To begin I will suggest that economic equilibrium can only be understood within the realm of subjectivism. I will return to this thought.
Let’s look at equilbrium in the natural world. We will look at magnetism and gravity and we will look at these beyond the usual elementary perspectives. Consider one pole of a magnet at the center and a metal fragment moving closer until it is pulled to the magnet. Now take the fragment to the other side (180 degrees on that same plane) and at the same distance from the magnet it will be pulled to this same center. In this sense the attraction of the magnet is acting like an equilibrium force from any and all directions in that plane.
Let’s examine gravity. Throw a ball up and it returns to the Earth. Now travel to the exact opposite location on other side of the globe and throw the ball up and it returns to the Earth. This is another example of an equilibrium force acting upon objects that move away and then are drawn back.
The force underlying gravity and magnetism is described by its properties but it is still unknown in its essence even though the scientists can make predictions.
Now it gets even more complicated because instead of these physical laws the economy operates according to the laws of human science! Economic equilibrium is a phenomenon of the realm of subjectivity!
As we know from praxeology the key to understanding the realm of subjectivity is human action. What this means is that economic equilibrium is driven by and expressive of human action.
Why is this important? To understand the economy and how it works requires an appreciation of the subjective nature of humans, which means recognizing that humans have partial knowledge upon which to make their rational decisions. This is then the foundation for the partial knowledge upon which they make their rational decisions in the future, and so on and so on.
Additionally humans use both science and religion to acquire knowledge. Some use one or the other but most use a combination of these as the basis of their partial knowledge. To ignore or deny this does not advance science since humans are subjective and human sciences must necessarily be both accurate and precise about the subject being studied – the study of human action.
One question that is of great significance is: when did economic equilibrium come into existence? It is undeniable that the economy exists only because humans exist and it is also undeniable that the economy always has had the equilibrium element or force operating ‘within’ it. Certain things are untraceable for many reasons, for example, they may have changed forms over time. It is safe to say that economic equilibrium – the equilibrium associated with subjective beings – is part of the same creation of what is known as ‘human.’ Humans are subjective and the implications of this distinction leads to the acknowledgement of an intellectual and spiritual nature for this special creature – the human being.
To sit back and leave unexplored economic equilibrium for whatever reason is not a characteristic of the scientific mind.
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