Economics and Epistemology: A Discussion In Epistemological Problems of Economics von Mises “argues that the Austrian theory of value, which had been developed by Carl Menger and his followers, is the core element of a general theory of human behavior that transcends the traditional confines of economic science. Value theory applies to human action at all times and places, whereas economic theory only applies to a special subset of human action, namely, to human action guided by economic calculation. “Mises argues that the general social science of which economics is the best-developed part has a rather unique logical and epistemological nature. In distinct contrast to the natural sciences it is not based on observation or any other information gathered through the human senses. It relies on insights about certain structural features of human action, such as the fact that human beings make choices or that they use self-chosen means to attain self-chosen ends. The validity of economic theory does therefore not stand and fall with empirical investigations. Rather, economic laws are a priori laws that cannot be confirmed or refuted by the methods predominant in the natural sciences. They exist independent of the particular conditions of time and place, and the social scientist comes to know them through pure deductive reasoning.” ~ quoted from Introduction to Epistemological Problems of Economics by JÖRG GUIDO HÜLSMANN Austrian value theory is based on recognition that no tools have existed for measuring the physics of thought. It does not rule out a priori that such tools are not possible. To do so would be like disregarding all of the reasoning of Aristotle because he had no microscope. Mises begins with what accessible – human action. Human beings act and without evidence to refute it, the value theorist must accept as axiomatic that action stems from choice not instinct nor some ephemeral “soul” or homunculus in our brains directing our actions. Economic theory is therefore not anti-empirical but only non-empirical – given that no reliable tools for empirical investigation exist...yet. Economic actions must rely on logico-deductive reasoning or “laws.” The human being we have to observe acting today empiricists tell us has not changed in any measurable or behaviorally significant way in at least 40,000 or perhaps even 200,000 years. Modern man has been “modern” for a very long time we are told. Let us accept that all humans acting today, at least, act just as their ancestors acted one thousand generations ago. So long as this uniformity is not altered by new empirical evidence, it is rational to reason from that premise. This premise does not assert that another mutation among humans could not arise that would alter the behavior of future descendants of “modern” mankind. But this event alone would not alter the validity of the deductive method until future empirical evidence required modification of the axiom of choice. Until a “soul” is measured, we must disregard it as explanatory. Therefore all modern reasoning about human action must rely on axiom of choice. A choice has no physical property that is measurable...not yet. Only the observed action can be measured, Human action can be observed, but how can it be measured? Human action is a discrete event in a unique context. It cannot be repeated exactly to verify, calibrate and eliminate error. It cannot be aggregated or extrapolate to predict future action and future consequences by mathematical manipulation. Things which result from human action can be measured. Yet we can observe regularities or patterns in human action. From these regularities we can make inferences with degrees of probability. If humans have been doing something for hundreds of generations it is probable they will continue to do that thing until the external environment changes their results when the act. * * * To be continued, perhaps, as my vision improves.
Posted on: Fri, 06 Sep 2013 22:10:20 +0000
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