Frank Shostak's penetrating question — "Does the 'economy' actually exist?" —strikes at the heart of one of modernity's most successful intellectual sleights of hand. The reification of "the economy" as a distinct, measurable entity separate from ongoing political and social action represents perhaps the most crucial ideological victory of liberal global capitalism. By creating the fiction of an autonomous economic sphere governed by natural laws rather than human choices, neoclassical economics has successfully depoliticised what are fundamentally political questions about how society should organise production, distribution, and exchange.
This reification doesn't merely represent an analytical error, it serves as the conceptual foundation for liberal governance itself, creating a technocratic apparatus that insulates market relationships from democratic deliberation while presenting this insulation as scientific necessity rather than political choice.
As Shostak demonstrates, what we call "the economy" is actually a statistical construct, an aggregation of countless individual decisions and transactions that government statisticians bundle together into indicators like GDP. Even government statisticians admit that "real GDP is an analytic concept" that "is not 'real' in the sense that it can, even in principle, be observed or collected directly." You cannot add potatoes to tomatoes, yet this is precisely what economic statistics attempt to do by reducing qualitatively different goods and services to quantitative measures.
But this mathematical impossibility reveals something deeper: the economy as a totality simply doesn't exist in the way a forest or a city exists. What exists are particular people making particular decisions about particular resources in particular contexts. The abstraction we call 'the economy' is a way of looking at these concrete activities, not a thing that exists independently of them.
Yet once this abstraction is constructed and given numerical form through statistics, it takes on a life of its own. Policymakers begin to speak of 'managing the economy," "stimulating growth," or "cooling an overheated economy" as if they were engineers adjusting the controls of a machine rather than politicians making choices about how to structure social relationships.
The reification of "the economy" serves a crucial ideological function: it transforms fundamentally political questions into apparently technical ones. Instead of asking "How should we organise production and distribution to serve human flourishing?" we ask "How can we maximise GDP growth?' Instead of debating "What kinds of work are valuable and how should they be rewarded?" we defer to "market signals" and "economic efficiency."
This transformation is not neutral. It privileges certain forms of value (those that can be monetised and measured) while rendering others invisible. Care work, community solidarity, environmental stewardship, cultural preservation, all the activities that sustain human life but don't generate market transactions, disappear from economic accounting and thus from policy consideration.
The genius of this system is that it presents itself as avoiding politics altogether. Market outcomes are treated as natural phenomena rather than the results of particular institutional arrangements and power relationships. When factories close and communities are devastated, this is described as "economic restructuring" rather than the human consequences of specific policy choices about trade, finance, and industrial policy.
The reification of the economy depends on and reinforces liberalism's conception of the abstract individual. Just as liberal political theory begins with isolated individuals who come together to form society through rational choice, neoclassical economics begins with "economic man," a calculating agent who maximises utility through market transactions.
This anthropological fiction serves the same function in economics that the state of nature serves in liberal political theory: it makes historically specific arrangements appear natural and inevitable. By treating market behaviour as the expression of timeless human nature rather than the product of particular social institutions, neoclassical economics naturalises globalist social relations.
Real human beings, of course, are embedded in webs of social relationships, cultural meanings, and historical traditions that shape their understanding of value, exchange, and obligation. But economic theory abstracts away from these concrete social realities to create a mathematical model populated by utility-maximising agents interacting in perfectly competitive global markets.
This abstraction isn't merely analytical, it becomes prescriptive. Institutions are reformed to make real people behave more like theoretical economic agents, and social relationships are restructured to approximate market transactions. The model doesn't just describe reality; it seeks to remake reality in its own image.
Once "the economy" is reified as an autonomous system with its own laws and requirements, managing it becomes a technical rather than political task. This creates space for a vast technocratic apparatus, central banks, statistical agencies, economic advisors, international financial institutions, that claims to operate according to scientific principles rather than political values.
As Shostak notes, in a hampered market environment, "businesspersons are forced to interpret various economic indicators in terms of how authorities are likely to respond to these indicators." The construction and interpretation of economic statistics becomes a central mechanism of governance, creating feedback loops between measurement and behaviour that make the statistical fiction increasingly real in its effects.
This technocratic apparatus insulates economic policy from democratic oversight by claiming that interfering with economic "laws" would be as futile as repealing the law of gravity. Monetary policy is handed over to independent central banks staffed by economists who claim to understand the technical requirements of price stability. Trade policy is constrained by international agreements that treat free trade as an economic necessity rather than a political choice. Fiscal policy is limited by debt-to-GDP ratios that are presented as objective constraints rather than political priorities.
