Hans-Hennann H~peSuch is <strong>the</strong> idea of economics as praxeolog~ And such<strong>the</strong>n is <strong>the</strong> ultimate disagreement that <strong>Austrian</strong>s have with<strong>the</strong>ir colleagues: Their pronouncements cannot be deducedfrom <strong>the</strong> axiom of action or even st<strong>and</strong> in clear-cut contradictionto propositions that can be deduced from <strong>the</strong> axiomof action.And even if <strong>the</strong>re is agreement on <strong>the</strong> identification offacts <strong>and</strong> <strong>the</strong> assessment ofcertain events as being related toeach o<strong>the</strong>r as causes <strong>and</strong> consequences, this agreement issuperficial. For such economists falsely believe <strong>the</strong>ir statementsto be empirically well-tested propositions when <strong>the</strong>yare, in fact, propositions that are true a priori.IINon-praxeological schools of thought mistakenlybelieve that relationships between certain eventsare well-established empirical laws when <strong>the</strong>y arereally necessary <strong>and</strong> logical praxeological ones. And <strong>the</strong>y<strong>the</strong>reby behave as if<strong>the</strong> statement "a ball cannot be red <strong>and</strong>non-red aU· over at <strong>the</strong> same time" requires testing inEurope, America, Africa, Asia <strong>and</strong> Australia (of courserequiring a lot of funds in order to pay for such daringnonsensical research). Moreover, <strong>the</strong> non-praxeologists alsobelieve that relationships between certain events are well-establishedempirical laws (with predictive implications)when a priori reasoning can show <strong>the</strong>m to be no morethan information regarding contingent historical connectionsbetween events, which does not provide us with anyknowledge whatsoever regarding <strong>the</strong> future course ofevents.The Ludwig von Mises Institute • 27
<strong>Economic</strong> <strong>Science</strong> <strong>and</strong> <strong>the</strong> <strong>Austrian</strong> <strong>Method</strong>This illustrates ano<strong>the</strong>r fundamental confusion non<strong>Austrian</strong> schools have: a confusion over <strong>the</strong> categoricaldifference between <strong>the</strong>ory <strong>and</strong> history <strong>and</strong> <strong>the</strong> implicationthat this difference has for <strong>the</strong> problem of social <strong>and</strong> economicforecasting.I must again begin with a description ofempiricism, <strong>the</strong>philosophy which thinks of economics <strong>and</strong> <strong>the</strong> social sciencesin general as following <strong>the</strong> same logic of research asthat, for instance, of physics. I will explain wh~ Accordingto empiricism-today's most widely held view of economics-<strong>the</strong>reis no categorical difference between <strong>the</strong>oretical<strong>and</strong> historical research. And I will explain what this impliesfor <strong>the</strong> idea ofsocial forecasting. The very different <strong>Austrian</strong>view will <strong>the</strong>n be developed out ofa critique <strong>and</strong> refutationof <strong>the</strong> empiricist position.Empiricism is characterized by <strong>the</strong> fact that it acceptstwo intimately related basic propositions. 2o The first <strong>and</strong>most central one is: Knowledge regarding reali~ which is calledempirical knowledge, must be verifiable or at least falsifiable byobservational experience. Observational experience can onlylead to contingent knowledge (as opposed to necessaryknowledge), because it is always of such a kind that, inprinciple, itcould have been different than it actually was. Thismeans that no one can know in advance ofexperience-that20For various representative accounts of empiricism-united in <strong>the</strong>ir oppositionagainst any form ofapriorism-see R. Carnap, Der logische AuJbau der mit(Hamburg: 1966); idem, Iestability <strong>and</strong> Meaning (New Haven, Conn.: YaleUniversity Press, 1950); Alfred ]. Ayer, Logic, Truth, <strong>and</strong> Language (New York:Dover, 1952); Karl R. Popper, Logic ofScientific Discuvery (New York: Harper <strong>and</strong>Row, 1959); idem, Conjectures <strong>and</strong> Refutations (London: Routledge <strong>and</strong> KeganPaul, 1969); C. G. Hempel,AspectsofScientiftcExplanation (New York: Free Press,1970); for accounts which also give some attention to economics, see in particularErnest Nagel, The Structure of <strong>Science</strong> (New York: Harcourt, Brace <strong>and</strong> World,1961); Felix Kaufmann, <strong>Method</strong>ology of <strong>the</strong> Social <strong>Science</strong>s (Atlantic Highl<strong>and</strong>s,N.].: Humanities Press, 1944).28 • The Ludwig von Mises Institute
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