Comments (88)

• greg

  I can tie the science of econmomic to probability theory where a 10% chance that an event will occure could be correct.

  Your reference to someone like Peter Schiff is an example of a fortune teller. You take a position and stick with it, at some point you will be correct. But getting back to probability theory, he will be correct about 20% of the time based on a sample of the business cycle over the last 100 years. Basically, he is not an economic forecaster, he just another gold bug.

  On the topic of gold, about 6 months ago I put my forecast on these blogs to buy the GLD at $80 and short it at $100. That was the exact investment you should have made. Does that make me a great economic forecaster, NO. I just play the odds and hope to be right 51% of the time!

  Because very few people understand probability theory, all economist need to master it and use it to justify their positions. Then they need to use it to sell it to the public. This where Ron Paul runs into problems, he is a politician that fails to sell his position in the political arena.

  Published: March 11, 2009 9:32 AM

• Briggs Armstrong

  Bravo! I am thrilled that you wrote this brilliant piece. It was badly needed and your background in philosophy and physics made you uniquely qualified to shred the Keynesian fallacy of empiricism. Thank you for the contribution!

  Published: March 11, 2009 9:36 AM

• Florian Kren

  Good point, that if Keynesians think they are doing empirical science, then they should make predictions and depending on the results discard parts of or their whole theory.

  "But scientists never got the memo, and there persists to this day a widespread prejudice that the only "real" sciences are empirical sciences."
  Of course thats right, but there is a fundamental advantage of empirical sciences, that has to be acknowledge by other sciences - only empirical sciences are able to uncover truth in such a way, that no sane person will deny it.
  Without empirical base there will always be people who dont get the argument misunderstand it or whatever and theredore, there will always be dispute and uncertainity.

  While today there are still lots of people in favor of socialism or some other ideas, although socialism has been refuted, there is for all practical purposes nobody who denies basic physics predictions.
  And this is not because the arguments of physicist are convincing anybody, but because there are countless devices which operate in the way predicted by physics. And this is only because of physics is an empirical science - even the nuts in Iran trying to operate a society on rules invented in the 7th-9th century think that nuclear physics is not some whacko-nonsense.

  
  But i have to object some points:
  "Its claims are based on logical deduction from indisputable axioms, and may be illustrated historically, but never verified or falsified experimentally."

  Thats wrong. Austrian economics makes some very rough predictions about the world e.g. a truly capitalist society will outperform economically a truly socialists society by some extent, if they do not differ too much in intial situation and are not effected too unequally by natural disasters or unprovoked foreign aggression.

  That is at least theoretically a empirical testable prediction. And if the test would result in the socialist society this would indicate that either some importatn factor was ignored or that some of the axioms austrians rely on are wrong however hard that might be to believed.

  Of course you are right in countering, that even if such an experiment would be feasible, it would be unethical beyond anything short of the holocaust.

  I agree, but "luckily" our friends on the left have no such moral problems. West and east germany and south and north korea came close to fulfilling the test described above. In both cases not countries with different people or culture on capitalist and socialist side and in both cases a rather clean cut with little time for people to move to the half of country which they like more.

  The "test result" is pretty convincing, even although in reality something one might call half-capitalism was "tested" against something not being true socialism but close(even Stalin was not cruel enough to follow Marxs suggestions to the letter.), the more socialistic countries had both to build walls to keep people from running away, while the half-capitalistic countries had no need to restrict people leaving the country in any way.
  As the whole point about economics is creating better living conditions for humans, this is strong empirial data for half-capitalism, because where people run from living conditions are certainly worse than where they run to.

  So we know empirically, that half-capitalism outperforms different versions of socialism(Differences between east germany and north korea are large, east germany still had at times some limited economic freedom.).

  But anything beyond that, e.g. whether half-capitalism is worse than full as predicted by austrians and whether or not full scale socialism is better or worse than east germanies performance we cannot judge on the data so far and i pray that we will never have empirical data deciding these questions.

  As a bottom line, yes so far economist running aroun ans posing as empirical scientists is nonesense, but this does not mean that economist should not from time to time closely observe the world in search of a situation, where conditions are so close to what a real experiment would have to look like, so that they can check their ideas against these hopefully very rare cases.

  Published: March 11, 2009 9:44 AM

• Florian Kren

  Imporatnt words missing above:
  "And if the test would result in the socialist society (!)outperforming the capitalist society(!) this would indicate that either some important factor was ignored or that some of the axioms austrians rely on are wrong however hard that might be to believe."

  Published: March 11, 2009 9:50 AM

• Sonic Ninja Kitty

  Thanks for the awesome article! Very well said.

  I am astounded at the way Austrian/Friedman/free market economics are mixed with Keynesian economics in discussions of 'what to do' these days. The general public and the media do not understand how they are polar opposites, and anything that helps illustrate the differences is sorely needed.

  IMO, since most people don't understand the fallacies of Keynes, the politicians use his famous name as a cover for purely political maneuvering. Ignorance will be our undoing.

  Published: March 11, 2009 10:13 AM

• Jason Gordon

  B.C.Richards- "No hand-waving nonsense for Keynesians! No floating on the ethereal heights of logic and deduction like those superstitious Austrians!"

  Unless something inconvenient presents itself -- and must be summarily dismissed as "animal spirits" or a "failure of confidence." Empirical my ass.

  Well done Mr. Richards.

  Published: March 11, 2009 10:22 AM

• Ryan Jankowski

  It would be wonderful if all scientists were required an undergrad in philosophy in hopes to utterly extinguish the pseudo-scientific mantra of positivism. But alas, we will have to make do with the Remnant of which Nock prophesied and which Mr. Richards seems to be a member of.

  This was an excellent article and I hope the author will have many more future contributions to this site!

  Published: March 11, 2009 10:33 AM

• Austroglide

  Excellent topic, and very well written. Succinct argument - stays on message without indulging in doomsday predictions (not that they'd be wrong - they're just so very common here...I think it turns off the non-Austrian readers with its frequency).

  Please to be writing more articles. Very enjoyable and I learned a thing or two. Thanks.

  Published: March 11, 2009 10:37 AM

• Bruce Koerber

  Economic Wisdom
  Wednesday, March 11, 2009

  Empirical Economics Is Fraudulent!

  Empiricism rests upon cardinal numbers. To the empiricists the numbers - the data - have meaning and then they must explain the meaning. What is scientific about someone just arbitrarily giving meaning to a number?

  The subjective methodology looks at numbers as ordinal. The numbers do not have any meaning except that they are relative to other numbers. What gives them meaning is that people rank their preferences which connects the numbers to human valuation. Since they are human valuations and since humans are complex beings these valuations change all of the time.

  The science necessary to understand humans is called praxeology which uncovers the laws of human action. Numbers that are associated with human action have meaning relative to each other because humans act like humans act! Praxeology, the science of human action, is the science built upon natural law. Natural law includes the natural sciences since animals act like animals, plants function like plants, minerals exhibit the characteristics of minerals, etc.

  Biology, chemistry and physics are natural sciences that have an empirical nature to them because of the way natural laws are binding upon them. Human sciences, likewise, are part of the natural law science but because humans act subjectively the appropriate methodology is subjectivism.

  All empirical economics is nothing but ego-driven interpretation and it is then used (misused and abused) by ego-driven interventionists to redistribute wealth directly or indirectly towards the perpetrator of this flagrant injustice.

  Published: March 11, 2009 10:38 AM

• Isaac M. Morehouse

  Excellent piece!

  I've wanted to write something on the stupidity of thinking ANY science can be wholly empirical (let alone economics), but it is much better coming from someone with a background in science. :-)

  Austrians are very good at describing why economics cannot be measured experimentally like the physical sciences - which is true - but I've always been interested in the further truth that even the physical sciences rest on logic, not empiricism, when it comes down to it. On what do empiricists base the assumption that repeated experimental results mean some kind of "law" exists? There are a priori assumptions there, whether acknowledged or not.

  Data is meaningless without a theoretical framework through which to interpret it - and the theoretical framework must be logical.

  The arrogant way that so many - in economics and other sciences - laugh at ideas or theories that are not "scientifically tested" (as if logical testing were not scientific) and the way they embrace just about anything that "they" have "proven with science" is very frustrating.

  Great article - I'd love to see more from you!

  Published: March 11, 2009 11:01 AM

• Wade A. Mitchell

  Great article! Welcome, Mr. Richards, to the Austrian School. I hope to see more articles from you.

  Published: March 11, 2009 11:23 AM

• Alex Fabijanic

  Benjamin,

  Excellent article - you are right on the spot. Congratulations!

  We can observe similar phenomena of falsehood becoming mainstream in other areas, such as physics, history, etc. Friedrich Hayek has done a great job of describing how and why it happens in econo-political sphere. Since you are a physicist, I'd be really curious to learn your position on string theory and its alleged "takeover" of the physics science domain (in the context of Lee Smolin's "The Trouble with Physics" and Peter Woit's "Not Even Wrong").

  Published: March 11, 2009 11:30 AM

• C [the forgotten man]

  Excellent analysis!

  But I would ask, how can anybody believe to be scientific a theory whose motive force is explained as "animal spirits?"

  Published: March 11, 2009 12:09 PM

• Robert A. Meyer

  Thanks, Mr Richards

  If only positivists and Keynesian economists possessed the common sense and open-mindedness to read and attempt to understand your brilliant article.

  Published: March 11, 2009 12:10 PM

• John Barbour

  Benjamin,
  Good article. It's nice to find someone else out there who not only graduated from Covenant but in philosophy no less. I also was a philosophy major at Covenant (1981) I hold an M-Div from Gordon Conwell (1984)as well. I'm glad you added theology. It wasn't that long ago that theology was the queen of the sciences. Not only are sound economic principles ignored but the moral and theological framework is often missing as well. In its place is a vague political correctness. Keynesian economics is part of that political correctness. John Maynard Keynes did not care about long term consequences either in the economy or his personal life. It is not surprising that his followers do the same.

  Published: March 11, 2009 12:26 PM

• Bryce Hotz

  I want to echo what has already been said by many about this piece. Excellent. One of the best I've seen on this site. I agree with Austroglide on the refreshing absence of doomsday predictions and fashion critiques (haha). Just a good old fashioned smack-down of bad thinking and misconceptions about science.

  It's disheartening knowing that this flies over the head of most people, who themselves are unaware (or just don't care enough) of their own sloppy thinking habits. Studying the sciences will provide a stark contrast in the way laypeople use words like "logic" "scientific" "reasoning" "sound" "theory" etc, and the strict meanings behind the words the scientific professions use. The way some of these terms are used by the general public, politicians and in the media shows a clear misunderstanding of what science is really all about. They all are happy with the nice toys that are presented to them as the result of science, but don't give a damn about how centuries of very precise thinking was required to arrive at this point where we can change matter into completely new things with a different function!

  Thanks Physics! Used for good or ill, you bring it to us real every time!
  Nonsense doesn't last long in the sciences (or at the very least, it doesn't last nearly as long as it does in other domains)

  Published: March 11, 2009 12:38 PM

• Inquisitor

  "Without empirical base there will always be people who dont get the argument misunderstand it or whatever and theredore, there will always be dispute and uncertainity."

  Empirical =/= based on reality. It merely means based on "testing" of "data". It's one thing for something to be grounded in the real world, and yet another to be based on "empirical" means of knowledge acquisition. If your point is that examples help clarify abstract principles, very few would disagree. If your point is that you require "empirical testing" to convince, that is false, and is akin to Friedman's silly idea that "empirical" economists can merely refer to the "facts" when they disagree, and these "facts" will resolve the disagreement. Pure fiction.

  Published: March 11, 2009 1:37 PM

• fundamentalist

  Great article! Thanks!

  John Barbour: “It wasn't that long ago that theology was the queen of the sciences.”

