The Economy Doesn’t Exist

I said last post, I plan to have an economic post upcoming. This is not it. This is some basic foundation for the upcoming post.

The economy does not exist. There is no such thing.

Hyperbole, but true hyperbole.

The economy, despite the absolute importance we place on it in our mammon-worship, is not a real, existent entitity. It is an abstraction and simplification of millions of humans making billions of trade decisions.

It does not stand alone. It should not and cannot stand apart from the people and decisions it abstractly represents.

The economy is the be all and end all of the liberal state. Almost every political decision comes down to: ‘will this grow the economy?’

But the economy is not an end. All these abstracted trade decisions exist, or at least should exist, to better human welfare. The flourishing of humanity is the goal, the economy is merely an abstraction of the trade decisions and processes we use to help bring this about.

The question government should ask itself is not, ‘will this grow the economy?’, but ‘will this benefit the people being governed?’

Growing the economy for its own sake is pointless and counterproductive.

To misquote Jesus, “The economy was made for man, man was not made for the economy.”

Which brings us to a sort digression on GDP.

GDP does not a measure human flourishing. It is a measured abstraction of the production of goods and services within a country, that is somewhat correlated to the economic health of a nation.

GDP was a moderately useful measure for ascertaining one small aspect of human welfare (goods), but it has become a goal purported to be the primary measure of welfare, against it’s creator’s advisement. Once a measure becomes a goal, as GDP most assuredly has, it ceases to be a useful measure. In addition, a measure is useless for measuring that which is was not designed to measure.

GDP was not designed to measure well-being and it does not do so. It measures economic production and to some degree economic health. Economic health is a part of well-being but definitely not the full measure, it ignores community, relationships, culture, and all those other things that make us human.

But even in that, GDP is insufficient. It counts the use of capital for consumption as economic gain, even though, long-term, capital loss is economically draining.

It doesn’t include productive activity if no one is getting paid, so making a beautiful wooden table for yourself does not add to the GDP or the economy, but buying a plastic table from Walmart does both. Making a home-cooked meal does not add to GDP, buying McDonald’s does. Raising your own children does not but paying a stranger to do so does. In each case, the former is probably superior for both economic production and human welfare, yet the GDP and the economy only recognize the latter.

More interestingly, the movement of women from home to the home to the workplace helped the economy, even though women generally do the same work in both.

Beyond this, the economy, and it’s measurement, GDP are not necessarily positive goods themselves, even in the limited areas where they are useful. While more widgets are usually, all things being equal, better than fewer widgets, all things are not equal. All goods and services come at their own cost, of which time is the most obvious, but the focus on the economy doesn’t measure time apart from the wages spent hiring them (if the income approach is used)  (ie. More time spent working leads to a higher GDP, ceterus parabus).

Look at these charts (keep in mind the y-axis labels):

Labour productivity (ie. comparitively how many goods/services workers in an hour) is five times what it was 70 years ago, on the other hand, the average work week has only dropped by about 4 hours. We can make 5x as many widgets per an hour as we used to be able to, but we still spend almost the same amount of time working.

The more we work and the more efficiently we work, the more the economy grows. If people started working less, the economy would shrink. Our government and almost every mainstream analyst would consider this shrinking a bad thing.

But wouldn’t life be better for everyone if a 5x increase in productivity led to a more than a 12% decrease in work hours? Full-time hours could be only 8 hours a week and we’d have the material standard of living as our grandparents, we could work 16 hours a week and have the same material standard of living as our parents. This doesn’t even include that during your grandparents’ time, women mostly didn’t work. Ceterus parabis, two parents could each work 4-hours per a week and have the same material standard of living as their grandparents.

Yet, more free time would kill the economy, because fewer widgets would be produced and fewer wages would be paid, even though many people would be happy to live like their parents if it meant only working two 8-hour shifts a week.

If GDP measures free time at all, it measures a lack of it, through money spent on wages.

