The Competitiveness of Nations in a Global Knowledge-Based Economy

F. A. von Hayek

Economics and Knowledge 1

Scientism and the Study of Society: PART I

Economica, New Series, 9 (35)

Aug. 1942, 267-291.


Systems which have universally owed their origin to the lucubrations of those who were acquainted with one art,

but ignorant of the other; who therefore explained to themselves the phenomena, in that which was strange to them,

by those in that which was familiar; and with whom, upon that account, the analogy, which in other writers gives

occasion to a few ingenious similitudes, became the great hinge on which every thing turned.

ADAM SMITH (Essay on the History of Astronomy).


I - Scientism

II - Science

III - Society

IV - Subjectivism

I – Scientism                               

IN the course of its slow development in the eighteenth and early nineteenth centuries the study of economic and social phenomena was guided in the choice of its methods in the main by the nature of the problems it had to face. [1]  It gradually developed a technique appropriate to these problems without much reflection on the character of the methods or on their relation to that of other disciplines of knowledge.  Students of political economy could describe it alternatively as a branch of science or of moral or social philosophy without the least qualms whether their subject was scientific or philosophical.  The term science” had not yet assumed the special narrow meaning it has to-day, [2] nor was there any distinction made which singled out the physical or natural sciences and attributed to them a special dignity.  Those who devoted themselves to those fields indeed readily chose the designation of philosophy when they were concerned with the more general aspects of their problems. [3]

1. This is, however, not universally true.  The attempts to treat social phenomena “scientistically,” which became so influential in the 19th century, were not completely absent in the 18th.  There is at least a strong element of it in the work of Vico, of Montesquieu and of the Physiocrats.  But the great achievements of the century in the theory of the social sciences, the works of Cantillon and Hume, of Turgot and Adam Smith, were on the whole free from it.

2. The earliest example of the modern narrow use of the term “science’ given in Murray’s New English Dictionnary dates from as late as 1867.  But T. Mere (History of European Thought in the Nineteenth Century, vol. I, 1896. p. 89) is probably right when he suggests that “science” has acquired its present definite meaning about the time of the formation of the British Association for the Advancement of Science (1831).

3. E.g. J. Dalton’s New System of Chemical Philosophy, 1808 Lamarck’s Philosophie Zoologique, 1809, or Fourcroy’s Philosophie chimiqne. 1806.


During the first half of the nineteenth century a new attitude made its appearance.  The term science came more and more to be confined to the physical and biological disciplines which at the same time began to claim for themselves a special rigourousness and certainty which distinguished them from all others.  Their success was such that they soon began to exercise an extraordinary fascination on those working in other fields, and who soon began to imitate their teaching and vocabulary.  Thus the tyranny commenced which the methods and technique of the Sciences [1] in the narrow sense of the term have ever since exercised over the other subjects.  These became increasingly concerned to vindicate their equal status by showing that their methods were the same as those of their brilliantly successful sisters rather than by adapting their methods more and more to their own particular problems.  And although in the hundred and twenty years or so, during which this ambition to imitate Science in its methods rather than its spirit has now dominated social studies, it has contributed scarcely anything to our understanding of social phenomena, not only does it continue to confuse and discredit the work of the social disciplines, but demands for further attempts in this direction are still presented to us as the latest revolutionary innovations which, if adopted, will secure rapid undreamed of progress.

Let it be said at once, however, that those who were loudest in these demands were rarely themselves men who had noticeably enriched our knowledge of the Sciences.  From Francis Bacon, the Lord Chancellor, who will for ever remain the prototype of this attitude, to Auguste Comte and the “physicalists” of our own day, the claims for the exclusive virtues of the methods employed by the natural sciences were mostly advanced by men whose right to speak on behalf of the scientists were not above suspicion and who indeed in many cases had shown in the Sciences themselves as much bigoted prejudice as in their attitude to other subjects.  Just as Francis Bacon opposed Copernican Astronomy [2], and as Comte taught that any too minute investigation of the phenomena by such instruments as the microscope was harmful and should be suppressed by the spiritual power of the positive society because it tended to upset the laws of positive science, so this dogmatic attitude has so often misled men of this type in their own field that there should have been little reason to attach too much importance to their views about problems still more distant from the fields from which they derived their inspiration.

The history of this influence, the channels through which it operated, and the direction in which it affected social developments, will occupy us throughout the series of historical studies to which the present essay is designed to serve as an introduction. [3]  Before we trace the historical

1. We shall use the term Science in capital letters when we wish to emphasise that we use it in the modern narrow meaning.

2. See M. R. Cohen, “The Myths about Bacon and the Inductive Method” Scientific Monthly, vol. XXIII, 1926, p. 505.

3. The first of this series, entitled “The Counter-Revolution of Science,” appeared in Economica, February to August, 1941.


course of this influence and its effects, we shall here attempt to describe its general characteristics and the nature of the problems to which the unwarranted and unfortunate extensions of the habits of thought of the physical and biological sciences have given rise.  There are certain typical elements of this attitude which we shall meet again and again and whose prima facie plausibility makes it necessary to examine them with some care.  While in the particular historical instances it is not always possible to show how these characteristic views are connected with or derived from the habits of thought of the scientists, this is easier in a systematic survey.

It need scarcely be emphasised that nothing we shall have to say is aimed against the methods of Science in their proper sphere or is intended to throw the slightest doubt on their value.  But to preclude any misunderstanding on this point we shall, wherever we are concerned, not with the general spirit of disinterested inquiry but with that slavish imitation of the method and language of Science, speak of “scientism” or the “scientistic” prejudice.  Although these terms are not completely unknown in English, [1] they are actually borrowed from the French, where in recent years they have come to be generally used in very much the same sense in which they will be used here. [2]  It should be noted that, in the sense in which we shall use these terms, they describe, of course, an attitude which is decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed.  The scientistic as distinguished from the scientific view is not an unprejudiced but a very prejudiced approach which, before it has considered its subject, claims to know what is the most appropriate way of investigating it. [3]

It would be convenient if a similar term were available to describe the characteristic mental attitude of the engineer which, although in many respects closely related to scientism, is yet distinct from it but which we intend to consider here in connection with the latter.  No single word of equal expressiveness suggests itself, however, and we shall have to be content to describe this second element so characteristic of 19th and 20th century thought as the “engineering type of mind”.

1. Murray’s New English Dictionary knows both “ scientism “ and “scientistic “, the former as the “habit and mode of expression of a man of science,” the latter as “characteristic of or having the attributes of, a scientist (used depreciatively).”  The terms “naturalistic” and “mechanistic”, which have often been used in a similar sense, are less appropriate because they tend to suggest a wrong kind of contrast.

2. See e.g. J. Fiolle, Scientisme ci Science, Paris, 1936, and A. Lalande, Vocabulaire technique et critique de la philosopie, 4th ed., vol. II. p.740.

3. Perhaps the following passage by a distinguished physicist may help to show how much the scientists themselves suffer from the same attitude which has given their influence on other disciplines such a baneful character: “It is difficult to conceive of anything more scientifically bigoted than to postulate that all possible experience conforms to the same type as that with which we are already familiar, and therefore to demand that explanation use only elements familiar in everyday experience.  Such an attitude bespeaks an unimaginativeness, a mental obtuseness and obstinacy, which might be expected to have exhausted their pragmatic justification at a lower plane of mental activity.” (P. W. Bridgman, The Logic of Modern Physics, 1928, p.46.)


