Epistemological Problems of Economics. Людвиг фон Мизес

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      Mr. George Reisman translated from the text published in 1933 under the title Grundprobleme der Nationalökonomie and the subtitle Untersuchungen über Verfahren, Aufgaben und Inhalt der Wirtschafts- und Gesellschaftslehre. The translation was prepared for publication by Mr. Arthur Goddard. The translator and the editor carried on their work independently. I myself did not supply any suggestions concerning the translation nor any deviations from the original German text.

      It remains for me to extend my heartiest thanks both to Mr. Reisman and to Mr. Goddard. I am especially grateful to the directors and staff members of the foundation² that is publishing this series of studies.

      Ludwig von Mises

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PREFACE TO THE GERMAN EDITION

      Misunderstandings about the nature and significance of economics are not due exclusively to antipathies arising from political bias against the results of inquiry and the conclusions to be necessarily drawn from them. Epistemology, which for a long time was concerned solely with mathematics and physics, and only later began to turn its attention to biology and history as well, is presented with apparently insuperable difficulties by the logical and methodological singularity of economic theory. These difficulties stem for the most part from an astonishing unfamiliarity with the fundamental elements of economics itself. When a thinker of Bergson’s caliber, whose encyclopedic mastery of modern science is virtually unparalleled, expresses views that show he is a stranger to a basic concept of economics,¹ one can well imagine what the present situation is with regard to the dissemination of knowledge of that science.

      Under the influence of Mill’s empiricism and psychologism, logic was not prepared for the treatment of the problems that economics presents to it. Moreover, every attempt at a satisfactory solution was frustrated by the inadequacy of the objective theory of value then prevailing in economics. Nevertheless, it is precisely to this epoch that we owe the most valuable contributions to the elucidation of the problems of the scientific theory of economics. For the successful treatment of these questions, Senior, John Stuart Mill, and Cairnes satisfied in the highest degree the most important prerequisite: they themselves were economists. From their discussions, which are set in the framework of

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      the psychologistic logic prevailing at that time, emerged ideas that required only fecundation by a more perfect theory of the laws of thought to lead to entirely different results.

      The inadequacy of empiricist logic hampered the endeavors of Carl Menger still more seriously than those of the English thinkers. His brilliant Untersuchungen über die Methode der Sozialwissenschaften² is even less satisfactory today than, for example, Cairnes’ book on methodology. This is perhaps due to the fact that Menger wanted to proceed more radically and that, working some decades later, he was in a position to see difficulties that his predecessors had passed over.

      Elucidation of the fundamental logical problems of economics did not make the progress that might have been expected from these splendid beginnings. The writings of the adherents of the Historical and the Kathedersozialist Schools in Germany and England and of the American Institutionalists confused, rather than advanced, our knowledge of these matters.³

      It is to the investigations of Windelband, Rickert, and Max Weber that we owe the clarification of the logical problems of the historical sciences. To be sure, the very possibility of a universally valid science

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      of human action escaped these thinkers. Living and working in the age of the Historical School, they failed to see that sociology and economics can be and, indeed, are universally valid sciences of human action. But this shortcoming on their part does not vitiate what they accomplished for the logic of the historical sciences. They were impelled to consider these problems by the positivist demand that the traditional historical disciplines—the moral sciences—be repudiated as unscientific and replaced by a science of historical laws. They not only demonstrated the absurdity of this view, but they brought into relief the distinctive logical character of the historical sciences in connection with the doctrine of “understanding,” to the development of which theologians, philologists, and historians had contributed.

      No notice was taken—perhaps deliberately—of the fact that the theory of Windelband and Rickert also involves an implicit repudiation of all endeavors to produce an “historical theory” for the political sciences. In their eyes the historical sciences and the nomothetic⁴ sciences are logically distinct. A “universal economics,” that is, an empirical theory of economic history that could be derived, as Schmoller thought, from historical data, must appear just as absurd, in their view, as the effort to establish laws of historical development, such as Kurt Breysig, for example, attempted to discover.

      In Max Weber’s view also, economics and sociology completely merge into history. Like the latter, they are moral or cultural sciences and make use of the same logical method. Their most important conceptual tool is the ideal type, which possesses the same logical structure in history and in what Max Weber regarded as economics and sociology. But bestowing on ideal types names like “economic style,” “economic system,” or “economic stage” in no way changes their logical status. They still remain the conceptual instrument of historical, and not of theoretical, investigation. The delineation of the characteristic features of a historical period and the understanding of its significance, which ideal types make possible, are indisputably tasks of the historical sciences. The very expression “economic style” is an imitation of the jargon and conceptual apparatus of art history. Thus far, however, no one has thought of calling art history a theoretical science because it classifies the historical data with which it deals into types or “styles” of art.

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      Moreover, these distinctions among art styles are based on a systematic classification of works of art undertaken in accordance with the methods of the natural sciences. The method that leads to the differentiation of art styles is not the specific understanding of the moral sciences, but the systematic division of objects of art into classes. Understanding makes reference only to the results of this work of systematizing and schematizing. In the distinctions among economic styles these conditions are lacking. The result of economic activity is always want-satisfaction, which can be judged only subjectively. An economic style does not make its appearance in the form of artifacts that could be classified in the same way as works of art. Economic styles cannot be distinguished, for example, according to the characteristics of the goods produced in the various periods of economic history, as the Gothic style and the Renaissance style are differentiated according to the characteristics of their architecture. Attempts to differentiate economic styles according to economic attitude, economic spirit, and the like, do violence to the facts. They are based not on objectively distinguishable, and therefore rationally incontrovertible, characteristics, but on understanding, which is inseparable from subjective judgment of qualities.

      Furthermore, everyone would find it completely absurd if an art historian were to presume to derive laws of style for the art of the present and the future from the relationships discovered among the styles of the past. Yet this is precisely what the adherents of the Historical School presume to do with the economic laws that they purport to discover from the study of history. Even if one were to grant that it is possible to empirically derive laws of economic action applicable within temporal, national, or otherwise delimited historical periods, from the data of economic history, it would still be impermissible to call these laws economics and to treat them as such. No matter how much views about the character and content of economics may differ, there is one point about which unanimity prevails: economics is a theory capable of making assertions about future economic action, about the economic conditions of tomorrow and the day after tomorrow. The concept of theory, in contradistinction to the concept of history, is, and always and universally has been, understood as involving a regularity valid for the future as well as the past.

      If the adherents of the Historical School were,