Some Hume-ility for the Austrian Economists
Back when I was studying Liberal Arts at Dawson College, I learned about a Scotsman who proved that you couldn’t prove anything. His name was David Hume, he lived in the 1700s, and he argued that all knowledge is inductive and empirical, that is to say, we only know anything from experience: if we see a hundred zebras with stripes, we can only make an educated guess that the next one we see will have stripes too. I remember reading Bertrand Russell’s 1945 book A History of Western Philosophy, where he said that nobody has ever disproved Hume’s epistemology, and I’m pretty sure that assessment has held up.
I didn’t really know it until recently, but I am a Humean. And apparently, I’m in good company. Nobel prize-winning economist Paul Krugman has listed Hume’s An Enquiry into Human Understanding as one of his major inspirations, which he read in college:
Then I read Hume’s Enquiry, this wonderful, humane book saying that nobody has all the answers. What we know is what we have evidence for. We do the best we can, but anybody who claims to be able to deduce or have revelation about The Truth – with both Ts capitalised – is wrong. It doesn’t work that way. The only reasonable way to approach life is with an attitude of humane scepticism. I felt that a great weight had been lifted from my shoulders when I read that book…. You look at people who are very certain, and have these beliefs of one form or another and you think, “Maybe they really know something!” And what Hume says is, “Actually, no. They don’t.”
Krugman argues forcefully for various economic policies in his columns, but I think that he would admit that his knowledge is provisional, and based on experience, rather than immutable truths. In this way, he’s like the man who inspired him, John Maynard Keynes. As The New Yorker’s John Cassidy wrote of Keynes:
At the heart of his vision, however, there is an elusive combination of boldness and humility. It calls not merely for the management of risk but for something politically and intellectually far more demanding: the acknowledgment of uncertainty.
And where did Keynes find his inspiration? Not from Karl Marx: Keynes (correctly) called Marxism “complicated hocus pocus.” No, Keynes built on the economic thought of another British empiricist, Adam Smith. And from where did Smith derive his empiricism? From his good friend and fellow Scotsman David Hume.
Right-wing economists could use some Hume-ility. Instead, however, they seem to have embraced the absolutism of the Austrians, particularly Friedrich Hayek and Ludwig von Mises. As my free-market friend Josh notes:
There are two big reasons today’s right loves the Austrians. One is that Austrian economists reject empirical analysis, and instead believe that you can reach conclusions about correct economic policies from a priori principles. It’s philosophy dressed up as economics; with the Austrians, there is never any risk that real-world events will interfere with your ideology.
The other big advantage is that the main Austrian thinkers, Friedrich Hayek and Ludwig von Mises, are dead, so they can’t argue with your interpretation of their work. This is especially important with Hayek, who got sort of squishy later in life.
Josh compares the Austrian economists to philosophers. But, as with the “Objectivism” of Ayn Rand, I think the better analogy is to religion. Followers of the Austrian economists and of Objectivism, some of whom are genuinely smart people, hold fast to their ideologies with the fervor of religious zealots. As I’ve argued before, this phenomenon isn’t limited to the Left: I’ve met many intelligent academics who deny or fail to see the religious nature of their attachment to Marx and Marxism. I firmly believe that nobody should be that certain about anything, and certainly not about everything. The more a theory purports to explain, the more it morphs from theory to religion, and the less I trust it.
That’s why I like Hume so much–his humility. Humean empiricism is fundamentally a Socratic epistemology: the only thing we know for certain is that we know nothing. From that humble premise we can build experience and hope to make our way in the world. It’s not saying much, but it’s the best that we have.