The Ultimate Foundation of Economic Science (9/20)
© 2018, Barry L. Linetsky. All Rights Reserved.
In 1962, after a career as one of the most important and distinguished economist of the 20thcentury, Ludwig von Mises, author of the 1949 classic Human Action: A Treatise on Economics, published his final book, The Ultimate Foundation of Economic Science: An Essay on Method.
Mises had written extensively on epistemological methodology in the social sciences before, and like Hayek, remained deeply concerned about an epistemological crisis in science and the foreseen consequences, necessitating a further warning in no uncertain terms that a rigorous and valid defense of epistemology was required, and its continued abuse can only be ignored at mankind’s peril.
As someone who escaped pursuit by the Nazi’s in pre World War II Eastern Europe, and was forced to flee to the United States, Mises had first hand experience of the consequences about which he wrote.
Mises wrote The Ultimate Foundation of Economic Science to re-articulate and re-ignite his argument about the appropriate and valid method to be used in studying human action, the social sciences in general, and economics in particular, as distinct from the natural sciences.
Mises viewed the need for a strong defense of a valid epistemology of human action as a requirement in defense of individual freedom and human flourishing via wealth creation and a rising standard of living. Epistemology serves as a foundation for all human knowledge, and in order to establish, define and defend the discoveries and principles of economics on a scientific basis to serve the wellbeing of mankind, Mises knew that establishing a scientific basis for economics was critical to guard it against unjustified criticism and economic fallacies that had been demonstrated to inevitably lead to human harm.
Economics, he said, was the science of assessing means and ends, of determining the proper actions to take to achieve the desired results. Such assessments had to be based in a valid assessment of the nature of reality and reasoned thinking. This is why he argued that epistemology is a matter of life and death for civilization and why he continued to fight an intense intellectual battle in defense of individual freedom and human flourishing as an outgrowth of the Enlightenment.
This is why he staunchly opposed the mounting forces of modernist and post-modernist attacks against reason and peaceful cooperation in the face of increasing government interventionism, socialist welfare economics, inflationary monetary expansion, and “scientific” central planning arising from an ideology of scientific positivism and a spreading penchant towards a scientific approach by government and influential institutions to managing and controlling the freedom of individuals to think, choose and act.
The adoption of any set of false ideas detrimental to our understanding of reality puts us in mortal peril, Mises warned. His arguments were aimed directly at the abuse of reason in science, the same abuse that Hayek identified as the fallacy of scientistic prejudice, namely the insistence that the only and singularly valid method for the pursuit of all knowledge is by means of the Newtonian experimental scientific method that was so successful when applied to the natural world, without any regard to the appropriateness of the methodology, or lack thereof, to the entity being studied.
Mises argued that it is important to treat the scientific study of human behavior and the human sciences differently because in any attempt to understand human action and behavior, the human method of survival rooted in the volitional nature of man’s use of reason to identify and choose appropriate efficacious actions in pursuit of values and desires, must be taken into account. The premise for Mises’ argument was that the search for, and discovery of, knowledge by methods appropriate for the discovery of knowledge in the domain of naturalscience is entirely inappropriate for the study of human events guided by human thought and action.
Mises identified the condition of science with regards to economics to be so dire circa 1962 that he was motivated at the age of 81 to make a final attempt to “stress the fact that there is in the universe something for the description and analysis of which the natural sciences cannot contribute anything. There are events beyond the range of those events that the procedures of the natural sciences are fit to observe and describe. There is human action.” (The Ultimate Foundation of Economic Science, xi)
NEXT: Part 10. The Unique Qualities of the Human Mind
Barry Linetsky has learned a considerable amount from the writings of Mises and Hayek. Barry makes his living specializing in value-driven strategic management, and is the author of the acclaimed business biography The Business of Walt Disney and the Nine Principles of His Success (Theme Park Press, 2017) and Free Will: Sam Harris Has It (Wrong), both available from amazon. He frequently blogs at www.BarryLinetsky.com and has been published in the Ivey Business Journal and Rotman Magazine. Twitter @BizPhilosopher.