Epistemological Problems of Economics
Preface to English-Language Edition
The popular epistemological doctrines of our age do not admit that a fundamental difference prevails between the realm of events that the natural sciences investigate and the domain of human action that is the subject matter of economics and history. People nurture some confused ideas about a “unified science” that would have to study the behavior of human beings according to the methods Newtonian physics resorts to in the study of mass and motion. On the basis of this allegedly “positive” approach to the problems of mankind, they plan to develop “social engineering,” a new technique that would enable the “economic tsar” of the planned society of the future to deal with living men in the way technology enables the engineer to deal with inanimate materials.
These doctrines misrepresent entirely every aspect of the sciences of human action.
As far as man can see, there prevails a regularity in the succession and concatenation of natural phenomena. Experience, especially that of experiments performed in the laboratory, makes it possible for man to discern some of the “laws” of this regularity in many fields even with approximate quantitative accuracy. These experimentally established facts are the material that the natural sciences employ in building their theories. A theory is rejected if it contradicts the facts of experience. The natural sciences do not know anything about design and final causes.
Human action invariably aims at the attainment of ends chosen. Acting man is intent upon diverting the course of affairs by purposeful conduct from the lines it would take if he were not to interfere. He wants to substitute a state of affairs that suits him better for one that suits him less. He chooses ends and means. These choices are directed by ideas.
The objects of the natural sciences react to stimuli according to regular patterns. No such regularity, as far as man can see, determines the reaction of man to various stimuli. Ideas are frequently, but not always, the reaction of an individual to a stimulation provided by his natural environment. But even such reactions are not uniform. Different individuals, and the same individual at various periods of his life, react to the same stimulus in a different way.
As there is no discernible regularity in the emergence and concatenation of ideas and judgments of value, and therefore also not in the succession and concatenation of human acts, the role that experience plays in the study of human action is radically different from that which it plays in the natural sciences. Experience of human action is history. Historical experience does not provide facts that could render in the construction of a theoretical science services that could be compared to those which laboratory experiments and observation render to physics. Historical events are always the joint effect of the cooperation of various factors and chains of causation. In matters of human action no experiments can be performed. History needs to be interpreted by theoretical insight gained previously from other sources.
This is valid also for the field of economic action. The specific experience with which economics and economic statistics are concerned always refers to the past. It is history, and as such does not provide knowledge about a regularity that will manifest itself also in the future. What acting man wants to know is theory, that is, cognition of the regularity in the necessary succession and concatenation of what is commonly called economic events. He wants to know the “laws” of economics in order to choose means that are fit to attain the ends sought.
Such a science of human action cannot be elaborated either by recourse to the methods praised—but never practically resorted to—by the doctrines of logical positivism, historicism, institutionalism, Marxism and Fabianism or by economic history, econometrics and statistics. All that these methods of procedure can establish is history, that is, the description of complex phenomena that happened at a definite place on our globe at a definite date as the consequence of the combined operation of a multitude of factors. From such cognition it is impossible to derive knowledge that could tell us something about the effects to be expected in the future from the application of definite measures and policies, e.g., inflation, price ceilings, or tariffs. But it is precisely this that people want to learn from the study of economics.
It is the aim of the essays collected in this volume to explode the errors implied in the negativistic doctrines rejecting economic theory and thereby to clear the way for the systematic analysis of the phenomena of human action and especially also of those commonly called economic. They represent, as it were, the necessary preliminary study for the thorough scrutiny of the problems involved such as I tried to provide in my book, Human Action: A Treatise of Economics (Chicago: Henry Regnery, 1966).
Some of the authors whose statements I analyzed and criticized in these essays are little known to the American public. But the ideas which they developed and which I tried to refute are not different from the doctrines that were taught by many other authors, either American or foreign, whose books were written in English or are available in English-language translations and are amply read in this country. Such is, for instance, the case with the doctrines of the late professor of the University of Berlin, Alfred Vierkandt. In order to pass over in silence the fact that men, guided by ideas and resorting to judgments of value, choose between different ends and between different means for the attainment of the ends chosen, Vierkandt tried to reduce the actions and achievements of men to the operation of instincts. What man brings about is, he assumed, the product of an instinct with which he has been endowed for this special purpose. Now this opinion does not differ essentially from that of Frederick Engels as especially expressed in his most popular book, the Anti-Dühring,1 nor from that of William McDougall and his numerous American followers.
In examining the tenets of Mr. Gunnar Myrdal I referred to the German-language edition of his book, Das Politische Element in der Nationalökonomischen Doktrinbildung, published in 1932. Twenty-one years later this German-language edition served as the basis for the English translation by Mr. Paul Streeten.2
In his “Preface to the English Edition” Mr. Myrdal declares that this edition is “apart from a few cuts and minor editorial rearrangements” an “unrevised translation of the original version.” He does not mention that my criticism of his analysis of the ends that wage-earners want to attain by unionism induced him to change essentially the wording of the passage concerned. In perusing my criticism, the reader is asked to remember that it refers to the literally quoted passage from pages 299 f. of the German edition and not to the purged text on page 200 of the English edition.
A further observation concerning the terminology used is needed. When, in 1929, I first published the second essay of this collection, I still believed that it was unnecessary to introduce a new term to signify the general theoretical science of human action as distinguished from the historical studies dealing with human action performed in the past. I thought that it would be possible to employ for this purpose the term sociology, which in the opinion of some authors was designed to signify such a general theoretical science. Only later did I realize that this was not expedient and adopted the term praxeology.
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 foundation that is publishing this series of studies.
—Ludwig von Mises
