has-the-time-come for a quantum revolution in economics? no.

David Orrell's suggestion that the laws of economics somehow no longer apply in the modern world is based on some very pie-in-the-sky type thinking. The Pakistani mathematician Asghar Qadir had similar thoughts before him. In his 1978 paper Quantum Economics, Asghar proposes that classic economic theory is essentially too simple to properly represent the modern economy. According to classic economic models, we can predict that a rise in cost will lead to a reduction in demand, and therefore sales. But, says Asghar, "consumer behavior depends on infinitely many factors and that the consumer is not aware of any preference until the matter is brought up." While this would certainly make for a great philosophical conversation, it is not really helpful in making predictions. It is true that certain individuals may not behave in ways that economists would consider 'rational', however these are the exception and should not define the rule.

Orrell correctly points to examples of the failures of mainstream economics: "while reported happiness levels seem to have peaked some time back in the 1960s. The financial crisis didn’t make many people happy, except some bankers." But fails to identify the root of the problem. Economics is not, as he suggests, due for an update. Instead, economists and, more importantly, policy-makers worldwide need a refresher in classic economic theory. Perhaps they should each be given copies of work's by greats such as Ludwig von Mises, Friedrich Hayek, Murray N Rothbard, maybe even some Milton Friedman.

The mainstream largely supports a more modern view of economics that largely draws on Keynesian principals. However, time and time again we see evidence of flaws in the Keynesian model - flaws that do not exist in Austrian economics. The greatest of these flaws is the necessity of central banks and their manipulation of, effectively, the value of our currency. Keynesians believe that expansionary monetary policy will lead to an increase in GDP via an increase in loan-able funds. Yet there are piles of evidence suggesting that this manipulation by the Federal Reserve and other government entities has been the cause of nearly every recession in recent history. This increase in lending creates an unsustainable bubble of growth, that eventually leads to supply outweighing demand. However, the economy is like a living thing - it tries to return to a state of homeostasis and in doing so causes the market corrections which collapse the bubble, and lead to a recession.


Orell, David (2018). "Economics is Quantum". Aeon.co.
Qadir, Asghar (1978). "Quantum Economics". Pakistan Economic and Social Review.