The result is what Wolfgang Streeck calls "market conforming democracy," democratic institutions that can deliberate and decide, but only within parameters set by economic necessity as interpreted by technical experts.
Perhaps the most important function of economic reification is that it renders power relationships invisible. In a world where outcomes are determined by impersonal market forces, there are no rulers and ruled, only participants in a voluntary exchange system that benefits everyone through the invisible hand.
This obscures the reality that markets are not natural phenomena but institutional arrangements created and maintained by financial elite and state power. Property rights must be defined and enforced, contracts must be backed by legal systems, currencies must be managed by central banks, and market competition must be regulated to prevent monopolisation. All of these require ongoing political decisions about how to structure economic relationships.
Moreover, market outcomes are shaped by the initial distribution of resources, which reflects centuries of political struggle, conquest, and institutional development. Those who own capital, land, and other productive resources have fundamentally different relationships to market processes than those who own only their labour power. But economic theory treats these different positions as mere factor inputs rather than class relationships that involve systematic advantages and disadvantages.
By presenting market outcomes as the result of voluntary exchanges between equal participants, neoclassical economics makes structural inequalities appear as natural differences in productivity, skill, or choice rather than the consequences of particular arrangements of power and property.
Recognizing the economy as a political fiction rather than a natural entity opens space for asking different questions. Instead of "How can we make the economy grow?" we might ask "What kinds of productive activities do we want to encourage, and how should their benefits be distributed?" Instead of deferring to market efficiency, we might deliberate about what kinds of efficiency we value and for what purposes. And, what financial system should we have to produce human flourishing, as Major Douglas asked.
This doesn't mean abandoning all economic analysis or returning to pre-modern forms of production. It means recognizing that all economic arrangements are political choices and therefore subject to democratic deliberation and revision. Markets can be useful tools for coordinating certain kinds of activity, but they are tools to be used for human purposes, not masters to be served.
Karl Polanyi understood this when he argued that the great transformation of the 19th century involved the subordination of society to economic logic rather than the embedding of economic activity within social relationships. The reification of "the economy" as an autonomous sphere represents the conceptual completion of this transformation.
The stakes of this debate extend far beyond academic economics. As long as we accept the fiction of an autonomous economy governed by natural laws, we cannot adequately address the crises that surround us, growing inequality, technological unemployment, financial instability, and the erosion of social solidarity.
These are not technical problems to be solved by better economic management, but political challenges that require collective deliberation about what kinds of society we want to create. Growing inequality reflects political choices about taxation, regulation, and the distribution of productive assets, not natural economic forces. Technological transformation that threatens mass unemployment requires political decisions about how to distribute both the benefits and burdens of automation, not market adjustments that leave displaced workers to fend for themselves.
Frank Shostak's insight that "the economy" doesn't actually exist as an independent entity, points toward a broader project of depoliticising economic life. This means recognizing that all economic arrangements are human creations that can be changed through collective action and democratic deliberation.
This repoliticisation doesn't require abandoning all use of economic analysis or statistical measurement. But it does require treating these as tools for understanding aspects of social life rather than as descriptions of autonomous systems that constrain human choice.
The reification of "the economy" has been one of neo-liberalism's most successful strategies for insulating market relationships from political challenge. By revealing this reification as an intellectual fiction rather than a natural reality, we can begin to reclaim democratic control over the social arrangements that shape our daily lives.
The question is not whether we can afford to politicise economic life, it has always been political. The question is whether we will acknowledge this reality and take responsibility for the choices we are already making, or continue to pretend that human arrangements are natural forces beyond our control.
https://mises.org/mises-wire/does-economy-actually-exist
"Does the "Economy" Actually Exist? Frank Shostak
On a regular basis various "experts" in the field of economics make comments on the state of the "economy." For instance, they report that the "economy" grew by such and such percentage, or that the widening in the trade account deficit threatens the "economy." According to commentators, the "economy" produces goods and services, called total national output. Once the output is produced, what is then required is its distribution among individuals in the fairest way.
But is it valid to hold that goods and services are produced by the "economy"? Is there such a thing as the total national output that should be distributed? What do commentators mean by the term "economy"? Does such an entity actually exist?
In an unhampered market, goods and services are not produced in totality and supervised by one supreme commander. Every individual is preoccupied with his own production and consumption of goods and services. Consequently, in the free environment, the term total output is misleading. By lumping together the values of final goods and services, government statisticians concretize the idea of the "economy" by means of the GDP statistic and other economic indicators. It would appear that once the "economy" is concretized by various economic indicators, policymakers could navigate the "economy" along the growth path that is considered desirable by "experts."
