The Hermeneutical Invasion

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article originally appeared in Review
of Austrian Economics 3
(1989): 45-59 (available
in PDF
) and was adapted from a paper delivered at a Conference
on Recent Trends in the Social Sciences held by the London Academic
and Cultural Resources Fund and the Institute of Philosophy
of the Jagellonian University of Krakow at Krakow, Poland, in
April 1987.


In recent
years, economists have invaded other intellectual disciplines
and, in the dubious name of “science,” have employed staggeringly
oversimplified assumptions in order to make sweeping and provocative
conclusions about fields they know very little about. This is
a modern form of “economic imperialism” in the realm of the intellect.
Almost always, the bias of this economic imperialism has been
quantitative and implicitly Benthamite, in which poetry and pushpin
are reduced to a single level, and which amply justifies the gibe
of Oscar Wilde about cynics, that they (economists) know the price
of everything and the value of nothing. The results of this economic
imperialism have been particularly ludicrous in the fields of
sex, the family, and education.

So why then
does the present author, not a Benthamite, now have the temerity
to tackle a field as arcane, abstruse, metaphysical, and seemingly
unrelated to economics as hermeneutics? Here my plea is the always
legitimate one of self-defense. Discipline after discipline, from
literature to political theory to philosophy to history, have
been invaded by an arrogant band of hermeneuticians, and now even
economics is under assault. Hence, this article is in the nature
of a counterattack.

To begin,
the dictionary definition of hermeneutics is the age-old discipline
of interpreting the Bible. Until the 1920s or 1930s, indeed, hermeneutics
was confined to theologians and departments of religion. But things
changed with the advent of the murky German doctrines of Martin
Heidegger, the founder of modern hermeneutics. With the death
of Heidegger, the apostolic succession of head of the hermeneutical
movement fell upon his student, Hans-Georg Gadamer, who still
wears this mantle.

The greatest
success of the hermeneutical movement has been achieved in recent
decades, beginning in the closely related movement of “deconstructionism”
in literary criticism. Headed by the French theorists Michel Foucault,
Paul Ricoeur, and Jacques Derrida, deconstructionism in the Western
Hemisphere is led by the formidable Department at Yale University,
from which it has spread to conquer most of the English-literature
departments in the United States and Canada. The essential message
of deconstructionism and hermeneutics can be variously summed up
as nihilism, relativism, and solipsism. That is, either there is
no objective truth or, if there is, we can never discover it. With
each person being bound to his own subjective views, feelings, history,
and so on, there is no method of discovering objective truth. In
literature, the most elemental procedure of literary criticism (that
is, trying to figure out what a given author meant to say) becomes
impossible. Communication between writer and reader similarly becomes
hopeless; furthermore, not only can no reader ever figure out what
an author meant to say, but even the author does not know or understand
what he himself meant to say, so fragmented, confused, and driven
is each particular individual. So, since it is impossible to figure
out what Shakespeare, Conrad, Plato, Aristotle, or Machiavelli meant,
what becomes the point of either reading or writing literary or
philosophical criticism?

It is an
interesting question, one that the deconstructionists and other
hermeneuticians have of course not been able to answer. By their
own avowed declaration, it is impossible for deconstructionists
to understand literary texts or, for example, for Gadamer to understand
Aristotle, upon whom he has nevertheless written on at enormous
length. As the English philosopher Jonathan Barnes has pointed
out in his brilliant and witty critique of hermeneutics, Gadamer,
not having anything to say about Aristotle or his works, is reduced
to reporting his own subjective musings – a sort of lengthy
account of “what Aristotle means to me.” Setting aside the hermeneutical
problem of whether or not Gadamer can know even what
Aristotle means to him, we push back the problem another notch.
Namely, why in the world should anyone but Gadamer, except possibly
his mother or wife, be in the least interested in the question
of what Aristotle means to him? And even in the improbable event
that we were interested in this earth-shattering question,
we would in any case be prevented on hermeneutical principles
from understanding Gadamer’s answer.

and hermeneutics are clearly self-refuting on many levels. If
we cannot understand the meaning of any texts, then why are we
bothering with trying to understand or to take seriously the works
or doctrines of authors who aggressively proclaim their own incomprehensibility?