  And it was a science based on axioms and logic, as is Austrian econ. I think empricism came from what Hayek calls the pseudo-reasoning of the French Enlightenment in his “Fatal Conceit”. Socialist intellectuals, who were also anti-Christian, insisted that everything in the past should be dismissed and considered as untrue unless proven by reason. But as Hayek wrote, their idea of reason was an emaciated version of true reason. As a result, we have an emaciated version of science.

  I’m not trying to bait anyone into a discussion over evolution/creation, but I see similar problems with the scientific establishment in that debate. When scientists who are also creationists point out the scientific problems with the theory of evolution, the scientific establishment usually responds by challenging those scientists to come up with another model for the devleopment of life as we know it. Of course, their caveat is that the model must include only natural means, which excludes creationism by definition.

  Science should be all about the natural world and seeking physical explanations about how the physical universe works. But the problem of origins far exceeds the tools of natural science because it can’t be conducted in a controlled experiment in a lab. The relationship of natural science methods to origins is similar to that of its relationship to economics spelled out in this article. Sound assumptions and reasoning are required. Data must be interpreted; it doesn’t interpret itself, and interpretation requires sound theory.

  By limiting the answers to the problem of origins to natural processes only, scientists appear to make the issue more scientific than it is, just as Keynesians use math to make their economics seem more scientific than it is. But by limiting models to natural processes only, evolution wins the debate by definition, not be scientific method. In addition, it has made science the pursuit of natural explanations instead of the search for truth. If creationism is true, and evolution false, then science would forever be promoting falsehood for the sole purpose of limiting knowledge to natural processes.

  But if we expand the definition of science to include axioms and reason, as Austrian economics has, then theology can again have a place at the table in the discussion of origins. Otherwise, science needs to admit that the issue of origions is an unscientific endeavor and best left to philosophy and religion, for even if no scientific problems existed with the theory of evolution, and there are many, all of the evidence for evolution only proves that it would be possible, not that life actually developed that way.
  

  Published: March 11, 2009 2:07 PM

• Vince Cozza

  Much needed article, Benjamin. Thanks!
  May I add… Economics cannot be an empirical science, like physics or chemistry. These are based on observations of say, anything that cannot think - inanimate objects, like rocks in a gravitational field, or even living tissue, excluding the brain. All economic forces are driven by the actions of people all over the world, to buy, sell, or even abstain. Unlike rocks, human beings think, then act. Therefore, economic forces can only be understood through the logic of human action, or deductive reasoning based on what we already know about how human beings normally react to given conditions, at the time of decision.
  Because only God can know how people will react in the present or the future, Keynesian policies give producers an unrealistic picture of economic conditions. Many bad investments are made based on that unrealistic picture. When Keynesian style, government ‘fixes’ are imposed, we get longer and deeper ‘boom & bust’ periods. Not only does the market have to adjust for the normal swings in the economy, it also has to wash out the excesses from the arbitrary stimulation of the economy through Keynesian intervention. The market naturally tends to adjust itself, and that process is unstoppable despite government intervention. So, Keynesian ‘fixes’ amount to throwing rocks into the gears of a self-adjusting machine.

  Published: March 11, 2009 2:15 PM

• Oil Shock

  Greg,

  You don't understand probability theory. First of all, if you get it right 51% of the time, that makes you a lucky person, not a good statistician. Second of all, you could lose what you made with your 51% and more in that other 49%. so there you have it.

  Benjamin,

  I want to echo the sentiment of the majority of posters here. Well done!

  Published: March 11, 2009 2:22 PM

• Deb Tiedemann

  As a newcomer to Austrian Economics (thank you, Ron Paul!) I found this helpful, from Hoppe's "Democracy: The God That Failed", (pp. xvi-xviii):
  "Examples of what I mean by a priori theory are: No material thing can be at two places at once. No two objects can occupy the same place. ....If A is a part of B and B is a part of C, then A is a part of C. 4=3+1. ....Implausibly, empiricists must denigrate such propositions as mere linguistic-syntactic conventions without any empirical content, i.e., "empty" tautologies. In contrast to this view and in accordance with common sense, I understand the same propositions as asserting some simple but fundamental truths about the structure of reality. And in accordance with common sense, too, I would regard someone who wanted to "test" these propositions, or who reported "facts" contradicting or deviating from them, as confused. A priori theory trumps and corrects experience (and logic overrules observation), and not vice-versa.
  More importantly, examples of a priori theory also abound in the social sciences, in particular in the fields of political economy and philosophy: Human action is an actor's purposeful pursuit of valued ends with scarce means. ....Production must proceed consumption. What is consumed now cannot be consumed again in the future. ....Taxes are an imposition on producers and/or wealth owners and reduce production and/or wealth below what it otherwise would have been. .....Democracy (majority rule) is incompatible with private property (individual ownership and rule).
  ....For an empiricist, propositions such as these must be interpreted as either stating nothing empirical at all and being mere speech conventions, or as forever testable and tentative hypotheses. To us, as to common sense, they are neither. In fact, it strikes us as utterly disingenuous to portray these propositions as having no empirical content. Clearly, they state something about "real" things and events! .....To negate these propositions and assume, for instance, ...that what is being consumed now can possibly be consumed again in the future...strikes one as absurd; and anyone engaged in "empirical research" and "testing" to determine which one of two contradictory propositions such as these does or does not hold appears to be either a fool or a fraud."
  And thank you, Lew Rockwell, for "Speaking of Liberty"! Your eloquent encouragement in that book gave me the gumption to tackle Mises' "Human Action"

  Published: March 11, 2009 2:36 PM

• RTRebel

  Good piece! It's nice to tell those empiricists, natural law comes law-gically not empirically!

  Published: March 11, 2009 3:03 PM

• Brent Railey

  I was also introduced to the epistemological problems of empirical science in my studies of theology through my readings of Gordon H. Clark, and it completely changed my view of the world. Clark had the gumption to say that all scientific conclusions “derived” through empirical methods are always and everywhere false in terms of formal logic, because all of them are clear examples of the fallacy of affirming the antecedent.

  You can see this to be true due to the fact that every empirical “law” is tentative at best, and will likely be tweaked or replaced in a few short years. How is this genuine “knowledge”? (This isn’t to say that science is not useful, it’s just not truth in the absolute sense of the word—it isn’t the truth that theologians and Austrian economists are in pursuit of)

  Empirical “conclusions” are not conclusions at all, for the empirical process starts with the conclusion (aka hypothesis) and the conclusion is either affirmed or denied via the testing.

  What is interesting to me is that “facts” in empirical science (the measurements in observation and experimentation) also have epistemological problems. Even something simple (like measuring the thickness of a board), when done multiple times will produce multiple results: the more precise the tool, the clearer the variances between measurements. So then, what is the real thickness of the board? Well, it is usually an average of the measurements, which is often a result that was never observed.

  One other question: “You cannot know anything you cannot empirically verify.” So, what empirical evidence do we have that helps us to know this?

  The “a priori” nature of Austrian economics is the reason why I respect it to the level I do—and the reason why it works.
  

  Published: March 11, 2009 3:09 PM

• Mark Knutson

  As the son of a physicist, the notion of using critical thinking to evaluate theories comes naturally to me. The predictive capabilities of a theory are its most important attributes, and its the height of doublespeak to call an ideology that fails to predict reliabily "science".
  
  This is an age where what we used to call science consists of charletons with degrees preparing flawed studies which support the political goals of the state.
  
  The dull mind is irresistably attracted to numbers, so we have the social sciences attempting to reduce complexity to statistics, again in the service of statism. (Not to mention the myriad ways that statistics can be manipulated by the advocate and misunderstood by the unschooled).
  
  This strikes me as the entire basis of the so-called social sciences, which analyze trends of phenomena where only a small portion of variables are controlled, representing a monument to the post-hoc, ergo propter hoc logical fallacy--breathtaking in its scope and influence.
  
  

  Published: March 11, 2009 3:21 PM

• Michael A. Clem

  Good article! I'm still waiting for mainstream economists to empirically quantify "irrational exuberance"...
  

  Published: March 11, 2009 3:26 PM

• Dick Fox

  Fantastic article!!!!

  I am a fanatical critic, but in this article I found nothing to criticize.

  Published: March 11, 2009 5:00 PM

• Florian Kren

  @Inquisitor
  Defintion i know:
  "The word empirical denotes information gained by means of observation, experience, or experiment[1], as opposed to theoretical."

  Therefore its not just data testing, it practically includes all experience. If you read every moday Krugmanns columns and conclude that he is an idiot, then the words of the comment is youre empirical information upon which you used reasoning and maybe information gathered elsewehre to arrive at youre conclusion.

  "If your point is that examples help clarify abstract principles, very few would disagree."
  No, its more than that. Abstract principles are created by human minds, which can make errors even in numbers. Take austrians and keynesians, both are numbering at least a few hundred, both groups of people are not obviously insane from a laymens point of view, but they have contradicting ideas about economics.

  One method to decide is to get understanding of their arguments and conclude from that who is wrong. But this has 2 disadvantages, first it requires a lot of reading and thinking and both time and one might have other things to spend time and thought on. And second maybe in ones on thinking one makes the same mistakes as the wrong group and ends up with thinking that the group that in truth is wrong is actually right.

  But if there would be 2 countries with similar inhabitants, similar landscape, climate, etc. and in 1 country keynesians get free ride to apply all their wonderful politics and in the other austrians would be free to apply all their wonderful ideas(which as far as i understand would mostly consist of doing nothing at all) and 1 country ends in starvation and civil war, while the other ends up prosperous i dont need to spend any additional thought to know, that the ideas of the ones with the failed country are more faulty than the ideas with the unfailed country.
  And if there is little difference in the end between the 2 countries i know, that whatever the differences between the 2 concepts are, they are not very relevant.

  "If your point is that you require "empirical testing" to convince,"

  I said easier to convince. Before 16th july 1945 physicist had a hard time to convince anybody, that they were doing something military useful at los alamos - they still managed to convince, otherwise the project would have been cancelled - but after 16th july there was no need to convince anybody.

  ", and is akin to Friedman's silly idea that "empirical" economists can merely refer to the "facts" when they disagree, and these "facts" will resolve the disagreement."
  Friedmans idea is silly in the practical sense, in an abstract sense its correct - if you have a few thousand copies of earth, some covert way to influence political decisions and lack any conscious Friedmans idea would work.
  But as we have no cpies of earth and hopefully all have a conscious its "Pure fiction."

  But this and that is my point does not exclude that there might not be circumstances where events in the real world are close enough to be as convincing and as evident for economics as a flying plane or a nuclear explosion are for parts of physics.

  Published: March 11, 2009 5:27 PM

• Sonic Ninja Kitty

  Thanks for the awesome article! Very well said.

  I am astounded at the way Austrian/Friedman/free market economics are mixed with Keynesian economics in discussions of 'what to do' these days. The general public and the media do not understand how they are polar opposites, and anything that helps illustrate the differences is sorely needed.

  IMO, since most people don't understand the fallacies of Keynes, the politicians use his famous name as a cover for purely political maneuvering. Ignorance will be our undoing.

  Published: March 11, 2009 5:41 PM

• newson

  florian kren says:
  "But if there would be 2 countries with similar inhabitants, similar landscape, climate, etc. and in 1 country keynesians get free ride to apply all their wonderful politics and in the other austrians would be free to apply all their wonderful ideas(which as far as i understand would mostly consist of doing nothing at all) and 1 country ends in starvation and civil war, while the other ends up prosperous..."

  without going to argue empirically (!), i would draw your attention to the different paths taken by the two post-war germanys. or maybe north and south korea. crude comparisons, i admit, but about as good as it gets as a social experiment.

  Published: March 11, 2009 7:51 PM

• E. Harding

  Careful there, "Sonic Ninja Kitty", we don't want to confuse such (monetary) inflationists as Friedman with anyone who could have written this. If the distinction between the Chicago and Austrian schools may seem blurry, consult this trusty article for more information.

