To the Austrians, the [economic] process is decidedly non-random, but operates (though in a non-deterministic way, of course) under the incentives of entrepreneurial “error-correction” in the economy. In a never ending series of steps, entrepreneurs homeostatically correct natural market “maladjustments” (as well as distinctly unnatural ones) back to what the Austrians call the evenly rotating economy.
Spitznagel is making the case that the Austrian economists treat the economy as a dynamical system. Rather than a wild beast to be mechanically broken and tamed, it is a quasicyclical system like an ecosystem. This system has attractor states, one of which is runaway inflation. Continue reading “The Austrians and the Swan: Birds of a Different Feather by Mark Spitznagel”