Reply to Aziz on Methodology

John Aziz has posted “A Critique of the Methodology of Mises & Rothbard.”

He objects to Mises’ statement that:

Our statements and propositions are not derived from experience. They are not subject to verification or falsification on the ground of experience and facts.

by averring:

This is completely wrongheaded. All human thought and action is derived from experience; Mises’ ideas were filtered from his life, filtered from his experience. That is an empirical fact for Mises lived, Mises breathed, Mises experienced, Mises thought. Nothing Mises or his fellow praxeologists have written can be independent of that — it was all ultimately derived from human experience.

Here Aziz conflates “derived from” with “result from”. Propositions certainly result from thinking; and thinking may be characterized as an experience.  But propositions are derived from that which purportedly validates them.

Nobody says, “X is true because I had the experience of thinking Y.”  Instead, they simply say “X is true, because of Y.”  Y, in this case, may be certain premises (as in the case of math and economics), or it may be experience (as in the case of the natural sciences), or a combination of both (as in the case of economic history).  But even when Y is itself experience, it is Y that X is derived from, not the “experience of thinking about the experience”.

For example, a student may experience reading a geometry textbook, and as a result of that experience, he may be able to state the Pythagorean Theorem.  That does not mean the Pythagorean Theorem was derived from experience.  It was derived through the experience of thinking, but it was not derived from the experience of thinking.  Rather it was derived from the premises from which it logically follows.

Aziz then objects to the Austrian rejection of data in economics:

If, as I often do, I produce a deductive hypothesis — for instance, that the end of Bretton Woods might produce soaring income inequality — it is essential that I refer to data to show whether or not my hypothesis is accurate. If I make a deductive prediction about the future, it is essential that I refer to data to determine whether or not my prediction has been correct.(…)

This is elementary stuff. Deduction is important — indeed, it is a critical part of forming a hypothesis — but deductions are confirmed and denied not by logic, but by the shape of the evidence.

Of course, while Austrians do reject the use of data in deriving or testing economic laws (that is, in economic theory), they fully embrace data as necessary in studying economic history.  So Aziz’s implied contention that Austrians would not use data to forecast the effect of ending Bretton Woods is entirely off-target.

Aziz then belatedly recognizes this crucial distinction when he says:

Praxeologists claim that praxeology does not make predictions about the future, and that any predictions made by praxeologists are not praxeological predictions, but instead are being made in a praxeologist’s capacity as an economic historian.

Even though this crucial distinction obliterates his case against Austrian methodology, Aziz claims it is “moot” because:

all predictions about the future are deductive. Unless predictions are being made using an alien framework (e.g. a neoclassical or Keynesian model) what else is the praxeologist using but the verbal and deductive methodology of praxeology?

This statement shows that Aziz has very little familiarity with Austrian methodology in the realm of history and forecasting. If he’s interested in learning about it, he might want to read Mises’ Theory and History, particularly the parts discussing “thymology” and “the specific understanding.”

Comments

  1. It seems to me that the a-priori methodolgy of praxeology and AE is usually impossible for those trained in empiricism to understand and appreciate. It is the rare individual who is sufficiently open minded to question the veracity of beliefs long held as sacrosanct.

    • This is an excellent reply to Aziz. I’ve always disagreed with Mises that the axiom of human action is somehow apriori to experience and observation. Rothbard’s Aristotelian position (which I had forgotten about) is much more appealing to me.

      But this still does not change the fact that I find it mystifying that anyone could think that positivist data collection could somehow invalidate an economic theory. For example, I can’t think of how collecting stats or analyzing specific historical events could invalidate Mengerian marginalist value theory.

  2. Hi Danny,

    Great response to Aziz. The only agreement I have with him is where he states that economic axioms cannot be seperated from observation. Allow me to explain. Mises’ founding axiom that man acts with purpose to remove ‘uneasiness’ is in my opinion necessarily true. The only way I can know this, though, is by observing that this is in fact the way man behaves. On the contrary, I know that animals don’t act this way because I have observed it. The rest of Aziz’s article is way off the mark.

  3. I appreciate the difference in principle, but in reality the line between derive from and result from is blurry. As I wrote:

    We’re not isolated, objective logical automata. We’re thinking, living, breathing, creatures and our biology, our neurology, and our sentience is encoded into any proposition we make. This is influences and shapes our mathematical language, our verbal language, syntax and both objective and abstractive conceptual frameworks (e.g. concepts of time, concepts of shape, concepts of number, space, processes, etc).

