The folks at Catallarchy have been on a total roll, particularly this post on Roger Ebert channeling Ronald Coase, and this post on physics envy in mainstream economics. Brian’s physics envy post has a quote from Ludwig von Mises that I find particularly relevant to some of the more philosophical issues I’m thinking about in my own work:
But economics is not history. Economics is a branch of praxeology, the aprioristic theory of human action. The economist does not base his theories upon historical research, but upon theoretical thinking like that of the logician or the mathematician. Although history is, like all other sciences, at the background of his studies, he does not learn directly from history. It is, on the contrary, economic history that needs to be interpreted with the aid of the theories developed by economics.
The reason is obvious, as has been pointed out already. The historian can never derive theorems about cause and effect from the analysis of the material available. Historical experience is not laboratory experience. It is experience of complex phenomena, of the outcome of the joint operation of various forces.
This shows why it is wrong to contend that “it is from observation that even deductive economics obtains its ultimate premises.” What we can “observe” is always only complex phenomena. What economic history, observation, or experience can tell us is facts like these: Over a definite period of the past the miner John in the coal mines of the X company in the village of Y earned p dollars for a working day of n hours. There is no way that would lead from the assemblage of such and similar data to any theory concerning the factors determining the height of wage rates.
One of the things that expermental economics brings to the party is a method for testing a priori hypotheses, creating environments in which some of the complexity of real-world phenomena is simplified away but the participants still face real profit motivation and real opportunity-cost-driven tradeoffs.
I also recommend reading the comments in the post, and I note that Andrew Chamberlain presents some food for thought in his comment that starts
Bad formalism is bad. But the Austrian response of no formalism is bad also.
I also think he has thrown down the gauntlet with the correct challenge:
The way to counter stupid formalism isn’t to lecture to PhD economists with tenure at Chicago. They don’t care what any Austrian has to say. The way to counter it is get a PhD and compete, by telling more compelling stories and showing that your methodological heat can also produce light.
OK, that’s got me fired up and ready to seize the day!