partly because they are based on different ethical and political values, we will have the confidence to discuss economics for what it really is - a political argument – and not a 'science' in which there is clear right and wrong.” (Ha Joon Chang) Ha Joon Chang has no clue about what science is all about. He is the next political smoke-blower. “Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). The distinction between science and non-science corresponds to the ancient Greeks’ distinction between episteme (= knowledge) and doxa (= opinion). The fact is that about ninety-nine per cent of people are satisfied with opinion, and only one per cent is devoted to episteme. Economists do NOT belong to the latter group. Economics is a cargo cult science, and economists are fake scientists, and the EconNobel is a fraud. The state of economics is this: there is political economics and theoretical economics. The founding fathers called themselves political economists; that is, they left no doubt that their main business was agenda pushing. Economists never got out of political economics. In other words, theoretical economics (= science) ultimately could not emancipate itself from political economics (= agenda-pushing). This is why economics never rose above the level of a proto- or cargo cult science. There are the hard rocks of true or false and the swamp between them. The swamp is the natural habitat of morons, agenda pushers, confused confusers, incompetent scientists, political economists, status-quo inertionalists, commonsensers, and anti-scientists. Political economists are natural-born swampies. In marked contrast to scientists who drive the question under discussion to the point of a clear-cut decision between true or false, neither the orthodox nor the heterodox swampy has a genuine interest in a definite outcome but seeks to keep matters in the swamp of inconclusiveness. Swampiness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) Therefore, the cargo cult scientist is mainly occupied with producing a methodological smoke screen that consists of vague concepts, anything-goes, pluralism of false theories, alleged complexity, ontological uncertainty, unreliable data, faux humility, the post-modern replacement of true theory by political narrative, and a veritable artillery barrage of silly excuses. The beauty of the swamp is that logical and empirical failure is inconsequential.” (AXEC) For more details, see What is so great about cargo cult science? or, How economists learned to stop worrying about failure https://t.co/VoQJMa4CUZ From the beginning, economics has not been a science but silly political agenda pushing. There has not been genuine scientific progress since the Enlightenment, only changes in propaganda. Watch the sorry contemporary academic discussion. They're just turning over the scientific dung heap without ever arriving at a result that satisfies the most elementary scientific principle: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941) Economics has defined itself as a social science and accordingly has been based on subjective/behavioral assumptions/axioms. This is the methodological ur-mistake. The major approaches (Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives) are mutually contradictory, axiomatically false, and materially/formally inconsistent. They all got profit wrong. When the subject's foundational concepts are inconsistent, the entire analytical superstructure is scientifically worthless. The minimum requirement in science is logical consistency. Economists never rose above confused blather. As far as an approach is formalized, economists apply the wrong math. However: “The problem is not just to say that something might be wrong, but to replace it by something ― and that is not so easy.” (Feynman) To finally become a science, economics needs a Paradigm Shift from false behavioral microfoundations and false Keynesian macrofoundations to true macrofoundations (⇓ AXEC121l). Economics does not need another smoke-blower like Ha Joon Chang.

— AXEC (@EgmontHandtke) October 21, 2026

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

“Incredible. I'm not a paid-up MMTer, but I understand its framework. It's based on the opposite - counter-inflationary fiscal spending policies limited by scalable real resources. Unless he's [Jon Steinsson] plain thick, this is a UK Berkeley Prof telling a barefaced lie on public media.” (Steve Hall) Jon Steinsson has already been identified as a scientifically incompetent political agenda pusher. For details, see The foul spirit of political economics https://t.co/BTIHKFN6RN However, Steve Hall is even worse; he is an #EconBlocker. That's economics in 2026: time wasting moron's quabble.

— AXEC (@EgmontHandtke) October 21, 2026

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

“Keynes: on stage and on our minds.” (Markus Brunnermeier) Keynesianism has always been proto-scientific garbage. It has been proven false from the beginning (⇓ AXEC172a). Therefore, it has never been more than theatrics, or what Feynman called a Cargo Cult Science. Keynes got macroeconomics axiomatically wrong. His scientifically incompetent followers never spotted the methodological defect. After-Keynesian macrofoundations are not a real improvement of the legacy microeconomic approach. Both are axiomatically false. Keynes, too, misunderstood the concept of profit because he was too stupid for elementary algebra. Consequently, he botched the long-overdue Paradigm Shift from microfoundations to macrofoundations. This initial blunder means that the entire field of economics (both micro and macro) is provably false. As a result, economics has never been more than silly blather for a low-IQ audience. But scientific principles have not really mattered in economics for over 200 years: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941) The After-Keynesian critique of mainstream economics is spot on, but their alternative is also scientifically worthless. However, for a theatrical performance on the academic stage, it's good enough. After all, the show must go on. For details, see Cross-references: Keynesianism https://t.co/ZoIDUg46Lg

— AXEC (@EgmontHandtke) October 21, 2026

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

“What do Larry Kudlow, Janet Yellen, Steve Mnuchin, econJaredB & me have in common? We all believe the permitting reform bill is essential for America to build, grow, tackle climate change and maintain our technological lead. Probably the broadest letter I've ever signed.” (Jason Furman) Scientifically competent economists do not sign propaganda letters. Only political agenda pushers do. Reminder: Economists never had a mandate for political agenda pushing: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.” (J. S. Mill) Obviously, economists never understood J. S. Mill, i.e., what science is all about. For over 200 years, economics has claimed to be a science, but it still isn't. The major approaches (Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives) are mutually contradictory, axiomatically false, and materially/formally inconsistent. They all got profit wrong. When the subject's foundational concepts are inconsistent, the entire analytical superstructure is scientifically worthless. Economic policy guidance has never had valid scientific foundations. It has never been much more than the blather of confused confusers (⇓ AXEC141g). The representative economist is NOT, and never has been, a competent scientist but an agenda pusher / useful idiot / impostor / phrase monger / storyteller / troll / pseudo-psychologist / self-gloryfier / 'good-cause' fighter / clown in the political Circus Maximus. For example, watch the PR stunts of Jason Furman and his sorry bunch of letter-signers.

