Economics is haunted by more fallacies than any other study known to man
Interpretation
This quote suggests that economics is often plagued by misconceptions and errors in reasoning compared to other fields of study.
Henry Hazlitt argues that economics faces a unique set of challenges related to incorrect beliefs and misunderstandings. These fallacies can significantly distort our understanding of economic principles and lead to misguided policies. As a study that impacts lives and societies, the prevalence of fallacies in economics necessitates careful critical thinking and analysis to navigate effectively.
In practice
In a debate on economic policies, this quote can emphasize the need for careful analysis.
A man with a scant vocabulary will almost certainly be a weak thinker. The richer and more copious one's vocabulary and the greater one's awareness of fine distinctions and subtle nuances of meaning, the more fertile and precise is likely to be one's thinking. Knowledge of things and knowledge of the words for them grow together. If you do not know the words, you can hardly know the thing.
Mere inflation-that is, the mere issuance of more money, with the consequence of higher wages and prices-may look like the creation of more demand. But in terms of the actual production and exchange of real things it is not.
Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine - the special pleading of selfish interests.
The only way we could remember would be by constant re-reading, for knowledge unused tends to drop out of mind. Knowledge used does not need to be remembered; practice forms habits and habits make memory unnecessary. The rule is nothing; the application is everything.
The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice.
If a government resorts to inflation, that is, creates money in order to cover its budget deficits or expands credit in order to stimulate business, then no power on earth, no gimmick, device, trick or even indexation can prevent its economic consequences.
Large corporations, of course, are blinded by greed. The laws under which they operate require it - their shareholders would revolt at anything less.
Never in the history of human credit has so much been owed.
Adam Smith's 'invisible hand' is not above sudden, disturbing, movements. Since its inception, capitalism has known slumps and recessions, bubble and froth; no one has yet dis-invented the business cycle, and probably no one will; and what Schumpeter famously called the 'gales of creative destruction' still roar mightily from time to time. To lament these things is ultimately to lament the bracing blast of freedom itself.
It certainly is dangerous that there are only a few clubs left in Europe that can afford to pay millions. At the end of the day however, the spectators decide the rates of pay - by watching the games and consuming the goods and services advertised on sports TV programmes.
Thus, our national circulating medium is now at the mercy of loan transactions of banks, which lend, not money, but promises to supply money they do not possess
For it is an essential difference between capitalist and socialist production that under capitalism men provide for themselves, while under Socialism they are provided for.
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