Austrian Economics (so the Bitcoin Standard) is wrong because of Scale Invariance in Human Phenomena
Note: placeholder for a longer article on this topic. Here is the Twitter convo we are having for now. Follow if you are interested: @Giovann35084111
Important: also what is meant by the “Bitcoin Standard” is wrong is not the main message that Bitcoin will be the new Monetary Standard. I’m in complete agreement on that and this is the greatest contribution of the Ammous work on Bitcoin, and that doesn’t change.
Read below what I think the main contentions are with Austrian economics and the approach in explaining the significance of Bitcoin by Ammous.
Austrian economists (including Ammous) believe statistics (I guess any math or scientific understanding of human nature) is history. Not sure if this is true about statistics in general so let’s leave that aside.
The study of human behavior is going beyond simple statistics.
It uses methods from physics like the study of complex systems and scale invariant phenomena in particular.
It is not history (it can be too) but I think here Mises is trying to say, that these methods are interesting to study the past, but they tell us nothing about the future.
WRONG!
Scale invariance is all about things not changing and continuing to behave in this way and also in the future so they allow for predictions.
They even allow us to know what would happen in a similar system when they are scaled up. Studying NYC allows to know what happens in a scaled-down or up city.
Human behavior is that regular, Austrian economists are simply wrong on this.
Scale Invariance allows us to make predictions, of course, and it is done all the time. That is what scale invariance is all about.
Yes, it could be this is where the biggest clash of ideas comes.
Through the study of scale-invariant properties of human-made phenomena, we can predict human behavior.
It is that big and Mises then is wrong.
QED
While I will make soon a reaction video to Saifedean Ammous interview with Lex Friedman, Ammous is already proven wrong in particular when he talks about how you cannot do what physics does with humans, this is already proven by the work of G. West and similar scientists.
A vast literature shows that humans “do behave like gases” (or other natural phenomena) when you look at their interactions as a whole. How do you explain the number of gas stations in a city following a power law?
The number of patents, crimes, how fast somebody walks in a city according to the size, and how information spreads in a social network all follow scaling laws that allow for predictability and informed decision-making regarding these subjects.
Yes, policymakers could be informed and make science-based informed decisions to improve efficiency in these areas even if just reducing friction of interaction (so not necessarily central planning that is so hated by the Austrian economists).
Even if science is not always about useful applications it is one of the consequences of knowing something scientifically that we can improve our lives with this knowledge if it is done correctly.
It is absurd to make the claim humans are different from natural phenomena and therefore the best thing is to do nothing.
Knowing and understanding the truth about nature is already doing something.
It is a geocentric point of view to believe humans are different from nature.
Then this means that the entire field of Austrian economics is also fundamentally wrong and it needs to be reformed or abandoned.
It is wrong and a bronze age statement to think humans are different from nature.
This is not even new. Why would Ammous would make such statements on an important show like the “Lex Friedman Show” followed by millions of people?
Is Ammous unaware of all this research?
Is he ignoring or dismissing it here?
It is baffling.
Compare this with this (one is opinion Ammous and the other science and beautiful data):
No, humans are predictable because of scale invariance phenomena, and Bitcoin in particular is that human experiment Ammous says we cannot have and, instead, we have (and he is a Bitcoin expert so he should know).
Please read about the Power Law Theory of Bitcoin if you have not done so.
Everything is known in the blockchain and all the data shows over and over and over predictability, natural law-like patterns, and network properties.
The adoption, valuation of the network, and the way price and hash rate interact are all similar to known power laws in nature and they are created by humans interacting and behaving like particles in a sense.
Particles with feelings (Feynman knows) but particles nonetheless follow natural laws.
Humans are part of nature and nature itself, we are not out of it.
That is a geocentric and bronze age idea and it should be abandoned.
