Here are a few quotes, all from Mises, that seem to contradict each other.
Group A:
1. Praxeology, the a priori science of human action, and, more specifically, its up to now best-developed part, economics, provides in its field a consummate interpretation of past events recorded ...
2. ...and a consummate anticipation of the effects to be expected from future actions of a definite kind.
3. This is the reason why history cannot predict things to come and why it is an illusion to believe that qualitative economics can be replaced or supplemented by quantitative economics. {Meaning that qualitative economics CAN predict stuff].
4. The predictions of praxeology are, within the range of their applicability, absolutely certain.
5. Economics can predict the effects to be expected from resorting to definite measures of economic policies. It can answer the question whether a definite policy is able to attain the ends aimed at and, if the answer is in the negative, what its real effects will be.
6. Economics too can make predictions in the sense in which this ability is attributed to the natural sciences. The economist can and does know in advance what effect an increase in the quantity of money will have upon its purchasing power or what consequences price controls must have. Therefore, the inflations of the age of war and revolution, and the controls enacted in connection with them, brought about no results unforeseen by economics.
7. ...the public's interest in the studies labeled as economic is entirely due to the expectation that one can learn something about the methods to be resorted to for the attainment of definite ends. The students attending the courses of the professors of "economics" as well as the governments appointing "economic" advisers are anxious to get information about the future,...
Bottom line, Group A says very clearly that economics [meaning fo course Austrian economics, what other kind is there] is great both for explaining the past and accurately predicting the future.
Group B:
1. [Praxeological] statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification or falsification on the ground of experience and facts.
2. ...Neither experimental verification nor experimental falsification of a general proposition is possible in its field.
3. Complex phenomena in the production of which various causal chains are interlaced cannot test any theory.
All the quotes in Group B contradict those in Group A. Because according to the Group A qoutes, economics and praxeology can make accurate predictions about the futre. thatś the whole point of studying economics, says Group A. And so, if economics makes a prediction that it assures us will be accurate, and the prediction does not come true, then that is a falsification of some economic principle, obviously. And yet Group B says economics cannot be falsified.
Similarly, if an economic prediction comes true a thousand times in a row [which can very well happen, says Group A], then that is a verification of the economic principle which led to the prediction. After all, physics, the queen of the sciences, is built exactly on that kind of proof. Itś called induction. This again contradicts Group B, which says there is no possible verification.
So what gives? All the quotes are from Mises himelf, in books he wrote over the years.
My humble blog
It's easy to refute an argument if you first misrepresent it. William Keizer
There is no contradiction. Group A says that with any given set of premises, economics can reach a conclusion that will accurately predict the future. Group B says that one cannot set experiments to test theory in economics. They are not directly related statements.
So, if an economist makes a prediction about the economy, and it turns out he is wrong, there are only two options:
1) There is a problem with the premises - some are false or there are not enough.
2) The argument is not valid.
If one uses AE to make a prediction and it turns out that prediction does not come true, what is happening is that the premises are flawed. We could say the argument is invalid, but then it wouldn't be AE. Just because one cannot set up an experiment to test this does not mean that one cannot make accurate predictions about the future.
@Dave: I don't mean to be obtuse but I really don't see the contradictions... can you lay out one or two examples side-by-side?
Clayton -
The contradictions are in the conclusions to be drawn from the statements.
Group A says economics can make reliable, accurate predictions. In fact, that is the whole purpose of studying it. Thus, if some tenet of economics leads one to predict that, say, the sky will fall down sometime in the next five years, and a hundred years pass by and the sky does not fall down, then that tenet has not made an accurate reliable prediction, meaning it has been tested and proven false.
Group B says there is no test for the principles of economics. But according to the logical consequences of the ideas in Group A, there can exist a test, as above.
My original post also showed how it follows from the ideas in Group A that there exists verifications, which Group b denies.
@Dave: I typed a response and my browser ate it... I'll re-post after I finish my pity-party.
That is not what Mises is saying. Group A is saying that AE is deductive based. Group B is saying that no experiments can be set up in economics. There is no contradiction.
If Group A makes a prediction, and it turns out to be false, then there are only 2 possibilites:
1) The premises are wrong
or
2) The argument is invalid
All Group B is saying is that there can be no experiments. If you want to show that something is wrong in AE, then you need to show the flaw in the premises or the flaw in the argument. If an economist predicts that there is a bubble and it will burst, and then it doesn't happen, that doesn't disprove AE. It just means that either the premises are false/incomplete or the argument is invalid. Mises is saying that you can only conclude that the premises are false/incomplete. In order to state that the argument is invalid, you would have to use logic to show that it is the case, not induction/observation. So, just because something doesn't come true doesn't mean that it is the fault of AE.
If you would prefer to use the example of the falling sky:
1) A scientist claims that the sky will fall in 5 years
2) The sky does not fall
Therefore
3) Either the premises are false/incomplete or the argument is invalid
It may be the case that the argument is invalid, but Mises is saying that you can only demonstrate this with logic. If the argument is valid, then it is the fault of the premises. This means it has not been proven false.
