—“Empirical science requires controlled experiments. In economics no such experiments are possible. Even in physics the study of a lone particle does not give us enough information to predict its movement in a many-particle environment, which is basically indeterminate.”– Shivank
[I]ntelligent response, thanks. But common errors.
You are confusing Empiricism with Positivism (which is a common fallacy of libertine argument). Empiricism requires observation (sense experience); and measurement is an operational means of ensuring our observations are not as erroneous, biased, or deceptive as they would be without measurements (operationalism). Just as we can observe red shift in physics, we can observe economic phenomenon by means of the measurements (recorded monetary transactions). Furthermore,
(a) while controlled experiments are helpful in the ascertainment of first principles (reductions), we know the first principles of human cooperation: we can sympathize with intent. We cannot likewise intuit the operations of the physical world – although we seem to be able to model it at various levels of precision. And;
(b) property rights and rule of law are experiments in economics, and so are fiscal, monetary and trade policy. And we can, and do, experiment and observe them and the emergent (complex and unpredictable) effects non-neutral, pre-equilibration effects of those policies. Also;
(c) I agree that local phenomenon are kaliedic, and that economic phenomenon equilibrate (are largely neutral). But that does not mean that the effects of actions do not produce consequences that influence the organization and rates of equilibration of the ‘particles’ (people). And finally;
(d) we can construct theoretical models from economic laws. We cannot construct axiomatic models from economic axioms. This is because in any axiomatic (prescriptive) system all information is present, while in all theoretical (descriptive) systems, information is always incomplete.
And so it is either erroneous or disingenuous to state that real world (incomplete) models, are identical to imaginary (complete) models. Even geometry failed Mises’ test: length was not what we thought it was at very great or very small scale.
So while complete, prescriptive, axiomatic systems, and incomplete, descriptive, theoretical systems, are are similar – analogous – they are not identical. Deduction is possible in an axiomatic system, but such deduction is not possible in a system of laws with an equal level of precision. This is because in an axiomatic system, the principle of arbitrary precision remains constant, while in a theoretic system, the principle of arbitrary precision does not remain constant – local variation due to dynamic interaction in real time, as you suggest, produces kaleidic results, and attempts at measurement influence the the outcome.
It is not that economic phenomenon cannot be stated as laws. It is that emergent phenomenon cannot be deduced from the axioms in economics for precisely the reasons you suggest that mises is correct. This is why economics is an empirical science just like any other science: because science is a set of moral constraint upon us, independent of the subject matter, in an attempt to eliminate error, bias, and deception. And Mises’ himself makes fairly significant errors in conflating the prescriptive, logical, axiomatic and deterministic, with the descriptive, theoretical, empirical and kaleidic.
Mises was ostracized from economics for reasons. They were good reasons. He embraced pseudoscience.
Ergo, my argument stands.
The Propertarian Institute