Montreal, February 5, 2006 • No 165




Gennady Stolyarov II is a science fiction novelist and philosophical essayist, and is Editor-in-Chief of The Rational Argumentator. He lives in Chicago.




<< Part One

by Gennady Stolyarov II


          Empiricism claims that the only true knowledge about reality is empirical and observational; furthermore, such knowledge cannot be held with certainty, because it is always contingent on future observation. To the empiricist, every item of knowledge must be arrived at via some particular observation and must be potentially open to falsification by some other particular observation. The empiricist considers any certain knowledge to be by definition unfalsifiable and therefore meaningless and irrelevant to reality.


          Commenting on the practical consequences of empiricism, Mises notes that "[i]t is a mistake to set up physics as a model and pattern for economic research" (HA, p. 6). Indeed, the empiricist seeks to impose the methods which have apparently led to progress in the physical sciences upon all other disciplines. Empiricism's consequences in the field of economics include the experimental testing of propositions that rightfully belong to the realm of praxeology. Instead of arriving at economic laws from irrefutable starting insights into the nature of human action, the empiricist proceeds to gather particular economic data first and create a contingent theoretical model on the basis of that data. The model is judged on its capacity to predict future economic events, rather than on its consistency with far more fundamental and reliable insights necessarily following from action itself.

          However, Mises realizes that the empiricist conceit of applying experimental methodology to all areas of study merely betrays an ignorance of the roles of logic and of all methods outside the scope of a laboratory scientist's field of work: "The research worker in the laboratory considers it as the sole worthy home of inquiry, and differential equations as the only sound method of expressing the results of scientific thought. He is simply incapable of seeing the epistemological problems of human action. For him economics cannot be anything but a kind of mechanics" (HA, p. 9). Empiricism, in imitating the methods of the natural sciences, implicitly ignores the very existence of human action. So doing, it encounters a major problem: human beings are not readily experimented upon.

          Man's behavior, unlike that of inanimate nature, is not deterministic. Inanimate entities have specific natures which necessitate identical responses in identical circumstances. These entities cannot deliberately affect their own responses to make it different from what it otherwise would be. Furthermore, contrary to the assertions of quantum physicists – grounded in improper epistemology – no act of observation can magically alter the observed inanimate entities' behavior without impacting physical causality and thus altering the entity's circumstances. If a given act of observation alters physical causality, it will always do so in the same way and produce the same result with regard to the observed entity.

          Human beings, on the other hand, choose the course of action they will follow; they select their values and the means by which they will obtain or secure them. Tweaking a given variable does not necessarily guarantee a similar outcome for all human experimental subjects. Furthermore, unlike inanimate objects, humans can know that they are being experimented on and adjust their behavior accordingly. Human beings are autonomous agents, not mere passive respondents to the experimenter's influences and designs. The behavior of other acting humans cannot be infallibly predicted except when it can be logically traced to the nature of action itself. The empiricist, by denying himself the latter pursuit, throws away the most powerful and accurate economic tool available to him.

          Hoppe offers another refutation of empiricism, starting from that doctrine's fundamental premise: that no knowledge can be categorically a priori true. He proceeds to show how following this premise to its logical conclusion results in absurdity. A consistent empiricist would have to claim that even the central empiricist tenet itself is "merely hypothetically true, i.e., a hypothetically true proposition regarding hypothetically true propositions, [which] would not even qualify as an epistemological pronouncement" ("On Praxeology and the Praxeological Foundations of Epistemology: Sec. II"). The empiricist faces two options. Either he must assert the central empiricist tenet's correctness categorically – hence laying claim to certain, unfalsifiable, a priori knowledge – or he must concede that the validity of empiricism itself is a mere hypothesis, open to falsification by later observations. The latter option also renders possible the existence of a priori knowledge: empiricism "would then provide no justification whatsoever for the claim that economic propositions are not, and cannot be, categorically, or a priori true, as our intuition informs us they are" (Hoppe, "On Praxeology and the Praxeological Foundations of Epistemology: Sec. II.") If empiricism is a mere hypothesis, the empiricist would have no means to categorically assert that economic knowledge cannot be a priori true. Empiricism, under such an assumption, would become vulnerable to refutation by the first demonstration of true a priori knowledge to come along. We have already discussed some such evidence, including the a priori nature of action, argumentation, and the law of diminishing marginal utility. Because a priori economic laws are true ubiquitously, their predictive power, too, far exceeds the empiricists' own contingent theories – and has done so since the Austrian school's inception. Under the empiricists' own basic assumption, such demonstration suffices to falsify the empiricist hypothesis.