Your example of the sky falling down sometime in the next five years is not the kind of prediction that economics can make. First, it contains definite quantities in space and time. Economics deals only with qualitative laws and therefore predictions. Second, in the real world you are not dealing with situations of ceteris paribus and therefore the veracity of the prediction cannot be determined unless we simply adopt post hoc ergo propter hoc. We cannot do this in regard to human action since there are only variables and no constants.
I'm fairly sure these two points address all of the concerns with the supposed contradiction in the statements of Mises.
The "predictions" of praxeology hold true because they are, as Hayek says, merely tautological transformations of the assumptions from which we begin.
Thus we can "predict" that if a person walks toward one location (assumption), he will walk away from another location (tautological transformation of the assumption).
And we can "predict" that if we make a car more fuel efficient by means of making it more aerodynamic (assumption), we will make that car take longer to come to a stop under the same braking power (tautological transformation of the assumption).
The B must come with the A with "apodictic certainty" because the B is a "formal implication" of the A.
Praxeology applies this same principle beyond such physical examples, into market phenomena, and eventually into other social phenomena, such as the ethical and political realm of action.
Praxeological laws cannot be tested in the empirical sense because the regularity in question (the constant relationship between A and B) derives not from a temporal "following" of B from A, but rather from an a-temporal co-presence of B with A. If A is present, B must also be present, because B is implied in the presence of A.
Robbins:
"If the "given situation" conforms to a certain pattern [A], certain other features [B] must also be present, for their presence is "deducible" from the pattern originally postulated."
"The analytic method is...an instrument for "shaking out" all the implications of given suppositions. Granted the correspondence of its original assumptions and the facts, its conclusions are inevitable and inescapable."
(An Essay on the Nature & Significance of Economic Science)
The correct analogy is not between praxeology and physics, but between praxeology and mathematics. Mathematics is essentially a formal theory of "physical action."
E.g., If I "have" 24 marbles [action A] ("having" being an intentional activity), then I have 8 groups of 3 marbles [action B].
If I "walk" 24 miles [action A], I walk 3 miles 8 times [action B].
If I "take" two marbles from my 24 marbles [action A], I will "have" 22 marbles [action B].
B is a formal implication of A, and so we can "predict" with certainty that if A happens B will happen.
These relationships cannot be tested by experiment if experiments test the relationship between two observations (two actions) as opposed to the formal implications of a single action. Praxeology does not say anything about the relationship between two actions (such as two observations). It only instructs on the formal implications of a unitary action.
"It would be preposterous to assert apodictically that science will never succeed in developing a praxeological aprioristic doctrine of political organization..." (Mises, UF, p.98)
Smiling Dave: Praxeology, the a priori science of human action, and, more specifically, its up to now best-developed part, economics, provides in its field a consummate interpretation of past events recorded ... [Praxeological] statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification or falsification on the ground of experience and facts.
Praxeology, the a priori science of human action, and, more specifically, its up to now best-developed part, economics, provides in its field a consummate interpretation of past events recorded ...
[Praxeological] statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification or falsification on the ground of experience and facts.
How the hell is science and mathematics a priori? He's wrong on that, clearly. Logic I understand, but systems of thought based on logic are not a priori; they're clearly a posteriori.
How the hell is science and mathematics a priori?
Did he say science?
As for math, perhaps we learn about numbers from counting teddy bears and such in kindergarden, but that isn't really needed. All of math needs no recourse to experiment or experience. On the contrary, it even teaches about things we can never experience, by which I mean the infinite.
...but systems of thought based on logic are not a priori...clearly...
Could you kindly explain why, as it is not clear to me at all.
Also, not sure why you copied the first quote.
Mathematics has historically been an exclusively a priori discipline. Only very recently with computational methods has an a posteriori mathematical discipline emerged, and it's still considered rather heterodox.
Economics (and praxeology) is clearly not an analytic a priori discipline in the Kantian definition but Kant also argued that there is a category of knowledge which he termed synthetic a priori. (As an aside, the recently emerged field of experimental maths would be the fourth category: analytic a posteriori!). Kant's arguments on this subject are pretty involved but I think just laying out his categories of knowledge make it pretty clear that he was right. Analytic knowledge is knowledge about abstract (non-real) things - things like geometric cubes or topological branes. Synthetic knowledge is knowledge about real (physical) things - things that are bound by the laws of physics and are (at least potentially) part of our experience. A priori knowledge is knowledge that is either true or false beforehand, that is, before any argument is made about them. A posteriori knowledge is knowledge that is only discovered to be true after some process of argument or discovery.
Conventional epistemology divides the world into two sharp categories: analytic a priori (logic, maths, etc.) and synthetic a posteriori. Kant argued that there is a third category - the synthetic a priori. This is knowledge about the real world that is either true or false before any sort of argument or discovery process (experiment). The positivists, of course, rejected the synthetic a priori as a valid category of knowledge and even though positivism has long since been discredited in every field its legacy is the eternal suspicion that any claims of synthetic a priori knowledge are subversive attempts to smuggle in religious ideology into science or spiritual beings into the clockwork Universe of maths and science.