II – Science

Before we can understand the reasons for the trespasses of scientism we must try to understand the struggle which Science itself had to fight against concepts and ideas which were as injurious to its progress as the scientistic prejudice now threatens to become to the progress of the social studies.  Although we live now in an atmosphere where the concepts and habits of thoughts of every-day life are to a high degree influenced by the ways of thinking of Science, we must not forget that the Sciences had in their beginning to fight their way in a world where most concepts had been formed from our relations to other men and in interpreting their actions.  It is only natural that the momentum gained in that struggle should carry Science beyond the mark and create a situation where the danger is now the opposite one of the predominance of scientism impeding the progress of the understanding of society. [1]  But even if the pendulum has now definitely swung in the opposite direction, only confusion could result if we failed to recognise the factors which have created this attitude and which justify it in its proper sphere.

There were three main obstacles to the advance of modern Science against which it has struggled ever since its birth in the Renaissance period; and much of the history of its progress could be written in terms of its gradual overcoming of these difficulties.  The first, although not the most important, was that for various reasons scholars had grown used to devoting most of their effort to analysing other people’s opinions this was so not only because in the then most developed disciplines, like theology and law, this was the actual object, but even more because, during the decline of Science in the Middle Ages, there seemed to be no better way of arriving at the truth about nature than the study of the work of the great men of the past.  More important was the second fact, the belief that the “ideas” of the things possessed some transcendental reality, and that by analysing ideas we could learn something or everything about the attributes of the real things.  The third and perhaps most important fact was that man had begun everywhere to interpret the events in the external world after his own image, as animated by a mind like his own, and that the natural sciences therefore met everywhere explanations by analogy with the working of the human mind, with “anthropomorphic” or “animistic” theories which searched for a purposive design and were satisfied if they had found in it the proof of the operation of a designing mind.

1. On the significance of this “law of inertia “in the scientific sphere and its effects on the social disciplines see H. Munsterberg, Grundzuge der Psychologie, 1909, vol. I, p. 137 E. Bernheim, Lehrbuch der historeschen Methode und Geschichts-philosophie, 5th ed., 1908, p. 144., and L. v. Mises, Naiionalôkononie, 1940, p. 24.  The phenomenon that we tend to overstrain a new principle of explanation is, perhaps, more familiar with respect to particular scientific doctrines than with respect to Science as such.  Gravitation and evolution, relativity and psycho-analysis all have for certain periods been strained far beyond their capacity.  That for Science as a whole the phenomenon has lasted even longer and had still more far-reaching effects is not surprising in the light of this experience.


Against all this the persistent effort of modern Science has been to get down to “objective facts”, to cease studying what men thought about nature or to regard the given concepts as true images of the real world, and, above all, to discard all theories which pretended to explain phenomena by imputing to them a directing mind like our own.  Instead, its main task became to revise and reconstruct the concepts formed from ordinary experience on the basis of a systematic testing of the phenomena, so as to be better able to recognise the particular as an instance of a general rule.  In the course of this process not only the provisional classification which the commonly used concepts provided, but also the first distinctions between the different perceptions which our senses convey to us, had to give way to a completely new and different way in which we learned to order or classify the events of the external world.

The tendency to abandon all anthropomorphic elements in the discussion of the external world has in its most extreme development even led to the belief that the demand for “explanation” itself is based on an anthropomorphic interpretation of events and that all Science ought to aim at is a complete description of nature. [1]  There is, as we shall see, that element of truth in the first part of this contention that we can understand and explain human action in a way we cannot with physical phenomena, and that consequently the term “explain” tends to remain charged with a meaning not applicable to physical phenomena. [2]  The actions of other men were probably the first experiences which made man ask the question “why ?”, and it took him a long time to learn, and he has not yet fully learned, [3] that with events other than human actions he could not expect the same kind of “explanation” as he can hope to obtain in the case of human behaviour.

That the ordinary concepts of the kind of things that surround us do not provide an adequate classification which enables us to state general rules about their behaviour in different circumstances, and that in order to do so we have to replace them by a different classification of events is familiar.  It may, however, still sound surprising that what is true of these provisional abstractions should also be true of the very sense qualities which most of us are inclined to regard as the ultimate reality.  But although the idea that science breaks up and replaces the system of classification which our sense qualities represent is less familiar, yet this is precisely what Science does.  It

1. This view was, I believe, first explicitly formulated by the German physicist G. Kirchhofl and later made widely known through the philosophy of Ernst Mach.

2. The word “explain” is only one of many important instances where the natural sciences were forced to use concepts originally formed to describe human phenomena.  “Law” and “cause”, “function” and “order”, “organism” and “organisation” are others of similar importance where Science has more or less succeeded in freeing them from their anthropomorphic connotations, while in other instances, particularly, as we shall see, in the case of “purpose”, though it cannot entirely dispense with them, it has not yet succeeded in doing so and is therefore with some justification afraid of using these terms.

3. Cf. T. Percy Nunn, Anthropomorphism and Physics (Proceedings of the British Academy, vol. XIII), 1926.


begins with the realisation that things which appear to us the same do not always behave in the same manner, and that things which appear different to us sometimes prove in all other respects to behave in the same way; and it proceeds from this experience to substitute for the classification of events which our senses provide a new one which groups together not what appears alike but what proves to behave in the same manner in similar circumstances.

While the naive mind tends to assume that external events which our senses register in the same or in a different manner must be similar or different in more respects than merely in the way in which they affect our senses, the systematic testing of Science shows that this is frequently not true.  It constantly shows that the “facts” are different from “appearances”.. We learn to regard as alike or unlike not simply what by itself looks, feels, smells, etc., alike or unlike, but what regularly appears in the same spatial and temporal context.  And we learn that the same constellation of simultaneous sense perceptions may prove to proceed from different “facts”, or that different combinations of sense qualities may stand for the same “fact”.  A white powder with a certain weight and “feel” and without taste or smell may prove to be any one of a number of different things according as it appears in different circumstances or after different combinations of other phenomena, or as it produces different results if combined in certain ways with other things.  The systematic testing of behaviour in different circumstances will thus often show that things which to our senses appear different behave in the same or at least a very similar manner.  We may not only find that, e.g., a blue thing which we see in a certain light or after eating a certain drug is the same thing as the green thing which we see in different circumstances, or that what appears to have an elliptical shape may prove to be identical with what at a different angle appears to be circular, but we may also find that phenomena which appear as different as ice and water are “really” the same “thing”..

This process of re-classifying “objects” which our senses have already classified in one way, of substituting for the “secondary” qualities in which our senses arrange external stimuli a new classification based on consciously established relations between classes of events is, perhaps, the most characteristic aspect of the procedure of the natural sciences.  The whole history of modern Science proves to be a process of progressive emancipation from the innate classification of the external stimuli till in the end they completely disappear and “physical science has now reached a stage of development that renders it impossible to express observable occurrences in language appropriate to what is perceived by our senses.  The only appropriate language is that of mathematics”, [1] i.e. the discipline developed to describe complexes of relationships between elements which have no

1. L.S. Stebbing, Thinking to Some Purpose, (“Pelican” Books), 1939, p.107.  Cf. also B. Russell, The Scientific Outlook, 1935, p.85.


attributes except these relations.  While at first the new elements into which the physical world was “analysed” were still endowed with “qualities”, i.e. conceived as in principle visible or touchable, neither electrons nor waves, neither the atomic structure nor electromagnetic fields can be adequately represented by mechanical models.

