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Source link: http://archive.mises.org/2105/praxeology-the-austrian-method-4-of-34/

Praxeology: The Austrian Method (4 of 34)

June 11, 2004 by

These are notes from the fourth lecture given at the Mises University. Any errors are mine, feel free to point them out so that I can correct them.


This lecture was given by Prof. Hoppe.


Introduction


  • Are economic propositions logically deriveable from apodictacly true axioms? Or are they just hypothesis that need to be tested again and again?


  • Everyone, except Austrians, believes economics is empirical, in need of testing; albeit, the good economists don’t practice what they preach.


  • The Austrian position used to be the mainstream position, until Milton Friedman’s 1950s essay on the positivist method. Previously, Lionnel Robbins, who was heavily invluended by Mises, was most referred to for methodology.


  • Modern positivism, or logical empiricism, is the heir of empiricism. Most important was the Vienna Circle. The logical empiricists are also the heirs of Karl Popper, who preferred the term ”positive falsification”, or ”critical rationalism”. The Vienna Circle movement was small in Europe, but became influencial when it emigrated to the US.




Popperion Positivism


  • Two types of propositions:



    1. Empirical: verifiable for positivists; for Popper, must be falsifiable through experience. Nothing can be known with certainty.
    2. Analytical statements: do not say anything about reality, but represent tautologies, things true by definition.


  • Out of step with Aristotle.


  • According to Positivists, then, there can be no normative statements; normative statements are just statements of preference.


  • Scientific explanations are the same as scientific predictions in terms of structure:



    • IF A, THEN B.
    • If observed reality is consistent with economic theory, then so far we have not found out that the theory is false, according to the positivists.
    • If observed reality is different from economic theory, then we reject the hypothesis; however, we cannot say that no relation exists between A and B, but only that the realtion is not exactly as we hypothesized it to be.


  • Relativistic implications of positivism:



    • No absolute ethics.
    • Implies adopting the philosophy of social engineering: everything is possible nad everything can and should be tried out, so long as we “keep an open mind”.
    • Economic laws require testing. Inductively, these are statements about reality which do not need any testing:

      • Minimium wage leads to higher levels of unemployment than would
        otherwise exist.
      • Inflation does not make us richer.
      • Under socialism, there is no cost-accounting.

    • Relativist result: if all these things are just hypothesis, we need to try them out to find out if they are true or not; e.g.:

      • We need to test out the “hypothesis” that minimum wage laws cause higher unemployment, perhaps we can raise minimum wage to $1,000,000 an hour and not cause unemployment levels to be higher than they would otherwise be.
      • We need to test out the hypothesis that inflation does not make us richer. Perhaps printing out piece of paper can make us richer. The State should try printing out 900 trillion dollars, to see whether or not we will become richer.
      • We need try out Socialism. Perhaps economic calculation is possible under Socialism.

    • Austrians know that we don’t need to try out these things — we know that the cited economic theories are correct, and that the idea of testing them out is humbug.
    • According to positivistm, a result different from the hypothesis doesn’t falsifly it, but just shows that the hypothesis is not correct exactly as stated. So there is an infinite number of excuses to try out every immagineable form of non-sense.




Criticisms of Positivism


  • If the statement that there are only analytical propositions and empirical propositions is true, then:


    • Is that statement empirical? If so, then why believe it? There could be an infinited number of other statements, and it could never be proven.
    • Is this statement analytical? If so, it is meaningless, and only
      definitive.
    • Is this statement neither analytical nor empirical, but a statement that is true a priori? To say that the statement is a priori true is non sensical, because it is a self-contradiction.


  • Definitions are either stipulative or ostensive. What kind of definition is this?



    • If stiuplative, then so what? It is just something that’s stipulated.
    • If ostensive, then you can’t say it is a true definition, because that is self-contradictory.


  • In any event, positivism is meaningless for human action. It mandates constant manipulation.



    • Economists proceed to try to either confirm a hypothesis or not to confirm it.

      • Why do we say it is a confirmation? Why not just say it is a string of facts? “Here is on fact, here’s another.”
      • Likewise, why say that we’ve falsified the hypothesis? Why not just
        say that there are two different facts? “Here is one fact, here’s another.”

    • Must assume that causes operate in a time-independent manner. Yet, how can he know that? It can’t be positively verified. And if it is not verified, it is meaningless according to the positivsts’ own philosophy.
    • This, however, canot be confirmed empirically.
    • y = aX bt e
    • Say y is a human action. The positivist must conceive of himself as a variable. The person engaging in this venture will have different knowledge after the outcome. But he doesn’t know the outcome in advance — we don’t know what we will know before we know it. We can only know it when we have it.
    • Actions can not be predicted like the movements of the stars.

{ 1 comment }

Rob June 11, 2004 at 8:42 am

Please, make haste when putting this lecture in it’s MP3 form in the media section.

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