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Reply to Aziz on Methodology

August 28, 2012
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."

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