  Published: March 11, 2009 7:57 PM

• Peter

  I’m not trying to bait anyone into a discussion over evolution/creation, but I see similar problems with the scientific establishment in that debate

  I used to argue with creationists, but then I read this - I'm not convinced, but have to seriously think about it :)

  Published: March 11, 2009 10:56 PM

• Jaycephus

  Peter: "I used to argue with creationists, but then I read this - I'm not convinced, but have to seriously think about it :)"

  I used to argue with evolutionists, but when so-called empiricists like Sagan and Dawkins use straw-man arguments and outright lies, then why bother.

  You posted a link to the ulimate anti-logical, fact-free response possible to creationism. And your point is...what?

  Published: March 12, 2009 2:21 AM

• Florian Kren

  @newson
  I mentioned that "experiment" in my first post. SInce it was more freedom(ordoliberalistic approach, which is thought to be wrong by austrians) against less freedem(some kind of outright socialism), you cannot conclude from it, whether minimal state or total freedeom(austrian/anarcho-capitalistic vision) would be better or worse. But one can draw the conclusion that more freedom was far, far better than less freedom, and therefore that more freedom is a plausible thing to try.
  Even socialist cannot escape that conclusion, today german socialist admit, that a free market is necessary for a prosperous society and that they do not want to abolish it anymore, they just want to abolish capitalism - so while the "experiment" did not help them with their inability to spot contradictions in their thinking, it at least gave them the idea, that economic freedom is necessary for a society.
  And this is the power of empirism, it can bring even total nuts closer to truth, even if they are unable to think about their worldview coeherently.

  And also, while trusting empirism to be guaranteed to lead to nearly correct knowledge is wrong, since it is only sensible in case of perfect or near perfect(as in physics) repeatability of all experiments and observations, it is also wrong to assume, that one get to nearly correct knowledge about events in the material world without any empirism.

  Take anarcho-capitalism and minimal state, which side of the argument is correct?

  Even reading all the arguments one cannot decide. The only way to decide would be, if with similar countries one part would go for minimal state while the other would go for anarcho-capitalism. Then by looking at what they evolve into, one could decide whether anarcho-capitalist are right or wrong.

  (It might be even worse, that each system has only a percentile chance to succesful, in that case it would have to be repeated many times to be able to decide between minmal state and anarcho-capitalism.)

  Published: March 12, 2009 3:52 AM

• newson

  to florian:
  my apologies, i jumped on your second post, not seeing the first.

  Published: March 12, 2009 4:28 AM

• Brian Macker

  You know, science has moved on since the logical positivists. As far as I can tell Austrian economics is empirical in the sense that Popper would use the word. In fact Austrian Economics is far more empirical than Keynesianism.

  I think it is an enormous mistake to take the position that economics is not an empirical science. I don't have time to explain now in detail. However like the term liberal has moved on in a bad way since one hundred years ago so has the term empirical.

  By saying your theories are not empirical you are saying more than that you disagree with the logical positivists.

  All scientific theories need to be logically consistent because if they aren't then they are useless in that they will predict conflicting outcomes. So Austrian economics isn't special in being a "logical science". All are.

  What about empricism. Well here's a quick definition from Wiki (I know) which is good enough for our purposes.
  "The word empirical denotes information gained by means of observation, experience, or experiment[1], as opposed to theoretical. A central concept in science and the scientific method is that all evidence must be empirical, or empirically based, that is, dependent on evidence or consequences that are observable by the senses. It is usually differentiated from the philosophic usage of empiricism by the use of the adjective "empirical" or the adverb "empirically." "Empirical" as an adjective or adverb is used in conjunction with both the natural and social sciences, and refers to the use of working hypotheses that are testable using observation or experiment. In this sense of the word, scientific statements are subject to and derived from our experiences or observations. Empirical data are data that are produced by experiment or observation."

  Are you claiming that the Austrians developed their theories without "observation, experience, or experiment?" Austrians never observed the business cycle, or how banks operate, before setting out their theories. They never observed human behavior? Austrians have no experience in these areas and do not use the experience of history? Austrians theory is not testable against past experience, or current experience and observation?

  I think the answer to all those is NO.

  What about experiments. Well, one of the benefits of experimentation is that you can replicate and control for variables. It may seem that this is not possible in the real world but it is to a certain degree. One can control for variables in other ways, and one can replicate in other ways than artificial experiments.

  The real world is running experiments all the time. So replication is not a problem. How can you control for variables. We'll you find two different situations that are similar in which the variables you which to control for are not present, and present.

  Austrians need to stop whining that it's not an empircal science and take the high ground instead. It's Keynesians that are not doing science. Not only aren't they logically correct, but they also fail empirically. What do you think stagflation was all about. That was an empirical falsification of Keynesian theory.

  Get with the program DAMN IT! Get unstuck from the philosophical wars of one hundred years ago and bring yourselves up to speed with current understanding.

  Saying that economics is not an empirical science now days is like saying you are a cult who wants to believe on faith rather than conformity of your theories to reality.

  Published: March 12, 2009 7:36 AM

• Brian Macker

  Jaycephus,

  Tying Austrian Economics to Creationism. Good luck with selling it as science then.

  BTW, The Theory of Natural Selection is the only well tested and unfalsified scientific theory we have to explain the FACT of evolution.

  Published: March 12, 2009 7:43 AM

• fundamentalist

  Brian: "The Theory of Natural Selection is the only well tested and unfalsified scientific theory we have to explain the FACT of evolution."

  If you could show me how it has been tested I would be very interested in knowing. Many scientists had accepted the theory of evolution without evidence long before Darwin published his book. His book only made the theory respectable.

  Published: March 12, 2009 7:53 AM

• Barry Loberfeld

  Let's not say that "axioms" have nothing to do with empirical reality — from Economics: A Trialogue:

  
  

  John: It seems to me that since you have theory as the basis of everything, we have to ask what is the basis of this theory.
  

  Adam: Economic science proceeds from theorems, or “axioms,” as some prefer -- I already gave you one: Lower the price, you sell more; raise it, less -- that themselves proceed from knowledge that is available to all people everywhere. A man has five dollars: It's easier for him to buy the one dollar widget than the four dollar one -- and impossible for him to buy the six dollar one. Theory is no more an arbitrary construct in economics than in mathematics. One-plus-one-equals-two isn't merely a "logical" proposition, but something we've observed from the result of putting one rock together with another.
  

  John: And it's by applying these theorems to "economic" questions of production and distribution that we engage in real science?
  

  Adam: Exactly.
  

  Published: March 12, 2009 9:10 AM

• Florian Kren

  @Brian Macker
  I agree with youre post, but this is too optimistic:
  " We'll you find two different situations that are similar in which the variables you which to control for are not present, and present."

  There are so many variables which might be important for economic development, that it is unlikely that all variables are what is desired.

  Take for example west and east germany, at first it looks like a "nice experiment" running from 1945 too 1989 with the result that socialism is vastly inferior to a social market economy.
  But there are many aspects in which west and east germany differ and its hard too tell whether these difference have a relevant effect:
  -different devastation by war
  -different influx of refugees(refugees wehre running from red army)
  -different size
  -different amount of reparations paid
  -different psychological situation - i remember stories from my grandma how nice and civilized the US-forces where, when they occupied her hometown, while in the east russians soldiers appearing sent everybody running and hiding
  -east got into the hands of Stalin, being amont the top nominees for greatest massmurder of all time contest - not what i would consider a normal kind of ruler
  -east knew they were heading for socialism

  Worst might be the combination combination of refugees and the prospect of living under Stalin and the red army. Who had run west and who stayed?
  Obivously the old and ill couldnt run, so the remaining population might have been slightly less healthy than those who ran.
  And people dislking the ideas of socialism where more likely to go west than those in favor of socialism. Maybe this worldview is corelated with abilities, which are important for hard work and economic success, then we would have a country divided with the highly productive individuals concentrated in the one half - how could we then judge whether and to what extent the economic advantage the west has over the east is due to the system or due to having the more productive individuals?

  And this potential change of population composition was not a one time at 1945, beacause the leftist "experimentators" forgot for 16 years to build a wall to keep individuals from "confounding" the "experiment" by following the foolish notion, that they go where theey think life is better for them.

  Still i think that the difference between east and west is large enough, so that it cannot be completely due to this uncontrolled variables. But if such a nearly "optimal" example is not without doubt, its likely that in all other cases the uncontrolled variables can destroy any certainity.

  Take for example US and Europe, per capita income in US is 35-50% higher now, but was only 20% higher in 1980. Now some reagan fan might say, that this is due to reagans policies since they slowed the growth of the social welfare state compared to the growth in europe.
  But there are other important differences:
  -US has far lesser population density, which makes land a lot less scarce
  -US is hovering about 2.0 children per women, europe is at 1.3-5
  -US has a lot of immigration and is painted worldwide since decades as a evil heartless capitalistic predator society - guess people heading for US are not likely to expect to be on social welfare, but intend to work hard and earn tons of money
  -Europe has a lot of immigration and is painted worldwide as a nice and social society, where the forces of evil capitalism are under control to the benetfit of the poor - guess a part of the people heading for europe could be drawn by the hope of welfare payments

  Now if you send all the hard working people too one country and all those - to say it politely - who are in need of help to another, it might well be that this trumps any difference short of outright socialism between the cuontries.

  Published: March 12, 2009 9:20 AM

• Gil

  What part of evolution offends you, fundamentalist? Or, for that matter, at what point does it offend God? If God is presented as all-powerful and eternal then how does science offend Him when it shows the Universe as being considerably larger and far more complex than what people thought it could be century ago? Likewise why should speices be eternally 'fixed'? Why can't animals evolve over time through umpteen generation of selected breeding? Or humans for that matter? If evolution is false then a whole lot of biology comes crumbling down - especially genetics. Perhaps the whole sphere of science comes crumbing with it. If species are fixed and recently created then the Universe must be fixed and young. The Earth and the Sun aren't two mere specks in the Universe but two very important players in a small Universe. The Universe isn't some 30 billion lights years across but some 12,000 light years across. And so on - the whole science disciplines with a large, dynamic, evolving Universe that goes with it must be woefully wrong. Evolution isn't one meaningless loose brick of the Temple of Science - it's one of the major pillars. Take evolution down and rest will come down with it.

  Published: March 12, 2009 10:04 AM

• Florian Kren

  @Gil
  You didnt read hitchhikers guide to galaxy.

  If the universe was created 12000 years or 12 seconds ago would not mean, that the universe isnt 30 billion LY in size, because it could simply have been created that way, with all light we think to see now from 20 billion ly away objects created at the right spot.

  Obviously not a scientific idea, because if an almighty and allknowing being would set out to create a universe in such a way, that we cannot notice that its only 12000 years old, then there cannot be any test or observations to check the idea.

  And you should not misinterpret what creationists are claiming, otherwise they get an advantage.

  No creationist claims any longer, that evolution is not happening, because with bacteria and antibiostics you can empirically verify that.
  What they claim is, that this evolution mechanism - they call it microevolution - is not powerful enough to start with single cell organisms and end up with humans 4 billon years later.
  This claim is cleverly selected, because we have no method to check this via experiment or observation. (again like in economics we would need a few alternative earths and lots of time.)

  But its unsicentific, because god doing sumething or nothing cannot be tested anyway. If one assumes, that god interferred some million years ago to speed up evolution, than one cannot know whether he interferred the last 300 years continuesly tweaking all experiments and observation in such a way, that all our science is completely of the true rules of the universe - so then pursuing science doesnt make much sense anymore.

  Published: March 12, 2009 10:45 AM

• Sonic Ninja Kitty

  Thank you very much for the great info, E. Harding. I'm still learning. (At least I know a Keynesian when I see one--haha!)

  Published: March 12, 2009 11:54 AM

• Barry Loberfeld

  There's nothing left of creationism.

