http://mises.org/story/2944

The close followers of the work of Ludwig von Mises (1881–1973), one of the leading thinkers of the Austrian School of Economics, maintain that economics is an a priori science, “a science whose propositions can be given a rigorous logical justification, which distinguishes Austrians, or more precisely Misesians, from all other current economic schools.”[1]

Indeed, such a view stands in very sharp contrast to today’s state-of-the-art mainstream economics, which has fallen victim to the spell of positivism: in an attempt to investigate the truth of hypotheses in the field of social sciences, the positivists declare that measuring peoples’ actions and their continual empirical testing (according to “if-then” statements) would be required, thereby allowing for scientific progress.[2]

However, the positivist-empiricist approach does not, and cannot, deliver on its promise. It promotes false economic doctrines, as it misconceives the logical status of the science of economics. Positivism-empiricism encourages, intellectually speaking, a drift away from the free-market order, paving the way towards collectivism, socialism, and even totalitarianism.

Positivism-empiricism encourages social relativism: it denies any a priori truth of the social reality of human action, adhering to the view that “anything goes.” As such, social relativism plays into the hands of the enemies of the free societal order: there is nothing that could, as a rule, prevent recommendations derived from the positivist-empiricist doctrine from violating individuals’ property rights.

In 1945, Friedrich August von Hayek (1899–1992) formulated the consequences of a social philosophy that ignores principles:

[T]he aversion to general principles, and the preference for proceeding from particular instance to particular instance, is the product of the movement which with the “inevitability of gradualness” leads us back from a social order resting on the general recognition of certain principles to a system in which order is created by direct command.[3]

In virtually all developed countries, government activity — as measured, for instance, in terms of state spending as a percentage of total income and the scope of authoritative regulation — has been expanding at the expense of individual freedom and the free-market order, acquiesced to — or even publicly advocated — by mainstream economists.

This is why Mises’s work on the logical status of the science of economics needs to be brought back to public attention: his work actually forms the intellectual bulwark against the degeneration of the free societal order. So in what follows, the methodological foundations of Austrian economics will be reviewed briefly.[4] Our starting point is, and necessarily so, the field of epistemology.

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