The notion of empiricism or ‘empirics’ has come to the fore again as a result of George A. Selgin’s recent article. http://www.cato-unbound.org/2012/09/10/george-a-selgin/how-austrian-is-it/ An important question concerns the apparent aversion praxeologists have toward empiricism. This post addresses empiricism from the praxeological point of view.
A notion widespread among Austrian social thinkers holds that the difference between physical science and positivism on the one hand, and social science and praxeology on the other hand, is that the former studies objects that are animated by physical causes, while the later studies objects that are animated by goals and purposes. Here is a passage from Talcott Parsons that reflects this conception of things:
It may be said that all empirical science is concerned with the understanding of the phenomena of the external world. Then the facts of action are, to the scientist who studies them, facts of the external world—in this sense, objective facts. That is, the symbolic reference of the propositions the scientist calls facts is to phenomena “external” to the scientist, not to the contents of his own mind. But in this particular case, unlike that of the physical sciences, the phenomena being studied have a scientifically relevant subjective aspect. That is, while the social scientist is not concerned with studying the content of his own mind, he is very much concerned with that of the minds of the persons whose action he studies. (The Structure of Social Action, 1968, p. 46)
Thus, it is commonly held that what distinguishes social science from physical science is that the objects of social science “have a scientifically relevant subjective aspect.” Social science studies objects of nature as physical science does, however, attached to or contained within the objects of social science are things such as purposes, goals, intentions, ideas, etc.
As the passage from Parsons explicitly states, this view of social science is one in which the social scientist studies facts of the external world, objective facts, and facts external to the scientist. This approach is one in which the scientist does not study the content (or form, or structure) of his own mind, but rather is “very much concerned with …the minds of the persons whose action he studies.”
From the beginning then, this is a view of social science at fundamental odds with the conception of praxeology as it was understood by Mises and Hayek in the 1930’s. Here are some key passages that paint a picture of a very different method of social analysis:
"...in discussing what we regard as other people's conscious actions, we invariably interpret their action on the analogy of our own mind: that is, we group their actions, and the objects of their actions, into classes or categories which we know solely from the knowledge of our own mind."
"We thus always supplement what we actually see of another person's action by projecting into that person a system of classification of objects which we know, not from observing other people, but because it is in terms of these classes that we think ourselves."
"...we can derive from the knowledge of our own mind in an "a priori" or "deductive" or "analytic" fashion, an (at least in principle) exhaustive classification of all the possible forms of intelligible behavior."
"If we can understand only what is similar to our own mind, it necessarily follows that we must be able to find all that we can understand in our own mind."
(Hayek, "The Facts of the Social Sciences")
“For, as must be emphasized again, the reality the elucidation and interpretation of which is the task of praxeology is congeneric with the logical structure of the human mind.”(Mises, The Ultimate Foundation of Economic Science, p.65)
"The scope of praxeology is the explication of the category of action. All that is needed for the deduction of all praxeological theorems is knowledge of the essence of human action. It is a knowledge that is our own because we are men....The only way to a cognition of these theorems is logical analysis of our inherent knowledge of the category of action. We must bethink ourselves and reflect upon the structure of action. Like logic and mathematics, praxeological knowledge is in us; it does not come from without." (Human Action, 3rd rev. p. 64)
To understand the meaning of these passages is to begin to understand that praxeology is what we may call an epistemological approach to the cognition of social phenomena. A detractor once scoffed that “economics isn’t some kind of applied epistemology.” However, praxeology, as distinct from empirical or mathematical economics is indeed a kind of applied epistemology. It is an approach that
…arrive[s] at laws of phenomena which are not only absolute, but according to our laws of thinking simply cannot be thought of in any other way but as absolute.
(Menger, Investigations Into the Method of the Social Sciences, 1985, p. 61)
The essence of praxeology is the interpretation of phenomena as manifesting in fixed relationships due to the logical structure of the mind which apprehends the phenomena. In other words, concrete A and concrete B must appear in relation X to one another, because my mind is structured such that when any A appears to me, the relationship of any B to A is always X. This “approach to cognition” relies primarily on reflective study of the nature and form of consciousness, not on study of the objects of the “external world.” This has important implications for understanding the relationship between praxeology, empiricism, and positivism.
It is common for Austrians to conceive that praxeology is not positivism because praxeology studies things that are animated by purposes whereas positivism studies things animated by physical causes (or explains things in terms only of physical causes). But this is not the essential characteristic that differentiates praxeology from positivism. What differentiates the two is that praxeology studies the structural form of consciousness (of mind), whereas positivism studies the relationship of objects of nature. In this sense, empiricism and positivism are more closely related to one another than praxeology is related to either one.