The new world which man thus creates in his mind, and which consists altogether of entities which cannot be perceived by our senses, is yet in a definite way related to the world of our senses.  It serves, indeed, to explain the world of our senses.  The world of Science might in fact be described as no more than a set of rules which enables us to trace the connections between different complexes of sense perceptions.  But the point is that the attempts to establish such uniform rules which the perceptible phenomena obey have been unsuccessful so long as we accepted as natural units, given entities, such constant complexes of sense qualities as we can simultaneously perceive.  In their place new entities, “constructs”, are created which can be defined only in terms of sense perceptions obtained of the “same” thing in different circumstances and at different times - a procedure which implies the postulate that the thing has in some sense remained the same although all its perceptible attributes may have changed.

In other words, although the theories of physical science at the stage which has now been reached can no longer be stated in terms of sense qualities, their significance is due to the fact that we possess rules, a “key”, which enables us to translate them into statements about perceptible phenomena.  One could compare the relation of modern physical theory to the world of our senses to that between the different ways in which one might “know” a dead language existing only in inscriptions in peculiar characters.  The combinations of different characters of which these inscriptions are composed and which are the only form in which the language occurs correspond to the different combinations of sense qualities.  As we come to know the language we gradually learn that different combinations of these characters may mean the same thing and that in different contexts the same group of characters may mean different things. [1]  As we learn to recognise these new entities we penetrate into a new world where the units are different from the letters and obey in their relations definite laws not recognisable in the sequence of the individual letters.  We can describe the laws of these new units, the laws of grammar, and all that can be expressed by combining the words according to these laws, without ever referring to the individual letters or the principle on which they are combined to make up the signs for whole words.  It would be possible, e.g., to know all

1. The comparison becomes more adequate if we conceive only small groups of characters, say words, to appear to us simultaneously, while the groups as such appear to us only in a definite time sequence, as the words (or phrases) actually do when we read.


about the grammar of Chinese or Greek and the meaning of all the words in these languages without knowing Chinese or Greek characters (or the sounds of the Chinese or Greek words).  Yet if Chinese or Greek occurred only written in their respective characters all this knowledge would be of as little use as knowledge of the laws of nature in terms of abstract entities or constructs without knowledge of the rules by which these can be translated into statements about phenomena perceptible by our senses.

As in our description of the structure of the language there is no need for a description of the way in which the different units are made up from various combinations of letters (or sounds), so in our theoretical description of nature the different sense qualities through which we perceive nature disappear.  They are no longer treated as part of the object and come to be regarded merely as ways in which we spontaneously perceive or classify external stimuli. [1]

The problem how man has come to classify external stimuli in the particular way which we know as sense qualities does not concern us here. [2]  There are only two connected points which must be briefly mentioned here and to which we must come back later.  One is that, once we have learnt that the things in the external world show uniformity in their behaviour towards each other only if we group them in a way different from that in which they appear to our senses, the question why they appear to us in that particular way, and especially why they appear in the same [3] way to different people becomes a genuine problem calling for an answer.  The second is that the fact that different men do perceive different things in a similar manner which does not correspond to any known relation between these things in the external world, must be regarded as a significant datum of experience which must form the starting point in any discussion of human behaviour.

We are not interested here in the methods of the Sciences for their own sake and we cannot follow up this topic further.  The point we

1. The old puzzle over the miracle that qualities which are supposed to attach to the things are transmitted to the brain in the form of indistinguishable nervous processes differing only in the organ which they affect, and then in the brain re-translated into the original qualities, ceases to exist.  We have no evidence for the assumption that the things in the external world in their relations to each other differ or are similar in the way our senses suggest to us.  In fact we have in many instances evidence to the contrary.

2. It may just be mentioned that this classification is probably based on a pre-conscious learning of those relationships in the external world which are of special relevance for the existence of the human organism in the kind of environment in which it developed, and that it is closely connected with the infinite number of “conditioned reflexes” which the human species had to acquire in the course of its evolution.  The classification of the stimuli in our central nervous system is probably highly “pragmatic” in the sense that it is not based on all observable relations between the external things, but stresses those relations between the external world (in the narrower sense) and our body which in the course of evolution have proved significant for the survival of the species.  The human brain will e.g. classify external stimuli largely by their association with stimuli emanating from the reflex action of parts of the human body caused by the same external stimulus without the intervention of the brain.

3. That different people classify external stimuli in the “same” way does not mean that individual sense qualities are the same for different people (which would be a meaningless statement) but that the systems of sense qualities of different people have a common structure (are homeomorphic systems of relations).


mainly wanted to stress was that what men know or think about the external world or about themselves, their concepts and even the subjective qualities of their sense perceptions are to Science never ultimate reality, data to be accepted.  Its concern is not what men think about the world and how they consequently behave, but what they ought to think.  The concepts which men actually employ, the way in which they see nature, is to the scientist necessarily a provisional affair and his task is to change this picture, to change the concepts in use so as to make more definite and certain our statements about the new classes of events.

There is one consequence of all this which in view of what follows requires a few more words.  It is the special significance which numerical statements and quantitative measurements have in the natural sciences.  There is a widespread impression that the main importance of this quantitative nature of most natural sciences is their greater precision.  This is not so.  It is not merely adding precision to a procedure which would be possible also without the mathematical form of expression - it is of the essence of this process of breaking up our immediate sense data and of substituting for a description in terms of sense qualities one in terms of elements which possess no attributes but these relations to each other.  It is a necessary part of the general effort of getting away from the picture of nature which man has now, of substituting for the classification of events which our senses provide another based on the relations established by systematic testing and experiment.

To return to our more general conclusion: the world in which Science is interested is not that of our given concepts or even sensations.  Its aim is to produce a new organisation of all our experience of the external world and in doing so it has not only to remodel our concepts but also to get away from the secondary sense qualities and to replace them by a different classification of events.  The picture which man has actually formed of the world and which guides him well enough in his daily life, his perceptions and concepts, are for Science not an object of study but an imperfect instrument to be improved.  Nor is Science as such interested in the relation of man to things, in the way in which man’s existing view of the world leads him to act.  It is rather such a relation, or better a continuous process of changing these relationships.  When the scientist stresses that he studies objective facts he means that he tries to study things independently of what men think or do about them.  The views people hold about the external world is to him always a stage to be over­come.

But what are the results of people perceiving the world and each other in a certain manner, as sensations and concepts which for different people are organised in a similar structure?  What can we say about the whole network of activities in which men are guided by the kind of knowledge they have and a great part of which at any time is


common to most of them?  While Science is all the time busy revising the picture of the external world that man-possesses, and while to it this picture is always provisional, the fact that man has a definite picture, and that the picture of all beings whom we recognise as thinking men and whom we can understand is to some extent alike, is no less a reality of great consequence and the cause of certain events.  Till Science has literally completed its work and not left the slightest unexplained residue in man’s intellectual processes, the facts of our mind remain not only data to be explained but also data on which the explanation of human action guided by those mental phenomena must be based.  Here a new set of problems arises with which the scientist does not directly deal.  Nor is it obvious that the particular methods to which he has become used would be appropriate to these problems.  The question is here not how far man’s picture of the external world fits the facts, but how by his actions, determined by the views and concepts he possesses, man builds up another world of which the individual becomes a part.  And by “the views and concepts people hold” we do not mean merely their knowledge of external nature.  We mean all they know and believe about themselves, other people, and the external world, in short everything which determines their actions, including science itself.