Finally, GDP treats increases in the nominal value of goods as an increase in production. As an example, housing makes up 15% or so of GDP (real estate is the largest industry in the US, other than combined government). As I’ve argued before, housing, is a positional good. What this means is that, as housing costs (captured by rents or imputed rents) go up due to competition, GDP goes up. So, if the cost (as shown through rents) of the same house doubles, GDP would increase, but there would be no difference in production. Other industries where the goods are positional, or that are mostly services suffer the same fate. For example, primary and secondary education costs continually increase, but it would be hard to argue anybody is receiving better education.

For many sectors of the economy increased GDP is not actually reflecting an increased quantity or quality of goods or services which may contribute to well-being, it is only reflecting an increase in costs and competition.

For all these reasons, the economy doesn’t exist, growing it is not an end goal, and the GDP is a narrow measure not an all-consuming goal.


  1. Yes, economy does not exist, that’s why Mises used the term Praxeology (study of human action) in lieu of Economics (study of economy). GDP is not even a good economic metric, rather it’s a false and intentionally misleading one – it was invented by Keynesians to show how successful their policies are, despite “man on the street” getting it worse – simply put it’s “trust me goyim, inflation is good for you, there can never be enough inflation, look at the charts, hehehehe.”

  2. “will this help the people being governed?”

    I can assure you – that thought is thr last thing on the minds of most people in government.

  3. Good stuff here. Our obsession with these economic statistics is completely retarded and I writhe inside when otherwise smart people sperg out about it.

    First, they’re mathematical abominations that aren’t even close to measuring what they claim. This is not a nitpick, there are severe problems with the validity of GDP, CPI, and U-3 unemployment, among others. See link below for good detail on this.

    Second, we’re obsessed with growth uber alles because our financialized economy is full of ponzi schemes that require more population, more profits, more debt, more taxes, more more more forever. This growth often comes in the form of ruinous deformations and bubbles that exacerbate inequality and unrest. Not to sound all libfag but we really should strive for a sustainable society, not trying to cram in more people and more consumption forever until the USA turns into a giant slum.

    Third, as you rightly point out, this is decadent and corrupting. Our glorious leaders go on TV and urge us to go deep in debt for frivolous consumption. When we get unhealthy, lonely, stressed, or bored we throw money at the problem. When our iPhone 5 fails to fulfill us we go out and buy an iPhone 6 on credit. We import millions of 3rd-world peasants in the insane belief they’ll pay our pensions and make our retirements comfortable. We manipulate our currency like a banana republic because obviously that is the route to sustainable prosperity. Meanwhile prudence, restraint, and frugality fall out of style.

    I’m with Nassim Taleb: nuke the economics establishment and salt the earth so a new one never grows in its place.

    Incidentally I really like Nathan Lewis’s writings on this subject, here’s a good example:

  4. I’ll look forward to the more major and upcoming article on economics, F.N. I’m thinking on this one, that not only economics but many of the Subjects taught under the current regimes are really invalid; pick any one and there is really, arguably, more propaganda and distortion than there are actual facts. That would be the idea where a lot of people get into the S.T.E.M. topics, in an attempt to avoid some of that nonsense.

    Another is that while pagan societies have put the good, or the health of the people above all other goals, Christian societies have put truth as the uppermost priority. That Christian law is good is a happy coincidence, and has to do with its factuality – not its worldly success. This idea is from Rev Rushdoony whose ideas have by-and-large helped me in getting a good grasp on what’s happening. That truth is most highly prioritised does have obvious practical applications in that it encourages more long-term planning than short term convincing. Needless to say, Rushdoony does mention how Christian-Biblical law does help things, but he mentioned this part specificially as well.


  5. “Ash V.”,

    L.O.L….Yet, that’s what happens in a dogmatically materialistic society…

    Best regards,


  6. I’m doing my part by not working at all. Well, I’m an artist, but the end result is pretty much the same. I’m barely earning capital, I’m not consuming much, and I’m not being taxed.