  Published: March 12, 2009 12:01 PM

• Inquisitor

  "Empirical data are data that are produced by experiment or observation.""

  Define a priori and empirical and explain their role in epistemology, please. Because I am sensing ignorance of how the terms are used here... Mises certainly believed he was theorizing about the real world, and his theories certainly had empirical content... but he never denied this. He did deny that testing theories in the positivist fashion made no sense in the field of economics. The two claims run independently of one another...

  "The real world is running experiments all the time. So replication is not a problem. How can you control for variables. We'll you find two different situations that are similar in which the variables you which to control for are not present, and present."

  No, it's not running controlled experiments of the type that positivists (substitue with any empiricist you would like) would need, and no, there are so many countless factors at play that no model can hope to even approximate them with the degree of accuracy displayed in the social sciences, for the simple reason that human action is far more multifaceted, diverse and complex. The fact that the subjects can react to the model makes an even worse mess of the idea of "empiricist" economics. All the Austrians are saying is that economics must refer to the fact that it is dealing with subjects characterized by a means-ends modality of action and must be built off this foundation. It is stupid to try approach economic agents in the way natural sciences approach inanimate objects.

  "Austrians need to stop whining that it's not an empircal science"

  They're not "whining". They are challenging the idea that the social sciences conform to the hypothetico-deductive methodology that is often described of the natural sciences and advocated for economics.

  "Get with the program DAMN IT! Get unstuck from the philosophical wars of one hundred years ago and bring yourselves up to speed with current understanding."

  Nope, the "wars" are very current and ongoing. Fact is, unless you're willing to understand Mises's claims within his Kantian framework (or Menger's with regard to his Aristotelian framework), you're not going to understand him at all, so strictly speaking this is not a job for laymen. This article is perhaps testament to that fact, as are many comments here.

  "Saying that economics is not an empirical science now days is like saying you are a cult who wants to believe on faith rather than conformity of your theories to reality."

  Define "empirical science" please. Because from where I'm standing one can interpret people who rely too much on prediction as people relying on oracles...

  Frankly I don't see what creationism has to do with an axiomatic-deductive framework, except insofar as it is a matter of metaphysics, itself a synthetic a priori discipline (no offence, positivists).

  Published: March 12, 2009 12:11 PM

• fundamentalist

  Gil: “What part of evolution offends you, fundamentalist? Or, for that matter, at what point does it offend God?”

  Nothing about the theory of evolution offends me, and I can’t speak for God. However, I find the attitude of the scientific establishment toward truth rather odd: they would rather have falsehood if it champions a naturalistic model than the truth if it involves God.

  Gil: “Likewise why should speices be eternally 'fixed'? Why can't animals evolve over time through umpteen generation of selected breeding?”

  No one proposes that species are fixed or can’t change. Creationists have no problem with selective breeding. All farmers and ranchers practice it. In fact, the fields of genetics and breeding came from the work of a devout believer, Gregor Mendel, not from Darwin. Mendel opposed Darwin’s ideas. What Mendel opposed, and creationists oppose, is the idea that species changes are unlimited and can eventually change one animal into another, such as a dog into a horse. As Mendel wrote, the variation in species has a definite limit. Evidence against that limit is almost non-existent.

  Gil: “If evolution is false then a whole lot of biology comes crumbling down - especially genetics.”

  This is where the ignorance of evolutionists causes them to battle straw men. There is an enormous gap between the idea that species can change and the idea that one animal can change into another animal. Creationists refer to the two as micro and macro evolution. Evolutionists falsely accuse creationists of not accepting micro evolution. As I wrote, the father of genetics was a devout Christian. Many creationists teach genetics in college. A good example is “Genetic Entropy & the Mystery of the Genome” by John C. Sanford, professor of genetics at Cornell.

  Gil: “Take evolution down and rest will come down with it.”
  Science is built on micro evolution, which creationists embrace. Show me how macro evolution has benefited science in any way.

  Florian: “This claim is cleverly selected, because we have no method to check this via experiment or observation.”

  The distinction between micro and macro evolution is a simple matter of observation. The evidence for micro evolution is all around us. Creationists depend upon it. The evidence for macro evolution is almost non-existent.

  Florian: “But its unsicentific, because god doing sumething or nothing cannot be tested anyway.”

  Using the positivist definition of science, you’re correct. But as the article suggests, that definition is too restrictive to be of real use.

  Inquisitor: “I don't see what creationism has to do with an axiomatic-deductive framework…”

  I was trying to point out that the disagreement over definitions of science are similar for creationists as for Austrian economists. That’s all. Philosophy and theology are both axiomatic-deductive. Also, Austrian economists insist that data cannot interpret itself; we need sound theory in order to interpret data. In a similar way, sound theory must be used to interpret data where origins are concerned because it, too, is historical data. In all other branches of science, repeated lab experiments can be used to develop theory, but not with the issue of origins. But in the issue of origins, assumptions are very important when interpreting data and differing assumptions can lead to vastly different interpretations.
  

  Published: March 12, 2009 12:40 PM

• Inquisitor

  Ah, I see. More a matter of metaphysics I'd say then.

  Anyway, on the Austrian method I cannot emphasise how important these three works are, in addition to more "traditional" resources (i.e. Mises, Hoppe):

  http://mises.org/journals/jls/12_1/12_1_9.pdf

  http://www.veritasnoctis.net/docs/aristotelianapriorism.pdf

  http://mises.org/journals/scholar/long.pdf

  Published: March 12, 2009 12:53 PM

• David Ch

  Mr Richards, I have rarely come across a natural scientist with such a clear understanding of praxeology as yourself. This article is pithy, incisive, and bang on the button.

  Being an economist myself (whose formal education was, it must be said, almost exclusively Keynesian), I have long taken a dabbler's interest in physics. But I can lay no claim to actually being a physicist by any stretch of the imagination. By contrast, your article demonstrates such a comprehensive grasp of economic fundamentals that you could quite legitimately regard yourself as an Economist.

  Now I quite understand that that's not exactly a label you would want to admit to at, say, a cocktail party, but you should privately take some pleasure in knowing that you are a real one, unlike most who go by that designation in the world at large.

  thank you

  Published: March 12, 2009 12:54 PM

• Inquisitor

  emphasise enough* also forgot to add Hayek to the list of "traditional" sources, as his The Counter-revolution of Science is an excellent resource. Long's paper is a nice summation/exegesis of all the authors' viewpoints.

  Published: March 12, 2009 12:55 PM

• Eric

  I don't see much similarity between evolution science and Austrian economics.

  People who don't accept evolution concepts, such as changing from one species to another over time are simply not willing or able to look at the millions of pieces of evidence available.

  I would bet that few who argue against species change can even define what it means to be a separate species. These people likely have never heard of a ring species.

  http://en.wikipedia.org/wiki/Ring_species

  All evolutionary evidence is cross-checked and there are no serious contradictions that I am aware of. When DNA studies came of age recently, there is near perfect agreement with evolutionary theory.

  Economics has a minuscule amount of empirical evidence in comparison, and what it does have is contradictory - and much is faked. In addition, the so-called evidence, such as the facts surrounding the Great Depression are numbers that come from the least trustworthy sources of information - the government.

  
  The real problem with mainstream vs. Austrian economics is probably best understood by an analogy:

  One can look at the workings of a computer at the physical level, and count the number of electrons going through all the various transistor gates in a computer chip.

  Another way is to look at the highest layer (and nature is in love with layers) and see that some human action is affecting these electrons to produce a comment on this blog.

  The mainstream, with all their numbers and charts and models is trying to determine what the effects will be of all those electrons running around in the FEDs money making computers. This myopia causes them to be unable to see the big picture - too much money and credit creation causes booms and busts because humans act in understandable ways.

  Published: March 12, 2009 2:16 PM

• Current

  Eric "I don't see much similarity between evolution science and Austrian economics. "

  Read more Hayek. They are very similar.

  Especially "The Constitution of Liberty".

  Published: March 12, 2009 3:06 PM

• Eric

  Current:

  Is there a summary or an online version of the "Constitution of Liberty"? How is this much different from Rothbard's ethics of liberty?

  My main point above was that evolution is a science that looks at millions of small details, and is able to describe, to my satisfaction, how life has come to have everything from viruses, bacteria, mitochondria, sponges, and even humans.

  However, evolution cannot explain why we are having a financial crisis today. That requires a much higher level of analysis. While the origin of man can be explained by a few low level rules, luck, and a few billions of years of natural selection, nothing quite so simple can explain the outcome of the actions of these humans.

  Austrian Economics begins with the actions and desires of humans and develops a logical framework to explain free exchanges in the market place, and also how force affects the patterns of these exchanges.

  Austrian economic knowledge grows using logic; evolution knowledge grows from physical evidence.

  Mainstream economics tries to use the ideas of science, as evolution does, but has nowhere near the amount of reliable information to look at. Evolution has been cross checked in a myriad of ways and also uses experiments to reproduce events.

  Economics has but a handful of historical events that it can call its evidence. While there have been a few experiments, such as socialism and the American constitutionalism, these hardly could be seen as controlled experiments. It would be like asking evolutionists to come up with a theory of life having only seen two or three fossils.

  
  

  Published: March 12, 2009 3:57 PM

• Brian Macker

  Fundamentalist,

  The Theory of Natural Selection predicted descreet particulate heredity (not blending), mutations of those particles, selection driving the proportions of those particles in populations.

  Since then we have also discovered that mutations do occur in genes and do cause changes. Experiments have been done where a known strain (with known genetics) is introduced into a novel environment. When a new strain evolves from this we can look at the genetics and see what genetic changes took place. In many cases they have identified the exact mutation that caused the change. So the theory was tested and passed.

  The theory predicts other things about how we would expect to find fossils. For instance we would expect to find intermediate organisms and we do (despite ridiculous claims by Creationists to the contrary). Tested and passed.

  There are also long lists you can find on the internet of other tests that the theory of natural selection has passed.

  Most of them are empirical tests like these and many of those do not involve experimentation at all. This is why I say empirical does not equal experimental. Even if you removed all experiments done to confirm evolution there would still be tons of empirical confirming tests of evolution.

  Evolution is an empirical science even though it is not one where experimentation rules the day.

  Published: March 12, 2009 6:11 PM

• Brian Macker

  "Nope, the "wars" are very current and ongoing. Fact is, unless you're willing to understand Mises's claims within his Kantian framework (or Menger's with regard to his Aristotelian framework), you're not going to understand him at all, so strictly speaking this is not a job for laymen. This article is perhaps testament to that fact, as are many comments here."

  That's baloney. I've read him and I understand him perfectly well. I can also map Austrian Economic theory onto other philosophical theories of knowledge. Logic works the same in these systems.

  Problem is that some of these philosophical systems are just plain wrong. The logical positivists are wrong.

  Mises had some pretty ridiculous things to say about other sciences. I don't recall right now but they were pretty embarrassing. Which isn't surprising. He's around 50 years behind the times on the philosophy of science.

  For example Mises might use a good dose of Daniel Dennett.

  Published: March 12, 2009 6:28 PM

• fundamentalist

  Brian Macker: "Since then we have also discovered that mutations do occur in genes and do cause changes. ... So the theory was tested and passed."

  I don't know how many times I have to repeat that creationists embrace genetic changes within animal types to produce new species. I keep repeating it, but you guys keep beating your straw man. This has been true since Mengel. What we don't agree with is that mutations can create the new information necessary to change one type of animal into another, such as a chimp into a human. If you read "Genetic Entropy & the Mystery of the Genome" John C. Sanford you will see than geneticists have known for decades that harmful mutations outnumber beneficial mutations by one million to one. A true understanding of genetics proves that the creation of new types of animals is simply impossible.

  Brian: "For instance we would expect to find intermediate organisms and we do (despite ridiculous claims by Creationists to the contrary)."