          Furthermore, aside from praxeology itself, a vast quantity of a priori knowledge can be derived from logic, arithmetic, and geometry. The success of each of these disciplines demonstrates the falsehood of the empiricist hypothesis in practice. Hoppe posits the necessary consistency of logic with reality due to human action:

          In each and every action, an actor identifies some specific situation and categorizes it one way rather than another in order to be able to make a choice… [S]imply by virtue of acting with a physical body in physical space we invariably affirm the law of contradiction and invariably display our true constructive knowledge of the meaning of 'and' and 'or.' ("On Praxeology and the Praxeological Foundations of Epistemology: Sec. III")

          Acting man knows the validity of the conjunction "and" because he can pursue one action, then pursue another. He can describe this succession of pursuits as pursuing action X and action Y. Furthermore, acting man knows the validity of the conjunction "or" because acting implies making choices on one's value scale – prioritizing in pursuing higher-ranked values by devoting more attention to them than to lower-ranked values or ends that are of no value to the actor. Acting man always faces choices between some actions and others: he can pick action X or action Y, with X as the opportunity cost of Y and vice versa. "And" and "or" are necessary in describing action and thus are not only true but indispensable tools for fathoming reality. Logical categorization is a part of action, which is a part of reality. Therefore, logical categorization, properly performed, is, too, a part of reality – and a means to an accurate understanding thereof.

          Similarly, to the empiricist, "the successful applicability of arithmetic in physics is an intellectual embarrassment" (Hoppe, "On Praxeology and the Praxeological Foundations of Epistemology: Sec. III"). Hoppe explains that the key to arithmetic is repetition – a repetition of a given action. In order to count an object, one must act. In order to count yet another object of the same type, one must act again in a manner fundamentally similar to the last. Arithmetic refers to an action being repeated in this manner as having been done twice; since the action referred to distinct entities – and each repetition of the action counted one entity – arithmetic can say that two entities were registered via the counting procedure. The existence of action can be arrived at a priori. Because it is possible to repeat a given action in reality, the counting numbers – the foundation of arithmetic – must, too, be examples of true synthetic a priori knowledge.

"The insights of praxeology allow us to disprove another doctrine that denies the possibility of certain, objective economic knowledge: historicism."

          Hoppe claims that a consistent empiricist would seek "to establish the theorem of Pythagoras by actually measuring sides and angles of triangles. Just as anyone would have to comment on such an endeavor, mustn't we say that to think economic propositions would have to be empirically tested is a sign of outright intellectual confusion?" ("Praxeology and Economic Science: Sec. I"). The empirical testing of the Pythagorean theorem would be absurd because Euclidean geometry is both a priori true and remarkably successful: its insights can be perfectly applied to engineering and construction. The validity of geometry, too, follows from the existence of human action, since "[a]ction is the employment of a physical body in space" (Hoppe, "Praxeology and Economic Science: Sec. II"). The ultimate standard of measurement is the manner in which the human body exists and moves spatially. These positions and movements can be analyzed in terms of simpler components: points, lines, and planes. To measure these spatial properties, humans can create instruments on the basis of the ubiquitously known manner in which the body exists and moves in order to act. No specific measurement or observation can ever refute the validity of Euclidean standards of measurement: the standards are what make measurement itself possible. Euclidean geometry "is not only the very precondition for any empirical spatial description, it is also the precondition for any active orientation in space" (Hoppe, "On Praxeology and the Praxeological Foundations of Epistemology: Sec. III"). If the standards of Euclidean geometry were not valid and perfectly accurate in describing reality, the human body as a three-dimensional entity would not be able to exist and relate to other three-dimensional entities.

          The axioms of Euclidean geometry correspond to the physical world, whereas the axioms of geometric systems contrary to Euclid's do not. (That is, they are not true axioms, since they can be elementarily refuted in the course of ubiquitous daily observation.) The human body can be measured by using three and only three spatial parameters – known as dimensions: any system of measurement claiming more or less than three dimensions will fail to adequately describe man's physical form. All parts of the human body have boundaries, describing which necessitates the Euclidean constructs of points, lines, and planes. Furthermore, all human movement and interaction with other entities occurs three-dimensionally. Every possible path of motion can be described by adding three mutually perpendicular vectors of the proper magnitudes. Moreover, all spatial measuring instruments can only be built with Euclidean postulates at the foundation of their design:

          Euclidean geometry… is no more and no less than the reconstruction of the ideal norms underlying our construction of such homogeneous basic forms as points, lines, planes and distances, which are in a more or less perfect but always perfectible way incorporated or realized in even our most primitive instruments of spatial measurements such as a measuring rod. (Hoppe, "On Praxeology and the Praxeological Foundations of Epistemology: Sec. III")

          No measurement can ever refute the validity of Euclidean geometry, since measuring tools themselves – as well as the bodies and movements of those who measure – are predicated upon the axioms of Euclid's system. If the spatial qualities of humans and all the objects they observe and interact with can be described and measured only through Euclid's system, there is no point in asserting that any non-Euclidean geometry can also be true: it cannot be true if it describes nothing that exists!