Indeed, a crucial
point about the hermeneuticians is that, for them, incomprehensibility
is a self-fulfilling prophecy. As a colleague of mine ruefully told
me: “I have read everything on hermeneutics I can lay my hands on,
and I understand no more about it than I did when I first started.”
Even in a profession – philosophy – not exactly famous
for its sparkle or lucidity, one of the most remarkable qualities
of the hermeneuticians is their horrendous and incomparably murky
style. Stalactites and stalagmites of jargon words are piled upon
each other in a veritable kitchen midden of stupefying and meaningless
prose. Hermeneuticians seem to be incapable of writing a clear English,
or indeed a clear German sentence. Critics of hermeneutics –
such as Jonathan Barnes or David Gordon[1]
– are understandably moved to satire, to stating or quoting
hermeneutical tracts and then “translating” them into simple English,
where invariably they are revealed as either banal or idiotic.

At first,
I thought that these German hermeneuticians were simply ill-served
by their translators into English. But my German friends assure
me that Heidegger, Gadamer, et al. are equally unintelligible
in the original. Indeed, in a recently translated essay, Eric
Voegelin, a philosopher not normally given to scintillating wit,
was moved to ridicule Heidegger’s language. Referring to Heidegger’s
master work, Sein und Zeit (Being and Time), Voegelin
refers to the meaningless but insistent repetition of a veritable
philosophical dictionary of phrases as the Anwesen des Answesenden
(“the presence of that which is present”), the Dingen des
Dings (“the thinging of the thing”), the Nichten des
Nichts (“the nothinging of the nothing”), and finally to
the zeigenden Zeichen des Zeigzeugs (“the Pointing sign
of the pointing implement”), all of which is designed, says Voegelin,
to whip up the reader “into a reality-withdrawing state of linguistic

On Gadamer
and the hermeneuticians, Jonathan Barnes writes:

What, then,
are the characteristic features of hermeneutical philosophy?
Its enemies will wade in with adjectives like empty, vapid,
dreamy, woolly, rhetorical. Gadamer himself tells an uncharacteristic
story. At the end of a seminar on Cajetan, Heidegger once startled
his devoted audience by posing the question: “What is being?”
“We sat there staring and shaking our heads over the absurdity
of the question.” Quite right too, say the enemies of hermeneutics:
the question is perfectly absurd. But Gadamer has only a frail
sense of the absurd, and his own readers ought to react as he
once – but alas, only once – reacted to Heidegger.

Barnes goes
on to say that Gadamer admits “that his thought has sometimes
been less than pellucid.” He further quotes Gadamer as saying:

I sometimes spoke over my pupils’ heads and put too many complications
into my train of thought. Even earlier my friends had invented
a new scientific measure, the “Gad,” which designated a settled
measure of unnecessary complications.

Barnes adds

Some may
prefer to this self-congratulatory little story a remark which
Gadarner makes of his younger self: “Despite my title of doctor,
I was still a 22-year-old boy who thought rather murky thinking,
and who still did not really know what was going on.”

Barnes adds:
“Did the boy ever grow up?”[3]

At this point
we may cite Sir Karl Popper on G.W.F. Hegel, who counts along
with Friedrich Schleiermacher as at least a great-grandfather
of hermeneutics. What Popper lacks in satiric gifts he makes up
in the vehemence of the scorn that he heaps upon the legion of
his philosophical enemies, real or imagined. After denouncing
Hegel’s “high-flown gibberish” and “imbecile fancies,” Popper
quotes with obvious relish the attack on Hegel by his contemporary
Schopenhauer as:

a flat-headed,
insipid, nauseating, illiterate charlatan, who reached the pinnacle
of audacity in scribbling together and dishing up the craziest
mystifying nonsense. This nonsense has been noisily proclaimed
as immortal wisdom by mercenary followers and readily accepted
as such by all fools, who thus joined into as perfect a chorus
of admiration as had ever been heard before.[4]

Why this
enormous acclaim and influence exerted by mystifying nonsense?
In addition to noting its establishment in the interests of the
Prussian state, Popper offers the following explanation:

For some
reason, philosophers have kept around themselves, even in our
day, something of the atmosphere of the magician. Philosophy
is considered a strange and abstruse kind of thing, dealing
with those mysteries with which religion deals, but not in a
way which can be “revealed unto babes” or to common people;
it is considered to be too profound for that, and to be the
religion and theology of the intellectuals, of the learned and

For a final
citation on the incomprehensibility of hermeneutics, let us turn
to the witty and devastating demolition by H.L. Mencken of Thorstein
Veblen, another early protohermeneutician and an institutionalist
opponent of the idea of economic law. In the course of an essay
featuring the “translation” into English of Veblen’s indecipherable
prose, Mencken wrote that what was truly remarkable about Veblen’s

was the
astoundingly grandiose and rococo manner of their statement,
the almost unbelievable tediousness and flatulence of the gifted
headmaster’s prose, his unprecedented talent for saying nothing
in an august and heroic manner….

