Economics is spectacularly Platonic, I've realised. Kind of obvious, but never really grasped it fully before. There's a perfect, Platonic economy out there that the theory describes in pristine mathematical perfection - and its the job of the world to strive to touch it.

The production possibility frontier is a prime example. Imagine a simple economy that can make only cars or jam sandwiches. Picture a perfectly Platonic production possibility frontier between 'everyone makes jam sandwiches as much as possible' and 'everyone makes cars'. The Platonic economy can lie anywhere along that line (with e.g. a 50/50 car and sandwich economy) and can't get past it without some change in car or jam-sandwich technology (or maybe genetically engineering better car / jam-sandwich workers). But if it falls into the vast space behind the line, it's inefficient and should be ashamed of itself for letting everyone down.

Few economists ever claim their theories are anything but useful fictions; Friedman famously even argued that the assumptions didn't matter at all, as long the theories had good predictive power. (And, gosh, don't they 'arf! Oh... er, no. Let's leave that for now, eh?) But this notion that there's a perfect frontier-line, where everyone's being as productive as possible? And that it applies to actual, real-world economies? Huh huh.

Geez, I'm sure I must have read somewhere that its a neat parallel to the American frontier-dream. It really is. There's this ever-utopian, just out of reach realm of perfect productivity, and we're all doing our little bit to either reach it, or find ways to push it even further out into productivity-space. And, stretching the metaphor a little, anyone milling about not helping push is likely to get supplanted or amended.

(I just set up a Google news alert related to the previous post: 'Nelson Oil'. Couldn't help thinking: wow, Google have really lowered the cost of information. Imagine how much work it would have taken to monitor stories coming off the back of that. Now it's a 60 second job, and I just sit here and wait. Go, frontiersman Google! Yee hah!)

I'm not sure I'm all against the Platonic-ness. I just think we can come up with some better fictions - ones that motivate people in a different direction. The standard economic treatment of limited resources, for example: there's no need to worry about it at all, because the price mechanism will let us know when stuff is running out. And, coo, look, in some cases the price keeps on going down as we get better at extracting, refining and distributing. End of conversation.

Which is a little bit like saying, hey, don't worry about your arteries furring up: the blood will keep pumping round, right up until the point where it doesn't.