The Review of Austrian Economics, 16:2/3, 127–131, 2003.
2003 Kluwer Academic Publishers. Manufactured in The Netherlands.
In 2000, in Paris, the second meeting
of the “Association des Historiens de la Tradition
Economique Autrichienne” (Association of the Historians of the Austrian Economic Tra-
dition) (AHTEA) was devoted to the Austrian contributions to Applied Economics. The
idea was to show that, in Walrasian parlance, Austrian Economics (AE) was not only a
“pure” theory but also an “applied” one. In other words, there was room for an Applied
Austrain Economics (AAE). After two levels of editorial selection (at the AHTEA level
and at the RAE one) this volume presents some of the contributions that were presented at
The fact that AE is able to address most of the theoretical and public policy questions is
now recognized even by those who challenge its approach. However, the capacity of AE
to produce applied economic results remains a great challenge. Indeed the main arguments
advanced against the existence of an AAE can be presented as follows.
– First, AE is said to be reluctant to empirically test the conclusions of its theories. This
argument is certainly true for some Austrians. Indeed the Misesians, because they assume
some a priori categories, consider that thanks to the logical properties of the if...then
proposition, it is necessary for a proposition, logically deduced from a true assumption,
to be true. It is then not necessary to test the praxeological propositions just because the
praxeological assumptions are true.
The only thing we then have to ensure is the logical
coherence of the chain of our deductive reasoning. Hayekians are not accepting this a
priori conception. Even if it is possible to discuss the fact that Hayek is or not Popperian,
it is difﬁcult to accept the idea that he is an apriorist. He is fundamentally a realist in the
sense that he thinks that we need to test our theoretical conclusions. Menger, because
he is an “essentialist”, and Mises, because of his “apriorism”, do not think that it is
The idea that empirical tests are needed is then, according to Misesians, a false problem
because the hypothesis logically deduced from praxeological assumptions empirically
apply. According to Hayek, the empirical element is fundamental to progress in economic
science, because economics is not a “pure logic of choice”.
– Second, AE is said to be reluctant to use mathematics, which makes its arguments less
conclusive and its results untestable. On this point there is confusion. It is often argued that
mathematics is less ambigous than natural languages. The syntactic clarity that mathemat-
ics ensures enables it to produce (quasi) universal and perfectly coherent reasoning. There
is, however, a trade-off between the degree of ‘realism’ of the assumptions and the rich-
ness of the language used to translate and manage them. In other words, “the mathematical
problems [...] are formulated completely in unambiguous words.” (Georgescu-Roegen
1971: 91, italics in the original). As an example, let’s assume that time is not “Newtonian”
but “Real” (O’Driscoll and Rizzo 1985). This idea is deduced from the assumption that