This is the field to which the social studies or the “moral sciences” address themselves.


III – Society

Before we proceed further to consider the effect of scientism on the study of society it will be expedient briefly to survey the peculiar object and the methods of the social studies.  They deal, not with the relations between things, but with the relations between men and things or the relations between man and man.  They are concerned with man’s actions and their aim is to explain the unintended or undesigned results of the actions of many men.

Not all the disciplines of knowledge which are concerned with the life of men in groups, however, raise problems which differ in any important respect from those of the natural sciences.  The spread of contagious diseases is evidently a problem closely connected with the life of man in society and yet its study has none of the special characteristics of the social sciences in the narrower sense of the term.  Similarly the study of heredity, or the study of nutrition, or the investigation of changes in the number or age composition of populations, do not differ significantly from similar studies of animals. [1]  And the same applies to certain branches of anthropology, or ethnology, in so far as they are concerned with racial characteristics or other physical attributes of men.  There are, in other words, natural sciences of man which do not necessarily raise problems with which we cannot cope with the methods of the natural sciences.  Wherever we are

1. Most of the problems of this latter group will, however, raise problems of the kind characteristic of the social sciences proper when we attempt to explain them.


concerned with unconscious reflexes or processes in the human body there is no obstacle to treating and investigating them “mechanically” as caused by objectively observable external events.  They take place without the knowledge of the person concerned and without his having power to modify them; and the conditions under which they are produced can be established by external observation without recourse to the assumption that the person observed classifies the external stimuli in any way differently from that in which they can be defined in purely physical terms.

The social sciences in the narrower sense, i.e. those which used to be described as the moral sciences, [1] are concerned with man’s conscious or reflected action, actions where a person can be said to choose between various courses open to him, and here the situation is essentially different.  The external stimulus which may be said to cause or occasion such actions can of course also be defined in purely physical terms.  But if we tried to do so for the purposes of explaining human action, we would confine ourselves to less than we know about the situation.  It is not because we have found two things to behave alike in relation to other things, but because they appear alike to us, that we expect them to appear alike to other people.  We know that people will react in the same way to external stimuli which according to all objective tests are different, and perhaps also that they will react in a completely different manner to a physically identical stimulus if it affects their body in different circumstances or at a different point.  We know, in other words, that in his conscious decisions man classifies external stimuli in a way which we know solely from our own subjective experience of this kind of classification.  We take it for granted that other men treat various things as alike or unlike as we do, although no objective test, no knowledge of the relations of these things to other parts of the external world justifies this.  Our procedure is based on the experience that other people as a rule (though not always - e.g. not if they are colourblind or mad) classify their sense impressions as we do.

But we not only know this.  It would be impossible to explain or understand human action without making use of this knowledge.  People do behave in the same manner towards things, not because these things are identical in a physical sense, but because they have learnt to classify them as belonging to the same group, because they can put them to the same use or expect from them what to the people concerned is an equivalent effect.  In fact, most of the objects of social or human action are not “objective facts” in the special narrow sense in which this term is used by the Sciences and contrasted to “opinions”, and cannot at all be defined in physical terms.  So far

1 Sometimes the German term Geisteswissenschaften is now used in English to describe the social sciences in the specific narrow sense with which we are here concerned.  But considering that this German term was introduced by the translator of J. S. Mill’s Logic to render the latter’s “moral sciences”, there seems to be little case for using this translation instead of the original English term.


as human actions are concerned the things are what the people acting think they are.

This is best shown by an example for which we can choose almost any object of human action.  Take the concept of a “tool” or “instrument”, or of any particular tool such as a hammer or a barometer.  It is easily seen that these concepts cannot be interpreted to refer to “objective facts”, i.e. to things irrespective of what people think about them.  Careful logical analysis of these concepts will show that they all express relationships between several (at least three) terms, of which one is the acting or thinking person, the other some desired or imagined effect, and the third a thing in the ordinary sense.  If the reader will attempt a definition he will soon find that he cannot give one without using some terms such as “suitable for” or “ intended for” or some other expression referring to the use for which it is designed by somebody. [1]  And a definition which is to comprise all instances of the class will not contain any reference to its substance, or shape, or other physical attribute.  An ordinary hammer and a steam-hammer, or an aneroid barometer and a mercury barometer, have nothing in common except the purpose for which men think they can be used.

It must not be objected that these are merely instances of abstractions to arrive at generic terms just as those used in the physical sciences.  The point is that they are abstractions from all the physical attributes of the things in question and that their definitions must run entirely in terms of mental attitudes of men towards the things.  The significant difference between the two views of the things stands out clearly if we think e.g. of the problem of the archaeologist trying to determine whether what looks like a stone implement is in truth an “artifact”, made by man, or merely a chance product of nature.  There is no way of deciding this but by trying to understand the working of the mind of prehistoric man, of attempting to understand how he would have made such an implement.  If we are not more aware that this is what we actually do in such cases and that we necessarily rely on our own knowledge of the working of a human mind, this is so mainly because of the difficulty (or impossibility) of conceiving of an observer who does not possess a human mind and interprets what he sees in terms of the working of his own mind.

1. It has often been suggested that for this reason economics and the other theoretical sciences of society should be described as “teleological” sciences.  This term is, however, misleading as it is apt to suggest that not only the actions of individual men but also the social structures which they produce are deliberately designed by somebody for a purpose.  It leads thus either to an “explanation” of social phenomena in terms of ends fixed by some superior power or to the opposite and no less fatal mistake of regarding all social phenomena as the product of conscious human design, to a “ pragmatic” interpretation which is a bar to all real understanding of these phenomena.  Some authors, particularly 0. Spann, have used the term “teleological” to justify the most abstruse metaphysical speculations.  Others, like K. Englis, have used it in an unobjectionable manner and sharply distinguished between “teleological” and “normative” sciences.  (See particularly the illuminating discussions of the problem in K. Englis, Teleologische Theorie der Wirischaft, Brünn, 1930.)  But the term remains nevertheless misleading.  If a name is needed the term “praxeological” sciences, deriving from A. Espinas, adopted by T. Kotarbinsky and E. Slutsky, and now clearly defined and extensively used by L. v. Mises (Nationalökonomie, Geneva, 1940) would appear to be the most appropriate.


There are no better terms available to describe this difference between the approach of the natural and the social sciences than to call the former objective and the latter subjective.  Yet these terms are ambiguous and without further explanation their use might prove misleading.  While for the natural scientist the contrast between objective facts and subjective opinions is a simple one, the distinction cannot as readily be applied to the object of the social sciences.  The reason for this is that the object, the “facts” of the social sciences are also opinions - not opinions of the student of the social phenomena, of course, but opinions of those whose actions produce his object.  In one sense his facts are thus as little “subjective” as those of the natural sciences, because they are independent of the particular observer; what he studies is not determined by his fancy or imagination but is equally given to the observation by different people.  But in another sense in which we distinguish facts from opinions the facts of the social sciences are merely opinions, views held by the people whose actions we study.  They differ from the facts of the physical sciences in being beliefs or opinions held by particular people, beliefs which as such are our data, irrespective of whether they are true or false, and which, moreover, we cannot directly observe in the minds of the people but recognise from what they do and say merely because we have ourselves a mind similar to theirs.