Let’s take the definitions of empiricism and positivism from Wikipedia:
Empiricism is a theory of knowledge that asserts that knowledge comes only or primarily from sensory experience.
Positivism is a philosophy of science based on the view that in the social as well as natural sciences, data derived from sensory experience, and logical and mathematical treatments of such data, are together the exclusive source of all authoritative knowledge.
We can see immediately that both definitions refer to sensory experience and neither definition refers to the examination of the form or structure of consciousness. Empiricism and positivism are alike in that they entail a description of events in terms of the relationships between perceptions (the relationships between various sensory experiences). Praxeology is not necessarily concerned with the relationship between perceptions or sensory experiences for the simple reason that perceptions or sensory experiences, as such, may constitute a singular category of consciousness (of intentional action) which then eliminates the notion of a comparison of several concrete perceptions or sensory experiences.
Thus, we may apply the following standard in differentiating praxeology from physical science, positivism, empiricism, and thymology. We can ask whether the proposed method of analysis requires that we classify or make distinctions between the characteristics of our various perceptions or sensory experiences.
The moon is closer than the sun
Elephants are large, mice are small
Humans act, stones re-act
These are examples of an approach to cognition that begins by making distinctions between the various objects of spatial and temporal nature. Praxeology need not begin this way and need not be founded on these distinctions for the simple reason that praxeology may conceive something like:
Every time I have a perception or sensory experience X, I try to replace it with a different perception or sensory experience Y.
In this conception, no distinctions between perceptions or sensory data arise. We treat perceptions and sensory data “as such” as constituting a singular category of action (category of intentional consciousness).
(here I will not address the epistemological problem or argument that Y’s being “different” from X constitutes a difference in characteristics)
Thus, we are led to a conception of praxeology in which praxeology may conceive a category of perceptual or sensory content, while non-praxeological approaches may treat the relationship between various sensory or perceptual contents.
(Here I’m referring to non-praxeological non-formal approaches to phenomena. Presently, I’m not addressing mathematics, geometry, formal logic, etc.)
The main point is that we may conceive an important distinction between positivism and empiricism on the one hand, and praxeology on the other. We may classify various scientific approaches to phenomena according to whether the given approach studies the structural form of intentional conscious as such, or, studies the relationship between the differentiated concrete perceptions or sensory data which appear to intentional consciousness. When we classify the sciences this way, then positivism and empiricism belong to the same family as they both seek for an explanation of experience in terms of the relationship between the concrete objects of experience.
The tendency may be to conceive that empiricism in social science is not the same as positivism because the “subjective aspect” (the mind) of the actors that we study in empirical social science is not an “object” in the commonsense meaning. Positivism may attempt to study the mind of a subject as a physical system, whereas empirical social science is content to conceive that the mind of the subject—to which we attribute ideas and purposes—is an intangible factor. However, the problem with this view of things becomes clear when we ask whether the mind of the subject is to be conceived as occupying a delimited region in space. Does the mind of the subject, considered as an intangible factor, reside within the head of the subject? If so, then to this extent does a mind so conceived become an object of the physical world: an object that may be differentiated from other objects by virtue of its location, an object that moves from place to place, an object that may exist in multiples and may thus be an object of mathematical operations, etc. If the mind of the subject is conceived as intangible and as not residing in or around the body of the subject, this suggests that the mind of the subject is a function of the intention(s) of the actor who observes the subject, which takes us back to praxeological analysis.
“…for the purposes of the social sciences, we have to define both the objects of human activity and the different kinds of actions themselves, not in physical terms but in terms of the opinions or intentions of the acting persons.” (Hayek, “The Facts of the Social Sciences”)
Thus, in praxeology, we could consider the mind of an observed person to be an aspect of the observer rather than an aspect of the observed.
Hayek’s Empiricism from the Praxeological Point of View
As we know, Hayek claimed that some of the most important aspects of social life, including the market, can only be studied empirically. Let’s look at this claim a little more closely.
Hayek held that social phenomena cannot be defined in physical terms, but only in terms of the intentions of the acting persons. This was one of the main points of "The Facts of the Social Sciences." When he claimed, in addition, that study of the market is empirical, he thus claimed that study of the market entails an empirical study of the intentions of the acting persons. This notion is problematic as we will now see.
If social phenomena cannot be defined in physical terms, but only in terms of the intentions of the acting persons, as Hayek argues, this principle must also apply to the social scientist himself. I.e., the relationship between the social scientist and the social objects he encounters is the same as the relationship between the observed actor and the social objects he encounters. Hayek provides no method by which the social scientist can find out the “real” or “physical” properties of social phenomena that remain hidden to other actors. Therefore, the social scientist, as any actor, cannot describe the prices he observes, the interest rate he observes, the market he observes, or the loan he observes, in physical, real, or objective terms, but only in terms of his own intentions.
