13 Epistemological Studies

Throughout the course of the nineteenth century, and upon the ruins of old religious beliefs, various sects began to entrench themselves; they sought to offer their followers a “substitute” for lost faith. The most lasting of these sects is positivism, the “incongruous insistence of bad science and eviscerated papistry,” as Huxley called it (Collected Essays, vol. V). In reaction against church practices, positivism found many ardent disciples in Catholic countries. Vienna was the city of Saint Clemens Maria Hofbauer, a positivist who believed himself to be truly free and free of prejudice, and his “Griesknödel”¹ miracle.

Positivism is usually credited with the development of sociology. That the term “sociology” was coined by August Comte is correct. But that which is pursued under the name of sociology, insofar as it is not just idle talk, has nothing to do with a positivist program of a science of human action built upon experience with the methods of Newtonian physics. Comte’s sociology is one of ethnography, cultural history, and psychology, and makes use of the old methods of history. He wanted nothing to do with the science of human action whose history began in classical economics. In this his followers remained faithful to their master.

For some time German universities rejected positivism and their doors remained closed to sociology. This enmity had little to do with scientific deliberation; it was of a political nature. When the positivists began to experience success, the German sciences had already assumed a hostile position toward western thought. Positivism was rejected because it came from France. But attitudes toward positivism’s central point wavered. It is notable that the historicism of the Schmoller School held to the belief that the laws of economics were to be derived from experiences in recorded economic history.

One can also say that the last great effort of German epistemology was made in dealing with problems not raised by positivism, but those that it made controversial. The building blocks of the theory of scientific understanding in the humanities were laid by scholars whose writings predated Comte, or who did not know him. Its development was a reaction against positivism, and no less against the historical materialism of the Marxists.

It followed that I saw no possibilities for economic science when I entered the university. I was convinced that economic history must make use of the means and methods of the historical disciplines and could never yield economic laws. I believed that there was nothing in economic life that could be made the object of scientific analysis outside of economic history. There could not have been a more consistent follower of historicism than I.

The cohesiveness of my epistemology suffered an irreparable breach after I actually came to know economics. I was helpless. The writings of the Methodenstreit²—even Menger’s splendid work—did not satisfy me. I was even more disappointed by John Stuart Mill. It was not until many years later that I became acquainted with Cairnes and Senior.

I tried to console myself with the fact that what mattered was the furthering of science and that problems of methodology were of lesser importance. I soon recognized the error of this stance. With each problem, the economist confronts the basic questions: whence do these principles come, what is their significance, and how do they relate to experience and “reality”? These are not problems of method or even research technique; they are themselves the fundamental questions. Can one construct a system of deduction without having asked the questions upon which the system is to be built?

I searched in vain for enlightenment in the writings of the Lausanne and Anglo-Saxon schools. Even there I encountered the same uncertainty and wavering between irreconcilable points of view. That these conditions led to the demise of economic thought came as no surprise. Institutionalism, on the one hand, and the empty dogmatism of the mathematical school, on the other, is the result.

I hesitated for a long time in making my investigations into these fundamental questions publicly known; I was aware that they reached far beyond the field of economics. In fact, the matter at hand was the opening up of a new field of epistemology and logic.

Until now, logic and epistemology have only addressed the thinking associated with experience and the natural sciences, and with the deductive system of mathematics. History, by comparison, was simply “not science.” Economics, at first, was not considered a science at all. When it finally became necessary to include it, one was content to assert that the discipline dealt with the economic aspects of human action. Aside from the fact that this homo oeconomicus is inapplicable to the subjective value theory, it does not solve the question of the origins of the knowledge of purely economic behavior.

Identifying the idiosyncrasies of the historical method was enormous progress, as was the development of the theories of Verstehen and ideal types. The fact that infamous metaphysicians sought refuge under the roof of these new theories does not detract from the value of their discovery. No architect is held responsible for the behavior of those who inhabit the structure he designed. What is more critical is that a man of Max Weber’s rank also sought to cast economic principles according to his model of ideal types.

