There Is No “Why” in the World#12
Economics
There Is No “Why” in the World #12
Around the eighteenth century, another peculiar type of human appeared in the history of human thought, one whose arrogance had risen all the way to the top of its head.
Their aim, as with so many humans before them, was to explain “the human,” and to explain “why.”
But their method was rather different.
Two Ways of Seeing: Iran, February 28, 2026
Here are two different lenses through which the world may be viewed.
View 1
After the Trump administration withdrew from the nuclear agreement in 2018, Iran’s central bank faced an extreme shortage of U.S. dollars.
In an attempt to prevent the price of basic goods from exploding, the government introduced a dual exchange-rate system.
For essential imports:
1 USD = 42,000 rials (official low rate)
For all other transactions:
market rate (1 USD = 600,000 rials or more)
This policy immediately created a powerful incentive.
Privileged groups were allocated cheap dollars under the label of “essential goods imports,” then resold them on the free market for profits exceeding fourteen times their original value.
In a game with no risk and astronomical profit, any “rational human being” would have chosen corruption.
And in fact, they did.
Meanwhile, ordinary citizens grew more desperate as black-market prices soared precisely while the government insisted it was protecting basic necessities.
This led to anti-government protests, and by February 28, 2026, became part of the justification for war.
View 2
People believe numbers created the anger, but in truth it was the collapse of expectation that produced reality.
From a Spinozist perspective, human beings possess a drive to preserve their own existence, conatus.
The citizens came into the streets not because of exchange-rate figures themselves, but because they realized that the deception of others was diminishing their own capacity to survive.
What emerged was the transformation of sorrow into anger.
War is not the result of economic indicators.
It is the grinding sound produced when bodies, each moved by different desires, collide.
The Birth of a New Human: Economics as Axiom
This new type of human would probably have found an explanation like View 1 more interesting, more rational, and more commonsensical.
So they began collecting, organizing, and generalizing the principles hidden behind human choice.
Every choice involves a trade-off
.
The cost of something is what must be given up to get it.
Rational decisions are made at the margin.
People respond to incentives.
Free trade can make everyone better off.
Markets are usually a good way to organize economic activity.
Governments can sometimes improve market outcomes.
A country’s standard of living depends on its ability to produce goods and services.
If too much money is printed, prices rise.
In the short run, inflation and unemployment are often in tension.
We now call this economics.
But these principles are rather different from the laws of physics.
When physics explains why a stone falls, it does not quietly smuggle in a judgment about what is desirable.
Economics, by contrast, often uses words such as efficient, inefficient, distortion, and rational, mixing description and value judgment inside the same sentence.
The fact that a court verdict was read aloud at 8 p.m. rather than 5 p.m., and the fact that the solemn text of that verdict was written by ordinary humans who change their underwear every morning just like we do, makes one begin to doubt the verdict’s absolute authority.
The same is true of economics.
Behind those formulas that appear so rigorous, there are, in the end, the values and choices of humans who also change their underwear.
Yet amusingly enough, economists may not regard those values as any profound defect in economics at all.
An Unintended System: The Truth of The Wealth of Nations
When Adam Smith wrote The Wealth of Nations in 1776, his inner motive may in fact have been rather impure.
Perhaps Smith simply wanted to justify the idea that Britain was not as poor as people believed it to be.
He redefined wealth not as the gold sitting in a king’s treasury, but as the total quantity of goods and services consumed by the nation as a whole, and from there advanced a brilliant claim:
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
The core of The Wealth of Nations was not a story of noble intention, but an explanation of a sophisticated system produced by individual selfishness and indifference.
It was, in a sense, a highly plausible excuse built on a less-than-noble view of human nature, the claim that the world can function even without good intentions.
And perhaps that is precisely what makes economics feel so convincing.
The content of the theory, self-interest, and the motive from which the theory emerged, the desire for justification, so closely resemble one another.
A truly persuasive explanation proves itself by reproducing the same pattern at every scale, whether in grand history or in the inner motives of a single person.
The Limits of Prediction
Like other disciplines, economics certainly possesses utility and predictive power.
Governments and firms do in fact use these principles to set prices and design policy.
And yet its predictions do not always succeed.
Consider a simple example.
One person has the authority to divide 100 dollars.
The other person can only accept or reject the offer.
If the offer is rejected, both receive nothing.
According to the classical assumption, this is what should happen:
Human beings are rational, and will choose the option that gives them more money.
Therefore, the proposer will offer the smallest amount possible, and the responder will accept it, because even 1 dollar is better than 0.
This is what classical assumptions, those underlying Mankiw’s famous principles, would lead us to expect.
The proposer gives as little as possible, perhaps 1 dollar out of 100, and the responder accepts, because receiving even 1 dollar is preferable to receiving nothing.
But what do experiments show?
Across many countries, when the proposer offers an amount judged to be too small, responders repeatedly reject it.
In other words, they choose an outcome in which both sides receive 0 dollars, simply because the offer feels unfair.
They give up money itself in order to preserve fairness.
This is a result that classical models struggle to explain.
So economics evolved.
It began to describe, with increasing mathematical precision and empirical sophistication, psychological tendencies such as loss aversion, the idea that people feel losses roughly twice as painfully as gains, and the human tendency to pursue fairness almost instinctively.
In this way, scenes that classical economics could not explain began to be translated once again through the languages of behavioral economics and experimental economics.
Rejecting an unfair offer was no longer dismissed as irrational whim.
It became a predictable pattern.
This explanation is certainly stronger than classical economics.
But that is precisely why it is more suspicious.
Our explanations have become more precise.
Yet it remains unclear whether this precision has revealed more of the human being, or whether it has merely cut the human being apart into pieces that are easier to explain.