  Roger Lewin is an evolutionist scientist and he disagrees with you. He wrote "Bones of Contention" and though he remains an evolutionist, he demonstrates that the fossil evidence is a joke.

  Brian: "Evolution is an empirical science even though it is not one where experimentation rules the day."

  No, it's an unscientific ideology even by the scientific establishment's own definition of science. It's junk science like Keynesian economics is junk economics.

  Published: March 12, 2009 8:27 PM

• fundamentalist

  My understanding of the Austrian objection to empiricism is that it applies to the idea that the techniques of natural science should be applied to economics.

  1) The natural sciences use experimental results to develop theory because they are examining a subject they know very little about. On the other hand, economics studies people, something we know a great deal about already. We are studying ourselves.

  2) Natural sciences use lab experiments in order to control variables and insure that just the variables they are studying change. Economics cannot be conducted with controlled experiments. All of history is its data and historical data is so vast and complex that peddlers of snake oil can always find some evidence for their position if they are selective enough. That's why Mises insisted that history cannot be understood unless approached with sound theory to create order from the chaos.

  3) A single experiment in the natural sciences is sometimes enough to destroy established theory. That is reasonable because physics operates the same way all of the time. Gravity has always had the same properties as far as we know. It will operate the same way in different places at different times. So it is reasonable to extrapolate from individual experiments. The subject of economics, humans, acts differently at different times and places and under different institutions. So extrapolating from small pieces of evidence, the way many mainstream economists attempt, is impossible.

  4) The natural sciences uses math extensively because the coefficients of variables, such as the speed of light, never change except under extreme conditions. Attempts at using math in economics has failed miserably. The multi-equation macro models of the 1960's are a perfect example. They were a disaster and continue to be an embarrassment to the field.

  On the other hand, Austrian economics is empirical in the broad sense because it is based on observation of how humans think and act, today as well as throughout history. That's why Mises called his masterpiece "Human Action" and not economics. For example, the Austrian Business Cycle theory came about because so many economists since Cantillon had observed that expansion of credit and money causes an increase in capital goods production more than in consumer goods production. Also, the capital goods industries have always been hurt the worst in depressions. The ABCT is an attempt to explain those phenomena which have been observed by many people over centuries.

  A single episode, or several episodes in historical data are not sufficient to overthrow theory in economics. Austrians might argue that the data was misinterpreted. But if a theory in Austrian econ failed to find any data to support it at all, very few Austrian economists would stick to the theory in the way that Keynesian economists have clung to theirs in spite of decades of data that refute it.

  Jörg Guido Hülsmann wrote in his "Mises: the Last Knight of Liberalism" about Menger that "His purpose was to demonstrate that the properties and laws of economic phenomena result from these empirically ascertainable "elements of the human economy" such as individual human needs, individual human knowledge, ownership and acquisition of individual quantities of goods, time, and individual error.[11] Menger's great achievement in Principles consisted in identifying these elements for analysis and explaining how they cause more-complex market phenomena such as prices. He called this the "empirical method," emphasizing that it was the same method that worked so well in the natural sciences."

  Nevertheless, mainstream Keynesian economics is not so disastrougly wrong as it is because it borrows techniques from the natural sciences. It's wrong because its assumptions and reasoning are faulty. It's not empirical enough. If it were more empirical, it would have such absurd assumptions.

  I think it's a shame that Austrians aren't more inclined to use econometrics because with sound theory, the resulting models could be very powerful. A few Austrians have done limited work with econometrics and the results are very impressive. Just search on this site for empirical evidence.

  Mises wrote all of this and more in the first chapters of "Human Action" and did a much better job. Hayek also writes about it in many of his books.

  Published: March 12, 2009 9:13 PM

• Gil

  What then is the true equivalent of evolution then, fundamentalist? If species can't change than all species must have been present from the start. How long ago was that? Considering large scale disasters can cull huge numbers of critters and cause many species to go extinct it could not have been that long ago.

  Published: March 12, 2009 9:22 PM

• Peter

  What we don't agree with is that mutations can create the new information necessary to change one type of animal into another, such as a chimp into a human

  But nobody believes chimps turn into humans.

  If you can pick your nose for one second, you can pick your nose for ten seconds.

  [My point, Jaycephus, is that that is actually a very good list of reasons people believe in creationism]

  Published: March 12, 2009 11:58 PM

• eric

  Fundamentalist,

  You too keep ignoring certain details. You speak of changing from a chimp to a human as being impossible.

  Well, first off, nobody has said that they did. Rather, it is said only that chimps and humans have a common ancestor from some 10-20 million years ago.

  You also didn't respond to the fact of existing ring species. This is one easy way to explain how different species can change from one into another.

  
  But this of course messes with the usual concepts of species as being somehow distinct organisms. In a ring species, there are gradual differences between neighboring organisms (all alive today), but they can still interbreed. BUT, while 1-2, 2-3, 3-4, etc. can all interbreed, 1-4 cannot.

  Once two groups cannot interbreed any longer, change between the groups happens faster. And when the intermediary goes extinct, it appears that 1 and 4 are separate species with no "missing link" between. It's simply that 2 and 3 went extinct.

  This can be seen in some gulls and some salamanders. You don't even need any fossils to show this. You just need to go and take a look for yourself. It's all happening in our own time.

  
  

  Published: March 13, 2009 12:00 AM

• Inquisitor

  "That's baloney. I've read him and I understand him perfectly well. I can also map Austrian Economic theory onto other philosophical theories of knowledge. Logic works the same in these systems."

  If you say so...

  "Problem is that some of these philosophical systems are just plain wrong. The logical positivists are wrong."

  Indeed...

  "Mises had some pretty ridiculous things to say about other sciences. I don't recall right now but they were pretty embarrassing. Which isn't surprising. He's around 50 years behind the times on the philosophy of science. "

  Like?

  Published: March 13, 2009 12:12 AM

• Inquisitor

  Very nice exposition of the Austrian methodology Fundamentalist.

  Published: March 13, 2009 12:19 AM

• Florian Kren

  @Inquisitor and Fundamentalist
  Taking Fundamentalists last post i dont see any difference in our position, the only difference is in our understanding of what empiricism is.
  "On the other hand, Austrian economics is empirical in the broad sense because it is based on observation of how humans think and act, today as well as throughout history."
  That is empiriricism, you look at something in the world(preferably controlled experiments with lots of data) and get from this to explanations about what is going on.
  But the important point for actually doing science is, that the explanation predicts something about the world, that can be checked against events in the world in some way, it might be even in a very remote way.
  Austrians fulfill that condition as well, e.g. Mises claimed long before the fall of socialism, that it would fail. If it had not failed and instead prospered and drawn millions of immigrants to workers paradise Mises would have been refuted and one could have been certain, that were some error in his thinking or in the axioms.
  Theology has no problem with these conditions, because its not supposed to explain anything in the material world. They have their axioms somehow written in the bible and conclude things from that.

  The reason why this "predicting something" is so important are invisible pink unicorns, sugar pills, healing stones, spoon bending and faith healers.
  All this stuff rest on some strange axioms added a little faulty thinking and then people go aroung claiming, that they do something special and earning money with this. If they ideas are correct, there is no problem with this, but if they are wrong they are fooling themselves and others to waste resources on things which are untrue, which in case of faith healers and sugar pills might actually be life threatening.

  The only solution is to require them to name conditions under which something in the world behaves differently as is expected from so far established knowledge. Thats the only way to nail them down, because even if you find a fault in their arguments, they can counter this by modifying their axioms.

  And this requirement needs to be applied to all sciences or ideologies or other ideas that claim to have found some kind of truth about the material world.

  
  Austrians fulfill this requirement, they do predict something about this world(nearly every second day some comment on mises.org claims, that Obama will make the recession more serious by his actions) and if one day conditions would fit their requirements, but the results would be different, everybody would know, that their is an error(e.g. if central banks meddling with money would stop, but the boom-bust cycle would continue in the same way as before, we would know that austrians are wrong to attribute boom bust nearly soley to money meddling.)

  
  @fundamentalist
  About evolution, we know for certain, that 5 billion years ago there were only single cell organisms on earth. Now we are here. Something must have happened since the last 5 billion years to cause that change.
  Possible culprits, who have not been proven innocent , so far:
  -micro evolution
  -god
  -spaghetti monster
  -shiva
  -zeus
  -allah

  What is wrong to assume, that it was micro evolution?

  Published: March 13, 2009 3:35 AM

• Florian Kren

  @Inquisitor and Fundamentalist
  Taking Fundamentalists last post i dont see any difference in our position, the only difference is in our understanding of what empiricism is.
  "On the other hand, Austrian economics is empirical in the broad sense because it is based on observation of how humans think and act, today as well as throughout history."
  That is empiriricism, you look at something in the world(preferably controlled experiments with lots of data) and get from this to explanations about what is going on.
  But the important point for actually doing science is, that the explanation predicts something about the world, that can be checked against events in the world in some way, it might be even in a very remote way.
  Austrians fulfill that condition as well, e.g. Mises claimed long before the fall of socialism, that it would fail. If it had not failed and instead prospered and drawn millions of immigrants to workers paradise Mises would have been refuted and one could have been certain, that were some error in his thinking or in the axioms.
  Theology has no problem with these conditions, because its not supposed to explain anything in the material world. They have their axioms somehow written in the bible and conclude things from that.

  The reason why this "predicting something" is so important are invisible pink unicorns, sugar pills, healing stones, spoon bending and faith healers.
  All this stuff rest on some strange axioms added a little faulty thinking and then people go aroung claiming, that they do something special and earning money with this. If they ideas are correct, there is no problem with this, but if they are wrong they are fooling themselves and others to waste resources on things which are untrue, which in case of faith healers and sugar pills might actually be life threatening.

  The only solution is to require them to name conditions under which something in the world behaves differently as is expected from so far established knowledge. Thats the only way to nail them down, because even if you find a fault in their arguments, they can counter this by modifying their axioms.

  And this requirement needs to be applied to all sciences or ideologies or other ideas that claim to have found some kind of truth about the material world.

  
  Austrians fulfill this requirement, they do predict something about this world(nearly every second day some comment on mises.org claims, that Obama will make the recession more serious by his actions) and if one day conditions would fit their requirements, but the results would be different, everybody would know, that their is an error(e.g. if central banks meddling with money would stop, but the boom-bust cycle would continue in the same way as before, we would know that austrians are wrong to attribute boom bust nearly soley to money meddling.)

  
  @fundamentalist
  About evolution, we know for certain, that 5 billion years ago there were only single cell organisms on earth. Now we are here. Something must have happened since the last 5 billion years to cause that change.
  Possible culprits, who have not been proven innocent , so far:
  -micro evolution
  -god
  -spaghetti monster
  -shiva
  -zeus
  -allah

  What is wrong to assume, that it was micro evolution?

  Published: March 13, 2009 3:35 AM

• Florian Kren

  @Inquisitor and Fundamentalist
  Taking Fundamentalists last post i dont see any difference in our position, the only difference is in our understanding of what empiricism is.
  "On the other hand, Austrian economics is empirical in the broad sense because it is based on observation of how humans think and act, today as well as throughout history."
  That is empiriricism, you look at something in the world(preferably controlled experiments with lots of data) and get from this to explanations about what is going on.
  But the important point for actually doing science is, that the explanation predicts something about the world, that can be checked against events in the world in some way, it might be even in a very remote way.
  Austrians fulfill that condition as well, e.g. Mises claimed long before the fall of socialism, that it would fail. If it had not failed and instead prospered and drawn millions of immigrants to workers paradise Mises would have been refuted and one could have been certain, that were some error in his thinking or in the axioms.
  Theology has no problem with these conditions, because its not supposed to explain anything in the material world. They have their axioms somehow written in the bible and conclude things from that.

