Mises Wire

Economics as a Universal Science

It is often argued in “decolonization” debates that each culture must find its own path to economic progress. In this context, the idea of inclusive economics is that building a diverse society requires economics to take account of “power relations, oppression, qualitative changes in social relations and . . . most importantly, the role of colonialism and the slave trade.” It is claimed that unless those factors are considered, economics will remain mired in a “thoroughly Eurocentric understanding of economic laws [seen to] operate in a universal manner across the world.”

This should be understood in the broader context of multiculturalism and the idea that all cultures are equal: “The central premise of the multiculturalist credo, after all, is that all cultures are created equal. To judge other cultures by Western standards is unforgivably ethnocentric.” From this, multiculturalists deduce that all civilizations are equal, and no economic principles are better than any others. For example, development economists like Peter Bauer who defend private property and argue that certain cultural attitudes impede economic progress are said to have no lessons applicable to the third world.

In presuming that economic principles vary from one culture to another, multiculturalists reject the idea that economic principles are universal. In Human Action, Ludwig von Mises argues that economics should be understood as “a part, although the hitherto best elaborated part, of a more universal science, praxeology.” Mises asserts that all human beings are guided by the same human motives, namely “to struggle successfully for survival and to use reason as the foremost weapon in these endeavors.” He gives the example of the struggle against illness and suffering: cultures that lack the advances of Western medicine would not “renounce the aid of a European doctor because their mentality or their world view led them to believe that it is better to suffer than to be relieved of pain.” If people fail to achieve their goals—in this example, where they lack advances in medicine—that failure does not signify that they have different motives from those making such advances but simply indicates that they have failed to achieve important goals to which they aspire. Mises therefore views praxeology as “a general theory of human action” rather than being narrowly applicable to certain cultures in specific historical and cultural conditions.

As David Gordon points out in “Hermeneutics versus Austrian Economics,” this understanding of economics as a set of general universally applicable principles is not confined to Austrian economics: “But Austrians are of course not the only economists who believe in the external world: the neoclassicals, however freely they allow unrealistic hypotheses, have no doubt that a real world exists outside their equations, against which they propose to measure the predictions ensuing from their version of economic theory.”

The Errors of Polylogism

One importance of holding economic principles to be universally applicable in understanding the external world lies in avoiding the pitfalls of polylogism. Pierre Perrin defines polylogism as follows: “Polylogism is an epistemological view based on the proposition that the logical structure of the mind is substantially different between human groups. It thus implies that the logical laws of thought (i.e., the law of noncontradiction, modus ponens, etc.) are different between groups to which individuals belong.”

For example, polylogism holds that logic varies according to race, sex, culture, or class. It treats economic reasoning as dependent on a thinker’s personal identity, from which it follows that economic principles are a matter of choice or preference that vary from one identity group to the next. Perrin observes that although progressive thinkers may not explicitly describe their theories as polylogistic, nevertheless they implicitly adopt that worldview in treating scientific theories as entirely socially and culturally constructed: “The relativist variant involves the impossibility of any universal social science (i.e., explanations of principles independent from particular circumstances of time and place).”

Identity politics builds further on these polylogistic theories by insisting that “your truth” varies from “my truth” based on our personal identities and that this ought to influence the construction of diverse and inclusive economies.

In Defense of Science

Identity politics and progressive “all cultures are equal” relativism are part of a wider denial of the universal nature of science. The idea now prevails in academic circles that the natural sciences are Eurocentric and ought to be deconstructed to permit “other ways of knowing.” The “decolonize the curriculum” movement denies the existence of science as a set of objective and universal principles or facts.

For example, biological sex is now treated as a mere preference or philosophical belief that one can choose to believe in or not. Hence, the so-called gender-critical feminists declare that they believe women exist. In a recent survey of two hundred scientists at British universities, 29 percent “agreed with the statement sex is not binary”—on a poll, they chose what they believed to be best rather than what is scientifically correct in an objective sense. That implies that the existence of women is not an objective fact but a subjective belief, or as some feminists frame it, it implies that “objective facts” are optional notions that anyone is free to “believe” in or not. It would be the equivalent of saying “I believe in gravity” or “I agree with gravity,” a fallacy that Thomas Sowell exposes in Is Reality Optional?.

These examples illustrate that Mises is right to place the denial of the universal nature of praxeology, the science of human action, in the wider context of the revolt against science. This means that the defense of praxeology is part of a philosophical defense of science itself. He argues:

Such [polylogistic] doctrines go far beyond the limits of economics. They question not only economics and praxeology but all other human knowledge and human reasoning in general. They refer to mathematics and physics as well as to economics. It seems therefore that the task of refuting them does not fall to any single branch of knowledge but to epistemology and philosophy.

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