          Empiricism denies the possibility of certain knowledge because it ignores the existence of human action. Empiricists systematically deride the valid and empirically successful branches of a priori knowledge – praxeology, logic, arithmetic, and Euclidean geometry – as meaningless formalisms devoid of actual information about reality. In so doing, the empiricists implicitly erect an impregnable barrier between the mind and reality. According to them, if X is a fact of reality, it cannot be conclusively grasped by the mind; if X was derived by the mind, it cannot be relevant to reality. The empiricists can claim this only by evading man's identity as an acting being with a mind that exists and acts in reality. The mind of an agent in reality must necessarily have access to the external world and the capacity to comprehend existence by means of reason. This access implies the mind's ability to derive certain, irrefutable, unfalsifiable knowledge about its own nature and the nature of the world with which it interacts.

Refutation of Historicism

          The insights of praxeology allow us to disprove another doctrine that denies the possibility of certain, objective economic knowledge: historicism. Hoppe describes historicism as the belief that economic events "are subjective expressions and interpretations unfolding in history to be understood and interpreted by the economist just as a literary text unfolds before and is interpreted by its reader" (Hoppe, "Praxeology and Economic Science: Sec. II"). To the historicist, no absolute, universal economic laws exist. All that exists is a set of past economic data as incorporated into historical texts. No past economic event occurred because it necessarily had to – as derived from insights into the nature of human action – but rather the events happened simply because they did. What is true for one historical era might not be true for another. The free market, according to the historicists, might have worked in the 19th century, but it does not necessarily have to work today – nor would even basic economic principles, such as the law of diminishing marginal utility, have to be permanent, immutable, or universally applicable. To the historicist, there is not only no certain knowledge about the economic principles behind historical events – there is also no certain knowledge even about what historical events actually happened. Since historical economic events are not constrained by any universally valid laws, there is no way to objectively interpret and gain genuine knowledge from them:

          [T]he formation of these always contingently related human expressions and their interpretations is also not constrained by any objective law… [H]istorical and economic events are whatever someone expresses or interprets them to be, and their description by the historian and economist is then whatever he expresses or interprets these past subjective events to have been. (Hoppe, "On Praxeology and the Praxeological Foundations of Epistemology: Sec. II")

          To the historicist, both history and economics ultimately become whatever a given historian or economist chooses to turn them into, with no definitive criterion of truth and falsity to verify or disprove a given economic theory. Mises was perhaps too generous to write that "[h]istoricism aim[s] at replacing [economics] by economic history…" (4). Rather, historicism replaces both economics and history with the historicist's unsubstantiated wishes concerning what each discipline ought to have been. Hoppe describes the unscientific result: the historicist's "output takes on the form of disquisitions on what someone feels about what he feels was felt by somebody else" ("On Praxeology and the Praxeological Foundations of Epistemology: Sec. II").

          The fundamental premise of historicism can be refuted in a similar manner to the fundamental premise of empiricism. Historicism claims that there are no permanent, constant economic laws transcending a given era and location. That premise itself, however, is held by the historicists to be a constant and time-invariant relation. That is, we cannot say of any era and location that its economic events follow a universally applicable, logically deducible set of laws. The historicist is faced with two alternatives. Either he admits that his basic premise constitutes a time-invariant relation, whereby he implicitly rejects historicism's blanket denial of such relations and concedes the possibility of a priori, logical, universally valid economics. Or he denies that this premise is a time-invariant relation, which means that we can never ascertain its absolute truth. Historicism can be true for one era, but not for another – and does not have to be true for any era. Hoppe describes the sorry state the historicist premise would attain under such an assumption: "it may be true now, if we wish it so, yet possibly false a moment later, in case we do not, with no one ever knowing anything about whether we do or do not" ("On Praxeology and the Praxeological Foundations of Epistemology: Sec. II"). If the historicist premise – under a consistent application of historicism – can possibly be false, that, too, leaves open the possibility of using logical, a priori methods for arriving at economic truths.