    If I make a deduction, I derive my propositions from my logic; but my logic is contingent upon the parameters of my own consciousness.

    And the issue is that it is perfectly possible to derive entirely logically consistent, well-defined logical structure that bear no resemblance to reality. They key is observation; that’s why Pythagoras’ theorem is still with us, because it’s observationally consistent. The fact that there are logically consistent propositions that bear no resemblance to reality empirically proves the necessity of observation in establishing principles and theorems.

    • I don’t see how what you said indicates a blur between “derive from” and “result from”. The propositions *derive from* logic, and the logic *results from* what Mises calls the “structure of the human mind.” But the fact that the two are related does not mean they are indistinct.

      “And the issue is that it is perfectly possible to derive entirely logically consistent, well-defined logical structure that bear no resemblance to reality.”

      Again you’re confusing theory with history; the formulation of theory with the application of theory. Austrians DO use observation to help them to decide which theorems are interesting, and worth formulating. There would be little use in formulating a rigorous theory of indirect exchange if we did not observe indirect exchange as a part of reality. Furthermore, Austrians DO use observation to determine whether any given theory is APPLICABLE in interpreting any given event in life. Austrians DO NOT use observation to determine whether the logical conclusions of a theorem are correct GIVEN the assumptions used in constructing the theorem. But Austrians DO use observation to determine whether those assumptions are ACTUALLY present in any given even in life.

      • As a fellow free market economist, I am sure you appreciate my dislike of monopolism — and LVMI doesn’t have a monopoly on the term “Austrian”. You’re talking about what I refer to as Misesean-Rothbardian economics, which as Sandeep Jaitly correctly notes is not entirely Mengerian (i.e. Austrian). As Gordon admitted in his piece yesterday, Menger was inductive-deductive (i.e. empiricist) in terms of determining whether the logical implications of a theory were correct, and Mises was a pure deductionist (i.e. rationalist). Your description above is consistent with that; if you’re not using observation and data in determining the logical conclusions (and by implication, the correctness) of a theorem, you are a rationalist. As I noted above, the fact that it is possible to formulate theorems that are entirely logically consistent and yet entirely unrealistic makes pure deductionism entirely problematic.

        • Jaitly’s case for Mises being non-Mengerian, as Woods has shown, was rife with inaccuracies; in many cases he attributed to Mises positions which were the exact opposite of what Mises actually held.

          For virtually everyone across the board, and across the spectrum — from self-described Austrians to Keynesians to Monetarists — Mises was an Austrian School economist. If the teeny-tiny circle of people contending otherwise is going to change the prevailing usage, you’re going to have to do a much better job than Jaitly’s preposterous assertions.

          Please cite a passage in Gordon’s piece in which you think he makes that “admission”.

          “As I noted above, the fact that it is possible to formulate theorems that are entirely logically consistent and yet entirely unrealistic makes pure deductionism entirely problematic.”

          And as I responded above, that critique fails, because Austrians use observations to determine whether a given theory is actually applicable to any given event in reality.

          Btw, the term is “deductivism,” not “deductionism.”

        • Also, I don’t believe you responded to this:

          “I don’t see how what you said indicates a blur between “derive from” and “result from”. The propositions *derive from* logic, and the logic *results from* what Mises calls the “structure of the human mind.” But the fact that the two are related does not mean they are indistinct.”

  4. To me, it seems Aziz (an autodidactic economist whose commentary is often exciting and illuminating) does not really understand what Mises was doing ,and more important why i.e. how exciting and illuminating economic subjectivism is. Peter Boettke, Don Lavoie, and Virgil Storr wrote in a 2004 paper “The Subjectivist Methodology of Austrian Economics and Dewey’s Theory of Inquiry” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1538074 :

    “The problem with economics as an academic discipline, then, is that instead of trying to understand the problems of everyday economic life, economists have largely satisfied themselves with playing logical games and solving imaginary puzzles….. An economics of the world, the subjectivists have asserted, must be thoroughly focused on the meanings that individuals attach to their actions and their situations. Man lives in a world of radical uncertainty yet he must orient himself to his fellow men if he is to succeed (Mises [1949] 1966). To understand how he accomplishes this, that is, to understand how he orients himself to his fellows and how he overcomes the problems of time and ignorance, we have to construct an economics of meaning. If economics is to be relevant, if it is to serve the everyman, we have to take seriously the ‘subjective perspectives’ of the individuals we study.”

