Was Mises Right? Philosophical Progress and the Methodology of Economic Science

Many Austrians consider methodology to be the distinguishing characteristic of the school of thought. "Austrian methodology," especially as laid out in work of Ludwig von Mises, has invited considerable criticism. Mises maintained that economic theory consists solely of a priori propositions. This epistemological status provides economic science with its unique methodology, distinct from that followed by the natural sciences, yet also distinct from historical study. Beginning with the self-evident axiom of action, economic theory is deduced through the aid of logic. If deduced without error, Mises contends, the laws thus arrived at have the same aprioristic character as the axiom itself. This being the case, economic laws, like the axiom of action, are not open to empirical falsification. Mises’s notion of a priori propositions comes from Kant, but his application of this idea to the science of economics moves beyond Kant. This working paper explores how Mises’s methodological position has important implications for modern economic research.