Once expressed in terms of various economic indicators, such as the GDP statistic, the "economy" is expected to follow the path of growth outlined by government planners. Thus, whenever the growth rate slips below the outlined path, government and central bank policymakers are expected to give the "economy" a suitable push via fiscal and monetary policies. Occasionally though, government officials also warn citizens that the "economy" has become overheated (i.e., it is "growing" too fast). In this case, government and central bank officials declare that it is their duty to prevent "overheating."
It must be realized that, at no stage, does the so-called "economy" have a life of its own, independent from individuals and their choices. Furthermore, it is not possible to establish the total real output given that we cannot arithmetically add potatoes to tomatoes. Even government statisticians admit that the whole thing is not real. According to J. Steven Landefeld and Robert P. Parker from the Bureau of Economic Analysis,
In particular, it is important to recognize that real GDP is an analytic concept. Despite the name, real GDP is not "real" in the sense that it can, even in principle, be observed or collected directly, in the same sense that current-dollar GDP cannot in principle be observed or collected as the sum of actual spending on final goods and services in the economy. Quantities of apples and oranges can in principle be collected, but they cannot be added to obtain the total quantity of "fruit" output in the economy.
This, in turn, means that various macroeconomic indicators compiled by government statisticians are detached from the real world. Consequently, various policies to influence the non-existent entity—the "economy"—via fictitious indicators inflict damage to the well-being of individuals.
The "Hampered" Environment and Macroeconomic Data
To succeed in a hampered market environment, entrepreneurs tend to respond to the prevailing conditions, which are influenced by central bank and government policies. A businessperson cannot afford to ignore changes in various economic indicators such as GDP given that government and central bank officials react to changes in these indicators in terms of fiscal and monetary policies. For instance, if the central bank is expected to tighten its monetary stance in response to a strengthening in the GDP, a businessperson must take this into account in order to succeed in his business.
In a hampered environment, businesspersons are forced to interpret various economic indicators in terms of how authorities are likely to respond to these indicators and how this response will affect their business environment in the months ahead. The government—in order to construct various economic indicators—collects data from businesses who must allocate resources to supply the government with information. The construction of these economic indicators generates employment opportunities for economists and experts in fields such as mathematics and statistics. These experts are employed, not only to compile the various economic data, but they are also employed to interpret the data and provide guidance to businesses. According to Rothbard,
The individual consumer, in his daily rounds, has little need of statistics; through advertising, through the information of friends, and through his own experience, he finds out what is going on in the markets around him. The same is true of the business firm. The businessman must also size up his particular market, determine the prices he has to pay for what he buys and charge for what he sells, engage in cost accounting to estimate his costs, and so on.
Do these constructed statistics about the "economy" help entrepreneurs in a free market?
In a free market environment—free of government and central bank interference—it would not make much sense to construct and publish various economic indicators. This type of information would be of little use to entrepreneurs. In a free market, what possible use can an entrepreneur make out of information regarding the growth rate of gross domestic product (GDP)? How can the information that GDP increased by some percentage help an entrepreneur to succeed in his business? Alternatively, what possible use can be made out of the data showing that the national balance of payments has moved into a deficit or a surplus?
In a free market economy, for a businessperson to be successful he or she must obey the wishes of consumers. Paying attention to consumers' wishes means that entrepreneurs must establish the most suitable production structure for that purpose. The information regarding the various macroeconomic indicators would be of little use to entrepreneurs. What an entrepreneur requires is not general macro-information, but rather specific information about consumer demand for a product or a range of products. Government macro indicators will not be of much help to entrepreneurs.
The entrepreneur has to establish his own network of information concerning a particular venture. Only an entrepreneur is likely to know the type of information he requires in order to succeed in the venture. If a businessperson's assessment of consumers' demand is correct, then he will make a profit. An incorrect assessment will result in a loss. The profit-and-loss system penalizes those businesses that have misjudged consumer priorities and rewards those who have exercised a correct appraisal. The profit-and-loss framework makes sure that resources are withdrawn from those entrepreneurs who fail to pay attention to consumer demands. According to Mises, "Thus, profit and loss are generated by success or failure in adjusting the course of production activities to the most urgent demand of the consumers."
Conclusion
Macroeconomic data compiled by government statisticians enables them to make the fiction, called the "economy," real. This supposedly makes it possible for government and central bank officials to expertly guide the so-called "economy" towards stable growth. As a rule, this navigation culminates in economic instability, price inflation, the boom-bust cycle menace, and a weakening in the process of wealth generation.