Economic truths valid in single markets fail catastrophically at macroeconomic scale

Evidence

Of his fellow economists, who insisted that money ought to be understood as another commodity, Keynes once said that they ‘resemble Euclidean geometers in a non-Euclidean world’, again confirming in no uncertain terms Einstein’s influence. Conventional economic thinking about money was damaging humanity, Keynes thought. Economists resembled spacecraft designers disastrously relying on Euclid, not Einstein. They were using illusions which, while helpful in the microcosm of a single market (e.g. the market for potatoes, where a fall in the price can usually be relied upon to boost sales), were catastrophic when applied to the economy at large – the macroeconomy, where a fall in the price of money (the interest rate) may never boost money’s flows in the form of investment and employment. — Yanis Varoufakis, Technofeudalism, 86

Categorization

• DEFINE: Core methodological claim previewing the book’s argument structure — micro-truths failing at system scale.
• XREF: Parallels the passage on space/time illusions failing at extreme scales — the author is building a rhetorical scaffold of scale-dependence for his feudalism thesis. — connects to: Austerity’s intuitive logic fails once distributional and aggregate questions are asked — Mark Blyth, Austerity: The History of a Dangerous…, 41

Broader Connections

• Austerity’s intuitive logic fails once distributional and aggregate questions are asked #exemplifies (0.85) — Mark Blyth, Austerity, 41