War and the Failure of Economics

Steve Keen points out how the economic models that Western military strategists are using are outdated and incorrect Neoclassical economic models that are going to make the ramifications of the war in the Middle East considerably worse regardless of the outcome for the US military:

The Trump-Epstein-Netanyahu War could cause more deaths than any war in history, including World War II. This will not be via its direct casualties, but via deaths caused by its economic and agricultural consequences across the planet. For someone who exalts in superlatives, Trump may be responsible for causing more deaths than any previous tyrant in human history.

This is because the world economic system resembles Trump himself: its self-image is one of robust power, but its inner nature is one of incredible fragility. One month ago, many people would not even have heard of the Strait of Hormuz—which Trump, in his bravado, has just referred to as “the Strait of Trump”. Now everyone knows where it is—if not precisely why it matters. We are about to learn the hard way, via the consequences of cutting off this vital artery in the global economy’s circulatory system.

This should have been common knowledge. But, just like Trump himself, our understanding of the global economy is based on an elaborate set of delusions. I am looking forward to the howls from mainstream “Neoclassical” economists when they hear that I blame most of those delusions on them.

Neoclassical economics has always lulled us into a false sense of security by its asinine assumption that most industries are “competitive”, as they define competition. A “competitive” industry, according to Neoclassical economics, is one in which there are a multitude of producers producing a homogeneous product. This definition is doubly delusional: most industries are dominated by a small number of very large firms; and all products are highly differentiated.

In the Neoclassical world, taking out a few producers would have only a trivial impact on total production, because there are thousands—millions!—of producers, and every producer’s output is a perfect substitute for all other producers’ output. In the real world, most industries are dominated by a handful of large firms, and one firm’s output cannot be easily substituted for another.

We are now finding this out the hard way in the TEN War: Venezuelan oil cannot replace oil from the Persian Gulf, and the key facilities which have been damaged—such as Qatar’s LNG processing plants—can only be repaired by a handful of companies.

Worse, those repairs will take years, whereas the canonical “supply and demand diagram” of Neoclassical economists completely ignores time. In the Neoclassical world, if you want to produce higher output, just increase the price and, hey presto, you move up the supply curve and produce a higher quantity.

In the real world, if you are 25 percent below the desired level of output of LNG—as the world is now, with not only the wartime destruction Qatar’s plants, but also the impact of tropical cyclone Narelle on Australia’s LNG plants—then it will take several years to move up that “supply curve”.

It’s insane to go into what is an industrial war of attrition with knowingly faulty strategic models, because it guarantees that no matter what decisions you are making, they are going to be suboptimal at best, with real potential for catastrophe.

DISCUSS ON SG

A Philosophical Bestseller

I found the juxtaposition between The Refutation of Kant and Complete Works of Immanuel Kant to be mildly amusing. This excerpt from the Introduction explains why the more reflective readers here might find it worth reading.

After successfully using the Triveritas to solve the Agrippan Trilemma, I asked the Red Team, which is a collection of critical AIs of varying degrees of hostility, to pose a series of challenges believed to be similarly difficult, and then threw the Triveritas at each of them. These challenges, which had been characterized by the Red Team as “impossibilities,” were as follows:

  1. The Agrippan Trilemma
  2. The scientific demarcation problem
  3. The underdetermination problem
  4. The hard problem of consciousness
  5. Hume’s is-ought distinction
  6. Gödel’s Incompleteness Theorem

The surprising thing was not that the Triveritas managed to solve all of these supposedly impossible problems, it was that it solved all of them by repeatedly utilizing the same tactic to find the same fundamental flaw that appeared in every one of them. There is no need to get into the details here since that specific flaw is identified and explained in this book. Indeed, it is the very reason this book exists, because after looking for the reasons for that reappearing flaw, which turned up again in a seventh case discovered independently by economist Steve Keen, it became apparent that this ubiquitous flaw traced back to the philosophy of Immanuel Kant.

“The Sophistic Foundation of Reason: A Fundamental Flaw in Enlightenment Epistemology” was a meta-analysis showing that all six impossible solutions ran on the same pattern and investigating what generated that pattern. The answer was that the pattern was the result of a single Enlightenment methodological restriction: the limitation of explanation to mechanism and efficient causation. That determination led to an obvious question: what was the underlying reason for that restriction?

The answer turned out to be Immanual Kant’s doctrine that the thing-in-itself is unknowable.

