Economics Can’t Predict Itself

By John-Michael Kuczynski

There’s a lingering fantasy in modern economics—one that underwrites everything from equilibrium models to the faith in central banks. It’s the idea that economics can predict itself. That by observing today’s economic state-variables, we can project tomorrow’s. That the economy is, at bottom, a system of equations waiting to be solved.

It isn’t.

This isn’t just a limitation of current models. It’s a conceptual failure. Because economics is not a self-contained system. It is not sealed off from the rest of human reality. It is downstream of culture, politics, religion, personality, and invention.

A charismatic leader can redirect an entire nation’s economy in a week. A new religious movement can alter the consumption patterns of millions. A war, a famine, a technological singularity—any of these things can make a mockery of even the best economic models. And these events are not noise. They are constitutive of how economies actually function.

Economics isn’t the ground floor. It’s a shadow on the wall of deeper, messier, more metaphysical forces.

Compare this with biology. Biological state-variables don’t perfectly predict the future. But they constrain it. A healthy person is statistically more likely to live longer than a sick one—unless some catastrophic interference occurs. The system is probabilistic, yes, but those probabilities are underwritten by non-random mechanisms: immune function, genetic stability, cellular repair.

In other words: probabilistic doesn’t mean useless. It means the system is complex, but not arbitrary.

Economics is not even probabilistic in that robust sense. It's not that the system is fundamentally sound but occasionally disrupted by externalities. It’s that the system never was self-predictive to begin with.

The ‘exceptions’ aren’t exceptions. They are the rule.

If I want to predict what the Inca will do in 1457, I might look at what they did in 1456. But I wouldn’t do it by analyzing marginal utility curves. I’d look at their rituals, their laws, their cosmic beliefs, their cosmological metaphors. That’s where their behavior lives.

Economics may record their food stores. It may track trade. But it won’t tell me why a certain class of workers was redeployed to rebuild a sacred site. Or why a surplus was burned instead of stored. Or why an entire system of labor was restructured to appease an eclipse.

To model that as a "distortion" of economic rationality is to fundamentally misunderstand what you are observing. It is not a deviation from economics. It is a non-economic system with its own internal logic.

This is why economic forecasting so often fails. It’s not just that the inputs are noisy. It’s that the underlying model is trying to predict shadows cast by events it refuses to acknowledge.

Economics isn’t wrong because it’s imperfect. It’s wrong because it thinks it’s primary.

It isn’t.