Positivism is dead. Synthetic a priori knowledge is actually the most important category of knowledge. The act of willing (choosing) and the conscious awareness or experience of the world that arises from being human can only be properly categorized as synthetic a priori forms of knowledge. Your experience of the world is what it is (a priori, no "experiments" or "arguments" required) and it is synthetic (about the real, that is, non-abstract world). This is why a priori science is possible.
Gotlucky,
Group A says that with any given set of premises, economics can reach a conclusion that will accurately predict the future.
By premises do you mean intial assumptions, for example, the action axiom, or do you mean assumed information about reality, say that unemployment is at 10%?
All Group B is saying is that there can be no experiments.
Here is an experiment. Mises writes in HA on page 866 wrote this about a boom created by a credit expansion. "The economist knows that such a boom must result in a depression."
OK, so when we have a boom created by credit expansion, which is a commonplace occurence all over the world at various times, we have the conditions for an experiment. If there is a depression after, that is one piece of an inductive proof of AE. If no depression occurs, AE has been refuted. Now granted that AE doesn't claim it knows when the depression will occur. But surely if the credit expansion ends, and for fifty years after there is no depression, that would be strong indication of the wrongness of AE.
Aristipuss,
What say ye to Mises' praxeological statement that a boom caused by credit expansion must result in a depression? Do you think Mises went beyond the limits of praxeology making such a claim, because it contains definite quantities in space and time? [Space= the country expanding credit. Time= within fifty years, which I assume he meant]. Or that it is mistaken because he forgot to include ceteris parebis disclaimers? Or that he forgot that there are only variables and no constants?
I don't think so. I think it is a valid praxeological statement, and indeed a bold prediction to boot. Being a prediction, it is subject to experiment, as described in this post.
Clayton,
Mises' prediction [he wrote "must"] that a credit induced boom must result in a depression was written to be understood. In other words, the word "depression" is defined within reason, and we can say [except perhaps in some borderline cases] that we either are or are not in a depression.
That being the case, we can conduct an experiment, as described earlier in this post.
Adam Knott,
The statement "A boom resulting from credit expansion must result in a depression" might be a tautology [although it is not what I was taught a tautology is], but many people dispute its veracity. AE's insists it is true always. Thus, AE can be subjected to an experiment, as described earlier in this very post.
Smiling Dave: By premises do you mean intial assumptions, for example, the action axiom, or do you mean assumed information about reality, say that unemployment is at 10%?
Either. I think wiktionary provides a pretty good definition here.
Smiling Dave: Here is an experiment. Mises writes in HA on page 866 wrote this about a boom created by a credit expansion. "The economist knows that such a boom must result in a depression." OK, so when we have a boom created by credit expansion, which is a commonplace occurence all over the world at various times, we have the conditions for an experiment. If there is a depression after, that is one piece of an inductive proof of AE. If no depression occurs, AE has been refuted. Now granted that AE doesn't claim it knows when the depression will occur. But surely if the credit expansion ends, and for fifty years after there is no depression, that would be strong indication of the wrongness of AE.
The problem with running an experiment is the definition: A test under controlled conditions made to either demonstrate a known truth, examine the validity of a hypothesis, or determine the efficacy of something previously untried. There is no way to control the conditions of an economic test, so it can't really be classified as an experiment. However, I'll grant the assumption that we can test whether a boom created by credit expansion must cause a depression.
So, Mises' argument is modus ponens = If p, then q. In this case: If there is a boom created by a credit expansion, then there will be a depression. Nevermind 50 years, let's assume that a depression never occurs. In other words, we would have a false conclusion. As I stated previously, if there is a false conclusion, the problem is either with the premises or the argument. Since it is modus ponens (which is always valid), we know that the flaw would be with the premises of Mises' argument. Here are two possibilities:
1) That all the evidence that supports the ABCT is just coincidental. There is no relation between credit expansion and economic depression.
2) Credit expansion is a necessary but insufficient factor in economic depression.
So, if there were a credit expansion but no resulting depression, then we could say that Mises was wrong. However, the problem lies with the experiment. How much money needs to be injected into the economy? How long after the injection are we going to measure? What happens if I inject only $1 into the economy? Will there be a depression? What if I inject $100,000? $1,000,000? Does it matter how big the economy is? What if inject 1% of the existing supply in the USA, and then I try the same thing with Ireland, France, and Canada? Will the results be the same?
People can use the Theory of Relativity to predict where planets will be with incredible precision. This cannot happen with economics. We can only make general statements.
However, the problem lies with the experiment. How much money needs to be injected into the economy? How long after the injection are we going to measure? What happens if I inject only $1 into the economy? Will there be a depression? What if I inject $100,000?...
Enough for the boom caused by the expansion to be generally accepted as a "boom". That's the p in p->q.
As for what generally accepted is, although there is no clear cutoff point, there are however plenty of cases that most people would consider as generally accepted.
...incredible precision. This cannot happen with economics. We can only make general statements.
But those general statements can be proven and disproven.