Epistemological Problems of Economics

The universally valid theory of economic action is necessarily formal. Its material content consists of the data of human circumstances, which evoke action in the individual case: the goals at which men aim and the means by which they seek to attain them.6

The equilibrium position of the market corresponds to the specific configuration of the data. If the data change, then the equilibrium position also Shifts. We grasp the effect of changes in the data by means of our theory. With its help we can also predict the quality—or, rather, the direction—of the changes that, ceteris paribus, must follow definite changes in the data. From the known extent of changes in the latter, we are unable to predetermine quantitatively what these consequent changes will be. For changes in external conditions must, in order to influence action, be translated into volitions that move men from within. We know nothing about this process. Even materialism, which professes to have solved the problem of the relation between the Psychical and the physical by means of the famous simple formula that thinking stands in the same relationship to the brain as gall does to the bladder, has not even undertaken the attempt to establish a constant relationship between definite external events, which are quantitatively and qualitatively discernible, and thoughts and volitions.

All the endeavors that have been and are being devoted to the construction of a quantitative theory of catallactics must, therefore, come to grief. All that can be accomplished in this area is economic history. It can never go beyond the unique and the nonrepeatable; it can never acquire universal validity.7

• 6Cf. the fruitful investigations of Strigl: Die ökonomischen Kategorien und die Organisation der Wirtschaft (Jena, 1923).
• 7This is also true, for example, of the attempts of Henry L. Moore in particular (Synthetic Economics, New York, 1929). Cf. the critique by Ricci, Zeitschrift für Nationalökonomie, I, 694 ff.