The Ultimate Foundation of Economic Science

As all brands of positivism see it, the eminent role man plays on the earth is the effect of his progress in the cognition of the interconnectedness of natural—i.e., not specifically mental and volitional—phenomena and in its utilization for technological and therapeutical behavior. Modern industrial civilization, the spectacular affluence it has produced, and the unprecedented increase in population figures it has made possible are the fruits of the progressive advancement of the experimental natural sciences. The main factor in improving the lot of mankind is science, i.e., in the positivistic terminology, the natural sciences. In the context of this philosophy society appears as a gigantic factory and all social problems as technological problems to be solved by “social engineering.” What, for example, is lacking to the so-called underdeveloped countries is, in the light of this doctrine, the “know-how,” sufficient familiarity with scientific technology.

It is hardly possible to misinterpret mankind’s history more thoroughly. The fundamental fact that enabled man to elevate his species above the level of the beasts and the horrors of biological competition was the discovery of the principle of the higher productivity of cooperation under a system of the division of labor, that great cosmic principle of becoming. What improved and still improves the fecundity of human efforts is the progressive accumulation of capital goods without which no technological innovation could ever be practically utilized. No technological computation and calculation would be possible in an environment that would not employ a generally used medium of exchange, money. Modern industrialization, the practical employment of the discoveries of the natural sciences, is intellectually conditioned by the operation of a market economy in which prices, in terms of money, for the factors of production are established and thus the opportunity is given to the engineer to contrast the costs and the proceeds to be expected from alternative projects. The quantification of physics and chemistry would be useless for technological planning if there were no economic calculation.1  What is lacking to the underdeveloped nations is not knowledge, but capital.2

The popularity and the prestige that the experimental methods of the natural sciences enjoy in our age and the dedication of ample funds for the conduct of laboratory research are attendant phenomena of capitalism’s progressive accumulation of capital. What transformed the world of horse-drawn carriages, sailing ships, and windmills step by step into a world of airplanes and electronics was the laissez-faire principle of Manchesterism. Large savings, continuously in search of the most profitable investment opportunities, are providing the resources needed for rendering the accomplishments of the physicists and chemists utilizable for the improvement of business activities. What is called economic progress is the joint effect of the activities of the three progressive groups—or classes—of the savers, the scientist-inventors, and the entrepreneurs, operating in a market economy as far as it is not sabotaged by the endeavors of the nonprogressive majority of the routinists and the public policies supported by them.

What begot all those technological and therapeutical achievements that characterize our age was not science, but the social and political system of capitalism. Only in the climate of huge capital accumulation could experimentalism develop from a pastime of geniuses like Archimedes and Leonardo da Vinci into a well-organized systematic pursuit of knowledge. The much decried acquisitiveness of the promoters and speculators was intent upon applying the accomplishments of scientific research to the improvement of the masses’ standard of living. In the ideological environment of our age, which, driven by a fanatical hatred of the “bourgeois,” is anxious to substitute the “service” principle for the “profit” principle, technological innovation is more and more directed toward the fabrication of efficient instruments of war and destruction.

The research activities of the experimental natural sciences are in themselves neutral with regard to any philosophical and political issue. But they can thrive and become beneficial for mankind only where there prevails a social philosophy of individualism and freedom.

In stressing the fact that the natural sciences owe all their achievements to experience, positivism merely repeated a truism which since the demise of Naturphilosophie nobody any longer disputed. In disparaging the methods of the sciences of human action, it paved the way for the forces that are sapping the foundations of Western civilization.

• 1About the problems of economic calculation, seeMises, Human Action, pp. 201-32 and Human Action 691-711.
• 2This answers also the often raised question why the ancient Greeks did not construct steam engines although their physics gave them the theoretical knowledge required. They did not conceive the primary importance of saving and capital formation.