Economic Science and the Austrian Method_3

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Hans-Hermann HoppeMoreover, according to empiricism, we cannot knowwith certainty whether something is a possible cause ofsomething else. If we want to explain some phenomenon,our hypothesizing about possible causes is in no way constrainedby a priori considerations. Everything can havesome influence on anything. We must find out by experiencewhether it does or not; but then experience will never giveus a definite answer to this question either.The next point brings us to our central topic of thissection: the relationship between history and theor~ Wenotice that according to empiricism there is no principaldifference between historical and theoretical explanations.Every explanation is of the same type. In order to explain aphenomenon we hypothesize some other phenomenon as itscause and then see whether or not the hypothesized causeindeed preceded the effect in time. A distinction exists betweena historical and a theoretical explanation only insofar as ahistorical explanation refers to events that already happened,something that lies in the past, whereas a theoretical explanationwould be an explanation, or rather a prediction, of aneffect that has not yet occurred. Structurall); though, thereis no difference between such historical explanations andtheoretical predictions. There is, however, a pragmatic differencewhich explains why empiricists in particular stressthe importance of a theory's predictive power and are notcontent with testing it only vis-It-vis historical data. 22 Thereason for this is quite evident to anyone who was everengaged in the foolish game ofdata analyses. Ifthe phenomenonto be explained has already occurred, it is easy as cake to22Por the emphasis placed on prediction by empiricist-positivists, see inparticular Milton Friedman, "The Methodology ofPositive Economics" in Friedman,Essays in Positive Economics (Chicago: University of Chicago Press, 1953).The Ludwig von Mises Institute • 31
Economic Science and the Austrian Methodfind all sorts of events that preceded it in time and couldpossibly be considered its cause. Moreover, ifwe don't wantto lengthen our list of possible causes by finding morepreceding variables, we can do the following (and in the ageof computers, it's even easier): We can take anyone of thepreceding variables and tryout different functional relationshipsbetween it and the variable to be explained-linear orcurvilinear ones, recursive or non-recursive functions, additiveor multiplicative relations, etc. Then one, two, three, wefind what we were looking for: a functional relationship thatfits the data. And you will find not just one but any amountof them that you could possibly desire.But which of all these preceding events, or of all thetypes of relationships, is the cause or the causally effectiverelation? There are no a priori considerations, according toempiricism, that could help us here. And that, then, is thereason why empiricists emphasize the importance of predictions.In order to find out which one of these manifoldhistorical explanations is indeed correct-or at least notfalse-we are asked to try them out by using them inpredicting events that have not yet occurred, see how goodthey are, and thereby weed out the wrong explanations.So much for empiricism and its ideas about theor~histor~ and forecasting. I will not go into a detailed analysisof the question whether or not this emphasis on predictivesuccess changes much, if anything at all, with respect to therather evident relativistic implications of empiricism. Justrecall that according to its very own doctrine, neither apredictive confirmation nor a predictive falsification wouldhelp us either in deciding whether a causal relationshipbetween a pair ofvariables did or did not exist. This shouldmake it appear rather doubtful that anything is gained bymaking prediction the cornerstone ofone's philosoph~32 • 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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