In the sense in which we here use the contrast between the subjectivist approach of the social sciences and the objectivist approach of the natural sciences it says little more than what is commonly expressed by saying that the former deal in the first instance with the phenomena of individual minds, or mental phenomena, and not directly with material phenomena.  They deal with phenomena which can be understood only because the object of our study has a mind of a structure similar to our own.  That this is so is no less an empirical fact than our knowledge of the external world.  It is shown not merely by the possibility of communicating with other people - we act on this knowledge every time we speak or write; it is confirmed by the very results of our study of the external world.  So long as it was naďvely assumed that all the sense qualities (or their relations) which different men had in common were properties of the external world it could be argued that our knowledge of other minds is no more than our common knowledge of the external world.  But once we have learnt that our senses make things appear to us alike or different which prove to be alike or different in none of their relations between themselves, but only in the way in which they affect our minds, this fact that men classify external stimuli in a particular way becomes a significant fact of experience.  While qualities disappear from our scientific picture of the external world they must remain part of our scientific picture of the human mind.  In fact the elimination of qualities from our picture of the external world does not mean that these qualities do not “exist”, but that when we study qualities we study not the physical world but the mind of man.


The reason why it is expedient to retain the terms “subjective” and “objective” for the contrast with which we are concerned, although they inevitably carry with them some misleading associations, is not only that the terms “mental” and material” carry with them an even worse burden of metaphysical associations and that at least in economics [1] the term “subjective” has long come to be used precisely in the sense in which we use it here.  What is more important is that the term “subjective” stresses another important fact to which we shall yet have to refer: that the knowledge and beliefs of different people, while possessing that common structure which makes communication possible, will yet be different and often conflicting in many respects.  If we could assume that all the knowledge and beliefs of different people were identical, or if we were concerned with a single mind, it would not matter whether we described it as an “objective” fact or as a subjective phenomenon.  But the concrete knowledge which guides the action of any group of people never exists as a consistent and coherent body.  It only exists in the dispersed, incomplete, and inconsistent form in which it appears in many individual minds and this dispersion and imperfection of all knowledge is one of the basic facts from which the social sciences have to start.  What philosophers and logicians often contemptuously dismiss as “mere” imperfections of the human mind becomes in the social sciences a basic fact of crucial importance.  We shall later see how the opposite “absolutist” view, as if knowledge, and particularly the concrete knowledge of particular circumstances, were given “objectively”, i.e. as if it were the same for all people, is a source of constant errors in the social sciences.

The “tool” or “instrument” which we have before used as an illustration of the objects of human action can be matched by similar instances from any other branch of social study.  A “word” or a “sentence”, a “crime” or a “punishment”, [2] are of course not objective facts in the sense that they can be defined without referring to our knowledge of people’s conscious intentions with regard to them.  And the same is true quite generally wherever we have to explain human behaviour towards things; these things must then not be defined in terms of what we might find out about these things by the objective methods of science, but in terms of what the person acting thinks about them.  A medicine or a cosmetic, e.g., for the purposes of social study, are not what cures an ailment or improves a person’s looks, but what people think will have that effect.  Any knowledge which we may happen to possess about the true nature of the material thing, but which the people whose action we want

1. I believe also in the discussions on psychological methods.

2. It is sheer illusion when some sociologists believe that they can make “crime” an objective fact by defining it as those acts for which a person is punished.  This only pushes the subjective element a step further back, but does not eliminate it.  “Punishment” is still a subjective thing which cannot be defined in objective terms.  If, e.g., we see that every time a person commits a certain act he is made to wear a chain round his neck, this does not tell us whether it is a reward or a punishment.


to explain do not possess, is as little relevant to the explanation of their actions as our private disbelief in the efficiency of a magic charm will help us to understand the behaviour of the savage who believes in it.  If in investigating our contemporary society the “laws of nature” which we have to use as a datum because they affect people’s actions are approximately the same as those which figure in the works of the natural scientists, this is for our purposes an accident which must not deceive us about the different character of these laws in the two fields.  What is relevant in the study of society is not whether these laws of nature are true in any objective sense, but solely whether they are believed and acted upon by the people.  If the current “scientific” knowledge of the society we study included the belief that the soil will bear no fruit till certain rites or incantations are performed, this would be quite as important for us as any law of nature which we now believe to be correct.  And all the “physical laws of production” which we meet, e.g., in economics, are not physical laws in the sense of the physical sciences but people’s beliefs about what they can do.

What is true about the relations of men to things is, of course, even more true of the relations between men, which for the purposes of social study cannot be defined in the objective terms of the physical sciences but only in terms of human beliefs.  Even such a seemingly purely biological relationship as that between parent and child is in social study not defined in physical terms and cannot be so defined  for their purposes: it makes no difference as regards people’s actions whether their belief that a particular child is their natural offspring is mistaken or not.

All this stands out most clearly in that among the social sciences whose theory has been most highly developed, economics.  And it is probably no exaggeration to say that every important advance in economic theory during the last hundred years was a further step in the consistent application of subjectivism. [1]  That the objects of economic activity cannot be defined in objective terms but only with reference to a human purpose goes without saying.  Neither a “commodity” or an “economic good”, nor “food” or “money”, can be defined in physical terms but only in terms of views people hold about things.  Economic theory has nothing to say about the little round disks of metal as which an objective or materialist view might try to define money.  It has nothing to say about iron or steel, timber or oil, or wheat or eggs as such.  The history of any particular

1. This is a development which has probably been carried out most consistently by L. v. Mises and I believe that most peculiarities of his views which at first strike many readers as strange and unacceptable are due to the fact that in that consistent development of the subjectivist approach he has for a long time moved ahead of his contemporaries.  Probably all the characteristic features of his theories, from his theory of money (so much ahead of his time in 1912!) to what he calls his a priorism, his views about mathematical economics in general and the measurement of economic phenomena in particular, and his criticism of planning all follow directly (although, perhaps, not all with the same necessity) from this central position.  See particularly his Grundprobleme der Nationalokonomie (Jena, 1933) and Nationalökonomie (Geneva, 1940).


commodity indeed shows that as human knowledge changes the same material thing may represent quite different economic categories.

Nor could we distinguish in physical terms whether two men barter or exchange or whether they are playing some game or performing some religious ritual.  Unless we can understand what the acting people mean by their actions any attempt to explain them, i.e., to subsume them under rules which connect similar situations with similar actions, are bound to fail.

