Economic Science and the Austrian Method_3

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PRAXEOLOGY ANDECONOMIC SCIENCEIt is well-known that Austrians disagree strongly withother schools of economic thought, such as theKeynesians, the Monetarists, the Public Choicers, Historicists,Institutionalists, and Marxists. 1 Disagreement ismost conspicuous, of course, when it comes to economicpolicy and economic policy proposals. At times there alsoexists an alliance between Austrians and, in particular, Chicagoitesand Public Choicers. Ludwig von Mises, Murray N.Rothbard, Milton Friedman, and James Buchanan, to cite afew names, are often united in their efforts to defend the freemarket economy against its "liberal" and socialist detractors.Nonetheless, as important as such occasional agreementsmay be for tactical or strategic reasons, they can only besuperficial, for they cover up some truly fundamental differencesbetween the Austrian school, as represented by Misesand Rothbard, and all the rest. The ultimate difference fromwhich all disagreements at the levels of economic theoryand economic policy stem-disagreements, for instance,IThe first two essays are based on two lectures delivered at the Ludwig vonMises Institute's '~dvanced Instructional Conference on Austrian Economics,"June 21-27, 1987. The third essay is reprinted from The Economics and Ethics ofPrivate Property (Kluwer Academic Publishers in 1993), pp. 141-64.The Ludwig von Mises Institute • 7
Economic Science and the Austrian Methodas regards the merit of the gold standard vs. fiat mone~free-banking vs. central banking, the welfare implications ofmarkets vs. state-action, capitalism vs. socialism, the theoryofinterest and the business cycle, etc.-concerns the answerto the very first question that any economist must raise:What is the subject matter ofeconomics, and what kind ofpropositions are economic theorems?Mises's answer is that economics is the science ofhumanaction. In itself, this may not sound very controversial. Butthen Mises says of the science of economics:Its statements and propositions are not derived from experience.They are, like those of logic and mathematics, apriori. They are not subject to verification and falsificationon the ground of experience and facts. They are bothlogically and temporally antecedent to any comprehensionof historical facts. They are a necessary requirement of anyintellectual grasp of historical events. 2In order to emphasize the status ofeconomics as a purescience, a science that has 11-10re in common with a disciplinelike applied logic than, for instance, with the empiricalnatural sciences, Mises proposes the term "praxeology" (thelogic ofaction) for the branch ofknowledge exemplified byeconomics. 3It is this assessment ofeconomics as an a priori science,a science whose propositions can be given a rigorous logicaljustification, which distinguishes Austrians, or more2Ludwig von Mises, Human Action (Chicago: Henry Regnery, 1966), p. 32.3Mises's methodological work is contained mainly in his EpistemologicalProblems ofEconomics (New York: New York University Press, 1981); Theory andHistory (Washington, D.C.: Ludwig von Mises Institute, 1985); The UltimateFoundation ofEconomic Science (Kansas City, Kans.: Sheed Andrews and McMeel,1978); Human Action, part I.8 • The Ludwig von Mises Institute
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INDEXAlbert, H., 10Andreski, St., 5
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ABOUT THE AUTHORHans..Hermann Hoppe
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