Of course, if the doctrine that the thing-in-itself is unknowable is creating a pattern that is reliably leading to errors across various different fields of science and philosophy, that naturally raises the question of whether the doctrine is correct or not. As I will demonstrate in this book, the doctrine is not correct. Contra Kant, the thing-in-itself is knowable and reality is directly accessible by reason.

Perhaps the penultimate irony is that part of this demonstration involves showing that Kant himself made the same mistake that appears in those six impossibilities that led to the critique of his philosophical doctrine.

The greatest irony can be found in Appendix B. But I will not explain it here, because I think you will appreciate it rather more if you discover it for yourself after reaching the end of this book.

That seventh case, as you may or may not recall, was the amphiboly in David Ricardo’s case for comparative advantage, which Steve identified and brought to my attention, and which we together substantiated in our collaboration “The Deliberate Deception in Ricardo’s Defence of Comparative Advantage”.

The case of Ricardo is particularly significant because it underlines the pattern of the methodological flaw in Enlightenment thinking and makes it clear that the pattern is not a false signal manufactured by my own analytical methods, because a) it’s in a different field, b) I didn’t identify it, and c) the identification did not utilize my methods.

DISCUSS ON SG

On The Refutation of Kant

I promised the release of two books today, and as you’ve seen, the first was the fourth volume of the Episodios Nacionales by Benito Pérez Galdós translated into English. It’s a very good historical novel about one of the more significant battles of the Peninsular War, and if you enjoyed any of the three previous novels, you will enjoy this one.

The second is the next book in the Veriphysics series. It’s entitled The Refutation of Kant: The Failure of the Modern Foundation and the Key to the Closed Door. It is an intellectual heavy-hitter, much more so than the Treatise which preceded it, and it’s not a book I was ever intending to write. To be honest, I hitherto considered Kant to be an immortal untouchable in the vein of Aristotle or Thomas Aquinas, although admittedly not on the basis of any particular knowledge of his works, principle of which is The Critique of Pure Reason.

Now, here’s where things get a little bit strange. You may recall, back in the days when the Four Horsemen of the New Atheism were riding high, I created a meme to mockingly summarize what I’d determined to be the core argument of philosopher Daniel Dennett. That was back in 2009.

And yet, that happens to be exactly where we landed today with the release of Veriphysics: The Refutation of Kant. This may require a little more explanation since probably it isn’t a priori obvious, so bear with me and allow me to explain how we somehow went from an atheist demoralizer in 2009 to a comprehensive destruction-in-detail of the core philosophical foundation of the Enlightenment in 2026.

If you’ve been following the Veriphysics site, then you’ll know that after developing the Triveritas in the Treatise, I started testing it against various epistemological challenges. Some of you are aware of my proof of Free Will that utilized it, and a few brave souls have even started profitably making use of it themselves. But it wasn’t until it solved the 2,000-year-old conundrum known as the Agrippan Trilemma that I realized there was something truly special here. I ran the notion of its potential significance past the Red Team, and Grok suggested that while solving the Trilemma was impressive, the Triveritas couldn’t be considered of historic philosophical significance unless and until it could successfully address other, equally difficult epistemological challenges. Grok provided a list of six “impossibilities” ranging from Hume to Godel, and declared that nothing and no one could successfully expect to solve them.

The Triveritas solved five of them and provided further confirmation that the sixth one was actually impossible. This was remarkable, but what was truly astonishing was the fact that it solved all of five in exactly the same way, using exactly the same method despite the very different nature of the problems. So I concluded this meant there was a deeper pattern that somehow linked all of these different intellectual puzzles, even though they were constructed by different people in different fields over a period of time that spanned centuries.

How was that even possible?

After performing a meta-analysis of all six problems, both Trilemmas, and a few more epistemological challenges, the answer, somewhat to my surprise, pointed at Immanuel Kant. Because the answer was that the pattern of the same flaw across all five papers was the result of a single Enlightenment methodological restriction: the limitation of explanation to mechanism and efficient causation. Which led to an obvious question: what was the underlying reason for that restriction?

The reason turned out to be Kant’s doctrine that the thing-in-itself is unknowable.

Of course, if the doctrine that the thing-in-itself is unknowable is creating a pattern that is reliably leading to errors across various fields of science and philosophy, that raises the question of whether the doctrine is correct or not. And as I demonstrate in The Refutation of Kant, the doctrine of unknowability is not correct. Kant’s argument for it not only fails once, it fails twice, for two different reasons that are substantiated in no little detail in the book.