This essentially subjective character of all economic theory, which it has developed much more clearly than any other branch of the social sciences, but which I believe it has in common with all the social sciences in the narrower sense, is best shown by a closer consideration of one of its simplest theorems, e.g., the “law of rent”.  In its original form this was a proposition about changes in the value of a thing defined in physical terms, namely land.  It stated, in effect, [1] that changes in the value of the commodities in the production of which land was required would cause much greater changes in the value of land than in the value of the other factors whose co-operation was required.  In this form it is an empirical generalisation which tells us neither why nor under what conditions it will be true.  In modern economics its place is taken by two distinct propositions of different character which combined lead to the same conclusion.  One is part of pure economic theory and asserts that whenever in the production of one commodity different (scarce) factors are required in proportions which can be varied, and of which one can be used only for this (or only for comparatively few) purposes while the others are of a more general usefulness, a change in the value of the product will affect the value of the former more than that of the latter.  The second proposition is the empirical statement that land is as a rule in the position of the first kind of factor, i.e. that people know of many more uses for their labour than they will know for a particular piece of land.  The first of these propositions, like all propositions of pure economic theory, is a statement about the implications of certain human attitudes towards things and as such necessarily true irrespective of time and place.  The second is an assertion that the conditions postulated in the first exist at a given time and with respect to a particular piece of land because the people dealing with it hold certain beliefs about its usefulness and the usefulness of other things required in order to cultivate it.  As an empirical generalisation it can of course be disproved and frequently will be disproved.  If, e.g., a piece of land is used to produce some special fruit the cultivation of which requires a certain rare skill, the effect of a fall in the demand for the fruit may fall exclusively on the wages.

1. In the extreme Ricardian form the statement is, of course, that a change in the value of the product will affect only the value of the land and leave the value of the co-operating labour altogether unaffected.  In this form (connected with Ricardo’s “objective” theory of value) the proposition can be regarded as a limiting case of the more general proposition given in the text


of the men with the special skill, while the value of the land may remain practically unaffected.  In such a situation it would be labour to which the “law of rent” applies.  But when we ask “why?” or: “how can I find out whether the law of rent will apply in any particular case?”, no information about the physical attributes of the land, the labour, or the product can give us the answer.  It depends on the subjective factors stated in the theoretical law of rent; and only in so far as we can find out what the knowledge and beliefs of the people concerned are in the relevant respects shall we be in a position to predict in what manner a change in the price of the product will affect the prices of the factors.  What is true of the theory of rent is true of the theory of price generally: it has nothing to say about the behaviour of the price of iron or wool, of things of such and such physical properties, but only about things about which people have certain beliefs and which they want to use in a certain manner.  And our explanation of a particular price phenomenon can therefore also never be affected by any additional knowledge which we (the observers) acquire about the good concerned, but only by additional knowledge about what the people dealing with it think about it.

We cannot here enter into a similar discussion of the more complex phenomena with which economic theory is concerned and where in recent years progress has been particularly closely connected with the advance of subjectivism.  We can only point to the new problems which these developments make appear more and more central, such as the problem of the compatibility of intentions and expectations of different people, of the division of knowledge between them, and the process by which the relevant knowledge is acquired and expectations formed. [1] We are not here concerned, however, with the specific problems of economics, but with the common character of all disciplines which deal with the results of conscious human action.  The points which we want to stress are that in all such attempts we must start from what men think and mean to do, from the fact that the individuals which compose society are guided in their actions by a classification of things or events in a system of sense qualities and concepts which has a common structure and which we know because we, too, are men, and that the concrete knowledge which different individuals possess will differ in important respects.  Not only man’s action towards external objects but also all the relations between men and all the social institutions can be understood only in terms of what men think about them.  Society as we know it is, as it were, built up from the concepts and ideas held by the people; and social phenomena can be recognised by us and have meaning to us only as they are reflected in the minds of men.

The structure of men’s mind, the common principle on which they

1. For some discussion of these problems see the author’s article “Economics and Knowledge”, Economica, February 1937.


classify external events, provide us with the knowledge of the recurrent elements of which different social structures are built up and in terms of which we can alone describe and explain them.  While concepts or ideas can, of course, exist only in individual minds, and while, in particular, it is only in individual minds that different ideas can act upon another, it is not the whole of the individual minds in all their complexity, but the individual concepts, the views people have formed of each other and the things, which form the true elements of the social structure.  If the social structure can remain the same although different individuals succeed each other at particular points, this is not because the individuals which succeed each other are completely identical, but because they succeed each other in particular relations, in particular attitudes they take towards other people and as the objects of particular views held by other people about them.  The individuals are merely the foci in the network of relationships and it is the various attitudes of the individuals towards each other (or their similar or different attitudes towards physical objects) which form the recurrent, recognisable and familiar elements of the structure.  If one policeman succeeds another at a particular post, this does not mean that the new man will in all respects be identical with his predecessor, but merely that he succeeds him in certain attitudes towards his fellow man and as object of certain attitudes of his fellow men which are relevant to his function as policeman.  But this is sufficient to preserve a constant structural element which can be separated and studied in isolation.

While we can recognise these elements of human relationships only because they are known to us from the working of our own minds, this does not mean that the significance of their combination in a particular pattern relating different individuals must be immediately obvious to us.  It is only by the systematic and patient following up of the implications of many people holding certain views that we can understand, and often even only learn to see, the unintended and often uncomprehended results of the separate and yet interrelated actions of men in society.  That in this effort to reconstruct these different patterns of social relations we must relate the individual’s action not to the objective qualities of the persons and things towards which he acts, but that our data must be man and the physical world as they appear to the men whose actions we try to explain, follows from the fact that only what people know or believe can enter as a motive into their conscious action.


IV - Subjectivism

At this point it becomes necessary to interrupt the main argument for a little in order to safeguard ourselves against a misconception which might arise from what has just been said.  The stress which we have laid on the fact that in the social sciences our data or “facts” are themselves ideas or concepts must, of course, not be understood


to mean that all the concepts with which we have to deal in the social sciences are of this character.  There would be no room for any scientific work if this were so; and the social sciences no less than the natural sciences aim at revising the popular concepts which men have formed about the objects of their study, and at replacing them by more appropriate ones.  The special difficulties of the social sciences and much confusion about their character derive precisely from the fact that in them ideas appear in two capacities, as it were, as part of their object and as ideas about the object.  While in the natural sciences the contrast between the object of our study and our explanation of it coincides with the distinction between ideas and objective facts, in the social sciences it is necessary to draw a distinction between those ideas which are constitutive of the phenomena we want to explain and the ideas which either we ourselves or the very people whose actions we have to explain may have formed about these phenomena and which are not the cause of, but theories about, the social structures.

This special difficulty of the social sciences is a result not merely of the fact that we have to distinguish between the views held by the people which are the object of our study and our views about them, but also from the fact that the people who are our object themselves not only are motivated by ideas but also form ideas about the undesigned results of their actions - popular theories about the various social structures or formations which we share with them and which our study has to revise and improve.  The danger of substituting “concepts” (or “theories”) for the “facts” is by no means absent in the social sciences and failure to avoid it has exercised as detrimental an effect here as in the natural sciences [1] ; but it appears on a different plane and is very inadequately expressed by the contrast between “ideas” and “facts”.  The real contrast is between ideas which by being held by the people become the causes of a social phenomenon and the ideas which people form about that phenomenon.  That these two classes of ideas are distinct (although in different contexts the distinction may have to be drawn differently [2] can easily be shown.  The changes in the opinions which people hold about a particular commodity and which we recognise as the cause of a change in the price of that commodity stand clearly in a different class from the ideas which the same people may have formed about the causes of the change in price or about

1 Cf. the excellent discussions of the effects of Begriffsrealismus on economics in W. Eucken, Die Grundlagen der Nasionalôkononiie, Jena, 5940, pp. 29 et seq.