  The reason why this "predicting something" is so important are invisible pink unicorns, sugar pills, healing stones, spoon bending and faith healers.
  All this stuff rest on some strange axioms added a little faulty thinking and then people go aroung claiming, that they do something special and earning money with this. If they ideas are correct, there is no problem with this, but if they are wrong they are fooling themselves and others to waste resources on things which are untrue, which in case of faith healers and sugar pills might actually be life threatening.

  The only solution is to require them to name conditions under which something in the world behaves differently as is expected from so far established knowledge. Thats the only way to nail them down, because even if you find a fault in their arguments, they can counter this by modifying their axioms.

  And this requirement needs to be applied to all sciences or ideologies or other ideas that claim to have found some kind of truth about the material world.

  
  Austrians fulfill this requirement, they do predict something about this world(nearly every second day some comment on mises.org claims, that Obama will make the recession more serious by his actions) and if one day conditions would fit their requirements, but the results would be different, everybody would know, that their is an error(e.g. if central banks meddling with money would stop, but the boom-bust cycle would continue in the same way as before, we would know that austrians are wrong to attribute boom bust nearly soley to money meddling.)

  
  @fundamentalist
  About evolution, we know for certain, that 5 billion years ago there were only single cell organisms on earth. Now we are here. Something must have happened since the last 5 billion years to cause that change.
  Possible culprits, who have not been proven innocent , so far:
  -micro evolution
  -god
  -spaghetti monster
  -shiva
  -zeus
  -allah

  What is wrong to assume, that it was micro evolution?

  Published: March 13, 2009 3:38 AM

• Florian Kren

  Stupid browser, some mod here?

  Published: March 13, 2009 3:45 AM

• axiomata

  One of my favorite articles I have seen posted here. But maybe that's the physicist in me talking.

  Published: March 13, 2009 4:13 AM

• Reason

  Florian, 'empirical in the broad sense' meant that Mises et al., by observing humans in action and history, discovered certain axioms that took account of the non-determinism of human behavior and the complexity of social phenomena. That is very different than broad observation leading to the discovery of positivist laws governing human behavior and history. This is why Mises was adamant in labeling economics a deductive vs. inductive science.

  
  

  Published: March 13, 2009 4:41 AM

• Florian Kren

  @Reason
  Sorry, i can only see a technical difference, no fundamental.

  Newton and others observed apples falling, planets moving and such stuff and concluded for example F=g*m1*m2/r**2 and F=m*a.

  Mises and others observed human behavior and concluded certain axioms.

  Both tried to deductively draw conclusions from their axioms, like the expected movement of massive bodies relative to each other or the expected effects upon a society by having socialistic or libertarian laws.

  The technical difference is that, from that on physicist have a huge advantage, because they can easily check whether their deductive conclusions are in accordance with observation and thereby check whether their reasoning and their axioms are correct - and found that both have to be improved.
  Economists have to be honest at that point(which keynisians arent), that a check of there axioms and an improvement of their knowledge is difficult to do, because they cannot as easily or often not at all check their conclusions against reality and thereby have a hard time to find errors in axioms or reasoning.

  If economists wouldnt have this technical difficulties(meaning they have a lot of copies of earth and can manipulate politics there without the inhabitants noticing and lack any ethics), economics would be rather similar to physics in many aspects, most noticeable would be, that economist would no longer argue about most stuff, that was first thought of 200 years ago, because experiments would have settled arguments long ago.

  If physicist would not be able to experiment in the same way, that economists arent able too, then physics would be as a mess as economics with a lot of different schools claiming that the others are just fools or corrupt and with little techniques applicable to real world.

  This is by the way observable in frontier physics, the discussions remind often of debates between people of different religions about whose religion is the true one. As a colleague of mine said:"Whatever the result of my measurement, i can find a theorist who will say, that this result was exactly what was to be expected and that others who disagree simply didnt understand the whole stuff."

  The grounding in observation or experiment is fundamental for keeping science from turning into religion, therefore it should never be ignored. (But relying on pseudoexperiments and -observation like some ecoonomists seem to do is wrong either.)

  Published: March 13, 2009 5:35 AM

• Reason

  Florian,
  Austrian theory is non-inductive as recognized in human action. This is part of the basic structure of reality- like gravity. There is no need to even hope for a discovery of positivist means for economics. It is impossible unless the laws of the universe somehow change. This reality does not make economics lesser, just different.

  That watching an apple fall from a tree hundreds of times can lead to the discovery of physical equations does have a parallel in watching how humans react to having an apple fall on their heads hundreds of times. But the difference is that there are no physical equations that predict human behavior because they are human and each moment changes the environment, exogenous and endogenous to the subject.

  At the same time, there are constancies in the universe afforded humans- how else could humans successfully use means to attain ends? And if this is so, how can one account for human unpredictability-yet-purposefulness in a universe of physical laws determining change where the use of physics cannot prove nor disprove human determinism?

  Answer, the logic of human action.
  

  Published: March 13, 2009 6:23 AM

• Florian Kren

  Reason,

  "Austrian theory is non-inductive as recognized in human action. This is part of the basic structure of reality- like gravity. There is no need to even hope for a discovery of positivist means for economics. It is impossible unless the laws of the universe somehow change. "

  No, the laws of the universe need not change, look at gravity. The laws of the universe didnt change, but newtons description of gravity seems to be wrong. Thats not fault of newton, but of the data he was using, which was only short range low density matter interaction. But if matter density increases or distances increases newton is more and more of.
  Same is true for F=m*a in terms of higher velocity.
  But both isnt newtons fault, it simple is due to the limited observation and experimental data he had access to, the error was only visible in a wider set of data.

  Economics could potentially contain similar problems, since they base their axioms on observations of rather small amount of humans(compared to the numbers that ever have lived and hopefully will live) under a limited set of circumstances(either personal observation or written sources, since most of humans who lived so far were illiterate, this is a possible source of errors).

  The simplest thing would be, that, that their axioms cover not all humans, but only a high percentage, this couldnt be noticed by economists. It might be possible, that under most certain circumstances this is irrelevant, so economy work as expected, but under some rare circumstances this by this humans not covered by the axioms cause a completely different result.

  An example of this problem might be the dispute between anarcho-capitalism and minimal state. As some austrians tend to favor one side over the other it is obviously impossible to use deductive reasoning to decide which side is wrong.

  "This reality does not make economics lesser, just different."

  No not just different, lesser in the sense of precision. Gravity constant is measured with 8 digits precision, error less than 0.00001 %, economic output and change of economic output can be measured at best with 1 digit precision, error about or even larger than 10%. And economic freedom, practically the most important idea advocated by economic science can only be measured in a very vague sense.

  With physics is perfectly ok(if you use youre own money), to give some physicist a few hundred billion dollars in exchange for a trip to mars - they can deliver.
  But it makes absolutely no sense to give economists a few billion dollars in exchange for saving the economy - many of them do not know how to deliver and even if, afterwards they would disagree about whether they succeeded or not.

  The only thing one can get from economics is a general advise, which is more economic freedom is far superior to less, but any advise going far more into details is wrong because economics cannot achieve that precision due to the technical difficulties of acquiring data to test and refine knowledge.

  Published: March 13, 2009 7:12 AM

• Reason

  It almost does not matter how Mises arrived at his axioms. Rather, it is the irrefutability of the axioms, that they can stand on their own, that is important.

  Do humans act? Is rationality (not the quality per instance) fundamental to the human makeup? Therefore, do humans act purposively?

  These questions have to be answered in the affirmitive. Any attempt to negate such premises is a contradiction.

  Precision in getting data is very important to Austrian methodology to the extent that having correct data will point to the right theoretical explanation. Having accurate data by itself does not reveal economic laws.

  Giving money to physicists vs. bureaucrats cannot represent an empirical test like that in the lab. There are way too many variables to account for. And over time, these same variables change, are muted, or deleted. No one even knows their own mind ahead of time.

  Besides, the confidence that such a social experiement could reveal economic laws relies on certain axioms that are at odds with the most fundamental axioms of human action.

  Physics is useless for determining economics, but all sciences may help determine which Austrian theory correctly applies to a specific event. Precision, by its nature, is suboordinated to axiomatic deduction.

  Do you think that every economic proposition is merely hypothetical? Or, now are you ready to admit that there is knowledge other than that of the empirical, testable?

  Published: March 13, 2009 10:03 AM

• Florian Kren

  "Do humans act? Is rationality (not the quality per instance) fundamental to the human makeup? Therefore, do humans act purposively?

  These questions have to be answered in the affirmitive. Any attempt to negate such premises is a contradiction. "
  Why are there only yes and no as answers allowed for?

  A total negation like "no human ever acts purposively." is of course a contradiction if uttered by a human. But already "i act purposefully and the rest of mankind doesnt" isnt contradicting anything, except maybe ones experience, but you want to rule out any observation.

  Asking very roughly, what about if 95% of humans act purposefully 80% of the time and the rest 5% act purposefully only 10% of the time, do you think this would be completely irrelvant to the conclusions of something derived deductively from "humans act purposefully"?

  "Giving money to physicists vs. bureaucrats cannot represent an empirical test like that in the lab."
  This wasnt a suggestion for a lab experiment, but a description what i think to be sensible allocation of money. If economists say "with x billion dollars we can shorten the recession" they are at least dishonest, because they do not know when the depression began, what factors in what way determine the length and when it ends, because their data is simply to imprecise to answer these question in any reliable way, so their claim, that they can shorten the recession is empty. If physicist say "with x billion dollars we can put a man on mars", they are at worst dishonest about x in an order of magnitude, but getting to mars they can manage, because their knowledge is precise enough due to precise enough data.

  "Precision, by its nature, is suboordinated to axiomatic deduction."
  Not if the axioms are only a approximation of reality.

  "Do you think that every economic proposition is merely hypothetical?"
  No, because i think most humans in decisions that are relevant for economics most of the time act purposefully. And that i conclude from observation.
  "Or, now are you ready to admit that there is knowledge other than that of the empirical, testable?"
  But i think its wrong to conclude that the part missing between "most" and "all" will be irrelevant under all circumstances.

  Published: March 13, 2009 10:35 AM

• Florian Kren

  Forgot to answer last question:
  "Or, now are you ready to admit that there is knowledge other than that of the empirical, testable?"

  There is no knowledge that is independent of observation, because to process any knowledge at all one assumes that the own thinking process is not in that way malfunctioning, that what one remembers to have thought a few seconds ago is vastly different from what one actually thought a few seconds ago.

  Since one has no way to determine whether this assumption is true or not one can never be certain whether any conclusion ones mind thinks up is true, because to check whether or not its true one has to use ones memory to recheck that the conclusions was reached by correct application of logic.
  So even 1+1=2 is only true if one can get from 1+ to =2 without ones mind malfunctioning seriously on the way without one remembering it.

  The only way to solve this problem is to assume, that ones mind does not malfunction in this way and check this assumption regularly against other input.
  (e.g. that the outside world is roughly as expected from memory.)

  So to ascertain that ones mind is actually able to uncover any truths at all, one has to rely on observation. So all knowledge rest upon observation, but it can differ vastly how much observation it rest upon.

  Published: March 13, 2009 12:07 PM

• fundamentalist

  Eric: “Well, first off, nobody has said that they did. Rather, it is said only that chimps and humans have a common ancestor from some 10-20 million years ago.”

  That’s simply not true. The standard model of evolution is that humans came from chimps. I’m astounded at how little evolutionists know about evolution. I’m constantly having to teach what evolution really is. But for the sake of argument, what kind of creature was the common ancestor if it wasn’t monkey-like?

  Eric: “You also didn't respond to the fact of existing ring species. This is one easy way to explain how different species can change from one into another.”

  Why comment on mere speculation? Evolutionists are full of could’ve would’ve should’ve, but it’s not evidence. It’s pure speculation about what might have happened.