— AXEC (@EgmontHandtke) October 20, 2026

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

“There's no such thing as a free lunch.” (Milton Friedman) Of course, there is. Milton Friedman never understood profit and, by consequence, how the economic system works. That's self-defeating for an economist. 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 Profit Law implies PublicDeficit=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 has been a critical factor for Capitalism's survival. The free-market economy is continuously saved from breakdown by the deficit-spending/money-creating duo of treasury/ central bank, i.e., the State. This means that the premise of legacy economics, i.e., that the unfettered free-market economy is a self-adjusting, self-stabilizing, and self-optimizing system, is axiomatically false. This means that economics is failed/fake science. Economists are not scientists. They are mostly silly wafflers for a low-IQ audience. Milton Friedman has been the most prominent case. The free-market polity is an Oligarchy with parliament / treasury / central bank / capital markets / big business / three-letter agencies as integral parts. With the other determinants excluded for the moment, private financial wealth grows with public debt. Eventually, WeTheOligarchy owns the financial assets, and WeThePeople owe the public debt and are taxed for interest on government bonds as long as the debt is rolled over. Interest payments on the debt reduce their disposable income for an indefinite time. The government taxes WeThePeople on behalf of WeTheOligarchy. This profit/interest/tax triple-whopper produces wealth for WeTheOligarchy and debt and real-income reductions for WeThePeople. On closer inspection, WeTheOligarchy gets three free lunches. This explains the observable distribution. In addition to legitimate monetary operations, the central bank is well-positioned to carry out or support illicit operations that are economically equivalent to putting counterfeit money into circulation. The volume of illicit deficit spending and money creation, as well as the quantity of Dark Money in circulation, is not publicly known. Therefore, Profit and Distribution Theory has no empirical leg to stand on. The financial sub-sector, big business, and billionaires recycle some of their profits and financial wealth to control major public, private, and political institutions. Thus, they corrupt the polity. In essence, this is how the self-alimentation and self-preservation of WeTheOligarchy work. Capitalism thrives on free lunches that are ultimately supplied by the duo of treasury/central bank, i.e., the State. There are no free lunches for WeThePeople, but there are voluminous free lunches for WeTheOligarchy. Milton Friedman should have known this.

— AXEC (@EgmontHandtke) October 20, 2026

Occasional X: There is an absolute limit to the growth of public debt (VII)

“The Debt/GDP ratio should not be stable at the top of a business cycle. It should be stable over the whole cycle. If it is stable at the top of the business cycle, it will ratchet up over the whole cycle (as we have seen since 2000). This is unsustainable.” (Jon Steinsson) In free-market economies, public debt has increased with minor interruptions for 200+ years. Growing debt has always been a crucial ingredient in Capitalism's life elixir. The representative economist doesn't get it. Put simply, he gets the foundational concepts of profit, distributed profit, income, saving, deficit, and debt wrong. That's why economics has been failed/fake science for 200+ years. The monetary economy in general thrives on growing private/public debt. If this growth stops, the economy implodes. Macroeconomic profit Qm is given by the axiomatically correct Profit Law Qm:=(I−Sm)+(G−T)+(X−M)+Yd. The Law implies Qm:=(G−T)>0, i.e., macroeconomic profit is (co-)produced by deficit-spending/money-creation, i.e., the growth of public debt. The minimum requirement for a free-market economy is that macroeconomic profit is greater than zero, i.e., Qm≥0. If Qm<0, recession/depression/breakdown results. This should be easy to understand, but it has always been above economists' mental capacity. The free-market economy is continuously saved from breakdown by the deficit-spending/money-creating duo of Treasury/Central Bank, i.e., the State. This means that the premise of mainstream economics, i.e., that the unfettered free-market economy is a self-adjusting, self-stabilizing, and self-optimizing system, is axiomatically false. Ultimately, this means that the representative economist is too stupid for science. Currently, the USA is exploding the public debt. This increases macroeconomic profit Qm, according to the Profit Law. The point is that this is only the beginning. Profit will continue to increase exponentially and with it the number of billionaires/trillionaires. It does not matter how badly the real economy performs. The growing public debt ultimately benefits WeTheOligarchy and not WeThePeople. Since the household sector is taxed for interest on government bonds, there is an absolute upper limit for the growth of public debt, which is roughly given by public_debt * avg_interest_rate ≦wage_income. Economic problems, though, start much earlier because of other irreducible items in the budget (military, health, etc.) and a not exactly known upper tax-to-income limit. The limit moves further away into the future if the interest rate approaches zero. If interest rates go up, the wall will be hit sooner. Note well that the State acts as the interest collector for WeTheOligarchy. The USA is a clear example of how Capitalism works and that it will break down with systemic necessity. President Trump is currently in acceleration mode.

— AXEC (@EgmontHandtke) October 20, 2026