Sunday, October 3, 2010

Do we understand why the economical theory is so bad?


It might be that some of my readers will disagree with my assumption. But I will not argue with them today.
I do not have a clear answer. I have only an impression.
It is obvious that general rules exist in economy. If the demands increases price will increase more or less at the same time. If there is a possibility to make a lot of money new people will fill this battle field to participate and make also a lot of money. You might have a lot more general rules in mind.
On the other side we have rules which depend strongly on people not having the right knowledge. What do I mean? Let us assume that stock prices will go up always on Mondays because the experts have thought about the stocks over the weekend and buy new stocks without selling old ones on Mondays. Based on this behavior the rule stock prices will go up on Mondays is obvious. But as soon as this rule is known to everybody or at least to a large group the behavior will be changed and at the end the stock prices will no longer increase on Mondays.
The effect is that as soon as a law or rule is known the rule will fade away.
Could this be a reason why all theories of our economy are so bad?
Some economist said that an analogy to the behaviors of the people ion economy can be compared with the situation that the particles in physics will know that they will collide soon. I strongly believe that physics will be different when the particles would know the physical laws and would try to avoid its consequences.
What is your opinion?