Comment by justushamalaine | Hacker News Reader

Comment by justushamalaine | Hacker News Reader

Parent Full thread

justushamalaine

I do think conflate praxeology (the study of human action) and Von Mises's preferred methods of studying it. Von Mises didn't hold any views on economics that wouldn't be acceptable in the mainstream and didn't really have any objections on mainstream economics during his lifetime.

I do really like they way von Mises broke down the human action and it is related studies. It is different to study what person should strive for (ethics), why people strive for something (psychology) and how people can attain the goals they have chosen (economics).

The understanding that economics is not science that can and should not do value judgement is a great contribution. Scholars are free to offer they ideas about ethics, but it is a different discipline.

On this background you should look with his criticism against socialism. He doesn't say that goals of socialism are bad. He just points out that tools and processes advocated cannot achieve the stated goals. And he had fairly great concrete criticism about socialism in his 1920 book "Socialism: An Economic and Sociological Analysis". This predated the great Soviet Union and Chinese socialism experiments, which haven't proved him wrong.

Von Mises was not so advocating about creating theories that don't stand the test of real world. His aim was always to understand real world phenomenon. His rejection was about using tools that don't work with humans. Physics and chemistry are governed by constants like gravity, electromagnerical force, weak and strong nuclear forces that allow you to use advanced mathematics to study them and isolate these constants. Economics do have laws as strong as laws of motion, but you cannot find these the same way as human action is variable.

I do get same feeling about Richard Feynman. For him it seems that you needed to have a mental model first about a problem, before trying to model it with mathematics. [1]

You cannot progress without insight and you cannot have insight without interaction with real world. Theories only have value if they can affect actions in the real world. And there is a lot of ways outside of p-values how to allow that feedback from the real world to affect you. And this is something I feel that all of those people intuitively understood. :)

[1] https://thinkjarcollective.com/articles/richard-feynman-spin...

Quoting Mises himself [1]:

> The experience with which the sciences of human action have to deal is always an experience of complex phenomena. No laboratory experiments can be performed with regard to human action. [...] Neither experimental verification nor experimental falsification of a general proposition is possible in its field.

> Praxeology is a theoretical and systematic [...] science. Its cognition is purely formal and general without reference to the material content and the particular features of the actual case. [...] Its statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification or falsification on the ground of experience and facts.

Basically, Mises claimed that Praxeology brings prerequisite tools necesary to understand human action, and that these tools are axioms, not subject to being tested themselves. Praxeology is, to him, an algebra that must be true in order to be able to understand complex events such as economics.

I don't want to say how Mises would have reacted, but had he faced modern economics (for instance RCTs in the context of development economics) or machine learning, he would have been confronted with the fatal flaws of his theory, just like a time-traveling medieval doctor could not reasonably defend the theory of humours today.

[1]: https://oll.libertyfund.org/titles/greaves-human-action-a-tr...

Thanks for your answer I really enjoyed it :)

I cannot treat Mises rejecting all verification. Of course this might be due to reading his works long after seeing how world has developed. This way it is easy to downplay the faults and see the things that had insight.

To take a concrete example of supply and demand. We can logically understand that raising supply cannot raise prices. Similarly increasing demand cannot lower prices. We can reach this conclusions by just starting with axioms that humans have a priori ideas how their situation can be improved and human acts with a goal to reach ideas. This is shown by Murray Rothbard in his book Man, Economy and State.

We cannot reach the same conclusion by just calculating ratios from historical data, due these being complex phenomena that have many confounding variables. We need to have a priori ideas to be able to start unconfound variables in such historical data.

I don't really get from his writing that he mistook the perfect algebra as representation of the real world. It just that to gain actionable insight with the real world you need to process with series of logical steps to the conclusion. The real point is not that can you make up a logical chain of statements. You always can add an ad hoc proposition to save a theory (and this was his outgoing criticism against the German Historic School). The point is to tease the statements and reasoning chains so that only things that are true remain. This is the way (Von Mises saw) to get the universal laws of human actions that he hold would be as universal as the laws of motion.

I don't think that RCT in modern economics are trying to answer same questions. You need a priori theories to devise the trials and then you need to use the same a priori theories to make sense of the results. The results might force you to change your a priori before devising a next trial. And for that process you need to use the reasoning that Von Mises advocated.

Most likely he wouldn't think that Development Economics is Economics proper. It doesn't mean that it shouldn't be studied, but it is a different realm from the laws of human action that he studied. He also didn't think that a good economist shouldn't understand other sciences and shouldn't take inspiration from them.

If you look how much insight and a priori knowledge and reasoning people like Kenneth Arrow or Milton Friedman had and used, I don't see the concrete gulf between them and Von Mises so large. They have major differences and had opposite views, but I feel that it is more a difference in degree not in kind. I think that economists have a bad habit of overstating their differences and downplaying how much they agree.

But I would believe that Von Mises would have rather drank hemlock like Socrates than admit faults on his views. But this is an characteristic of many great economists :D

Reply on news.ycombinator.com