2. In some contexts concepts which by another social science are treated as mere theories to be revised and improved upon may have to be treated as data.  One could, e.g., conceive of a “science of politics” showing what kind of political action follows from the people holding certain views on the nature of society and for which these views would have to be treated as data.  But while in man’s actions towards social phenomena, i.e. in explaining his political actions, we have to take his views about the constitution of society as given, we can on a different level of analysis investigate their truth or untruth.  The fact that a particular society may believe that its institutions have been created by divine intervention we would have to accept as a fact in explaining the politics of that society but it need not prevent us from showing that this view is probably false.


the “nature of value” in general.  Similarly, the beliefs and opinions which lead a number of people regularly to repeat certain acts, e.g. to produce, sell, or buy certain quantities of commodities, are entirely different from the ideas they may have formed about the whole of the “society”, or the “economic system”, to which they belong and which the aggregate of all their actions constitutes.  The first kind of opinions and beliefs are a condition of the existence of the “wholes” which would not exist without them; they are, as we have said, “constitutive”, essential for the existence of the phenomenon which the people refer to as “society” or the “economic system”, but which will exist irrespectively of the concepts which the people have formed about these wholes.

It is very important that we should carefully distinguish between the motivating or constitutive opinions on the one hand and the speculative or explanatory views which people have formed about the wholes; confusion between the two is a source of constant danger.  It is the ideas which the popular mind has formed about such collectives as “society” or the “economic system”, “capitalism” or “imperialism”, and other such collective entities, which the social scientist must regard as no more than provisional theories, popular abstractions, and which he must not mistake for facts.  That he consistently refrains from treating these pseudo-entities as “facts”, and that he systematically starts from the concepts which guide individuals in their actions and not from the results of their theorising about their actions, is the characteristic feature of that methodological individualism which is closely connected with the subjectivism of the social sciences.  The scientistic approach, on the other hand, because it is afraid of starting from the subjective concepts determining individual actions, is, as we shall presently see, regularly led into the very mistake it attempts to avoid, that of treating as facts those collectives which are no more than popular generalisations.  Trying to avoid using as data the concepts held by individuals where they are clearly recognisable and explicitly introduced as what they are, people brought up in scientistic views frequently and naďvely accept the speculative concepts of popular usage as definite facts of the kind they are familiar with.

We shall have to discuss the nature of this collectivist prejudice inherent in the scientistic approach more fully in a later section.

A few more remarks must be added about the specific theoretical method which corresponds to the systematic subjectivism and individualism of the social sciences.  From the fact that it is the concepts and views held by individuals which are directly known to us and which form the elements from which we must build up, as it were, the more complex phenomena follows another important difference between the method of the social disciplines and the natural sciences.  While in the former it is the attitudes of individuals which are the familiar elements and by the combination


of which we try to reproduce the complex phenomena, the results of individual actions, which are much less known - a procedure which often leads to the discovery of principles of structural coherence of the complex phenomena which had not (and perhaps could not) be established by direct observation - the physical sciences must needs commence with the complex phenomena of nature and work backwards to infer the elements from which they are composed.  The place where the human individual stands in the order of things brings it about that in one direction what he perceives are the comparatively complex phenomena which he analyses, while in the other direction what is given to him are elements from which more complex phenomena are composed which he cannot observe as wholes. [1]  While the method of the natural sciences is in this sense analytic, the method of the social sciences is better described as compositive [2] or synthetic.  It is the so-called wholes, the groups of elements which are structurally connected, which we learn to single out from the totality of observed phenomena only as a result of our systematic fitting together of the elements with familiar properties, and which we build up or reconstruct from the known properties of the elements.

It is important to observe that in all this the various types of individual beliefs or attitudes are not themselves the object of our explanation,

1. Cf. Robbins, An Essay on the Nature and Significance of Economic Science, and ed., 1935, p.105: “In Economics… the ultimate constituents of our fundamental generalisations are known to us by immediate acquaintance.  In the natural sciences they arc known only inferentially.”  Perhaps the following quotation from an earlier essay of my own (Collective Economic Planning, 1935, p.ii) may help further to explain the statement in the text: “The position of man, midway between natural and social phenomena - of the one of which he is an effect and of the other a cause - brings it about that the essential basic facts which we need for the explanation are part of common experience, part of the stuff of our thinking.  In the social sciences it is the elements of the complex phenomena which are known to us beyond the possibility of dispute.  In the natural sciences they can be at best surmised.”  Cf. also C. Menger, Unsersuchungen uber die Methoden der Socialwissenschaften, 1883, p.157, note : [HHC: long German footnote not reproduce here.]

2. I borrow the term “ compositive” from a manuscript note of Carl Menger who in his personal annotated copy of Schmoller’s review of his Methoden der Socialwissenschaften (Jahrbuch für Gesezgebung. etc., N.F., 7, 1883, p. 42) wrote it above the word “deductive” used by Schmoller.


but merely the elements from which we build up the structure of possible relationships between individuals.  In so far as we analyse individual thought in the social sciences the purpose is not to explain that thought but merely to distinguish the possible types of elements with which we shall have to reckon in the construction of different patterns of social relationships.  It is a mistake, to which careless expressions by social scientists often give countenance, to believe that their aim is to explain conscious action.  This, if it can be done at all, is a different task, the task of psychology.  For the social sciences the types of conscious action are data [1] and all they have to do with regard to these data is to arrange them in such orderly fashion that they can be effectively used for their task. [2]  The problems which they try to answer arise only in so far as the conscious action of many men produce undesigned results, in so far as regularities are observed which are not the result of anybody’s design.  If social phenomena showed no order except in so far as they were consciously designed, there would indeed be no room for theoretical sciences of society and there would be, as is often argued, only problems of psychology.  It is only in so far as some sort of order arises as a result of individual action but without being designed by any individual that a problem is raised which demands a theoretical explanation.  But although people dominated by the scientistic prejudice are often inclined to deny the existence of any such order (and thereby the existence of an object for theoretical sciences of society), few if any would be prepared to do so consistently that at least language shows a definite order which is not the result of any conscious design can scarcely be questioned.

The reason of the difficulty which the natural scientist experiences in admitting the existence of such an order in social phenomena is that these orders cannot be stated in physical terms, that if we define the elements in physical terms no such order is visible, and that the units which show an orderly arrangement do not (or at least need not) have any physical properties in common (except that men react to them in the same” way - although the  sameness” of different people’s reaction will again, as a rule, not be definable in physical terms).  It is an order in which things behave in the same way because they mean the same thing to man.  If, instead of regarding as alike and unlike what appears so to the acting man, we were to take for our units only what Science shows to be alike or unlike, we should probably find no recognisable order whatever in social phenomena –

1. As Robbins (i.e., p. 6) rightly says, economists in particular regard “the things which psychology studies as the data of their own deductions.”