Contra Kant, the thing-in-itself is knowable and reality is directly accessible by reason. The great irony of the Enlightenment is that despite elevating Reason to the status of a literal goddess, and despite claiming its objective to be liberating Reason and freeing the mind of Man from the chains of his Christian tradition, the Enlightenment imprisoned Reason, subjected it to a metaphysical vivisectomy, and bound the mind of Man far more tightly than the pagan and Christian philosophers had even imagined possible.

This book is neither a light nor an easy read. But it may be, quite literally, the most important book published in the last 250 years. Because Kant’s foundational error has propagated through every modern science, every modern philosophy, every modern concept, and every modern thought. It has fundamentally restricted not only the way you think, but the very concepts that lie under the words you utilize.

And that’s what brought us all the way back to a minor little meme about one of the New Atheists created 15 years ago.

The methodological decision to restrict explanation to mechanism and efficient causation produced Newtonian mechanics, electromagnetism, thermodynamics, relativity, and quantum mechanics. This success created an overwhelming presumption that the restriction was not a restriction but a discovery: this is how reality works, and the method’s success proves it. The success in physics provided apparent empirical confirmation of the metaphysical claim, even though the success was in physics and the metaphysical claim was about all of reality.

In other words, you can trust [fill-in-the-blank] because physicists produce amazingly accurate results. If you don’t understand how comprehensively this refutation of Kant’s unknowability doctrine necessarily alters the very way you think about the world on a daily basis, that’s fine, that’s what the book is there to explain to you. It will literally free your mind. And you don’t need to follow all the technical details for it to make sense to you; they are there so you can be confident that its conclusions will withstand any and every critical attack lodged against the refutation and its inevitable consequences.

DISCUSS ON SG

The More Things Change

It’s fascinating to see Roman-style tactics being utilized against the dyscivilizational forces of the invasion:

Anti-ICE rioters are now FULLY KETTLED between TWO WALLS of concrete and two walls of police here in Newark

A MASS ARREST bus has just rolled up.

And has prepared to take rioters into custody.

There is literally NO ESCAPE for them out here!

This is somewhat reminiscent of the battle of Alesia, although I’m skeptical about the idea that an anti-ICE army is going to show up to allow the rioters to defeat ICE and the police.

I saw an old episode of FBI from just before Covid, and Hollywood was already signaling desperately against ICE and the deportations. This has been going on longer, and is getting more serious, than most of us probably realize.

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BAILÉN by Benito Pérez Galdós

The fourth volume of the Episodios Nacionales — the great historical novel cycle of Spain

July 1808. Napoleon’s armies are invincible. They have crushed Austria, humiliated Prussia, and forced the Tsar to the negotiating table. Now twenty thousand French soldiers occupy Andalucía, and all Europe waits for Spain to submit as every other nation has submitted.

Gabriel Araceli, a young Spanish soldier who survived the slaughter of the Dos de Mayo and the French firing squads in Madrid, rides south with the ragged army assembling to challenge the Empire. Around him march raw recruits, militia volunteers, and hard-bitten regulars — fourteen thousand men with short rations, blistering heat, and the knowledge that no army on the continent has yet beaten Napoleon in open battle.

But Gabriel is fighting two wars. On the parched plains before Bailén, he faces Dupont’s veteran infantry and the terrible French marines. In the intercepted letters he carries in his coat, he faces something worse: the news that Inés, the woman he loves, is to be made legitimate and married to another man — his own commanding officer’s son. While the armies clash under a pitiless Andalusian sun, while men kill each other for a mouthful of water and the guns fall silent for want of powder, Gabriel must reckon with the possibility that victory on the battlefield will mean defeat in everything that matters to him.

Bailén is the fourth novel in Benito Pérez Galdós’s Episodios Nacionales, the great historical cycle that follows Gabriel Araceli from Trafalgar through the upheaval of the Napoleonic Wars. In this volume, Galdós delivers one of the finest battle narratives in nineteenth-century fiction — the engagement that shattered the myth of Napoleonic invincibility and changed the course of European history.

Now available for Kindle, KU, and audiobook on Amazon. The ebooks have already been sent out to the paid subscribers. To receive a new translation every week and support the translation efforts, become a paid subscriber to the Castalia Library substack which has already produced and released more than a dozen original translations from Spanish and Japanese, most of which had never before been available in English.

