Occasional X: The futile attempt to recycle Austrianism (CXXXVII)

“Rothbard put it in italics, so Alex Pollock read it twice at the Summit: 'The natural tendency of the state is inflation.' Money is normally got by producing something. There is another way—create it, and produce nothing.” (Mises Media) The Founding Fathers defined economics as a social science, and accordingly, it has been based on subjective/behavioral assumptions/axioms. In Austrianism, it's the Praxeology Axiom. This has been the methodological ur-mistake. Actually, economics is about how the economy works. It is a systems science, and NOT a social science. 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. Consequently, economic policy guidance has never had valid scientific foundations. To this day, it has no scientific truth-value but only political use-value. Austrianism is a case in point. Ludwig von Mises never understood profit, and by logical consequence, how the economic system works. That's self-defeating. 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 at best. Utility/profit maximization or free people on free markets or competition or hard work or innovation or the entrepreneur or optimal allocation 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 temporarily 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. On the contrary, Austrianism claims that the State is the root of all evil. That's moral blaming, not science. Rothbard was a silly agenda pusher, not a competent scientist. Because Austrianism is axiomatically false, its Theory of Money is false. For the axiomatically correct approach, see the working paper ⇒ The Dark-Matter Theory of Fiat Money https://t.co/0QSqFFstKv

— AXEC (@EgmontHandtke) November 5, 2026