2. That this task absorbs a great part of the economist’s energies should not deceive us on the fact that by itself this “pure logic of choice” (or “economic calculus”) does not explain any facts.  For the precise relationship between the pure theory of the economic calculus and its use in the explanation of social phenomena I must once more refer to my article “Economics and Knowledge” (Economica, February, 1937).  It should perhaps be added that while economic theory might be very useful to the director of a completely planned system in helping him to see what he ought to do to achieve his ends, it would not help us to explain his actions - except in so far as he was actually guided by it.


at least not till the natural sciences had completed their task of analysing all natural phenomena into their ultimate constituents and psychology had also fully achieved the reverse task of explaining in all detail how the ultimate units of physical science come to appear to man just as they do, i.e. how that apparatus of classification operates which our senses constitute.

It is only in the very simplest instances that it can be shown briefly and without any technical apparatus how the independent actions of individuals will produce an order which is no part of their intentions; and in those instances the explanation is usually so obvious that we never stop to examine the type of argument which leads us to it.  The way in which tracks are formed in a wild broken country is such an instance.  At first everyone will seek for himself what seems to him the best path.  But the fact that such a path has been used once is likely to make it easier to traverse and therefore more likely to be used again ; and thus gradually more and more clearly defined tracks arise and come to be used to the exclusion of other possible ways.  Human movements through the district come to conform to a definite pattern which, although the result of deliberate decisions of many people, has yet not been consciously designed by anyone.  This explanation of how this happens is an elementary “theory” applicable to hundreds of particular historical instances; and it is not the observation of the actual growth of any particular track, and still less of many, from which this explanation derives its cogency, but from our general knowledge of how we and other people behave in the kind of situation in which the successive people find themselves who have to seek their way and who by the cumulative effect of their action create the path.  It is the elements of the complex of events which are familiar to us from everyday experience, but it is only by a deliberate effort of directed thought that we come to see the necessary effects of the combination of such actions by many people.  We “understand” the way in which the result we observe can be produced, although we may never be in a position to watch the whole process or to predict its precise course and result. [1]

The physicist who wishes to understand the problems of the social sciences with the help of an analogy from his own field would have

1. It makes no difference for our present purpose whether the process extends over a long period of time as it does in such cases as the evolution of money or the formation of language, or whether it is a process which is constantly repeated anew as in the case of the formation of prices or the direction of production under competition.  The former instances raise theoretical (i.e. generic) problems (as distinguished from the specifically historical problems in the precise sense which we shall have to define later) which are fundamentally similar to the problems raised by such recurring phenomena as the determination of prices.  Although in the study of any particular instance of the evolution of an “institution” like money or the language the theoretical problem will frequently be so overlaid by the consideration of the particular circumstances involved (the properly historical task), this does not alter the fact that any explanation of a historical process involves assumptions about the kind of circumstances that can produce certain kinds of effects - assumptions which, where we have to deal with results which were not directly willed by somebody, can only be stated in the form of a generic scheme, in other words a theory.


to imagine a world in which he knew by direct observation the inside of the atoms and had neither the possibility of making experiments with lumps of matter nor opportunity to observe more than the interactions of a comparatively few atoms during a limited period.  From his knowledge of the different kinds of atoms he could build up models of all the various ways in which they could combine into larger units and make these models more and more closely reproduce all the features of the few instances in which he was able to observe more complex phenomena.  But the laws of the macrocosm which he could derive from his knowledge of the microcosm would always remain deductive”; they would, because of his limited knowledge of the data of the complex situation, scarcely ever enable him to predict the precise outcome of a particular situation; and he could never verify them by controlled experiment - although they might be disproved by the observation of events which according to his theory are impossible.

In a sense some problems of theoretical astronomy are more similar to those of the social sciences than those of any of the experimental sciences.  Yet there remain important differences.  While the astronomer aims at knowing all the elements of which his universe is composed, the student of social phenomena cannot hope to know more than the types of elements from which his universe is made up.  He will scarcely ever even know of all the elements of which it consists and he will certainly never know all the relevant properties of each of them.  The inevitable imperfection of the human mind becomes here not only a basic datum about the object of explanation but, since it applies no less to the observer, also a limitation on what he can hope to accomplish in his attempt to explain the observed facts.  The number of separate variables which in any particular social phenomenon will determine the result of a given change will as a rule be far too large for any human mind to master and manipulate them effectively. 1  In consequence our knowledge of the principle by which these phenomena are produced will rarely if ever enable us to predict the precise result of any concrete situation.  While we can explain the principle on which certain phenomena are produced and can from this knowledge exclude the possibility of certain results, e.g. of certain events occurring together, our knowledge will in a sense be only negative, i.e. it will merely enable us to preclude certain results but not enable us to narrow the range of possibilities sufficiently so that only one remains.

The distinction between an explanation merely of the principle on which a phenomenon is produced and an explanation which enables us to predict the precise result is of great importance for the under-

1. Cf. M. R. Cohen, Reason and Nature, p. 356 “If, then, social phenomena depend upon more factors than we can readily manipulate, even the doctrine of universal determinism will not guarantee an attainable expression of laws governing the specific phenomena of social life.  Social phenomena, though determined, might not to a finite mind in limited time display any laws at all.”


standing of the theoretical methods of the social sciences.  It arises, I believe, also elsewhere, e.g. in biology, and certainly in psychology.  It is, however, somewhat unfamiliar and I know no place where it is adequately explained.  The best illustration in the field of the social sciences is probably the general theory of prices as represented, e.g., by the Walrasian or Paretian systems of equations.  These systems show merely the principle of coherence between the prices of the various types of commodities of which the system is composed, but without knowledge of the numerical values of all the constants which occur in it and which we never do know, this does not enable us to predict the precise results which any particular change will have. [1]  Quite apart from this particular case, a set of equations which shows merely the form of a system of relationships but does not give the values of the constants contained in it, is perhaps the best general illustration of an explanation merely of the principle on which any phenomenon is produced.

This must suffice as a positive description of the characteristic problems of the social sciences.  It will become clearer as we contrast in the following sections the specific procedure of the social sciences with the most characteristic aspects of the attempts to treat their object after the fashion of the natural sciences.


(To be continued.)

1. Pareto himself has clearly seen this.  After stating the nature of the factors determining the prices in his system of equations, he adds (Manuel d’écoomie politique, 2nd ed., pp. 233-4): “It may be mentioned here that this determination has by no means the purpose of arriving at a numerical calculation of prices.  Let us make the most favourable assumptions for such a calculation; let us assume that we have triumphed over all the difficulties: of finding the data of the problem and that we know the ophélimités of all the different commodities for each individual, and all the conditions of production of all the commodities, etc.  This in already an absurd hypothesis to make.  Yet it is not sufficient to make the solution of the problem possible.  We have seen that in the case of 1oo persons and 700 commodities there will be 70,699 conditions (actually a great number of circumstances which we have so far neglected will still increase that number) we shall, therefore, have to solve a system of 70,699 equations.  This exceeds practically the power of algebraic analysis, and this is even more true if one contemplates the fabulous number of equations which one obtains for a population of forty millions and several thousand commodities.  In this case the roles would be changed: it would not be mathematics which would assist political economy, but political economy which would assist mathematics.  In other words, if one really could know all these equations, the only means to solve them which is available to human powers is to observe the practical solution given by the market.”  Compare also A. Cournot, Researches into the Mathematical Principles ef the Theory of Wealth (1938), trs. by N. T. Bacon, New York, 1927, p. 127, where he says that if in our equations we took the entire economic system into consideration “this would surpass the powers of mathematical analysis and of our practical methods of calculation. even if the values of all the constants could be assigned to the numerically.”