I developed my theory in a series of critical essays, the first of which appeared in 1928. These essays were compiled in 1933 and published in one volume under the title Grundprobleme der Nationalökonomie.³ The opening essay was one that had not before appeared in print. I summarized this material yet again in Nationalökonomie.

In the essay originally published in 1928, I sought to eliminate the distinction between economic and noneconomic action. The subjective value theory had already brought about deliverance from this specter, but Menger and Böhm-Bawerk had not drawn all necessary conclusions given their basic position.

The next essay, appearing under the title “Sociology and History,” was concerned with the investigation of the theoretical science of human action and of history. Here I made the mistake of using the term “sociology” to designate the theory of human action. I should have used the term “praxeology.” That which one generally calls sociology today is not theoretical, but historical knowledge. Max Weber was quite right in describing what he saw to be sociology in terms of the humanities. He observed that this was the sociology that worked with the formation of ideal types. His error lay in assigning to it many praxeological elements and in seeing economics as a field serviced by the intellectual methods of understanding. My essay was primarily directed against Max Weber’s epistemology, about which I raised two objections: its failure to comprehend the epistemological characteristics of economics, and its distinction between rational actions and actions oriented otherwise.

In a third essay I contrasted understanding in the historical disciplines with comprehending in economics and praxeology. Lastly, in the essay that serves as an introduction in Grundprobleme der Nationalökonomie, I demonstrated the a priori nature of praxeological knowledge. It was thus that I drew the epistemological conclusion from the scientific development that began with the discovery of regularity in market phenomena in the eighteenth century.

I was fully aware that my theory would meet with rejection at first. I knew the positivist bias of my contemporaries rather well. The reigning panphysicalism is blind to the basic problems of epistemology, looking even upon the biological problems as “disturbances” of its worldview. To these fanatics, everything else is senseless metaphysics flirting with pseudoproblems. One cannot make excuses for the excesses of this neopositivism by recalling at the same time the no-less-regrettable fabrications of idealistic philosophy, or even by considering it a “beneficial” reaction. It is indeed the task of the historian of dogma to understand error and thereby explain it. Understanding cannot, however, provide an argument toward a more satisfactory solution in answer to error. I believe I understand positivism, but this has nothing to do with whether or not its answers are useful.

It is clear to me that it would be impossible to unsettle, much less extirpate the popularity of, positivist metaphysics with an explanation of the epistemological characteristics of the science of human action. Economic problems, unlike those of biology and physics, are much too complex to be entrusted to the abilities of the multitudes as part of a program of general education. Positivism has made classical physics palatable to the masses, and neopositivism has done the same for the present state of physical teachings. Both adulterate and simplify in a manner similar to that in which Darwinism has been recast for everyday usage with the cliché “man is descended from apes.” Much time will elapse before people dispense with such raw simplifications. Until then, the bourgeoisie will remain occupied with a popular philosophy.

Whether or not the small number of thinkers will be satisfied with the system of empiricism is another question. I do not wish to take into account that this system simply refuses to acknowledge the science of human action, and therefore, contrary to its own emphatically asserted principle, rejects what does not fit into its system. But can man get along with positivist assertions about logical principles in the long run?

The principles of logic are said to be arbitrarily chosen conventions that have proven themselves practical or useful. Viewed in this way, one is only postponing the problem without bringing it any closer to resolution. One may claim that man has tried various arbitrarily chosen rules and, in the end, has held fast to those that have proven themselves effective. But in terms of what purpose did these rules appear effective? If this is the question posed, then one has arrived again at the problem of intellectual mastery of worldly things, and at the problems of explication and truth. For this reason it is also futile to attempt to solve the problems of truth through an appeal to usefulness.