  7. Re: GDP – it’s worse than that. GDP isn’t a good measure or a trying-to-be-good-and-failing measure or even really a measure at all. It’s a magic number that a bunch of people in the Bureau of Labor Statistics (or the equivalent ministries in other countries) come up with via the statistical equivalent of throwing darts at the wall.

    I mean this in the strongest possible sense. The calculations for GDP involve ‘intangible multipliers’, which are just numbers the BLS statisticians felt good about that day because they make the GDP come out in a nice smooth line. They’re supposed to account for growth in economically unmeasurable ways, such as the difference between a toilet and an outhouse from the user’s perspective, but by definition those things are unmeasurable, and attempting to include them in a measure just leads to GIGO.

  8. Couldn’t agree with this post more. Such a position should be near unimous among Reactionaries but we see many of our thinkers clinging to economics. Why are there so many who continue to utilize Austrianist analysis? Why are there so many who laud ‘free-markets’, commerce, and capitalism as /our values/?

    Restorative change in regards to praexsis has to be as radical as any other area. Economism is very much so the status quo, wanting to keep it is in no way Reactionary whatsoever.

  9. @Froude Society

    Because poverty and famine most certainly aren’t “our values.”

    In England:
    It was population growth… that was wrecking mercantilist Europe. Population growth was the reason for the rise of able-bodied beggars and thieves in eighteenth-century England. There was no work for them to do. It was the rise of capitalism—the advance of capital to provide them with jobs, the expansion of the market to produce cheap goods for the masses—that not only enormously increased the standard of living of the masses but also provided jobs for these increasingly “excess” people. Furthermore, Polanyi continues the old anti-capitalist canard that the Industrial Revolution was made possible by the enclosure movement, which supposedly drove sturdy yeomen off their lands and into the cities. This is nonsense; not only did the enclosure movement enclose the “commons” and not people, and by the great increase in agricultural productivity provide the wherewithal in resources and income for the Industrial Revolution, but also the enclosures did not drive people off the land. The surplus population in the rural areas was a consequence of population growth; it was this increase in rural population that drove these desperate people into the cities to look for work. Capitalism did not, therefore, tragically disrupt, as Polanyi would have it, the warm, loving, “social” relations of pre-capitalist era. Capitalism took the outcasts of society—the beggars, the highwaymen, the rural overpopulated, the Irish immigrants—and gave them the jobs and wages that moved them from destitution to a far higher standard of living and of work. It is easy enough to wring one’s hands at the child labor in the new British factories; it is, apparently, even easier to forget what the child population of rural England was doing before the Industrial Revolution—and during the Industrial Revolution, in those numerous areas of England where it and the new capitalism had not yet penetrated: these children were dying like flies and living in infinitely more miserable conditions.

    Or the case of Sweden. Before 1850 Sweden was fiercely mercantilist:
    At that time Sweden was incredibly poor—and hungry. When there was a crop failure, my ancestors in northern Sweden, in Ångermanland, had to mix bark into the bread because they were short of flour. Life in towns and cities was no easier. Overcrowding and a lack of health services, sanitation, and refuse disposal claimed lives every day. Well into the twentieth century, an ordinary Swedish working-class family with five children might have to live in one room and a kitchen, which doubled as a dining room and bedroom. Many people lodged with other families. Housing statistics from Stockholm show that in 1900, as many as 1,400 people could live in a building consisting of 200 one-room flats. In conditions like these it is little wonder that disease was rife.
    But then it transitioned to capitalism:
    Between 1850 and 1950 the average Swedish income multiplied eightfold, while population doubled. Infant mortality fell from 15 to 2 per cent, and average life expectancy rose an incredible 28 years. A poor peasant nation had become one of the world’s richest countries.

    IOW Romantic Reaction is dumb.

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