Implications of Machlup's Interpretation of Mises's Epistemology

We argue that Machlup's (1955) interpretation of Mises’s epistemology is at least, if not more, plausible than Rothbard's (1957). The implications of Machlup’s interpretation of Mises and Austrian epistemology affect Austrians, non-Austrians and how they relate to each other. Machlup’s interpretation shows that Austrian’s epistemology is well grounded and that most criticisms of Austrian economics based on their aprioristic characteristic are misplaced. Furthermore, Machlup’s interpretation provides a potential road to re-built the academic interaction between Austrians and non-Austrians that was characteristic of the early twentieth century.

That's the abstract of a new working paper by Gabriel Zanotti and Nicolas Cachanosky. You can access the full paper here.

Comments

[Gene Callahan]

I'm very sympathetic with the approach they are taking, but their English is brutal! They have to get someone to edit this for them.

[Matthew Schiros]

Thanks so much for posting this, Chris. The Rothbard (and before I read this, Mises) absolute rejection of empiricism is one of the things I've been struggling to resolve for myself for a long time. One one hand, I find purposeful human action to be a perfectly valid axiomatic beginning, and the Austrian arguments derived from that to be internally consistent. On the other hand, an outright rejection of all empirical evidence rubs me raw, and seems to be a concession by Austrians to an entire side of the debate that they could win if they found a way to either a.) incorporate empirical results into the theory, or b.) at least attempt to explain them. I'm not quite to the point where I've internally resolved the question, but this definitely is a start on the right path. Next up, Machlup.

[Roger Koppl]

FWIW, I think Zanotti and Cachanosky are basically right. Machlup was a subtle thinker steeped in the methodology literature. IMHO he trumps Rothbard on these issues. And he is a kind of bridge between "Austrian" and "neoclassical" economics. His position in the Machlup-Lester debate was important in shaping post-war neoclassical orthodoxy. Same goes for Robbins' famous essay, which was explicitly recognized by reviewers as "Austrian" when it was first published. So the bad old post-war “neoclassical” orthodoxy owes much to “Austrian” economics. That fact may help to suggest that the obstacles to an Austrian reintegration to the mainstream may not be as hard to overcome as we sometimes seem to imagine. In any event, I like the idea that we should study Machlup closely in methodology and, well, pretty much everything else he did.

In my Big Players book I lay out an interpretation of Mises’ methodology that is probably close to Zanotti & Cachanosky. And, yeah, I was influenced by Machlup. But I claim that Mises’ position is not as clear as we would want it to be. Schutz complained once that Mises “deliberately abstains from a discussion of questions of a general epistemology basic to the problems of the social sciences” (p. 92 of vol. IV of Schutz papers). I think we have to face up to the fact that Mises was not all that clear about what he really meant. I think Machlup’s 1955 essay reflects this fact, because he really does *not* come out and say “This is Mises.” In my Big Players book I quote a remark from Machlup’s interview in The Austrian Economics Newsletter. He says it’s a mistake to make as big a deal out of “a priori” as Mises and some of his followers have done. That remark suggests that Machlup thought his position was not really just an interpretation of the master, but moved at least some slight distance from it.

Zanotti and Cachanosky make no reference to Schutz. But Machlup explicitly identified himself as a Schutzian in methodology. He cites Schutz in the ’55 paper on “understandability” in a strongly favorable manner. In a footnote in that bit of the paper, he says neglect of understandability is “the only serious flaw” in Milton Friedman’s famous essay “the methodology of positive economics.” So that suggests less of a gap between Machlup and Friedman than one might have expected after reading Zanotti and Cachonsky.

For my money, the way to go is to see Schutz and Hayek as Misesian methodologist. I lay out that position in the Big Players book. But to do that you have to face up to ambiguities in Mises’ position. Very loosely, I think we can say that Schutz took a “humanistic” approach to Misesian methodology and Hayek took up a “scientific” approach to Misesian methodology. Since that are both basically Misesian, however, these two semmingly very different methodologies are not really all that far apart. I don’t think you need to do much amending of either to fit them together neatly.

[Roger McKinney]

Nice paper! Thanks! I never have followed the epistemology debate very closely, but reading Mises then Hayek I couldn’t see what all the fuss was about. Mises and Hayek seemed to saying the same things with slightly different perspectives.

[Nicolas Cachanosky]

Thank you Chris for this post with a link to our piece.

I'm glad that the topic and the content is of interest. We are still working on this; we welcome all comments and suggestions to improve the WP.

@Roger. Could you tell us in which part of your Big Players book you discuss this issue?