Since these principles of logic were arrived at arbitrarily, could one just as easily have chosen other principles, if their effectiveness were the same in terms of purpose? No, certainly not. The basic relations used by logic to link statements are necessary to and inseparable from human thought; irreconcilable relations are unimaginable. The category of negation is not arbitrarily chosen; it is necessary to thought. No thought can dispense with it. Even if we wanted to assume that the distinction between yes and no were a product won by experience, or that once arbitrarily established proved itself through experience, one has not yet refuted the contention that, logically, the ability to comprehend yes and no must precede all thought.

The basic assumptions of logic have been called the rules of the game. But what must be added is that this game is our life: we are born into this game and must play as long as we live; for man there is no second game with a different set of rules.

Praxeology’s special calling is to reveal the fallacies of conventionalism, as it does not adhere to the cult of the word “purpose.” The purpose of action is to attain success in the world that is our environment. Adjusting to the conditions of this world and its order is therefore expedient in any case. If the human mind can give birth to rules of the game that are useful in this adjustment, then only two explanations remain open: either there is something in our minds that belongs to the environment and permits us to understand it—an a priori; or the environment plies our minds with rules that enable us to deal with it. In no case is there room for arbitrariness and convention. Logic is either active within us or effected within us. It affects the world through us, or the world affects us through it. Logic is the stuff of the world, of reality, and of life.

It is not at all obvious what is to be achieved by doggedly contesting the a priori. Even if we were to assume that experience leads us to comprehension of the category of means and ends, the question remains open: what is in us that allows for experience at all, and indeed, such experience wherein a different outcome appears plainly absurd? What sense does it make to claim to have gained this knowledge through experience when we cannot boast of other outcomes to which other experiences could have led? When I say that experience has shown A to be red, it is meaningful in that our minds could have also recognized another outcome. But if it were said that experience had led us to the category of negation or that of means and ends? This is senseless; what, then, could other experiences have taught us?

The same is true of conventionalism. What other rules of the game could take the place of logical principles or the praxeological concept of action? One could play a game that differs from a standard game of chess in that one of its rules is replaced by another arbitrarily chosen one. But can one “play” with thinking that does not distinguish between yes and no? If this question is answered in the negative, then it is plain to see that the nature of this difference is one that deviates from the rules of the game. Here, again, we encounter the inescapable a priori.

We are not sketching a plan for a new economics when we assert that economics is a deductive system derived from an a priori point of departure. Rather, we are demonstrating what today’s economics is.

It did not escape me, naturally, that there were also attempts to conduct economics as an experimental science. There is an economics association that adopted for its motto: “Science is measurement.” With Menger, I will be happy to see this movement, richly endowed with financial support, run its full course. But it is not worthwhile to refute yet again the notion that in the sphere of human action measurements can be made in the same way they are made in physics. Economic statistics is a method of economic history, and not a method from which theoretical insight can be won.

Even in economic history, one must understand where comprehension is no longer sufficient. After all data have been acquired that have or could have affected an event to be researched, it is only with Verstehen⁴ that one can begin to approach an answer to the questions of if and to what degree the individual factors had an impact on the result. It is precisely in the quantitative that the task of “understanding,” which allows for exactness or near exactness in the area of physics, lies in the sphere of human action: here there are no constant relations between quantities.

Mathematics and physics are undergoing a severe crisis from which they will emerge in a new form. Little remains of the cheerful trust in the indisputable certainty, clarity, and exactness of its tenets that once led them to look down with pity on the poor arts and ignore economics entirely. Mathematicians and physicists are now beginning—tardily enough—to acknowledge logical and epistemological problems. Logic and the epistemology of the science of human action cannot learn anything from physics and mathematics. But the “exact” sciences still have much to learn from their once-disdained siblings. The cleft between the natural sciences and the sciences of human action will thereby not be bridged. A unified science can be achieved only when the physical and chemical processes of physiology that generate the thought, “two times two are four,” can be distinguished from those that generate the thought, “two times two are five.”

My epistemological studies did more than serve the development of logic and epistemology, and disclose the errors of positivism, irrationalism, and historicism.

I dealt as well with polylogism.