About the author. Benito Pérez Galdós (1843–1920) is widely regarded as the greatest Spanish novelist since Cervantes. Over four decades, he produced the Episodios Nacionales, one of the most incredible accomplishments of world literature ever written; only 8 of its 46 volumes have ever been translated into English. Pérez Galdós was nominated for the Nobel Prize in Literature five times but never won.

EXCERPT

On the following day we made a movement along the left bank, upstream, as far as a point well above Mengíbar. We understood nothing of it; but Santorcaz, whether from vanity or because he had truly penetrated Reding’s intention, told us:

“Our general knows what he is about, and is a man who understands the philosophy of marches.”

Halting on the banks of the Guadalimas, part of the army occupied itself with incomprehensible movements, and having spent more than a day at this, we found ourselves once more before Mengíbar at nightfall on the 18th, a point which the division of the Marqués de Coupigny had reached some hours earlier. The two armies being reunited, there was no halt beyond what was strictly necessary to collect the provisions of which we stood in such want, and well into the night we took the road for Bailén. We were fourteen thousand men. Everything announced that we were about to have a formal encounter with the French army.

According to our intelligence, Dupont remained at Andújar, reinforced by Vedel’s division. Had they engaged our third corps and the reserve which, having crossed the river at Marmolejo, were situated on the right bank? We believed so, unless Castaños were waiting to attack in earnest until the first and second divisions should fall upon the rear of Dupont’s army, descending from Bailén. Was this the object that guided us on our march? So it seemed.

While the moment of the drama drew near, far from us and upon the flanks of the imperial army, a thousand dramatic convulsions were hastening the catastrophe, tormenting the enemy by degrees. The bodies and columns of guerrilleros, commanded by Don Juan de la Cruz, the Conde de Valdecañas, and the cleric Argote, had scattered like a deadly swarm through the towns and hamlets commanding the French headquarters in the first foothills of the sierra north of Andújar. So furiously did those ardent countrymen pursue the French, and with such rapidity did they disperse to avoid attack, that the invaders found it utterly impossible to be tranquil for a single moment. The powerful giant swatted those venomous horseflies with a blow of his hand; but they returned to buzz about him, tormented him with their terrible stings, and escaped unharmed, fearing neither sword nor cannon, for these weapons were not made for mosquitoes.

The French could not stir from their headquarters save in large detachments: frequently a thousand men were sent to fill a few water-jugs at the nearest spring. If by chance small parties ventured out to forage, they were dispatched by the guerrilleros in less time than it takes to say a creed. Rather than suffer the French to seize a granary, the people burned it: the springs were fouled with mud and dung so they could not drink: the mills were dismantled and their stones buried so that not a single grain could be ground. Woe to any Frenchman who fell behind on the march! He felt himself seized by a thousand furious hands, dragged off by the women, pinched by the children, and knifed by the men, until his existence was extinguished with a terrible shock in the cold depths of a well. The invader found no shelter anywhere, and forcibly confined within the limits of his headquarters, he saw men and nature conspired alike against him.

For this reason, raging and desperate, he longed to fight a pitched battle, confident in his skill and habit of war; and lamenting the stupefaction of the commander-in-chief, he cried: “Let us fight a battle, and though half the army perish, the other half will conquer a puddle to drink from and a handful of dry wheat to put in our mouths.”

DISCUSS ON SG

Learning From History

Dominic Cummings is attempting to help people better understand the repeated failures of the governing elites, or at least, the elites that appears to be governing. He started this back in 2023.

One of the most fundamental things I’ve learned in 24 years involvement is that almost nobody has any interest in general principles underlying success and failure, nor interest in execution/management, and although political people read a lot of history books it’s hard to see any learning.

This is a core feature of why the world is as it is. It’s why I found a lot of interest in Silicon Valley about ‘why did Leave win the referendum’ and ‘how exactly does No10 and the deep state work’ but in London practically no interest beyond the surface phenomena. This is so extreme I’ve found more interest from people in San Francisco in ‘how exactly does X work’ than I have from the actual minister in London nominally ‘in charge’ of X.

So this is mainly for a) people outside politics interested in how it really works and b) people (almost all young) interested in the general problem of ‘the hard thing about doing really hard things’ (cf. Ben Horowitz’s excellent book on this in the entrepreneur context). I predict I will have ~100X more interest from entrepreneurs and researchers than from people ‘working in politics’. (And 1,000X more interest from some deep state officials than MPs who aren’t even interested in how the media really works even though they’re obsessed with the media.) But I also learned that odd people in politics are interested in these things and the <1% who are interested have an interesting knack of finding each other and working on things. These people are disproportionately young. (This is partly what happened in Vote Leave.)