          Moreover, the analysis of historical data alone is sufficient in obtaining any understanding of economics. According to Hoppe, "observational evidence can only reveal things as they happen to be; there is nothing in it that would indicate why things must be the way they are" ("On Praxeology and the Praxeological Foundations of Epistemology: Sec. II"). When we examine a succession of economic statistics or an account of who traded with whom or what government policies correlated with what effects on industry – we only know that given events happened. We cannot, from sheer observation – know why they happened; we cannot have any comprehensive understanding of causality, since causality is a category of action. All we can effectively understand from observing historical data alone is what physical movements individuals happened to make in a given time and place. In order to form any meaningful theory that accurately interprets the historical events, man must introspect and reflect upon those events using the methods available to his rational faculty. There is no way to interpret historical events if one conceives of them as mere meaningless, contingent physical movements. The movements must be analyzed within the framework of action: the economist knows that the events are actions because he, too, is an acting being, and his mind is linked to reality via his status as such. As soon as one concedes that historical events are actions, the entire body of propositions derivable from that fact – indeed, the whole science of praxeology – can be applied to them.

          Only the logical, a priori methods of praxeology can reveal any meaning to historical economic events. For example, let us presume that in year X the government of a country set an artificial ceiling on the price of widgets. A shortage of widgets occurred. However, in year Y, the government established a similar ceiling and no shortage took place. The historicist would hasten to claim that we cannot know with certainty that government price ceilings have negative effects: after all, in year Y, no shortage happened. Only the methods of praxeology could show the historicist that a government price ceiling is always detrimental under a given set of conditions – namely, when the government tries to restrict a good's price below the market equilibrium.

          The praxeologist would know that the widget shortage did not occur only because of the positive influence of some other factor beside the price ceiling. In year Y, the widget manufacturers' technological capacity increased – independent of government regulation – to enable them to mass-produce widgets on a scale previously impossible. The shift in technological capacity happened to occur at the same time as the government was in the process of imposing its price ceiling. However, because of the increased supply of widgets from mass production, the equilibrium price of widgets was pushed below the government price ceiling; hence, the restriction was plainly irrelevant to the widget price: it was tantamount to the government forbidding anyone to charge more than $500 for a bottle of milk. This particular historical event does not negate the universal truth that, whenever the government artificially pushes a good's price below market equilibrium, shortages will result – since the number of goods consumers demand at the lower price will exceed the number of goods producers are willing to supply at that price. The praxeological insight concerning the origin of shortages does not require the analysis of an open set of historical data in order to be validated with certainty; all one needs to know is the nature of supply, demand, and market equilibrium – arrived at via the action axiom. However, once understood, the praxeological truth can be applied to any relevant historical event and give the economist certain, irrefutable knowledge about it. Unlike historicism, which seeks to negate the objective truth of both economics and history, praxeology renders the study of both disciplines meaningful and crucial to man's understanding of reality.


          We have demonstrated how praxeology – the science of human action – affirms the validity of an entire type of human knowledge – synthetic a priori truths – without which cognition of reality would be unattainable. The action axiom, the starting point of praxeology, is also an indispensable link between reason and observation, for humans have the minds of entities acting in the absolute reality. By means of the insight that humans act, the study of an entire array of disciplines – logic, epistemology, arithmetic, geometry, economics, and history (when analyzed with the help of praxeology) – can be demonstrated as useful and capable of imparting certain, irrefutable, unfalsifiable knowledge. Furthermore, two principal doctrines – empiricism and historicism – which deny the possibility of irrefutable knowledge have been shown to be false, contradictory, and absurd. The logical errors in both doctrines implicitly concede the possibility and validity of a priori economic analysis and a priori knowledge in general.


NOTE: This essay is my attempt to describe the manner in which the fundamentals of Austrian economic thought affirm man's ability to know this world through his rational faculty. Hence, I seek to represent the Austrian view and its implications as accurately as I can – which involves using terms and concepts which I, as an Objectivist, might not necessarily endorse. Unlike Ludwig von Mises, I do not adhere to Kantian epistemology – and do not believe in the synthetic-analytic dichotomy. However, I acknowledge that Misesian contributions to Kantian epistemology render the latter less flawed than it otherwise would have been. Mises and his intellectual successors recognize what many Kantians and post-Kantians did not: the existence of synthetic a priori true propositions – which serve as the crucial link between reason and observation. The Objectivist who rejects the synthetic-analytic dichotomy can simply refer to such propositions as axioms (or the derivatives of axioms). "Axioms/axiom-derivatives" and "synthetic a priori true propositions" are, for all real purposes, identical designations. Aside from this slight epistemological clarification, I fully endorse the endeavor of praxeology in its analysis of human action qua action and this idea's implications.
WORKS CITED: Hoppe, Hans-Hermann. Economic Science and the Austrian Method. Auburn, Al.: Ludwig von Mises Institute, 1995. Mises, Ludwig von. Human Action: A Treatise on Economics. Irvington: Foundation for Economic Education, 1996.