Mises is entirely prescient when observing that economic science grants no meaning to a price except in reference to its equilibrium with other prices. He develops this observational premise further through his equally unassailable finding that the economy is never seen in equilibrium. Simple logic then dictates that all price computations must be unrealistic; and, wherever artificially computed prices might be imposed, the only possible result would be economic chaos — a prediction that has been amply instantiated.
However forceful, this performance does nothing to explain the order and stability observed in the economic realms wherein prices are not imposed. The spontaneous generation of prices that efficiently control free-market economies remains a mystery that can only be interpreted through the great deus ex machina of Austrian economics:
Only actors on the market can allocate resources in a non-arbitrary way, because only on the market can someone evaluate a course of action according to the economizing principle of profit and loss. This is what the Austrians call economic calculation.1Here we encounter the veritable deity of materialist thought: ‘only Markets can generate prices’ and ‘Markets must remain forever inscrutable as well as omnipotent’. The oracle so described thereby reserves economic calculation unto Himself, informing a bewildered humanity that the essence of its material well-being is beyond the comprehension of mere mortals.
This exquisitely rational performance does not impress an authentically Western man of science because it merely levitates the critical notion of price formation over to ‘the market’, whereupon it enters the custody of a supernatural being. If economic order can only be created via their literal miracle of the market, then the Austrians’ claim to a superior causality will always remain unassailable:
Because if it is a Miracle, any sort of evidence will answer, but if it is a Fact, proof is necessary 2SFEcon’s premise that markets are material phenomena (i.e.: facts that the economist is obligated to explain) leads us to reject the inevitable magi sitting at the terminus of Mises’ rational development. Such creatures being foreign to scientific thought, we proceed back up Mises’ logical chain to conclude that prices must not in fact be computed with reference to equilibrium. (This should have, in any case, been known from the outset: any equilibrium reference will inevitably cause instability in any self-organizing dynamic system.)
Having resolved to account for observed economic order on strictly material bases, the scientist
would then obligate himself to formulate
disequilibrium prices; and these would be investigated in
terms of their potency in controlling economics’ dynamics. A prospective science of economics would
necessarily offer some sort of price calculation that would be shown to guide economic dynamics toward
discovery of the singular,
optimal state around which it might
stabilize.