    Instead of taking an isolated clause from Mises and using syllogistic type logic to tear it down, I strongly suggest that Aziz read more Mises and look into some of the other literature on Austrian methodology and I think he will get a feel for what it is all about — and only then try to critique it.

  5. Nobody says, “X is true because I had the experience of thinking Y.” Instead, they simply say “X is true, because of Y.” Y, in this case, may be certain premises (as in the case of math and economics), or it may be experience (as in the case of the natural sciences), or a combination of both (as in the case of economic history). But even when Y is itself experience, it is Y that X is derived from, not the “experience of thinking about the experience”.

    I think you missed my point. This is not a conscious process; in fact Mises’ own thought process was that his deductions were a priori. So you’re generally correct to say that “nobody says X is true because I had the experience of Y”. But we’re not isolated, objective logical automata. We’re thinking, living, breathing, creatures and our biology, our neurology, and our sentience is encoded into any proposition we make. This is influences and shapes our mathematical language, our verbal language, syntax and both objective and abstractive conceptual frameworks (e.g. concepts of time, concepts of shape, concepts of number, space, processes, etc).

    Of course, this does not mean to say that we cannot deduce correctly, and I reject any such claims as nihilistic and specious. Humans deduce correctly all of the time, but only external confirmation can determine when we have reasoned correctly. Could Pythagoras’ theorem have survived the test of time if it did not correlate with real world expectations? Of course not. It is possible to deductively produce millions of logically consistent models of the universe; millions of string theories and other such attempts to tie gravitation to quantum mechanics have been produced in the minds of scientists. Which will survive? The ones consistent with observation. As we observe more we can falsify more. Pure deductionism — even from flawless mathematical or verbal premises (and because of our biological nature, very, very, very often we do not start from flawless premises, or use flawless reasoning) — produces many, many possibilities both in an esoteric field like string theory, as well as a more grounded one like economic theory. It is an empirical fact, though, that only observationally consistent theories survive. And that’s the case whether Woods, Murphy, you, Mises and Rothbard like it or not.

  6. Here Aziz conflates “derived from” with “result from”. Propositions certainly result from thinking; and thinking may be characterized as an experience. But propositions are derived from that which purportedly validates them.

    Nobody says, “X is true because I had the experience of thinking Y.” Instead, they simply say “X is true, because of Y.” Y, in this case, may be certain premises (as in the case of math and economics), or it may be experience (as in the case of the natural sciences), or a combination of both (as in the case of economic history). But even when Y is itself experience, it is Y that X is derived from, not the “experience of thinking about the experience”.

    For example, a student may experience reading a geometry textbook, and as a result of that experience, he may be able to state the Pythagorean Theorem. That does not mean the Pythagorean Theorem was derived from experience. It was derived through the experience of thinking, but it was not derived from the experience of thinking. Rather it was derived from the premises from which it logically follows.

    Let’s go one level lower. The Pythagorean theorem is not knowledge; it is a definition. But at least it is a totally abstract definition that refers to an abstract concept as opposed to economic definitions which purportedly refer to real world objects, things, environments, situations, etc. (There is in our world of infinitesimals no such thing as an exact 90 degree angle, for instance) I can accept the premise that mathematical definitions can be formulated abstractly. Economic theorems are not abstract; they by definition refer to the world, and by definition are shaped by biological and economic nature of the creature that is making them.

    Of course, while Austrians do reject the use of data in deriving or testing economic laws (that is, in economic theory), they fully embrace data as necessary in studying economic history. So Aziz’s implied contention that Austrians would not use data to forecast the effect of ending Bretton Woods is entirely off-target.

    I find it difficult to draw a line between economic theory and economic history, and I find it surprising that praxeologists find it so easy. Yet the only thing I implied here is that Misesean-Rothbardian attempts to consider the results of the end of BW looking forward from 1971 were 9http://lyontheeves.com/ltdocs/rothmoney.pdf) based on ideas deduced from axioms, as opposed to ideas developed out of data. Looking into the past, I understand that praxeologists wearing their thymologist hat would use data in much the way I do as a tool of economic analysis.

    • Aziz, instead just introducing new contentions to grapple with, it’d probably be better to address the ones already proposed. Can you address the first 2 paragraphs you quote?

      Your characterization is incorrect. In the Misesian view, thymology is utilized in both historical investigations AND forecasts.

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