There is no Economic "Theory of Everything"
September 28, 2008 § 31 Comments
A complete economic theory of everything is not something which exists. Of existence, it has none.
Therefore, when we make economic choices, particularly in large scale crises with enormously complicated implications, we face the same kind of situation we face, well, pretty much all the rest of the time too. Even physics has no theory of everything, and in mathematics it has been proven that there is no such thing.
Our situation is as always that there are certain things we know, certain things we don’t know, and certain things we can’t know. The first we are responsible for; the second, we are responsible for learning to the extent it is important to our choices; the third, we simply have to trust to Providence.
Doing what is right right now, and trusting in Providence for the rest, is built into the nature of reality. We are always trying to banish our need to trust in Providence with our theories of everything. Thus far, our attempts to build the Tower of Babel have all been abject failures.
When we are in a burning train wreck in progress, and we have definite and clear means to get out and to rescue many others in the process, we have a concrete obligation to actually do so. If doing so violates our economic theories about actions and consequences that tells us something about our economic theories; it doesn’t tell us anything about our concrete moral obligations right here and now.
So color me unimpressed when it is suggested that the Chicago School is against the government injecting liquidity into the market to prevent a disastrous collapse with global implications. The last century or so is littered with the bodies of people who have suffered and even died for the sake of vindicating economic theories. “Let Main Street burn, because my economic theory tells me we should” is not a proposition I find it even slightly tempting to adopt.