It is most unfortunate that Popper’s closest colleague while he wrote The Open Society was Colin Simkin, soon to be a professor of economics, during his Keynesian and social democrat phase. Later he became an admirer of Hayek and Margaret Thatcher, although he never came to terms with the Misean a priori or the strong version of libertarianism.

If someone like Bill Hutt or Hayek had claimed Popper’s undivided attention for a few minutes he should have learned that unemployment and monopolies (two major evils in his eyes), are caused by interference with the market and with that insight in place he would have been more helpful. Still, even in 1945 he was not in favour of redistribution or central planning and the more he saw of the postwar welfare state the less he liked it.

“Popper made no attempt to distinguish between democracy and freedom…My impression is that Popper believed that contemporary unlimited democracy was under all aspects good, and found nothing strange in the incredible concentration of power in the hands of our “representatives”: the reasoning being, most likely, that he thought he could find a way out of the “moral conundrum” in the will of the majority.”

I don’t know where the idea arose that he thought unlimited is benign because in the OSE chapter on leadership he demonstrated that all theories of sovereignty are paradoxical (what if the majority turn to a dictator?) and democracy has to be sought in some other direction than the will of the majority in order to maintain freedom. Like Hayek he saw that unlimited democracy was no better than any other kind of tyranny. Like Mises he saw that the idea of majority rule (with elected representatives) is not a deep philosophical answer or a failsafe to protect freedom, it is just a procedure for changing the leadership without violence.
http://www.the-rathouse.com/OpenSocietyOnLIne/Chapter-7-Leadership.html

As to his attitude to the concentration of power, he considered that all concentrations of power are dangerous and they all need to be limited, monitored, balanced in all ways possible. His Mont Pelerin paper on the dangers of public opinion (an irresponsible form of power) is interesting, it contains his statement of liberal principles which should be reassuring; “the state is a necessary evil” for example.
http://www.the-rathouse.com/CRPublicOpinion17.html

He always warned that any extention of state activity is a potential threat to freedom and should be limited to the minimum. Admittedly that is subject to broad interpretation, the leaders of the EU might claim that “we are all minimum staters now” but they just believe in a big minimum.

He also demanded evaluation of the effects of all policies so that errors can be detected early in the piece. Application of that principle would have seen off socialism and interventionism a long time ago.

More could be said but that should be enough to indicate that there is more for libertarians in the works of Popper than most people appreciate, especially those followers of Popper who are social democrats. That especially applies to Malalchi Hacohen who hoped that his magesterial biography might enable the left to reclaim Popper as their own. In this review I have argued that Hacohen’s hope is doomed to fail!

http://www.quadrant.org.au/php/article_view.php?article_id=369

Hoppe largely follows (and improves upon Mises), whilst Long, Plauche and Smith argue from an Aristotelian vantage point. There’s two other epistemological traditions within Austrianism, one being the later Hayek’s (which whilst not empiricist strictly speaking, is close enough; e.g. http://blog.mises.org/archives/008056.asp) and the other Lachmann’s subjectivist framework. I think Plauche’s is the best paper on methodology (,http://www.veritasnoctis.net/docs/aristotelianapriorism.pdf) though it is definitely essentialist in the neo-Aristotelian sense.

What should be striking is not so much Mises’ neo-Kantianism, which is an attempt to address problems Kant poses, but rather that logical positivism is still favoured by contemporary economists, with little done on their part to remedy its faults, or abandon it altogether.

I approached classical liberalism reading Popper, several years ago, then I finally switched to Mises. Mises is my favourite thinker and I think that Mises’s theoretical system is lacking in no more than a handful of aspects: (1) he neglected the idea of the state (better Rothbard), (2) he neglected international relations (unsettled problem of classical liberalism and libertarianism), (3) he neglected jurisprudence (better Leoni), (4) he neglected the importance of domestic balance of power (better Jouvenel), (5) he neglected integralism and fanaticism (not completely, more on this in the following).

All these limitations he shared with Popper. But Popper had some more.

Popper made no attempt to distinguish between democracy and freedom: he only distinguished progressive social engineering and totalitarian social revolution.

Mises had the former distinction clear, as he believed that government ought not to do more than enforcing laws and defending boundaries: Popper proposed no effective limitations in the scope of government intervention.

For what concerns the latter distinction, which is the core of Popper’s political philosophy, Popper was only concerned that politicians could have had fanatical goals (compare for instance Talmon’s totalitarian democracy, a history of French philosophy before, during and immediately after the Revolution), but whatever the majority’s choice, Popper has nothing to oppose except common sense (that’s not exactly the more abundant virtue in politics). In other words, Popper’s thought is one-dimensional, moderately socialist and more or less disconnected with the themes of classical economics.

In a sense, one of the five limitations of Mises has been partially addressed by Popper: his common sense. Surely not because Mises lacked it, but Popper’s “obvious” political thought is a good therapy against fanaticism.