Marx, I
daresay, had said a good deal of it long before him, and what
Marx overlooked had been said over and over again by his heirs
and assigns. But Marx, at this business, labored under a technical
handicap; he wrote in German, a language he actually understood.
Prof. Veblen submitted himself to no such disadvantage. Though
born, I believe, in these States, and resident here all his
life, he achieved the effect, perhaps without employing the
means, of thinking in some unearthly foreign language –
say Swahili, Sumerian or Old Bulgarian – and then painfully
clawing his thoughts into a copious and uncertain but book-learned
English. The result was a style that affected the higher cerebral
centers like a constant roll of subway expresses. The second
result was a sort of bewildered numbness of the senses, as before
some fabulous and unearthly marvel. And the third result, if
I make no mistake, was the celebrity of the professor as a Great


Marx, in fact,
has been hailed by the hermeneuticians as one of the grandfathers
of the movement. In 1985, for example, at the annual meeting of
the Western Political Science Association in Las Vegas, virtually
every paper offered in political theory was a hermeneutical one.
A paradigmatic title would be “Political Life as a Text: Hermeneutics
and Interpretation in Marx, Heidegger, Gadamer, and Foucault.” (Substitute
freely such names as Ricoeur and Derrida, with an occasional bow
to Habermas.)

I do not
believe it an accident that Karl Marx is considered one of the
great hermeneuticians. This century has seen a series of devastating
setbacks to Marxism, to its pretensions to “scientific truth,”
and to its theoretical propositions as well as to its empirical
assertions and predictions. If Marxism has been riddled both in
theory and in practice, then what can Marxian cultists fall back
on? It seems to me that hermeneutics fits very well into an era
that we might, following a Marxian gambit about capitalism, call
“late Marxism” or Marxism-in-decline. Marxism is not true and
is not science, but so what? The hermeneuticians tell us that
nothing is objectively true, and therefore that all views and
propositions are subjective, relative to the whims and feelings
of each individual.

So why should
Marxian yearnings not be equally as valid as anyone else’s? By
the way of hermeneutics, these yearnings cannot be subject to
refutation. And since there is no objective reality, and since
reality is created by every man’s subjective interpretations,
then all social problems reduce to personal and nonrational tastes.
If, then, hermeneutical Marxists find capitalism ugly and unlovely,
and they find socialism beautiful, why should they not attempt
to put their personal esthetic preferences into action? If they
feel that socialism is beautiful, what can stop them, especially
since there are no laws of economics or truths of political philosophy
to place obstacles in their path?

It is no
accident that, with the exception of a handful of contemporary
economists – who will be treated further later – every
single hermeneutician, past and present, has been an avowed collectivist,
either of the left- or right-wing variety, and sometimes veering
from one collectivism to another in accordance with the realities
of power. Marx, Veblen, Schmoller, and the German Historical school
are well known. As for the modern hermeneuticians, Heidegger found
it all too easy to become an enthusiastic Nazi once the Nazi regime
had been established. And Gadamer had no difficulty whatever adapting
either to the Nazi regime (where he was known for having only
a “loose sympathy” with the Third Reich) or to the Soviet occupation
in East Germany (where, in his own words, he won “the special
esteem of the Russian cultural authorities” for carrying out “their
directives exactly, even against my own convictions”).[7]

and Keeping the “Conversation” Going

Here we must
note two variants of the common hermeneutical theme. On the one
hand are the candid relativists and nihilists, who assert, with
an inconsistently absolutist fervor, that there is no truth. These
hold with the notorious dictum of the epistemological anarchist
Paul Feyerabend that “anything goes.” Anything, be it astronomy
or astrology, is of equal validity or, rather, equal invalidity.
The one possible virtue of the “anything goes” doctrine is that
at least everyone can abandon the scientific or philosophic enterprise
and go fishing or get drunk. This virtue, however, is rejected by
the mainstream hermeneuticians, because it would put an end to their
beloved and interminable “conversation.”

