Economics is not a natural science. Unlike physics, you cannot reliably say things like:
For a fixed amount of an ideal gas kept at a fixed temperature, P [pressure] and V [volume] are inversely proportional.
(That is, halve the volume and the pressure will double.)
Unfortunately, many economists and other social scientists think otherwise. Some believe the individual actions of large numbers of humans can be treated mechanistically. They use terms like “aggregate demand” as if the actions and aspirations of millions of individual people should be averaged. In “Human Action”, von Mises argued otherwise.
The Ludwig von Mises Institute explains further:
The opinions of economists are not random. They can be classified into schools of thought, and to schools within schools. It’s too bad that the radio and television announcers can’t just say this before the economist ever opens his mouth.
“Now we have a word from Professor Jones, who was trained according to the Keynesian tradition, and advocates Keynesian-style policies as dictated by a Keynesian model.”
Or, “Now we turn to Professor Smith, who adheres to a Marxian paradigm that regards capitalism as a moral outrage that is destined to collapse according to the implacable laws of history.”
Or, “Professor Walker is a Chicago-school economist who generally appreciates markets but believes in monetary intervention based on a positivist understanding of economic method.”
But of course the economists themselves do not want to be so classified. They would rather be seen as objective scientists — and anyone who disagrees with them to be guilty of fallacy or to be inadequately familiar with empirical reality.
So we begin to understand the character of the present economic debate: participants state their opinions as facts and deride opponents as fools, when such an approach is not justified. Economics is necessary and difficult, but it does not produce reliable scientific laws.
The Institute has produced a quiz which highlights the differences between the Austrian School and the other key schools of thought (Marxist/institutionalist, Keynesian/neoclassical and Chicago/RatEx). The question is, Are you an Austrian?