Catallaxy Files

The twentieth century was not kind to some of the great ideas that were buzzing around the Austo-Hungarian empire at the end of the nineenth century. Very important persons and lines of scholarship were sidelined and only exist as distant rumours to most students of philosophy, economics and the humanities in the explosion of the universities after WW2.

This is changing due to the revival of Austrian economics in the 1970s and the inspiring work of scholars in other fields – philosophy, psychology, literary studies, value theory – which will be on display at the Uni of Texas next month (almost next week). Many fine scholars will be there, notably Barry Smith who is the kind of person who makes everyone else look lazy. Oh well, if you can’t beat them, join them, so I will be there too.

My contribution is to explain how a modern Austrian re-discovered the old Austrian realist framework of thought that was buried by developments in the 20th century, including some that started in Vienna like the logical positivism and logical empiricism in the philosophy of science. This is the abstract of the paper, I only get to talk for 20 minutes and so the talk will be an extract from a larger paper.

THE RETURN OF AUSTRIAN REALISM

It seems that Karl Popper revived or rediscovered the Aristotelian or “Austrian realism” framework of ideas which Barry Smith found in Carl Menger’s economics. Smith described the framework with seven general features and three additional points to demarcate Austrian from German social thought at the time. Those features are replicated practically point for point in the program Popper elaborated in his long debate with the historicists, the positivists and the quantum physicists.

This Aristotelian/Austrian framework or program is a robust alternative to the positivism and empiricism that became dominant in the philosophy of science in the twentieth century. The history of the Austrian school of economics demonstrates the importance of framework assumptions and the need to subject them to criticism. Some of the tenets of the Austrian economists, but not the framework, were taken up by the mainstream of the profession, but as positivism rose in the 1930s and significant differences emerged between the Austrians and others, these differences were resolved in favour of the mainstream by weight of numbers rather than arguments. The framework assumptions of rival research programs could not be addressed effectively under the ban on metaphysics imposed by the positivists. This problem persisted when Kuhn and Lakatos drew attention to paradigms and programs but did not encourage criticism of the central assumptions and “hard cores”.

One of the functions of frameworks is to create winners and losers. In economics the winners in the positivist/empiricist framework include general equilibrium theory, the “measure and model” approach, Keynesian macroeconomics, econometrics, mathematical game theory and the general demand for mathematical rigor. These developments isolated economics from the social sciences and humanities at large. More than that, they also isolated large tracts of the profession from the real world “outside the window”, so the GFC came as a surprise to the majority of economists (but not to the Austrians). If the Aristotelian/Austrian framework can be revived, other approaches will thrive, especially the Austrians and the political program of classical liberalism. More important, the framework will facilitate the re-integration of economics, sociology, and all the disciplines of the humanities including law, politics, and cultural studies at large.

The paper sketches the main features of Popper’s program, especially the correspondence with Aristotelian/Austrian realism, and draws attention to his major contributions to epistemology and methodology: the conjectural or hermeneutic turn; the “objective turn” to focus on scientific or public knowledge and objects of thought rather than subjective beliefs; the social or “rules of the game” approach take account of the social context of investigation; and the move to take metaphysics seriously.