Popper has been one of the many, possibly one of the first, thinkers who understood the importance of fanaticism in the political tragedies of his time, together with, for instance, Hoffer, Hayek and Talmon, at his time, and Glucksmann, more recently. Apart from this, I find his political philosophy rather uninteresting, and its conception of freedom dangerously close to that of that special brand of gulag-less socialists called, in the US, “liberals”. Most people may confuse ideological differences with theoretical differences, but I won’t: I’m just perplexed by Popper from both points of view.

Finally, Mises was a moral relativist, so was Popper, and so am I. For a relativist, a moral system cannot be defended on purely rational grounds, notwithstanding the importance of this defense (the “moral conundrum”, although there is nothing mysterious about it). Mises understood the importance of widespread acceptance of some moral/legal rules by part of the majority, to have a stable social order. My impression is that Popper believed that contemporary unlimited democracy was under all aspects good, and found nothing strange in the incredible concentration of power in the hands of our “representatives”: the reasoning being, most likely, that he thought he could find a way out of the “moral conundrum” in the will of the majority. In the end he found no fault in contemporary democracies, where the state has the widest role in every aspect of our lives. Something impermissible, in the XX century, although understandable, after gulags and lagers…

Popper may be good to save someone from Marx, provided that someone so fool to believe in Marx can be saved at all. Popper may be good in saving someone from positivism (and you are wholly right claiming he wa no positivist), and I could make the same irony about the chances of saving them. I believe his thought to be of no avail for more complicated tasks.

I approached classical liberalism reading Popper, several years ago, then I finally switched to Mises. Mises is my favourite thinker and I think that Mises’s theoretical system is lacking in no more than a handful of aspects: (1) he neglected the idea of the state (better Rothbard), (2) he neglected international relations (unsettled problem of classical liberalism and libertarianism), (3) he neglected jurisprudence (better Leoni), (4) he neglected the importance of domestic balance of power (better Jouvenel), (5) he neglected integralism and fanaticism (not completely, more on this in the following).

All these limitations he shared with Popper. But Popper had some more.

Popper made no attempt to distinguish between democracy and freedom: he only distinguished progressive social engineering and totalitarian social revolution.

Mises had the former distinction clear, as he believed that government ought not to do more than enforcing laws and defending boundaries: Popper proposed no effective limitations in the scope of government intervention.

For what concerns the latter distinction, which is the core of Popper’s political philosophy, Popper was only concerned that politicians could have had fanatical goals (compare for instance Talmon’s totalitarian democracy, a history of French philosophy before, during and immediately after the Revolution), but whatever the majority’s choice, Popper has nothing to oppose except common sense (that’s not exactly the more abundant virtue in politics). In other words, Popper’s thought is one-dimensional, moderately socialist and more or less disconnected with the themes of classical economics.

In a sense, one of the five limitations of Mises has been partially addressed by Popper: his common sense. Surely not because Mises lacked it, but Popper’s “obvious” political thought is a good therapy against fanaticism.

Popper has been one of the many, possibly one of the first, thinkers who understood the importance of fanaticism in the political tragedies of his time, together with, for instance, Hoffer, Hayek and Talmon, at his time, and Glucksmann, more recently. Apart from this, I find his political philosophy rather uninteresting, and its conception of freedom dangerously close to that of that special brand of gulag-less socialists called, in the US, “liberals”. Most people may confuse ideological differences with theoretical differences, but I won’t: I’m just perplexed by Popper from both points of view.

Finally, Mises was a moral relativist, so was Popper, and so am I. For a relativist, a moral system cannot be defended on purely rational grounds, notwithstanding the importance of this defense (the “moral conundrum”, although there is nothing mysterious about it). Mises understood the importance of widespread acceptance of some moral/legal rules by part of the majority, to have a stable social order. My impression is that Popper believed that contemporary unlimited democracy was under all aspects good, and found nothing strange in the incredible concentration of power in the hands of our “representatives”: the reasoning being, most likely, that he thought he could find a way out of the “moral conundrum” in the will of the majority. In the end he found no fault in contemporary democracies, where the state has the widest role in every aspect of our lives. Something impermissible, in the XX century, although understandable, after gulags and lagers…

Popper may be good to save someone from Marx, provided that someone so fool to believe in Marx can be saved at all. Popper may be good in saving someone from positivism (and you are wholly right claiming he wa no positivist), and I could make the same irony about the chances of saving them. I believe his thought to be of no avail for more complicated tasks.

(Not exactly on topic, but I wanted to say it.)

In my opinion Mises and Popper are the two most important classical liberal thinkers in the 20th century and the divide between the followers of these two titans is potentially disastrous for the future of the principles that both camps share. For example they both identified positivism and historicism as the two major intellectual problems in the social sciences.

