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Last Knight Live Blog 28 - Kraus

February 7, 2008
In this entry I am going to comment on some aspects in one of Mises's book-length monograph, Theory and History, on epistemology/methodology of social science as a whole, not just economics narrowly conceived. Last Knight's chapter 21 deals comprehensively with a number of issues in Theory and History. As the book's title suggests, the meaning and problems in connection with multi-faceted problems in theoretical and historical dimensions of social science research constitute the core of it. The specific issues that are discussed in the book include: methodological dualism, knowledge and judgments of value, the doctrines of determinism and materialism, and a general discussion of the nature and place of historical/empirical investigations in social science. Instead of summarizing the chapter, I want to continue my thoughts on epistemology that I began in a recent entry. This time it is methodological dualism that I will focus on. In the preface to Theory and History, Murray Rothbard offers a clear-cut introduction of the essence of methodological dualism:
At the heart of Mises and praxeology is the concept with which he appropriately begins Theory and History: methodological dualism, the crucial insight that human beings must be considered and analyzed in a way and with a methodology that differs radically from the analysis of stones, planets, atoms, or molecules. Why? Because, quite simply, it is the essence of human beings that they act, that they have goals and purposes, and that they try to achieve those goals.
I strongly disagree with this position. I am not convinced why the distinguishing characteristics of man and his free-will place the social scientist apart from his colleagues in natural sciences. My position is that both group of scientists face the same fundamental problem and task that unite all sciences: explaining and describing the regularities we observe in the real world. Fundamentally, when we speak about regularities (or laws) in the real world what we mean with it is that the nature and behavior of the phenomena subject to those regularities are independent of human will and consciousness. They are, in other words, metaphysically given. As all things metaphysically given, they cannot be changed, it is rather humans who must bow to them. But if they are metaphysically given, then ultimately it does not matter whether we deal with natural phenomena or with social phenomena. The element of the free-will which Mises stressed in arguing for methodological dualism becomes simply irrelevant. To put it another way, if science, in general, is about finding objective laws which by definition cannot be altered by human will and consciousness then starting with the fact of human will and consciousness cannot represent a valid scientific method. Yet this is precisely the essence of praxeology. It regards the fact of human free-will and consciousness not only as self-evident fact (or axiom) but makes it as the starting point of theoretical social science, here economics. But certainly the former does not imply the latter; that is, being a self-evident fact does not follow that it also must constitute the key element in scientific efforts. In both physical and social sciences, the task of the scientist is to come up with a description (theory) of these laws that would explain observable phenomena, so long as we suspect regularities in observable events. On the other hand, no regularities imply that there are no metaphysical forces at work and thus human free-will reigns supreme and man can alter things which are subject to his control. It is precisely the distinction between metaphysical and man-made that Ayn Rand so beautifully and convincingly stressed. (Cf. Metaphysical Versus The Man-Made in Ayn Rand, Philosophy Who Needs It. In my opinion, of all Rand's writings, this essay is the most profound.) Rand writes, without mentioning economic laws though:
The primacy of existence (of reality) is the axiom that existence exists, i.e., that the universe exists independent of consciousness (of any consciousness), that things are what they are, that they possess a specific nature, an identity. The epistemological corollary is the axiom that consciousness is the faculty of perceiving that which exists - and that man gains knowledge of reality by looking outward. (last emphasis mine, -- W. Kraus) The rejection of these axioms represents a reversal: the primary of consciousness - the notion that the universe has no independent existence, that it is the product of a consciousness (either human or divine or both). The epistemological corollary is the notion that main gains knowledge of reality by looking inward (either at his own consciousness or at the revelations it receives from another, superior consciousness). ... Today, this is (implicitly) understood and (more or less) accepted in regard to the physical sciences (hence their progress). It is neither understood nor accepted - and is, in fact, vociferously denied - in regard to the humanities, the sciences dealing with man (hence their stagnant barbarism). ... Man's faculty of volition as such is not a contradiction of nature, but it opens the way for a host of contradictions - when and if men do not grasp the crucial difference between the metaphysically given and any object, institution, procedure, or rule of conduct made by man. (emphasis in original)
Economic life in a modern division of labor economic system does follow distinctive paths prescribed by economic laws and which are definitely and absolutely independent of human will and consciousness. In this extremely crucial regard, economics IS very much like physics. Furthermore, economics is most emphatically not a kind of "interpretative science" of human action and its consequences, as hermeneuticians and radical Austrian subjectivists want make us to believe. If this were true, then it would in principle be conceivable, like in psychology, by putting enough effort and will, to adjust key economic variables such as interest or wage rates, for example, according to one's liking or disliking. But certainly the fact is that no amount of reflection, interpretation, discussion, persuasion, strong-will, incentive-setting and similar attempts to alter behavior can ever lift the average money wage rate above the equilibrium level. Mises clearly recognized the danger of conceiving economics as yet another branch of psychology or some other behavioral science. Mises knew that unlike psychology, economics is about finding and formulating objective laws. Unfortunately, as I have pointed out in one of my earlier posts, Mises's specific proof of the existence of immutable economic laws by means of the logical structure of human mind (universal to all human beings), which in turn implies purposeful human action, is clearly unsatisfactory. This is precisely because economic laws are something which is outside human will and consciousness. Thus, the proof of economic laws can be found only in something which is given but which is not "inside" of human mind. In my opinion, this "something" must be inherent in the system of market economy, in things, in relationships that define and sustain the system.

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