Let's say that Hayek instructs his student to conduct a study of markets, prices, loans, and interest. By Hayek's own arguments, the student won't be able to locate these things by virtue of their physical characteristics. He will only be able to locate them as aspects of his own intentions. Hayek will insist that his student conduct only an empirical study and not a praxeological or a priori-type study. Hayek is in effect asking his student to conduct an empirical study of his own intentions. Recall that in the course of explaining that social phenomena cannot be defined in physical or objective terms, Hayek wrote:
“If we wish, we could say that all these objects are defined not in terms of their “real” properties but in terms of the opinions people hold about them. In short, in the social sciences the things are what people think they are. Money is money, a word is a word, a cosmetic is a cosmetic, if and because somebody thinks they are.” (“The Facts of the Social Sciences”)
Hayek provides no principle or procedure by which the social scientist, as opposed to an observed subject, can reveal or discover the objective, real, or physical properties of social phenomena. We must conclude that the principles Hayek explains apply to any actor: the social scientist, his student, and the observed subject. The implications of this situation are significant. It means that when the student goes to study phenomena of the market, and if Hayek is to be taken at his word, the student can’t say “this is money,” (which implies an objective state of affairs) but must instead say “I intend this to be money” or “I believe this is money,” (indicating that the social object he encounters is a function of his own intentions). This is consistent with Hayek’s understanding of the formal approach:
“It is important to remember that the so-called “data,” from which we set out in this sort of analysis, are…all facts given to the person in question, the things as they are known to (or believed by) him to exist, and not, strictly speaking, objective facts. It is only because of this that the propositions we deduce are necessarily a priori valid and that we preserve the consistency of the argument.”(Hayek, “Economics and Knowledge”)(emphasis added)
What we are saying is that Hayek’s principles apply in the first person, not merely in the third person.
If social phenomena exist or manifest only as the intentions of the acting persons as Hayek argues, then Hayek’s student, by virtue of this, can only study social phenomena as aspects of his own intentions. Any consequences or copresences that accompany the originally observed social phenomenon must also be a function of the observer’s intentions for the same reasons. Once we realize this and make it explicit, we can begin to see what Mises was trying to say about a priori theory and praxeology, and we can begin to see the epistemological or foundational problem in Hayek’s claim that market study can only be empirical.
Hayek held that market study can only be empirical and that Mises was wrong in claiming that market study is a priori. But it is possible that the exact opposite is the case. By virtue of his own premises (that social phenomena can only be defined in terms of the intentions of the acting persons), it may be that Hayek can only study social phenomena praxeologically, but due to his failure to realize the full implications of the intentional nature of social phenomena Hayek believes he can study social phenomena empirically. Hayek’s social scientific vision may be fundamentally flawed if it entails the attempt to study the formal implications of one’s own intentions as if they were empirical aspects of the physical world.
Empiricism and Economic or Social Magnitudes
Mises’s position on magnitudes (or quantities or statistics) are captured in this short passage:
“When you introduce figures into economics you are no longer in the field of economic theory, but in the field of economic history. Economic history is also, of course, a very important field. Statistics in the field of human action is a method of historical study. Statistics give a description of a fact, but they cannot prove any more than that fact.”(The Free Market and its Enemies)
In the article linked above, George Selgin argues in favor of quantities and statistics in economics. According to Selgin, the use of quantities and statistics in economics can help us to answer such questions as:
By how much were interest rates driven below their “natural” levels as a result of the open-market purchases and discount rate reductions that took place between 1922 and 1928? How much additional investment activity can be attributed to the difference? How great was the substitution of more capital intensive or “roundabout” investment activities for less roundabout ones? (How, indeed, might one quantify roundaboutness?) How, finally, does the scale of consequences statistically attributable to the mechanism described by the Austrian theory compare to that attributable to, say, the monetarist theory, which blames the depression [between 1922 and 1928] on monetary contraction?(bold added by AK)
When Selgin argues in favor of economic magnitudes he refers to past events, which confirms Mises’s theoretical insight regarding the introduction of figures into economics. Note that Mises’s theoretical insight regarding economic magnitudes does not itself rely on definite magnitudes.
"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)
1. So people don't use their noodles when studying physics, only when studying economics?
2. Of course numbers are about the past. How are you going to get numbers about the future until it happens? But Selgin has bigger fish to fry than economic history. What he wants to do is take the numbers and use them to predict the future, which is what Mises said is a big no no. Also he wants to use the numbers to test whether AE is right or wrong.
My humble blog
It's easy to refute an argument if you first misrepresent it. William Keizer