The following items may help to explain where I am coming from with these remarks.
http://www.the-rathouse.com/RC_PopperPaper.html
http://www.the-rathouse.com/2008/Poverty-of-Historicism.html
http://www.the-rathouse.com/shortreviews/Mises-Epistemological-Problems.html

Before this paragraph, Mises had mentioned than in the natural sciences, no theory is allowed that contradicts experimental results. The experiment reigns supreme as the chief method of discovery and guide to theory in natural sciences, because since gravity, velocity, mass, etc., always act the same way under the same circumstances. But with humanity, controlled experiments are almost impossible. The number of variables needing to be controlled are to numerous and we often don’t even know what they are, and the circumstances are never exactly identical as they are in a controlled experiment. As a result, any theory, no matter how ridiculous can find support in history. Mises includes statistical data as history since it reports on past events. In addition, no one can use historical data to prove any theory wrong because the proponents will claim that the critic used the wrong data or didn’t analyze it correctly. That’s why modern macro is such a muddle.

This was hard for me to grasp, coming from an education in econ in which the empiricism was dogma, even though mainstream econ is no where near as empirical as it claims. For example, neo-classical econ assume equilibrium at all times regardless of the evidence which clearly contradicts that assumption. But learning statistics helped move me closer to Austrian a priori thinking. In statistics classes, they emphasize the necessity of having a hypothesis before doing analysis and using the analysis to support or not the hypothesis. Anything found by accident is suspect and not grounds for establishing theory. That’s why real statisticians objected very strongly to data mining. In data mining, a large mass of data is put through a statistical grinder and the miner waits to see what relationships develop, mainly correlations. But many people have been fooled, and a lot of money lost, by spurious correlations, especially in hedge funds. The statistical rule of thumb is that if you can’t support a surprising correlation with sound theory, it’s probably spurious. Of course, there are statistical tests for spurious correlations but few people apply them. Why I don’t know. But if you apply them, they eliminate most spurious correlations and most statistical data that contradict sound theory. If you show me data that contradict Austrian econ, I can usually show you the statistical mistakes that the author made which when corrected, verify Austrian theory. The most common mistakes are spurious correlations, misspecification and reversing cause and effect.

A simple example might help. I was analyzing trucking rates for a company a few years ago and found that in my initial models price hikes caused demand to increase (the sign of the price coefficient was positive). I explained to a co-worker that I would need to add other variables, and maybe do some transformations in order to uncover the true price/demand relationship. He argued that if I did those things, I would be guilty of finding what I was looking for instead of letting the data speak for itself. I explained that simple econ theory makes it impossible for higher prices to increase demand. If the data suggests that, then we’ve done something wrong in the analysis. By adding seasonality and other variables, I uncovered the real relationship between price and demand and found it to be pretty small, and it changed with the state of the economy. Leaving out important variables is called misspecification in statistics and is one of the most common errors analysts make.

So where does empirical research contribute value in the Austrian paradigm? As Mises wrote a priori reasoning “aims at knowledge valid for all instances in which the conditions exactly correspond to those implied in its assumptions and inferences.” In other words, it strives for general principles. Those principles guide us in our evaluation of history and data via statistical analysis. With the a priori principles, we can better understand and explain specific events in the data. So a priori principles provide the paradigm; empirical research guided by those principles explains specific, concrete events. Statistics can’t prove relationships between factors; they can only put numbers to those relationships.

I think empirical research is important in applying reason to economic analysis as we apply that reasoning to specific events. It’s easy to make leaps in logic and use unwarranted assumptions that could lead reason astray. In that case, it’s important to check the conclusions of logic against history. For example, the ABCT arose, to a large degree, because Austrians noticed that the major swings in profits and employment occurred in the producer goods industries, that is, empirical research. If conclusions deviate too much from history, then we should examine our assumptions to determine if they are sound, and the logic to see is if you have made an unwarranted leap somewhere.

Also, Austrians aren’t in total agreement about many details. I think judicious use of statistical analysis might help resolve some of those issues as well as help convince mainstream economists of their error. Finally, the major framework has been built and rests on solid foundations. New discoveries will involve filling in the details.

The idea is that certain fundamental truths about reality are reflected in the human mind, and thus are “a priori” and “come before” other less fundamental truths. But then Smith take Menger’s famous “four conditions” as an example of this.

I ask myself: how and why are those four conditions reflected in the human mind? Well, they are reflected in my mind, because I have read Menger (and seen the logic of his reasoning).

But then, how come they were first reflected in Carl Menger’s mind and not in anybody’s mind before him? If “reflective apriorism” were true, they would have been known to everyone since time immemorial!

In fact, Menger’s “four conditions” (and all his other insights) were the end result of an intensive study of actual market conditions (you may have read Hayek’s introduction to “Principles of Economics”). Thus I would certainly call them “a posteriori”, simply because they came after (and were the result of) this study.

I actually read Barry Smith’s essay a couple of years ago, but I wasn’t entirely happy with it. I agree, of course, with his rejection of “impositionist” (i.e. Kantian) apriorism, but I think there is a problem with “reflexionist” apriorism, too. (I even wrote a short critique of Smith’s essays, but unfortunately it is in Swedish, and I don’t have the time to translate it.)

I will certainly take a look on the other essay (have just skimmed the beginning so far; it was news to me that the terms “a priori” and “a posteriori” were introduced by St. Thomas.)

http://mises.org/apriorism.asp

http://www.veritasnoctis.net/docs/aristotelianapriorism.pdf