In the Market, the Price doesn't Determine Anything
Macroeconomists , by birth or by training, take “the price” or “the interest rate” as the determinant “variable” in their hypothetic equations and diagrams incl. the shiniest IS-LM and AS-AD models. They at best fall in the trap of “ fallacy of composition .” More weird is that they often in building hypotheses refer to Paul Samuelson who famously warned against such a fallacy at the dawn of macroeconomics ( Economics , 1948, p. 9). To begin, with the term “the price” we mean “the equilibrium price ,” so to speak, not the sacrifice or cost we must pay in return for a benefit. Sacrifices are “individual,” but the price must be “collective”: the former for “each” participant the latter for “all” the market. To be fair: ① We presume an accounting period of limited duration so as to make plausible such calls as the qu...