Saudino’s Scientism: A Response to John Saudino’s “Road to Fallibilism”
by Kai Weiss
26 November 2019
In the three-part series The Road to Fallibilism (part I, part II, part III), John Saudino attacks the Austrian School of Economics and Friedrich August von Hayek in particular. According to Saudino, Austrian Economics suffers from “many methodological and practical errors,” “inherent dogmatism,” and a “radical departure from the principles of science, be it social or natural, that one cannot help but be reminded of the stultifying Platonic biases of medieval scholasticism.” Saudino raises many problems in Austrian Economics, some justifiable and ones that Austrians should take note of. In the end, his attack on the economic school of thought is nonetheless misguided.
Most of his argument against Austrian Economics pertains to its methodological approach. As Saudino shows correctly, Austrians have throughout the school’s existence used a deductive approach in one way or another which uses a more strictly theoretical approach over the analysis of data, historical facts, and such. One of the core principles of Austrians has also been a strict separation of economic theory and economic history. For Saudino, this focus on theory leads to dogmatism, and as he explicitly states multiple times, a return to the unscientific approaches of Catholic scholastics as well as Ancient Greek philosophers. Others may appreciate this approach for having dominated throughout most of Western Civilization, but considering Saudino’s use of Popper’s methodological approach as a (positive) contrast, it is not surprising that he sees little value in Plato, Aquinas et al.
Some historical background may be helpful, however, in better understanding the Austrian approach. In many regards, the Austrian School came into being over methodological disputes – or one in particular, namely the Methodenstreit with the German Historical School. The German Historicists around Gustav Schmoller used an inductive method in social sciences. That is, they proposed that scientists should look at a possibly endless amount of historical data – when enough data was collected, one could derive some conclusions from this.
The Viennese Carl Menger, the founder of the Austrian School, heavily opposed this method. For one, when would “enough” historical data be collected to eventually come to conclusions? In a sense, new data would always arise, and thus, no definitive conclusions could ever be reached. Relativism would be the natural consequence of a purely historical approach. After all, if the conclusions reached could change day-in, day-out, then there are no permanent principles in this world at all. But even more so, if there are no principles that had first been established deductively, then what are we even looking for when we look at the data? We first need some basis when we analyze empirical and historical facts. If not, we would just be men in the dark, unaware of what is happening in our surrounding, looking for something but not knowing what exactly.
Menger and his colleagues instead argued that some permanence, some basic framework, some general principles, perhaps even laws of social sciences, were needed. Armed with these principles, which obviously have to correspond with reality, we could look at data and draw conclusions.
How far social scientists would be able to go with this deductive approach has been hotly debated among Austrians ever since. As Saudino correctly notes, the likes of Ludwig von Mises and Murray Rothbard went further than others. Mises’s first axiom was that “man acts.” From this, he deduced many more a priori truths. He would show from this first axiom of human action how minimum wages don’t work and how some regulation would immediately be followed by more regulations, until nothing of the free market was left (his example were milk regulations, which would inevitably lead to the abolition of the market economy). He called this field of study praxeology and it would encompass all of human action – that is, everything in the world. Some Austrians have thought that this proves the significance and potency of the deductive method. Others have argued that this first action axiom is tautological and, thus, useless. Everything else that followed in this construction of principles, those Austrians thought, would then indeed by unscientific and dogmatic.
What Saudino seems to miss is that methodology itself is one of the most controversial elements within the Austrian School. One could accuse Austrians for inconsistency in their wide breadth of opinions, from the Social Economics approach of Friedrich von Wieser, Joseph Schumpeter, and the German non-Austrian Max Weber, which tries to reconcile the Austrian and German approaches from the Methodenstreit, all the way to the Misesian approach of focusing exclusively on deductive reasoning. But Saudino does not mention any of these disagreements. Rather, he builds a strawman which does not apply to a large chunk of Austrians and ignores any nuance in the school’s position.
Nowhere is this clearer than when he talks about his actual target, Friedrich Hayek. While Saudino does realize that Hayek was less convinced by praxeology than his mentor Mises, he still depicts Hayek as the same theorist. In this, he only uses one book of Hayek throughout his entire three-part essay, namely Monetary Theory and the Trade Cycle, which Hayek wrote in 1933, i.e. early in his career, when he was focused on monetary policy. By ignoring Hayek’s entire work in the decades after, Saudino naturally doesn’t mention Hayek’s opposition to more extreme deductive approaches, his constant attacks on “pure theory,” and his emphasis on putting “catallactics,” i.e. real-life human interactions, at the forefront methodologically. It has even been suggested that the hero of Saudino’s narrative, Karl Popper, could have learned something from Hayek’s methodological insights.[1] In any case, Hayek still thought that general, first principles are essential. But they have limits, and the moment they divert from the real world they become useless.