  Eric: “It's all happening in our own time.”
  Then where is your evidence for the intermediate species of the past? If the theory of biological evolution is true, we should dig up bones of intermediate species everywhere. Why is the collection of such bones, many of which are in dispute, so incredibly small? Roger Lewin wrote that all of the evidence for human evolution will fit on a single table.
  

  Published: March 13, 2009 2:54 PM

• Franklin

  Mr. Richards' article was indeed masterful. It is young scholars such as this gentleman who reduce my rare visits to the doldrums even further. His words are my evidence -- there is hope for liberty and the cloudy future may be brighter than we sometimes fear.

  Regarding the evolution of this blog, I am not particularly concerned what date and time some divine Providence may have tapped homo erectus with a sense of self. My issue is semantics on whether "evolution is a fact." That sounds a lot like "physics is a fact" or "meteorology is a fact." It is poor usage. A fact is, "Colonel Mustard used the revolver in the parlor." And so the "fact" under dispute is whether my great, great-times-several-million, great grandfather was a chimp. I have no issue if he was. When I hear that "evolution is a fact," the usage perturbs me. It seems to smack of provocation, rather than being precise or direct.
  
  Perhaps I'm thinking too much like a journalist or a lawyer, but evolution is a process, a theory, an explanation. Of history, of physiology. And this theory or process delivers me quite a logical explanation of how a rainy, violent planet, covered in mold and rock gave way to microbes and to yinlongs, gave way to Mozart and to Yeats, and gave way to me and to you.
  I embrace the explanation, and I think it is correct; it does not diminish the possibility that a spirit could exist within us. It does not diminish the possibility that one day a spark was struck upon one or more smelly grunts. I just hope that the scene was more picturesque than a boring black monolith standing amid Strauss. Nevertheless, evolution works for me. But so does God. How else can I imagine who kick-started this whole thing? Whose loaded gun went "bang," marking Day-1 of the evolutionary calendar?

  Alas, mises.org is focused on more pragmatic matters, and rightly so.
  Before too long, hopefully not too soon either(!), I may find the answer. And if I don't, more's the pity.
  

  Published: March 13, 2009 10:49 PM

• fundamentalist

  Florian Kren: "What is wrong to assume, that it was micro evolution?"

  There is nothing wrong with assuming it. Just don't call it science. Call it what it is--an assumption. The science of micro evolution is well established, having been begun by an opponent of Darwin, Gregor Mendel. Darwin proposed that micro evolution (such as changes in dog species) could cause macro evolution (such as a change from a dog to a horse). He predicted that fossil evidence of such change would would confirm his theory in the future and that if such evidence couldn't be found then he was wrong. Mendel proposed that the degree of change possible through micro evolution was limited and could not produce new kinds of animals. Almost 200 years later, some evidence for macro evolution has been offered, but the amount is very disappointing even for devout evolutionists. The amount of evidence is so small, in fact, that it forced Stephen Gould to resurrect the "hopeful monster" theory of evolution to explain away the lack of evidence. Since the 1970's a great deal of effort has gone into explaining away the lack of evidence for the theory rather than just admitting the theory is wrong.

  That's exactly how Marxists and Keynesians work. Marxists spend all of their time explaining why all attempts at implementing socialism have failed. Keynesians try to explain why their models can't predict anything accurately.

  Florian: "That is empiriricism, you look at something in the world(preferably controlled experiments with lots of data) and get from this to explanations about what is going on."

  The difference is that in natural sciences the scientists attempt to approach experiments with no preconceived theory in mind. They run their experiments and build theory from the results. They have to work that way because they are ignorant of the subject matter. The method is inductive.

  Some people want economists to apply the inductive method by running thousands of econometric models without any theory and building up theory based on the results. A lot of people have tried just that approach over the past 50 years and the results are very disappointing. They're contradictory, often trivial, and sometime just plain nonsense.

  The problem is that economics cannot use controlled experiments, at least not for the really important concepts. Some trivial results have been produced with computer labs. Other than that, all data is historical data and it is vast and complex. Just choosing a small enough sample to make analysis possible requires some sort of theory to begin with.

  And controlled experiments aren't as necessary in economics as they are in natural sciences because natural science studies non-human objects and laws about which they are ignorant. In economics, we are studying ourselves. We are not ignorant about human behavior.

  Austrian econ is not inductive, but deductive. It builds sound basic axioms about human behavior through introspection, reason, and observation, then uses those axioms to deduce principles of behavior in the field of economics.

  The differences may be subtle, but the consequences are very serious.

  
  

  Published: March 13, 2009 11:22 PM

• Gil

  Strange, fundamentalist, you have no problems understanding economic evolution yet can't grasp biological evolution. Free marketers have problems showing there's no Master Planner in economics there are just individuals who micromanage their lives and change to suit the environment accordingly and the accumulated actions of million of players can give the appearance of planning from a distance but this unity disappears when one gets close. Futhermore, free marketers can also show how wonderfully the overall economy changes with time because those who correctly change are rewarded and those who don't disappear. They will also like to show a free market economy will barely resemble its counterpart a century ago because of the all the subtle changes.

  My question again: if you see evolution as false then what is true? God-guided evolution? No. That's still evolution and makes God less in control of the Universe. Would be it a recent special creation by God with humans as the focal point where the fate of the Universe is determined by the morality of the human race?

  BTW: In the Top 11 Myths About Evoluton. Your notion of humans descending from chimps and not from a common ancestors must come from creationist rags.

  Published: March 14, 2009 12:14 AM

• Brian Macker

  Fundamentalist,
  "I’m not trying to bait anyone into a discussion over evolution/creation, but I see similar problems with the scientific establishment in that debate."
  
  It's clear now that this was false. You were baiting. It's quite clear also that you have been spoon-fed these "problems" you see.

  It's also clear that you don't understand what science is. It's you who is assuming that "macro evolution" can't occur. That despite all the hard core evidence that it has occurred that is quite independent from Darwin's theory.

  There is no "macro" and "micro" evolution just like there is no "macro" and "micro" economics. What you call macro evolution is a simple result of lots of micro evolution. It's not an assumption but a deduction. A deduction that is supported by an overwhelming amount of evidence.

  Just remember that you don't learn science in church, or from creationists and you'll be fine.

  BTW, your understanding of the philosophy of science is abysmal. Science does not operate the way you think it does, at all.

  There really is no point in discussing this with you since your critical thinking skills have been crippled by your "education."

  Published: March 14, 2009 8:14 AM

• Brian Macker

  Franklin,

  You are wrong in your understanding of the science of biology. You are confused because of layman's usage of terms. The theory of natural selection is not equivalent to "evolution".

  "Perhaps I'm thinking too much like a journalist or a lawyer, but evolution is a process, a theory, an explanation. Of history, of physiology. And this theory or process delivers me quite a logical explanation of how a rainy, violent planet, covered in mold and rock gave way to microbes and to yinlongs, gave way to Mozart and to Yeats, and gave way to me and to you."

  What you just described is the "Theory of Natural Selection". It is the explanation of why evolution occurred. Evolution itself is a fact.

  Biologists have gone over this again and again. So I'm not going to give you another detailed exposition. Here read this.
  

  "It is a fact that the earth with liquid water, is more than 3.6 billion years old. It is a fact that cellular life has been around for at least half of that period and that organized multicellular life is at least 800 million years old. It is a fact that major life forms now on earth were not at all represented in the past. There were no birds or mammals 250 million years ago. It is a fact that major life forms of the past are no longer living. There used to be dinosaurs and Pithecanthropus, and there are none now. It is a fact that all living forms come from previous living forms. Therefore, all present forms of life arose from ancestral forms that were different. Birds arose from nonbirds and humans from nonhumans. No person who pretends to any understanding of the natural world can deny these facts any more than she or he can deny that the earth is round, rotates on its axis, and revolves around the sun. " - Lewontin

  Do you get upset when geologists claim as fact that the earth is more than the 4000 years the creationists claim?

  I don't even like to refer to the Theory of Natural Selection as "Evolution" because it confuses the layman due to the possibility of equivocation between that and the main meaning of the word.

  Here's a wiki article, "Evolution as Theory and Fact" that speaks to clearing up this confusion. It's clear that anyone who says "Evolution is just a Theory" in order to claim that it is doubtful whether organisms have evolved over time, is using a fallacy. The fallacy of equivocation between the different meanings of the word evolution.
  

  Published: March 14, 2009 8:57 AM

• Brian Macker

  The link: "Evolution as Theory and Fact"

  Published: March 14, 2009 9:00 AM

• Brian Macker

  "There is no need to even hope for a discovery of positivist means for economics."

  Same is true for all scientific disciplines. None of them operate on positivist means and none of them operate on apriorist means. Anyone who thinks this way is stuck in the 19th and 20th centuries.

  Florian made many points that I was going to make. Apriorism isn't enough. Nor does science operate purely on experimentation. Drop these 19th century notions of science and non-science.

  Humans are fallible and the whole point of science is to reduce error by checking and rechecking against reality. All sciences are empirical. Math is not science, but a tool of science used to reduce error.

  When you claim that your school of economics is not empirical (even when you use empirical methods) then you are saying that it is not a science, but a religion. Sorry but that's just the way the cookie crumbles. Current day usage of the word empirical is not the same as what Mises used.

  The fact that 19th century scientific wars still rage in minor corners of philosophy, and english departments does not mean anything to me. The same is true about creationism.

  I cannot stress strongly enough how much damage this claim does to acceptance Austrian economics. Austrian economics is empirical and it is Keynesian economics that does not conform to good scientific practice.

  The problem with claims to apriorism is that one can make mistakes in both ones assumptions and ones logic. One cannot rely on these only. One should never limit the scope of ones criticisms in science.

  Published: March 14, 2009 10:16 AM

• Brian Macker

  "Because I am sensing ignorance of how the terms are used here..."

  Well you are wrong.

  " Mises certainly believed he was theorizing about the real world, and his theories certainly had empirical content... but he never denied this."

  Same with the Catholic Church. Every religion I am familiar with believes they are theorizing about the real world. That is not what makes them empirical or not.

  Mises theories need empirical support whether he likes that or not. Rothbard spends much of his time providing empirical support for Austrian theories in his writings.

  It's just ridiculous to claim that economics isn't empirical. Mises entire enterprise is empirical from start to end. He didn't just deduce that bank runs would occur. He first observed (or read about) the phenomenon. He then had to use empirical methods to find out how banks operate. He didn't just deduce it from "I think therefore I am" nor even "Men Act". That's a stupifying simplification of what actually was done by him.

  Deduction plays a very important role in all the sciences. The difference is that some of the sciences one can easily run experiments to test ones deductions. It's not so easy in economics and likewise biology (evolution), as in physics or chemistry. That doesn't mean that evolutionary biology is a "non-empirical science".

  " He did deny that testing theories in the positivist fashion made no sense in the field of economics. The two claims run independently of one another..."

  Look, I've read Mises and I don't need you to repeat or interpret it for me. I understand how he used the term "empiricism" and what it meant in his time period. The problem is that it does not have the same meaning today and other advances in scientific philosophy like pan-critical rationalism have occurred since Mises.

  Empiricism is much broader than just the positivists. Mises was correct in many of his criticisms of the positivists. At the same time he was operating under his own misunderstandings. For example he assumed that behaviorism was the correct way to work in the field of animal psychology. Which is not true. The positivist program doesn't work there either. Behaviorism has been abandoned.

  Mises's attacks on positivism are correct. Problem is that we have moved on. Everyone recognizes that positivism is wrong and there are much better criticisms of positivism than Mises provided.

  The word empiricism now means something different and much broader than what Mises understood. In fact, it had actually been in the process of moving on in Mises's time but I'm giving him the benefit of the doubt that he was ignorant of it.

  People were doing good science long before they understood the philosophical basis for the success. Likewise with Mises.

  Published: March 14, 2009 10:41 AM

• Franklin

  Brian: "Do you get upset when geologists claim as fact that the earth is more than the 4000 years the creationists claim?"