In short,
the mainstream hermeneuticians do not like the “anything goes”
dictum because, instead of being epistemological anarchists, they
are epistemological pests. They insist that even though it is
impossible to arrive at objective truth or indeed even to understand
other theorists or scientists, that we all still have a deep moral
obligation to engage in an endless dialogue or, as they call it,
“conversation” to try to arrive at some sort of fleeting quasi-truth.
To the hermeneutician, truth is the shifting sands of subjective
relativism, based on an ephemeral “consensus” of the subjective
minds engaging in the endless conversation. But the worst thing
is that the hermeneuticians assert that there is no objective
way, whether by empirical observation or logical reasoning, to
provide any criteria for such a consensus.

Since there
are no rational criteria for agreement, any consensus is necessarily
arbitrary, based on God-knows-what personal whim, charisma of
one or more of the conversationalists, or perhaps sheer power
and intimidation. Since there is no criterion, the consensus is
subject to instant and rapid change, depending on the arbitrary
mindset of the participants or, of course, a change in the people
constituting the eternal conversation.

A new group
of hermeneutical economists, eager to find some criteria for consensus,
have latched onto a Gestalt-like phrase of the late economist Fritz
Machlup, perhaps taking his name very much in vain. They call this
criterion the “Aha! principle,” meaning that the truth of a proposition
is based on the exclamation of “Aha!” that the proposition may arouse
in someone’s breast. As Don Lavoie and Jack High put it: “We know
a good explanation when we see one, and when it induces us to say
Somehow I do not find this criterion for truth, or even for consensus,
very convincing. For example, many of us would find the prospect
of being confronted with the option of engaging in endless and necessarily
fruitless conversation with people unable to write a clear sentence
or express a clear thought to be the moral equivalent of Sartre’s

I have a hunch that if someone came up with the proposition: “It
would be a great thing to give these guys a dose of objective
reality over the head” or at the very least to slam the door on
their conversation, that this would elicit many more fervent “Ahas!”
than the murky propositions of the hermeneuticians themselves.

The prime moral
duty proclaimed by the hermeneuticians is that we must at all times
keep the conversation going. Since this duty is implicit,
it is never openly defended, and so we fail to be instructed why
it is our moral obligation to sustain a process that yields such
puny and ephemeral results. In keeping with this alleged virtue,
the hermeneuticians are fervently and dogmatically opposed to “dogmatism”
and they proclaim the supreme importance of remaining endlessly
“open” to everyone in the dialogue. Gadamer has proclaimed that
the highest principle of hermeneutic philosophy is “holding oneself
open in a conversation,” which means always recognizing “in advance,
the possible correctness, even the superiority of the conversation
partner’s position.” But, as Barnes points out, it is one thing
to be modestly skeptical of one’s own position; it is quite another
to refuse to dismiss any other position as false or mischievous.
Barnes points out that the modest skeptic:

that he himself may always be wrong. Gadamer’s “open” philosopher
allows that his opponent may always be right. A modest skeptic
may … indeed, in his modest way, regard the history of
philosophy as a ceaseless campaign, marked by frequent defeats
and occasional triumphs, against the ever powerful forces of
fallacy and falsehood…. [W]ith some opponents he will
not be “open”: he will be quite sure that they are wrong.[9]

The most important
hermeneutical philosopher in the United States is Richard Rorty,
who, in his celebrated book, Philosophy
and the Mirror of Nature
, devotes considerable space to
the prime importance of “keeping the conversation going.” In his
sparkling critique of Rorty, Henry Veatch points out that, to the
crucial question of how can we conversationalists ever know which
ideals or “cultural posits” (in the Rortian language) are better
than others, “Rorty could only answer that, of course, there can’t
be any such thing as knowledge in regard to matters such
as these.” So, if there is no knowledge and, hence, no objective
criteria for arriving at positions, we must conclude, in the words
of Veatch, that “although Aristotle may well have taught that ‘philosophy
begins in wonder,’ … present-day philosophy can only end in a
total conceptual or intellectual permissiveness.”[10]
In short, we end with the Feyerabendian “anything goes” or, to use
the admiring phrase of Arthur Danto in his summary of Nietzsche,
that “everything is possible.”[11]
Or, in a word, total “openness.”

But if all
things are open, and there are no criteria to guide conversationalists
to any conclusions, how will such conclusions be made? It seems
to me, following Veatch, that these decisions will be made by
those with the superior Will-to-Power. And so it is not a coincidence
that leading hermeneuticians have found themselves flexible and
“open” in response to the stern demands of state power. After
all, if Stalin, Hitler, or Pol Pot enters the “conversational”
circle, they cannot be rejected out of hand, for they too may
offer a superior way to consensus. If nothing is wrong and all
things are open, what else can we expect? And who knows, even
these rulers may decide, in a sardonic burst of Marcusean “repressive
tolerance,” to keep some sort of Orwellian “conversation” going
in the midst of a universal gulag.

