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Epistemological Problems of Economics
Ludwig von Mises

2
Sociology and History

1. The Methodological and the Logical Problem

To begin with, departing from the procedure usually followed, one must distinguish the methodological from the logical problem.

As a rule, methodology is understood to be logic conceived as the theory of the methods of thought. We shall speak of it in the less customary sense as the technique of scientific thought (heuristic) and contrast it, as an art (ars inveniendi), to the science of logic.

For a long time, following in the path of Bacon, the inductive method has been held in especially high esteem. The natural sciences, so one heard, particularly from laymen, owed their success primarily to perfect induction. It was said that the general law could be derived only when all individual cases had been compiled. One did not let oneself be disconcerted by the fact that Bacon and most of those who expounded his theory themselves had no successes to show and that precisely the most successful inquirers had taken a different view. No notice was taken of the fact that Galileo, for example, had declared the customary perfect induction uncertain, and that for the comparison of a number of individual cases he substituted the analysis of one case, from which he derived the law that was then to be experimentally verified. What was altogether fantastic was that perfect induction was praised as the specific method of the natural sciences, whereas in fact it was not used by scientists at all, but by antiquarians. Because of the scarcity of the sources available to them, the latter set out in principle to draw their conclusions from an exhaustive study of all the accessible data.

What counts is not the data, but the mind that deals with them. The data that Galileo, Newton, Ricardo, Menger, and Freud made use of for their great discoveries lay at the disposal of every one of their contemporaries and of untold previous generations. Galileo was certainly not the first to observe the swinging motion of the chandelier in the cathedral at Pisa. Many doctors before Breuer had gone to the bedside of a person suffering from hysteria. It is merely the routine of scientific procedure that can be taught and presented in textbooks. The power to accomplish feats of scientific achievement can be awakened only in one who already possesses the necessary intellectual gifts and strength of character. To be sure, without the foundations, which mastery of the scientific technique and literature provides, nothing can be accomplished. However, the decisive factor remains the personality of the thinker.

On this point opinions are no longer divided. We need not spend any more time on it.

The situation is altogether different with regard to the logical problem. In the course of the Methodenstreit [*] the question of the logical character of sociology fell into the background until it was finally dropped entirely. But in the early years of the Methodenstreit this was not the case. At that time, first Walter Bagehot and then Carl Menger argued against the rejection in principle of every theoretical science of human action by pointing out the character and logical necessity of a theoretical science of social phenomena. It is well known flow this dispute ended in Germany. Economics disappeared from the universities, and its place was taken, occasionally even under its name, by the study of the economic aspects of political science, an encyclopedic collection of knowledge from various subjects. Whoever wished to define this study scientifically viewed it as a history of governmental administration, economic conditions, and economic policy continued into the most recent past. From this history one endeavored, by adherence to the standards of value accepted by the authorities and the political parties, to derive practical rules for future economic policy in a way similar to that of the writer on military affairs who seeks to discover rules for the conduct of coming wars from the study of the campaigns of the past. In general, the investigator of the economic aspects of political science differed from the historian in that he was usually more concerned with the most recent past and with problems of internal politics, finance, and economic policy and was less intent on concealing his political point of view and quicker to draw from the past practical applications for the politics of the future. The logical character of his work scarcely ever became a problem for him. If it did, however, his mind was soon set at rest by the dicta of Schmoller.

The first sign of disquietude is to be seen in the controversy over value judgments that broke out in the second and third lustrums of the twentieth century. The matter-of-factness with which political demands were advanced as postulates of science in lectures, textbooks, and monographs began to give offense. A group of younger professors insisted that the world view of the instructor should not influence the content of his teaching or at least that the instructor, as soon as he does present his personal value judgments, point out the subjective character of what is being taught. However, the discussions connected with this agitation scarcely touched upon the problem of the possibility of a theoretical science of social phenomena.[6]

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*A discussion concerning the method and epistemological character of economics carried on in the second half of the eighties and into the nineties of the last century between Carl Menger and his supporters on the side of the Austrian School of economics, and the proponents of the German Historical School, led by Gustav von Schmoller.

[6] The point in question in the dispute about the freedom of the social sciences from all valuations had long since been resolved. It had never in any way constituted a problem whose solution could have caused any difficulties. Cf. Cantillon, Essai sur la nature du commerce en general, ed. with an English translation by Higgs (London, 1931), pp. 84-85; Ricardo, Notes on Malthus' "Principles of Political Economy," ed. by Hollander and Gregory (Baltimore, 1928), p. 180; Mill, J. S., System of Logic Ratiocinative and Inductive (8th ed.; London, 1872), Book VI, chapter 12, ?6; Cairnes, Essays in Political Economy, Theoretical and Applied (London, 1873), pp. 256 ff.; Sidgwick, The Principles of Political Economy (2nd ed.; London, 1887), pp. 12 ff.

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