Best,
NC

[Roger Koppl]

Hi, Nicolas. See chapters 2, 3, & 4. 2 is on Mises, 3 on Schutz, and 4 on Hayek.

[Rafe Champion]

It is good to see more appreciation of the compatability of Popper and the other Austrians. A preliminary statement along those lines was presented at the 2002 Popper Centenary Conference in Vienna but did not make the cut for the published proceedings.
http://www.the-rathouse.com/RC_PopperPaper.html

One of the problems is the situation where it is possible to spend a career in academia and not encounter a straight feed on Popper's ideas. This came about because the Continental diaspora of positivists took all the key posts in the Anglosphere while Popper was on an extended vacation in the south Pacific.

It is helpful to take on board the idea of "fallibillistic apriorism" from Barry Smith, which is more or less the same as "conjectural knowledge". This contribution did better and was accepted for an Italian journal.
http://www.the-rathouse.com/WritingsonMises/FallibleApriorism.html

It is possible to discern a "gang of three" in the 1930s, Talcott Parsons, von Mises and Popper, but Talcott Parsons lost the plot after his (1937). This paper was rejected by an Australian history of ideas journal after a split decision with the first two referees. It also had a split decision with the Review of Aust Ec and more work is required.
http://www.the-rathouse.com/EvenMoreAustrianProgram/Convergence.html

It also helps to see the similarity in the presuppositions of Menger's economics and Popper's "metaphysical research program". Thanks again to Barry Smith.
http://www.the-rathouse.com/EvenMoreAustrianProgram/Arlington-final.html

[Mariorizzo.wordpress.com]

Mises is so screwed up on methodology that I wish I have never read that first section of Human Action. It is not that his position is entirely wrong but he doesn't know how to explain it. He uses terms very carelessly.

The only interpretation of Mises on methodology that makes any sense to me is that produced by Roderick Long in his yet-unpublished, but available, book on Wittgenstein and Austrian Economics. You can find it on Mises.org and on Roderick's web page.

But then we must ultimately thank Wittgenstein for this.

[Nicolas Cachanosky]

Thank you Mario for your suggestion on Long's book.

[FriedrichHayek]

Roderick Long does not begin his book in a fashion which engenders confidence in it -- Hayek *explicitly* identifies his explanatory science as empirical science, in many places, and identifies the core explanatory elements of economic science as empirical and causal.

In Hayek the problems to be explained are empirical and the elements providing the explanation are causal and empirical.

It undermines confidence in Long that he asserts otherwise in the first paragraph.

[Brian Gladish]

Supporting Rafe's project, I suggest that some of Popper's work adds credibility to the action axiom and integrates economics more closely with the natural sciences: http://radicalliberal.blogspot.com/2013/03/ludwig-von-mises-action-axiom-and.html

[Roger McKinney]

Mario, can you provide an example so I can better understand what you wrote?

[Barkley Rosser]

I am probably going to get Roger in trouble, or at least vaguely annoyed with me, but I cannot resist, quite aside from agreeing with some other posters above (implicitly) that he is downplaying the differences between Mises and Hayek on these matters (and, again, showing my ignorance of Schutz, whom he so reveres).

Anyway, I am going to quote Roger quoting Machlup, with this joke in fact having epistemological implications after one stops giggling:

"Vaht in New York is called a hot dog, in Vienna ["Wien," for the ignorami] is called a frankfurter and in Frankfurt is called wiener."

[Roger Koppl]

Heh. Okay, Barkley I'll take the bait. I can’t help it.

We are accustomed to thinking of Hayek and Mises as very different thinkers. Hayek the empiricist and Mises the apriorist. Nope. Z&C show that the “apriorism” Mises lays out in Human Action is not as extreme as we might have thought. (Peter Kurrild-Klitgaard says Mises’ took a more extreme position in Ultimate Foundations.) Okay, Mises is starting to look a little better, perhaps. But wasn’t Hayek an empiricist? Not really; not in any very standard sense. Check out what he says in The Sensory Order, paragraphs 8.24 & 8.27.

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Science thus tends necessarily towards an ultimate state in which all knowledge is embodied in the definitions of the objects with which it is concerned; and in which all true statements about these objects therefore are analytical or tautological and could not be disproved by any experience.

[I]n so far as we have been led into opposition to some of the these traditionally associated with empiricism, we have been led the their rejection not from an opposite point of view, but on the contrary, by a more consistent and radical application of it basic idea.
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Even physics tends toward a tautological system! So who is the more extreme apriorist, Hayek or Mises?