Economic Science and the Austrian Method_3

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