It is true that Hayek clearly saw the limits of going too far with empiricism as well. Saudino attacks Hayek for his anti-scientism. And yet, Hayek offers some of the most poignant arguments against scientism as an ideology – or way of living. The Nobel Prize Laureate in Economic Science of 1974 shows that his fellow social scientists had gone too far in their focus on empiricism. Testing, modelling, and laboratory experiments work for natural scientists. But doing the same in the social sciences is a different matter, since one would test human action. This is not only much more difficult. It could, indeed, as Saudino mockingly mentions, be “dangerous and could destroy all of civilization.” By looking at humans as mere automatons, as a combination of 1s and 0s, we would not only lose the profound concept of human dignity for which Western Civilization is known. We would also invite technocrats with political power to use this science against their fellow beings.
In this, Hayek has not become “obscurantist by design.” He has set out clear limits of what science can do; that science is not an all-encompassing tool. Thereby, in his analysis of social processes, he shows the very humility that Saudino accuses him of lacking.
In the final part of his essay, Saudino tries to show how his depiction of Austrian methodology leads to false political conclusions – and, beyond that, “biases,” where a dogmatic methodology, full of “cognitive and epistemological error,” leads to dogmatic “right-libertarianism.”
His two real-world examples are curious to say the least: on the one hand, we are led to believe that dogmatism led to Austrian failure during the stagflation of the 1970s, whereas Keynesians, with an allegedly more scientific approach, had the solutions at hand. In reality, while Austrians warned in the decades before that stagflation may be around the corner, Keynesians argued that such a thing would be an impossibility and eventually had to readjust their teachings at that very time period to the reality that stagflation is actually a possibility.
The other example is the Austrians’ critical position in regards to today’s monetary system, which he describes as “overly essentialist,” though he does not really explain why that is the case, other than that an Austrian approach “unnecessarily ties the hands of policy makers” and ignores the potential benefits of the Keynesian multiplier effect. Austrians would not only agree with the first assertion, but also wish to enforce it, given that monetary policymakers have been unrestrained for years now. Meanwhile, that the Keynesian multiplier effect is a myth is not an exclusively Austrian invention either and is grounded in basic economics principles that have been established for much longer than the Austrian School has existed.[2]
How the Austrians’ supposed dogmatism in methodology influences any of their other teachings, among them spontaneous orders, the knowledge problem, the damaging effects of particular regulatory and tax policies, the impossibility of socialist calculation, and the wide-reaching studies on the role institutions play in society, Saudino leaves open.
Instead, he ends his essay by accusing Hayek of being an aristocrat who just wants to hurt the working class. After all, Hayek’s resistance to calls for government stimuli in times of economic crisis means that “he conveniently forgets that it is the working class that will have to bear the crushing blow of the economic depression to which he urges us to acquiesce.” Austrians, however, see a depression as a healthy correction to an unsustainable, artificial boom from which wealthier people have profited in the first place through Cantillon Effects. Saudino leaves out the part of how Austrians also want to end the Keynesian booms-and-busts so as to end certain privileges for politically well-connected people.
Indeed, Austrians, like most social scientists, want “to improve
society,” something that Saudino thinks only those with a “Social Democratic
tendency do.” Eventually, in the last paragraph of his essay, he adopts the
same dogmatic method he wrongly accuses all Austrians of: he uses
“scientism,” something he sees only being employed by the center-left, as a
method that naturally has to lead to center-left politics. Perhaps,
however, the humility of Hayek and Austrians vis-à-vis complex, social
institutions and processes is precisely what Saudino and the Social Democrats
should adopt to finally escape their pretense of knowledge.
[1] See José A. Colen and Scott Nelson, “The Republic of Science and Its Citizens: What Role May Humanities Play Within the Popperian Framework?,” in The Impact of Critical Rationalism: Expanding the Popperian Legacy through the Works of Ian C. Jarvie, eds. Raphael Sassower and Nathaniel Laor (Cham: Palgrave Macmillan, 2019), 173-188.
[2] See, e.g., Frédéric Bastiat’s “That Which Is Seen, and That Which Is Not Seen.”
Dear Kai,
Thank you very much for your critical yet thoughtful response to my piece. You have given me ample food for thought. Being that I am drown in work at the moment, I will need some time to give you a decent response.