If you disbelieve me, reflect on one simple fact that I’ve hammered repeatedly: the entire Westminster debate has, with the sort of ruthless focus it cannot muster to achieve anything positive, totally ignored the loathed, despised, lowest status issue in Westminster — how the government actually buys critical goods and services and the capacity of our industrial production. And it has maintained this ruthless focus through the worst pandemic in a century that left over a hundred thousand unnecessarily choking to death then through the biggest war in Europe since 1945. There has literally been more interest in Russel Brand among political-media-academia elites than this central aspect of how our state and society work and why we’re worse at it than we were in the pre-computer age.

We are living through exactly what we read about in periods like summer 1914 — a structural blindness of dominant political-media-academic elites about core features of the system they participate in all day. We read history books about summer 1914 and ask ‘how could the entire Cabinet week after week not probe exactly what our military commitments to Belgium were, what exactly the plans were, and expose that there was no actual plan or institution to cope with the crisis’. We’re in a worse situation than they were.

It’s a disaster and an opportunity. And studying this chronology can help you see how to create opportunities from disasters. In 2015 I thought the structure of the system was a disaster but the referendum was an opportunity and I tried to apply some of the things I’d learned. This proved unexpectedly successful. And, in keeping with the point above about people struggling to learn, the same happened in 2019 even though powerful forces really wanted it not to happen.

What’s needed is a shift in governing institutions roughly as profound as the shift from the ancien regime pre-1789 to what we think of as the modern western state — a shift in the types of people, their training, their tools, institutions, and the fundamental principles and incentives by which they operate. We are still governed by the Cabinet Room almost indistinguishable from what it looked like when it was overwhelmed in summer 1914: a dozen or so people with poor education and training on top of highly centralised dysfunctional institutions largely blind to the incredible system complexity yet responsible for crises that can affect billions. 

His Bismarck project is a fascinating one. I’m giving some serious contemplation into engaging in it, assuming that he’s actually continued with it over the last two years, and it might make for an interesting collective effort in the old Voxiversity sense. Share your thoughts on this if it might be of any interest to you.

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It Ain’t Far

There’s a new Soulsigma song at AI Central for those interested in checking it out, It Ain’t Far. It shows off, rather well, how much Suno 5.5 has improved its audio quality.

I can feel it in the morning
When it just hurts to rise
There’s the weakness that wasn’t there before
A dimming of my eyes
I don’t need a doctor’s verdict
I don’t need a preacher’s call
I can read the writing plain enough
It’s right there on the wall

I’ll probably debut it on UATV tomorrow night, along with the new book announcement.

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A Strong and Based Performance

First, congratulations to Sarah Hoyt, who was the winner of the Summer 2026 Based Book Sale with 346 sales of her novel No Man’s Land.

Second, it was an excellent performance by Castalia House, which placed four of its books in the top ten. I very much hope that these books will serve as an intriguing introduction to Castalia for those readers who have not encountered us before. And if you’re already a Castalia reader, I hope you’ll post ratings and reviews for those books on Amazon after you finish them.

There are more details and statistics there.

In other book-related news, you can expect announcements about not one, but TWO new Castalia House releases tomorrow.

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The Retarded Art

To absolutely no one’s surprise, the short fake Trump is practicing the art of the fake deal again:

Trump pushes for last-minute changes to Iran peace draft. The US president has reportedly requested that Iran make additional commitments on its nuclear program

US President Donald Trump has toughened the terms of peace talks with Iran, the New York Times and Axios reported on Saturday, citing officials familiar with the matter. On Thursday, the two countries reportedly agreed on a memorandum of understanding that would extend the ceasefire reached in April for another 60 days and restart negotiations over Iran’s nuclear program. A day later, Trump summoned senior national security advisers to the White House Situation Room.

According to the NYT, Trump became concerned about provisions in the proposed agreement that would unfreeze Iranian assets and grew frustrated with the pace of Tehran’s response to previous proposals. The revised terms were intended to increase pressure on the Iranian leaders.

I know I’m shocked. Even the real Trump is less reliable than Darth Vader. Has he ever not altered the terms of a deal to which he’s agreed?

Why does anyone ever waste time “negotiating” with him? I certainly wouldn’t.

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