Epistemological Problems of Economics. Людвиг фон Мизес

their program, to confine themselves to

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      speaking only of the economic conditions of the past, and if they were to decline to consider any questions touching on the economic conditions of the future, they could at least spare themselves the reproach of inconsistency. However, they maintain that what they write about and deal with is economics. Moreover, they engage in discussions of economic policy from the standpoint of scientific theory, as if their science, as they themselves conceive it, were in a position to make predictions about the economic conditions of the future.

      We are not concerned here with the problems dealt with in the debate over the permissibility of value judgments in science. What is at issue is rather the question whether an adherent of the Historical School has not debarred himself from participating in the discussion of purely scientific problems, apart from all questions concerning the desirability of the ultimate ends being aimed at: whether, for example, he may make predictions about the future effects of a proposed change in currency legislation. Art historians speak of the art and the styles of the past. If they were to undertake to speak of the paintings of the future, no painter would pay any attention to what they said. Yet the economists of the Historical School talk more about the future than about the past. (As far as the historian is concerned, there are fundamentally only the past and the future. The present is but a fleeting instant between the two.) They speak of the effects of free trade and protection and of the consequences of the formation of cartels. They tell us that we must expect a planned economy, autarky, and the like. Has an art historian ever presumed to tell us what art styles the future holds in store for us?

      The consistent adherent of the Historical School would have to confine himself to saying: There are, to be sure, a small number of generalizations that apply to all economic conditions.⁵ But they are so few and insignificant that it is not worth while to dwell on them. The only worthy objects of consideration are the characteristics of changing economic styles that can be ascertained from economic history, and the historical theories relevant to these styles. Science is able to make statements about such matters. But it should be silent about economic conditions in general, and therefore about the economic conditions of tomorrow. For there cannot be an “historical theory” of future economic conditions.

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      If one classifies economics as one of the moral sciences that make use of the method of historical “understanding,” then one must also adopt the procedure of these sciences. One may, accordingly, write a history of the German economy, or of all economies thus far, in the same way as one writes a history of German literature or of world literature; but one may certainly not write a “universal economics.” Yet even this would be possible, from the point of view of the Historical School, if one were to contrast “universal economics,” understood as universal economic history, to an alleged “special economics” that would deal with individual branches of production. However, the standpoint of the Historical School does not permit economics to be differentiated from economic history.

      The purpose of this book is to establish the logical legitimacy of the science that has for its object the universally valid laws of human action, i.e., laws that claim validity without respect to the place, time, race, nationality, or class of the actor. The aim of these investigations is not to draw up the program of a new science, but to show what the science with which we are already acquainted has in view. The area of thought encompassed here is one to which Windelband, Rickert, and Max Weber were strangers. However, if they had been familiar with it, they would certainly not have disputed its logical legitimacy. What is denied is the possibility of deriving a posteriori from historical experience empirical laws of history in general, or of economic history in particular, or “laws” of “economic action” within a definite historical period.

      Consequently, it would be completely amiss to want to read into the results of these investigations a condemnation of theories which assign to the moral or cultural sciences that make use of the historical method the cognition of the historical, the unique, the nonrepeatable, the individual, and the irrational, and which consider historical understanding as the distinctive method of these sciences and the construction of ideal types as their most important conceptual instrument. The method employed by the moral and cultural sciences is not in question here. On the contrary, my criticism is leveled only against the impermissible confusion of methods and the conceptual vagueness involved in the assumption—which abandons the insights that we owe to the inquiries of Windelband, Rickert, and Max Weber—that it is possible to derive “theoretical” knowledge from historical experience. What is under attack here is the doctrine that would have us believe, on the one hand,

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      that historical data can be approached without any theory of action, and, on the other hand, that an empirical theory of action can be derived by induction from the data of history.

      Every type of descriptive economics and economic statistics falls under the heading of historical research. They too apprise us only of the past, albeit the most recent past. From the point of view of empirical science, the present immediately becomes past. The cognitive value of such inquiries does not consist in the possibility of deriving from them teachings that could be formulated as theoretical propositions. Whoever fails to realize this is unable to grasp the meaning and logical character of historical research.

      One would also completely misunderstand the intention of the following investigations if one were to regard them as an intrusion into the alleged conflict between history and empirical science, on the one hand, and pure and abstract theory, on the other. All theory is necessarily pure and abstract. Both theory and history are equally legitimate, and both are equally indispensable. The logical contrast between them is in no sense an opposition. The goal of my analysis is, rather, to distinguish aprioristic theory from history and empirical science and to demonstrate the absurdity of the endeavors of the Historical and the Institutionalist Schools to reconcile the logically incompatible. Such endeavors are inconsistent with the aims of historical research precisely because they seek to draw from the past practical applications for the present and the future, even if only to the extent of denying that the propositions of the universally valid theory are applicable to the present and the future.

      The virtue of historical inquiry does not lie in the derivation of laws. Its cognitive value is not to be sought in the possibility of its providing direct practical applications for our action. It deals only with the past; it can never turn toward the future. History makes one wise, but not competent to solve concrete problems. The pseudo-historical discipline that today calls itself sociology is essentially an interpretation of historical events and a proclamation of allegedly inevitable future developments in the sense of the absurd Marxian metaphysics of progress. This metaphysics seeks to secure itself against the strictures of scientific sociology on the one hand and of historical investigation on the other by its pretension to view things “sociologically,” and not economically, historically, or in some other way that would be exposed to “non-sociological” criticism. The proponents of the pseudo-historical discipline

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      that calls itself “the economic aspects of the sciences of the state” and the adherents of the Institutionalist School protect themselves from the economists’ critique of their interventionist program by citing the relativity of all the economic knowledge that they purport to have acquired through the presuppositionless treatment of economic history. Both seek to substitute the irrational for logic and discursive reasoning.

      In order to examine the legitimacy of all these objections, it seemed to me imperative not only to demonstrate positively the logical character of the propositions of economics and sociology, but also to evaluate critically the teachings of a few representatives of historicism, empiricism, and irrationalism. This, of necessity, determined the outward form of my work. It is divided into a number of independent essays which, with the exception of the first and most comprehensive, were published previously.⁶ From the outset, however, they were conceived and planned as parts of a whole, and they have been given further unity by means of various revisions, especially in the case of the second investigation. Furthermore, I considered it essential to reformulate, in this context, several basic ideas of economic