Economic Science and the Austrian Method_3

Economic Science and the Austrian Methodstatus as laws of nature: Like laws of nature they statehypothetical relationships between two or more events,essentially in the form of if-then statements. And likehypotheses of the natural sciences, the propositions ofeconomics require continual testing vis-a-vis experience. Aproposition regarding the relationship between economicevents can never be validated once and for all with certain~Instead, it is forever subject to the outcome of contingent,future experiences. Such experience might confirm the hypothesis.But this would not prove the hypothesis to be true,since the economic proposition would have used generalterms (in philosophical terminology: universals) in its descriptionof the related events, and thus would apply to anindefinite number of cases or instances, thereby alwaysleaving room for possibly falsifying future experiences. Alla confirmation would prove is that the hypothesis had notyet turned out wrong. On the other hand, the experiencemight falsify the hypothesis. This would surely prove thatsomething was wrong with the hypothesis as it stood. Butit would not prove that the hypothesized relationshipbetween the specified events could never be observed. Itwould merely show that considering and controlling inone's observations only what up to now had been actuallyaccounted for and controlled, the relationship had not yetshown up. It cannot be ruled out, however, that it mightshow up as soon as some other circumstances have beencontrolled.The attitude that this philosophy fuels and that hasindeed become characteristic of most contemporary economistsand their way of conducting their business is one ofskepticism: the motto being "nothing can be known withcertainty to be impossible in the realm of economic phenomena."Even more precisel~ since empiricism conceives52 • The Ludwig von Mises Institute