  Of course not. And that is precisely my point. I accept that statement and proposition as "a fact." I would only get irked if a geologist says, "Geology is a fact." That seems tautological to me, and it deserves a, "Huh? Fine, I guess my garden is 'a fact' too. What precisely are you trying to assert? Spit it out, man."

  It may seem like hair-splitting, and I certainly am a layman, but just expected more specificity and context.

  Thanks for the link you referenced.

  Cheers.
  F.
  

  Published: March 14, 2009 11:26 AM

• theoretical physicist

  Thanks for the nice article. Having a background in physics myself I enjoyed reading the piece from a fellow physicist.

  Also I subscribe to the bashing of "you cannot know anything you cannot empirically verify" fallacy, and of Keynesianism in general - the only way in which it can be tought of as science is with the many other theories that have been shown to be false too.

  Yet allow me to suggest a modification to the reasoning. I find it a weak point to argue along "Economics is a science in the same sense that mathematics and logic are sciences. Its claims are based on logical deduction from indisputable axioms, and may be illustrated historically, but never verified or falsified experimentally."

  The scientific criteria as formulated by Karl Popper, hold that a theory is to be considered scientific as long as it can either be proven, or leaves itself open to falsification.

  Now the "let's prove" avenue is open to mathematics and all its branches (logic, computer science, ...), which begin by constructing all the objects and tools - all the world they talk about.

  The issue with the real world is that our knowledge of it is by definition too imperfect to be able to create a logical construct that could be shown to match 1:1 with reality.

  So in order to address real world in a scientific manner we have to take the other path, and open our theories (hypotheses, in fact) to falsification.

  Now of course Keynesians have neither done that (cf. "animal spirits" - how could one falsify that?), nor acknowledged the falsification when it was demonstrated (spending, wages, whatever). Demasking their stance as pseudoscience is well deserved.

  Yet let me repeat. By positioning economics as "logical deduction from indisputable axioms, [... never to be] falsified experimentally", we also severe it from the real world.

  If we keep true to the scientific honesty principle, any outcomes from such an economics would apply only to the gedanken world it operates upon.

  And in an attempt to "map" the results to the real world we'd be faced with the same challenge of opening it up to falsification, to keep our method scientific.

  Hope this makes some sense.
  

  Published: March 15, 2009 6:22 AM

• Brian Macker

  Franklin,

  You were responding to my statement. I didn't say anything remotely similar to "Geology is a fact". Nor is it hair splitting. The word evolution in the context of my sentence does not mean an area of study. It's a reference to the fact that organisms have changed over time.

  You merely picked an incorrect meaning of the word. One that one one uses.
  There is no disciple called "Evolution". There is one called "Biology" or "Evolutionary biology". I didn't however say "Biology is a fact" or "Evolutionary biology is a fact".

  Geology is to erosion as "Evolutionary Biology" is to evolution.

  I'd certainly say "Erosion is a fact." to someone who was claiming that mountains don't change. To someone claiming that the hills of the Catskills were never mountains, and that "so called erosion" only works on the micro level moving dirt back and forth with no cumulative effects.

  
  

  Published: March 15, 2009 9:00 AM

• david Ch

  I have watched the long digression into the creationism/evolution debate with interest, but as much as I was itching to weigh in on the micro/macroevolution red herring, and the myth of the so-called 'species barrier' , I resisted it, as the entire digression is rather remote from the nature of this blog.

  However, I do think it is appropriate in this forum to to hear what Mises said about the question, characteristically at the exact nexus where Darwin himself was at his most coy - the question of human evolution.

  "Man is descended from nonhuman ancestors who lacked this [mental} ability. These ancestors were endowed with some potentiality which in the course of ages evolution converted them into reasonable beings. This transformation was achieved by the influence of a changing cosmic environment operating on succeeding generations. Hence the empiricist concludes that the fundamental principles of reasoning are an outcome of experience and represent an adaptation of man to the conditions of his environment'.

  Human action , page 33.

  And again, on page 35:

  'The human mind is not a tabula rasa on which the external events write their own history. It is equipped with a set of tools for grasping reality. Man acquired these tools, i.e. the logical structure of his mind, in the course of his evolution from an amoeba (sic) to his present state. But these tools are logically prior to any experience.'.

  My comment: Interestingly, his reference to the empiricist is not dismissive in this context - here he is epistemologically delineating where the empirical sciences such as biology stop, and praxeology, a necessarily a priori science, starts - and making sure that the 'ultimate givens' ( Mises's term) of praxeology are not inconsistent with the knowledge of the biology of the human brain, as revealed by other scientific disciplines.

  As for the amoeba reference, while technically incorrect, I'm sure we can forgive him that bit of literary license - 'single eukaroytic cell' hardly scans well.

  SO it seems to me from these quotes that the entire body of Mises's work stands on a foundation which explicitly acknowledges evolution and natural selection.
  

  Published: March 15, 2009 10:18 AM

• Brian Macker

  David,

  Yes, Mises is mostly sensible. I really wish I had that embarrassing Mises quote, because someone threw it up in my face. I went to the book where it came from and read it in context. I had to admit that Mises was wrong in that case. Embarrassingly wrong. Maybe it's a blessing I can't find it.
  

  Published: March 15, 2009 11:10 AM

• Florian Kren

  
  "The difference is that in natural sciences the scientists attempt to approach experiments with no preconceived theory in mind. They run their experiments and build theory from the results. They have to work that way because they are ignorant of the subject matter. The method is inductive."

  No.
  With a lot of stuff natural scientist have a fair idea about the subject matter. And that in a literal sense, matter is made of atoms made up of inseperable gluons interacting by gravity, elektro weak and strong interaction. Its just calculating from that knowledge the behaviour of a sun is difficult.

  Science uses deduction as far as possible, then uses induction to get new input and from that deduce again something.
  "Austrian econ is not inductive, but deductive."
  "The differences may be subtle, but the consequences are very serious."
  No, this difference is irrelevant.
  What is relevant, is to approach a problem in a way which is supported by experience.
  When you have a complex system like for example the sun and want to understand how it operates you have basically 2 options. You can either measure what the properities of the sun or you can use youre knowledge of atoms to calculate the sun.

  The first approach is easy to do, but has the risk that you do not see any pattern at all or miss some important subpattern due to limited data and problems to do experiments.
  The second approach is hard or even impossible to do perfectly, but one knows that conclusions gained from this side are as reliable as the knowledge one has about atoms, which is very reliable.
  One can separate the two only for practical purposes, but in the end they must not differ and any difference indicates something was misunderstood.
  Therefore one should always apply both approaches, because one of them is a way to check the other.(This is empirical knowledge :))

  So in case of a complex system, the approach supported by experience is to try to look at the full system and at the same time to look at the subsystems and calculate from them the full system behavior.

  If applied to economics one should look at all those BNPs and other stuff and try to understand something there and at the same time understand the system from the individual human.

  So the correct empirical approach to economics includes an attempt to simulate individual human behavior and deduce from that how groups of humans and the whole society behave.

  For this the best method of simulation is needed. Since human behavior is complex we need something with a high calculation power and a program, that operates on the simulation device that is designed to simulate human behavior.
  Whether something is able to simulate one can determine by looking whether the simulation can predict human behavior.

  We know from empirical knowledge, that the only device, that might have enough calculation power to simulate human behavior is the human brain - at least is capable of operating a human.
  And also from empirical knowledge - (micro) evolution - we know that the human brain was trained for tens of thousands of years to predict correctly what the guy with the big club is going to do next.

  Therefore for the task of simulating or understanding individual economic behavior and to conclude from that how groups of humans behave, a human is suited well. So the empirical approach leads to the conclusion, that to understand economics one important thing is to find an intelligent human give him pencil and paper and ask him to think about how economy functions.

  Of course we could get a lot of idiotic writings that way, therefore comparison with observation is still necessary, to decide who might have simulated human behavior well(e.g. Mises, prdiction for socialism indicates this) and who didn't succeed(e.g. Marx).

  But having humans think about how humans behave economically is a sensible approach from an empiristic point of view.

  What keynes and followers seem to do - completely ignoring the individual human - is wrong from an empiric point of view, because even simple systems like gases have shown behavior, that was not explainable by looking only at the whole system.
  E.g. the unfreeying of degrees of freedom causing a change in specific heat capacity cannot be understood by looking at the gas alone, only with knowledge of atoms it can be explained. As human society is more complex than a simple gas, there are more such effects to be expected, which cannot be understood by only looking at the full system.

  Published: March 18, 2009 10:54 AM

• Florian Kren

  
  "The difference is that in natural sciences the scientists attempt to approach experiments with no preconceived theory in mind. They run their experiments and build theory from the results. They have to work that way because they are ignorant of the subject matter. The method is inductive."

  No.
  With a lot of stuff natural scientist have a fair idea about the subject matter. And that in a literal sense, matter is made of atoms made up of inseperable gluons interacting by gravity, elektro weak and strong interaction. Its just calculating from that knowledge the behaviour of a sun is difficult.

  Science uses deduction as far as possible, then uses induction to get new input and from that deduce again something.
  "Austrian econ is not inductive, but deductive."
  "The differences may be subtle, but the consequences are very serious."
  No, this difference is irrelevant.
  What is relevant, is to approach a problem in a way which is supported by experience.
  When you have a complex system like for example the sun and want to understand how it operates you have basically 2 options. You can either measure what the properities of the sun or you can use youre knowledge of atoms to calculate the sun.

  The first approach is easy to do, but has the risk that you do not see any pattern at all or miss some important subpattern due to limited data and problems to do experiments.
  The second approach is hard or even impossible to do perfectly, but one knows that conclusions gained from this side are as reliable as the knowledge one has about atoms, which is very reliable.
  One can separate the two only for practical purposes, but in the end they must not differ and any difference indicates something was misunderstood.
  Therefore one should always apply both approaches, because one of them is a way to check the other.(This is empirical knowledge :))

  So in case of a complex system, the approach supported by experience is to try to look at the full system and at the same time to look at the subsystems and calculate from them the full system behavior.

  If applied to economics one should look at all those BNPs and other stuff and try to understand something there and at the same time understand the system from the individual human.

  So the correct empirical approach to economics includes an attempt to simulate individual human behavior and deduce from that how groups of humans and the whole society behave.

  For this the best method of simulation is needed. Since human behavior is complex we need something with a high calculation power and a program, that operates on the simulation device that is designed to simulate human behavior.
  Whether something is able to simulate one can determine by looking whether the simulation can predict human behavior.

  We know from empirical knowledge, that the only device, that might have enough calculation power to simulate human behavior is the human brain - at least is capable of operating a human.
  And also from empirical knowledge - (micro) evolution - we know that the human brain was trained for tens of thousands of years to predict correctly what the guy with the big club is going to do next.

  Therefore for the task of simulating or understanding individual economic behavior and to conclude from that how groups of humans behave, a human is suited well. So the empirical approach leads to the conclusion, that to understand economics one important thing is to find an intelligent human give him pencil and paper and ask him to think about how economy functions.

  Of course we could get a lot of idiotic writings that way, therefore comparison with observation is still necessary, to decide who might have simulated human behavior well(e.g. Mises, prdiction for socialism indicates this) and who didn't succeed(e.g. Marx).

  But having humans think about how humans behave economically is a sensible approach from an empiristic point of view.

  What keynes and followers seem to do - completely ignoring the individual human - is wrong from an empiric point of view, because even simple systems like gases have shown behavior, that was not explainable by looking only at the whole system.
  E.g. the unfreeying of degrees of freedom causing a change in specific heat capacity cannot be understood by looking at the gas alone, only with knowledge of atoms it can be explained. As human society is more complex than a simple gas, there are more such effects to be expected, which cannot be understood by only looking at the full system.

  Published: March 18, 2009 10:54 AM