The synergy of Popper and the Austrian economists is apparently not an idea whose time has come just yet. This calls for a study of the reason why the synergy is apparent to some people like the late Gerard Radnitzky and Francesco di Iorio but not to most others. One of the reasons is that very few people have taken on board the strong version of Popper rather than various misperceptions. Quite likely a person could spend a career in philosophy without meeting someone who could give a straight feed on Popper’s ideas, let alone a follower of Popper or a course on his ideas. The same applies with the Austrians in economics although their situation is improving from a practically zero base in the early 1970s to a 2% share of the community these days. Still, some unspecified proportion of the 2% are promulgating the dogmatic apriorism that is not essential but cuts them off from critical rationalists and also the economics profession at large.
One way to explore the synergy or at least the congruence is to look at the long friendship of Popper and Hayek and their shared concerns. Three of these were : (1) scientism, that is misguided attempts to copy the method of the natural sciences; (2) the abuse of reason that Hayek called constructivism rationalism and Popper called unlimited rationalism: (3) the need for institutional analysis to widen the field of economics to embrace political economy and moral philosophy.
First a look at scientism. Hayek emphasised in the opening pages of The Counter-revolution in Science (1952) that his attack on scientism was not addressed at the proper and effective methods of science. That was written long after he read Logik der Forschung (probably in 1935 before the actually met Popper) when he recognized that he and Popper were essentially partners in epistemology and methodology. He claimed that he was thinking along those lines before he read LdF and Popper convinced him that the methods of “scientism” were not actually the effective methods of science but a form of inductivism with a lot of mathematics added whether it was helpful or not.
Scientism, defined as the inappropriate emulation of the perceived methods of the natural sciences, has been a problem in natural science since Newton’s triumph converted science into Science with a capital S. Hitherto the term ”science” referred to any body of organised information, and to be “scientific” was to be systematic in pursuit of any activity from angling to astronomy. Newton’s example created a new standard of excellence that called for sophisticated mathematical analysis using the Inductive Method applied to large bodies of careful and accurate observations.
Copying observed practices without insight and imagination produces what the physicist Richard Feynman called cargo cult science. The concept of cargo cults came from the Pacific islands where the cultists constructed mock airstrips in the expectation that cargo would arrive from the skies as it did when the Americans built temporary facilities during the war. Some will recall the vogue of Behaviorism in psychology that eliminated subjective processes and focussed entirely on observable behaviour!
Popper challenged the obsession with inductive methods that tends to produce the “cargo cult” approach and some leading scientists who took philosophy seriously agreed with him, among them Einstein, Eccles and Medawar. An interesting footnote is Einstein’s rejection of the invitation to contribute to the Carnap volume in the Library of Living Philosophy series.
I cannot accede to your request. For I have dealt with this slippery material only when my own problems made it absolutely necessary…I would not be able to do justice to this swarm of incessantly twittering positivistic birdies…Entre nous I think that the positivist nag, which originally appeared so frisky, after the refinements which it had of necessity to undergo, has become a somewhat miserable skeleton and has become addicted to a fairly dried-up petty-foggery. In its youthful days it nourished itself on the weakness of its opponents. Now it has become respectable and finds itself in the position of having to make a go of its existence under its own power, the poor thing.
The upshot of all this is that natural science is conjectural and Barry Smith argued that the apriorism of Austrian economics is conjectural as well. That justificationism prompted Mark Blaug to write “Mises made important contributions to monetary economics, business cycle theory and of course socialist economics, but his later writings on the foundations of economic science are so cranky and idiosyncratic that we can only wonder that they have been taken seriously by anyone” (Blaug, 1992, 81). He quoted Samuelson’s famous rejoinder to the Austrians: “Well, in connection with the exaggerated claims that used to be made in economics for the power of deduction and a priori reasoning…I tremble for the reputation of my subject.”
Popper’s critical rationalism offers a corrective to the methodological rhetoric of the strong apriorists among Austrians and simultaneously a rejoinder to Blaug and Samuelson. For critical rationalists the test of evidence applies to the explanations and predictions generated by a scientific research program. The program itself is a system of ideas including philosophical and metaphysical framework assumptions and methodological procedures and principles that generate explanations and predictions. Not all of these parts are amenable to empirical testing and this applies to the natural sciences as much as the human sciences.
Hence it is not a departure from standard scientific practice to make use of untestable propositions. The critical rationalist does not insist that all the premises and presuppositions in scientific discourse should be verified, merely that they stand up to criticism as well or better than other options. Recall the four forms of criticism: empirical tests are a particular kind of criticism, but they are not appropriate for all assumptions, especially those of methodology and the philosophical framework assumptions of the program. They prove themselves at one step removed – by the power of the explanatory theories and the research programs that they generate.
Di Iorio (2008) found many points of contact between Mises and Popper:
“…the primacy of theory compared to experience; the anti-instrumentalist or realist conception of science; the fact that empirical theories rest on non-empirical presuppositions…methodological individualism; the criticism of scientism, inductivism and holism in social sciences “
Larry Boland is a productive follower of Popper in a career devoted to the methods of economics. He sketched a four-point Popper-Hayek program in Chapter 15 of The Foundations of Economic Method (Boland, 2003). The elements of the program are (1) Anti-justificationism, (2) Anti-psychologism, (3) Rational decision-making (according to the logic of the situation) and (4) Situational dynamics (behavior can change as a result of learning as well as from changes in the situation). Surprisingly I wrote about Boland’s program in a comprehensive summary of the first edition of that book many years ago but it dropped out of my consciousness until this revival of my efforts to explain the potential partnership of critical rationalism and Austrian economics.