Epistemological Problems of Economics

Every new theory encounters opposition and rejection at first. The adherents of the old, accepted doctrine object to the new theory, refuse it recognition, and declare it to be mistaken. Years, even decades, must pass before it succeeds in supplanting the old one. A new generation must grow up before its victory is decisive.

To understand this one must remember that most men are accessible to new ideas only in their youth. With the progress of age the ability to welcome them diminishes, and the knowledge acquired earlier turns into dogma. In addition to this inner resistance, there is also the opposition that develops out of regard for external considerations. A man’s prestige suffers when he sees himself obliged to admit that for a long time he has supported a theory that is now recognized as mistaken. His vanity is affected when he must concede that others have found the better theory that he himself was unable to find.4  And in the course of time the authority of the public institutions of compulsion and coercion, i.e., of state, church, and political parties, has somehow become very much involved with the old theory. These powers, by their very nature unfriendly to every change, now oppose the new theory precisely because it is new.

However, when we speak of the opposition that the subjective theory of value encounters, we have something different in mind from these obstacles, which every new idea must overcome. The phenomenon with which we are confronted in this case is not one that touches all branches of human thought and knowledge. The opposition here is not mere resistance to the new because it is new. It is of a kind to be found exclusively in the history of praxeological, and especially of economic, thought. It is a case of hostility to science as such—a hostility that the years have not only not dispelled or weakened, but, on the contrary, have strengthened.

What is at issue here is not alone the subjective theory of value, but catallactics in general. This can best be seen from the fact that today there is no longer a single theory of price determination that opposes that of subjectivism. Now and then a Marxist party official tries to defend the labor Theory of value. For the rest, no one dares to expound a doctrine essentially different from the subjective theory. All discussions (concerning the theory of price determination are based completely on the latter theory of value, even if many authors—like Liefmann and Cassel, for example—believe that what they are saying is very different. Today whoever rejects the subjective theory of value also rejects every economic theory and wants to admit nothing but empiricism and history into the scientific treatment of social problems.

It has already been shown in earlier sections of this book what logic and epistemology have to say about this position. In this section we shall deal with the psychological roots of the rejection of the subjective theory of value.

Therefore, we need not consider the hostility that the sciences of human action encounter from without. There is, to be sure, enough of such external opposition, but it is scarcely capable of arresting the progress of scientific thought. One must be very strongly prepossessed by an etatist bias to believe that the proscription of a doctrine by the coercive apparatus of the state and the refusal to place its supporters in positions in the church or in government service could ever do injury to its development and dissemination in the long run. Even burning heretics at the stake was unable to block the progress of modern science. It is a matter of indifference for the fate of the sciences of human action whether or not they are taught at the tax-supported universities of Europe or to American college students in the hours not occupied by sports and amusements. But it has been possible in most schools to dare to substitute for praxeology and economics subjects that intentionally avoid all reference to praxeological and economic thought only because internal opposition is present to justify this practice. Whoever wants to examine the external difficulties that beset our science must first of all concern himself with those which arise from within.

The results of praxeological and historical investigation encounter opposition from those who, in the conduct of their discussion, treat all logic and experience with contempt. This peculiar phenomenon cannot be explained merely by saying that whoever sacrifices his conviction in favor of views that are popular with the authorities is generally well rewarded. A scientific investigation may not descend to the low level at which blind partisan hatred has carried on the struggle against the science of economics. It may not simply turn against its opponents the epithets that Marx used when he described the “bourgeois, vulgar” economists as villainous literary hirelings. (In doing so, he liked to use the word “sycophant,” which he apparently altogether misunderstood.) Nor may it adopt the bellicose tactics with which the German academic socialists seek to suppress all opponents.5  Even if one were to consider oneself justified in denying the intellectual honesty of all those opposed to the subjective theory of price determination, there would still be the question why public opinion tolerates and accepts such spokesmen and does not follow the true prophets rather than the false.6

• 4For a psychoanalytical examination of this stubborn resistance to the acceptance of new knowledge, cf. Jones, On the Psychoanalysis of the Christian Religion (Leipzig, 1928), p. 25.
• 5Cf. the description of these methods by Pohle, Die gegenwärtige Krisis in der deutschen Volkswirtschaftslehre (2nd ed.; Leipzig, 1921), pp. 116 ff.
• 6The opposition of which we speak is not confined to one country only; it is likewise to be found in the United States and England, though not perhaps as strong as in Germany and Italy.