© 2018, Barry L. Linetsky. All Rights Reserved.
It was not so long ago that scientific dualism – the idea that the social sciences and the natural sciences require distinct methodologies – was uncontroversial. It was accepted that science was the systematic search for knowledge wherever appropriate to advance human understanding of the world and man’s place in it. This quest for discovery took place both in the realm of human action and the realm of the non-teleological world of nature.
What Mises, Hayek, and others point out is that the abandonment of epistemological rigor has resulted in debasement and abuse of science, and that abuse comes with consequences.
To the extent that the logic of human action is not understood or abandoned or dismissed as unworthy of scientific study by appropriate scientific means, science fails to serve – and is exceedingly likely to harm – its human masters.
Economist-philosopher Hans-Hermann Hoppe provides a retrospective assessment of Mises’ epistemological insights in his essay “Praxeology and Economic Science.”
One of Mises’ key achievements, notes Hoppe, is his insight into the obvious differences between economics and the empirical sciences: “[Mises] makes us understand the nature of this difference and explains how and why a unique discipline like economics, which teaches something about reality without requiring observations, can possibly exist. It is this achievement of Mises’s which can hardly be overrated” (Hoppe, Economic Science and the Austrian Method, 17).
Mises begins with the long recognized observation that there are self-evident axioms on which all knowledge depends. “They are self-evident,” notes Hoppe, “because one cannot deny their truth without self-contradiction; that is, in attempting to deny them one would actually, implicitly, admit their truth (ibid, 18).” These axioms are derived from self-reflection and logical inference rather than being empirically observable (ibid, 20). In addition, observes Hoppe, “Our mental categories have to be understood as ultimately grounded in categories of action. … As categories of action, they must be mental things as much as they are characteristics of reality. For it is through actions that the mind and reality make contact” (Ibid, 20).
Because action is the bridge between the mind and the natural world we encounter, causality is identified by Mises as a category of action. Hoppe writes, “To act means to interfere at some earlier point in time in order to produce some later result, and thus every actor must presuppose the existence of constantly operating causes. Causality is a prerequisite of acting, as Mises put it” (ibid, 21).
From the axiomatic premise that humans act – which is necessarily true and cannot be undone because any attempt at a denial must itself be categorized as a human act and hence an affirmation of the axiom of action – Mises proceeds to build a structural framework for the human sciences and economics that, while not self-evident, “once made explicit it can be understood as an undeniably true proposition about something real and existent” (ibid, 22).
Out of the axiom of action, Mises shows other categories to be implied and equally undeniably true, including: values, ends, means, choice, preference, cost, profit, loss, time, and causality. Hoppe provides a series of examples to demonstrate the undeniable truth of these corollaries.
For example, Hoppe informs us that it is neither self-evident nor observable – but rather is shown to be true by means of reason and logic starting with the axiom of action – that inherent in every action is pursuit of a goal. Whatever that goal may be, the act of pursuing it reveals that that agent places a relatively higher value on it at that moment than alternatives. It is also neither self-evident nor observable that in pursuit of a most highly valued goal, an actor must decide to interfere or not interfere at an earlier point in time to produce some later result. It is also neither self-evident nor observable that the decision taken implies consideration of the employment of some scarce means, at minimum the time and effort of the actor, etc.
Action requires the consideration of costs, and as Mises reminds us and brings to our attention, “Calculating costs is a mental tool of action, the purposive design to make the best of the available means for an improvement of future conditions” (Human Action, 349).
Hoppe observes and informs us of the importance of Mises’ contribution to the challenge of demonstrating the validity of a non-Newtonian empiricist scientific method as proper for the study of teleological entities. Hoppe writes:
…that one is able to interpret observations in such categories requires that one already knows what it means to act. No one who is not an actor could ever understand them. They are not “given,” ready to be observed, but observational experience is cast in these terms as it is construed by an actor. …
It took painstaking intellectual effort to recognize explicitly what, once made explicit, everybody recognizes immediately as true and can understand as true synthetic a priori statements, i.e., propositions that can be validated independently of observation and thus cannot possibly be falsified by any observation whatsoever.
The attempt to disprove the action-axiom would itself be an action aimed at a goal, requiring means, excluding other courses of action, incurring costs, subjecting the actor to the possibility of achieving or not achieving the desired goal and so leading to a profit or a loss.
And the very possession of such knowledge then can never be disputed and the validity of these concepts can never be falsified by any contingent experience, for disputing or falsifying anything would already have presupposed their very existence. As a matter of fact, a situation in which these categories of action would cease to have a real existence could itself never be observed, for making an observation, too, is an action. (ibid, 24-25)
By building logically on basic axioms and their corollaries, Mises establishes economic propositions step-by-step. Hoppe mentions the laws of exchange, the law of diminishing marginal utility, the law of price controls and others.
Observing how Mises established economics as a social science of human action, building an edifice of universally valid economic laws to guide human action, Hoppe provides further evidence in support of scientific dualism and against the fallacy of scientistic prejudice:
[A]ll the examples of economic propositions which I have mentioned – can be logically derived from this axiom [of action]. And this is why it strikes one as ridiculous to think of such propositions as being of the same epistemological type as those of the natural sciences. To think that they are, and accordingly to require testing for their validation, is like supposing that we had to engage in some fact-finding process without knowing the possible outcome in order to establish that one is indeed an actor. In a word: It is absurd.
Praxeology says that all economic propositions which claim to be true must be shown to be deducible by means of formal logic from the incontestably true material knowledge regarding the meaning of human action. (ibid, 25)
Mechanical materialists, positivists, and empiricists in science outright reject the notion that any truth claims can arise from rational deduction, and that all such claims to knowledge are at best subjective and without evidence that rises to the standard of knowledge.
This is considered to be true of all descriptive and normative sciences like archeology, botany, paleontology, linguistics, astronomy, musicology, statistics, logic, jurisprudence, and economics, all of which are viewed pejoratively by those engaged in experimental science. British physicist Earnest Rutherford, considered a father of nuclear physics, exuded this attitude in his famous quip: “All science is either physics or stamp collecting.”
NEXT: Part 12. A Science of Two Parts Forms a Whole
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.