The fundamental deficiency implied in every quantitative approach to economic problems consists in the neglect of the fact that there are no constant relations between what are called economic dimensions. There is neither constancy nor continuity in the valuations and in the formation of exchange ratios between various commodities.
In the realm of physical and chemical events there exist (or, at least, it is generally assumed that there exist) constant relations between magnitudes, and man is capable of discovering these constants with a reasonable degree of precision by means of laboratory experiments. No such constant relations exist in the field of human action outside of physical and chemical technology and therapeutics.
Those economists who want to substitute “quantitative economics” for what they call “qualitative economics” are utterly mistaken. There are, in the field of economics, no constant relations, and consequently no measurement is possible. The mathematical economist, blinded by the prepossession that economics must be construed according to the pattern of Newtonian mechanics and is open to treatment by mathematical methods, misconstrues entirely the subject matter of his investigations. He no longer deals with human action but with a soulless mechanism mysteriously actuated by forces not open to further analysis.
The mathematical economist eliminates the entrepreneur from his thought. He has no need for this mover and shaker whose never-ceasing intervention prevents the system reaching the state of perfect equilibrium and static conditions. As the mathematical economist sees it, the prices of the factors of production are determined by the intersection of two curves, not by human action.
Mathematical economists substitute algebraic symbols for the determinate terms of money as used in economic calculation and believe that this procedure renders their reasoning more scientific. They deal with equilibrium in various mathematical symbols as if it were a real entity and not a limiting notion, a mere mental tool. What they are doing is vain playing with mathematical symbols, a pastime not suited to convey any knowledge. They strongly impress the gullible layman. In fact they only confuse and muddle things which are satisfactorily dealt with in textbooks of commercial arithmetic and accountancy.
The equations formulated by mathematical economics remain a useless piece of mental gymnastics and would remain so even if they were to express much more than they do.