Mises Quote of the Day

9 October 2010 at 8:24 am 9 comments

| Peter Klein |

Mises is known for his uncompromising defense of apriorism in economics, yet he began his career as a historicist, trained by Karl Grünberg, a Marxist and prominent member of the German Historical School. (Mises’s first publications were on land reform in his native Galicia and child-labor laws in Austria, both tediously empirical and inductive.) It was only later, after encountering Menger’s Principles, that Mises turned to social theory.

One of this week’s Mises Dailies features an excerpt from Mises’s 1957 book Theory and History and I can’t resist passing along this nugget, which is hopelessly out of touch with today’s enthusiasm for all things experimental:

[H]istorical experience is always the experience of complex phenomena, of the joint effects brought about by the operation of a multiplicity of elements. Such historical experience does not give the observer facts in the sense in which the natural sciences apply this term to the results obtained in laboratory experiments. (People who call their offices, studies, and libraries “laboratories” for research in economics, statistics, or the social sciences are hopelessly muddle-headed.)

Mises isn’t talking about the literal laboratories used by today’s experimental economists, but the casual use of such scientistic jargon when collecting and analyzing non-experimental data, whether or primary or secondary. (He likewise rejected the language of “hypothesis testing” and the like when applied to social science.) Anyway, agree or disagree, you have to admit there are a lot of hopelessly muddle-headed people on university campuses.

Entry filed under: - Klein -, Austrian Economics, Methods/Methodology/Theory of Science, People.

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9 Comments Add your own

  • 1. Scott Masten  |  9 October 2010 at 9:21 am


  • 2. Richard Ebeling  |  9 October 2010 at 10:49 am

    The underlying real issue in this quote from Mises is that the methods of the social sciences must accept the existence of features to their subject-matter that are not present in many of the natural sciences.

    That are they? Such things as intentionality, purposefulness, subjective (personal) meanings attached to actions, objects, and interactions. The distinction between intended and unintended — which has no meaning if one does not start with the acceptance and use of the notion of “intentional” conduct.

    If I may be permitted to add a quote from another Austrian, Friedrich von Wieser, who pointed out part of this distinction between the methods of the natural and social sciences, from his 1914 treatise, “Social Economics” (pp. 8-9):

    “The theoretical economist need never deplore a lack of the instruments which are employed in the exact natural sciences. Whatever advantages they may otherwise enjoy and great as are their achievements, they are nonetheless strangers to their object.

    “They may never scan the innermost recesses of nature. Let their instruments be infinitely refined, still they must be content to describe a succession of happenings, abandoning the hope of showing how the effect springs from the cause. The group of practical sciences, of which economics theory is one, accomplishes more. The object of investigation is man in a condition of activity. Hence our mind ratifies every accurate description of the processes of his consciousness by the affirmative declaration that such is the case, and by the compelling feeling that it must be so . . .

    “Where the natural sciences can only offer proof, the theory of economics can persuade, it can enlist the unqualified inner consent of the reader.”

    Austrians have not been afraid to see introspection and the use of “mental experiments” based on the discovered logic of human action from introspective reflection, as an essential source of human knowledge and understanding.

    Anyone interested in following up on this type of argument by a more “modern” Austrian may consult, Frtiz Machlup, “If Matter Could Talk,” [1969] reprinted in two of Machlup’s collected articles: “Selected Economic Writings of Fritz Machlup” (New York University Press, 1976) pp. 3-26, and “Methodology of Economics and Other Social Sciences” (Academic Press, 1978) pp. 308-332.

    He emphasizes the importance and relevancy of information from our own mind and that of others for a more complete and realistic understanding of the working and nature of the social world.

    Richard Ebeling

  • 3. Peter Klein  |  9 October 2010 at 10:57 am

    Kirzner’s Essay on Capital, perhaps his least-well appreciated book, is quite good on this issue as well. He emphasizes that the use of particular assets in production is not ultimately determined by their objective, observable, measurable, physical characteristics, but by their place in an entrepreneur’s subjective production plan.

    Perhaps transaction cost economists should be more sympathetic to subjective, survey-based measures of asset specificity?

  • 4. Scott Masten  |  9 October 2010 at 11:27 am

    Peter, Maybe the lighting is bad, but did you make that last statement with a twinkle in your eye?

  • 5. Peter Klein  |  9 October 2010 at 12:20 pm

    You must bring your own, subjective, tacit understanding to the text. ;)

  • 6. FC  |  9 October 2010 at 4:10 pm

    Or one could adopt the idea that consciousness is an illusion, currently fashionable among some neuroscientists, and claim that behavioral/neuroeconomics will explain and control everything.

  • 7. Rafe  |  10 October 2010 at 3:59 pm

    Much as I love Richard Ebeling’s work, the fact that the human sciences have to take into account subjective things does not establish the case for methodological dualism at the level of critical appraisal and testing of theories. All scientists practice situational analysis, and the important elements of the situation are not the same in the human and the natural sciences, but then they are not all the same in different branches of the natural sciences either.

    Possibly the root of the problem was the failure of von Mises to understand that empiricism and positivism do not work in the natural sciences. He never got hold of Popper’s critique of inductivism and he even resorted to a sophomoric argument to rubbish Popper’s theory of conjectural knowledge.

  • 9. cloned  |  12 December 2010 at 10:52 am


    Thanks Professor Klein:)

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