In all the
blather about openness, I am reminded of a lecture delivered by
Professor Marjorie Hope Nicholson at Columbia University in 1942.
In a critique of the concept of the open mind, she warned: “Don’t
let your mind be so open that everything going into it falls through.”

There is
another self-serving aspect to the hermeneutical demands for universal
openness. For if nothing – no position, no doctrine –
can be dismissed outright as false or mischievous or as blithering
nonsense, then they too, our hermeneuticians, must be spared such
rude dismissal. Keeping the conversation going at all costs means
that these people must eternally be included. And that is perhaps
the unkindest cut of all.

If one reads
the hermeneuticians, furthermore, it becomes all too clear that
typically no one sentence follows from any other sentence. In
other words, not only is the style abominable, but there is no
reasoning in support of the conclusions. Since logic or reasoning
are not considered valid by the hermeneuticians, this procedure
is not surprising. Instead, for reasoning the hermeneuticians
substitute dozens or scores of books, which are cited, very broadly,
in virtually every paragraph. To support their statements, the
hermeneuticians will list repeatedly every book that might possibly
or remotely relate to the topic. In short, their only argument
is from authority, an ancient philosophic fallacy which they seem
to have triumphantly revived. For indeed, if there is no truth
of reality, if for logic or experience, we must substitute a fleeting
consensus of the subjective whims, feelings, or power plays of
the various conversationalists, then what else is there but to
muster as many conversationalists as possible as your supposed

Armed with
their special method, the hermeneuticians are therefore able to
dismiss all attacks upon themselves, no matter how perceptive or
penetrating, as “unscholarly.” This lofty rebuttal stems from their
unique definition of scholarly, which for them means ponderous and
obscurantist verbiage surrounded by a thicket of broad citations
to largely irrelevant books and articles.

So why then
have not the distinguished critics of hermeneutics played the
game on their opponents’ own turf and waded through the mountains
and oceans of hogwash, patiently to cite and refute the hermeneuticians
point by point and journal article by journal article? To ask
that question is virtually to answer it.

In fact,
we have asked some of the critics this question, and they immediately
responded in a heartfelt manner that they do not propose to dedicate
the rest of their lives to wading through this miasma of balderdash.
Moreover, to do so, to play by the hermeneuticians’ own rules,
would be to grant them too much honor. It would wrongfully imply
that they are indeed worthy participants in our conversation.
What they deserve instead is scorn and dismissal. Unfortunately,
they do not often receive such treatment in a world in which all
too many intellectuals seem to have lost their built-in ability
to detect pretentious claptrap.[13]


like to think of their discipline as the “hardest” of the social
sciences, and so it is no surprise that hermeneutics – though
having conquered the field of literature and made severe inroads
into philosophy, political thought, and history – has yet
made very little dent in economics. But the economics discipline
has been in a state of methodological confusion for over a decade,
and in this crisis situation minority methodologies, now including
hermeneutics, have begun to offer their wares in the economics
profession; of course, the practitioners down in the trenches
only loosely reflect, or indeed have scarcely any interest in,
the small number of methodological reflections in the upper stories
of the ivory tower.

But these seemingly
remote philosophical musings do have an important long-run influence
on the guiding theories and directions of the discipline. For approximately
two decades, Lionel Robbins’s justly famous The
Nature and Significance of Economic Science
was the guiding
methodological work of the profession, presenting a watered-down
version of the praxeological method of Ludwig von Mises. Robbins
had studied at Mises’s famous privatseminar at Vienna,
and his first edition (1932) stressed economics as a deductive discipline
based on the logical implications of the universal facts of human
action (for example, that human beings try to achieve goals by using
necessarily scarce means). In Robbins’s more widely known second
edition (1935), the Misesian influence was watered down a bit further,
coupled with intimations no bigger than a man’s hand of the neo-classical
formalism that would hit the profession about the time of World
War II.[14]
After the war, the older economics was inundated by an emerging
formalistic and mathematical neoclassical synthesis, of Walrasian
equations covering microeconomics and Keynesian geometry taking
care of macro.

Aiding and
abetting the conquest of economics by the new neo-classical synthesis
was the celebrated article by Milton Friedman in 1953, “The Methodology
of Positive Economics,” which quickly swept the board, sending Robbins’s
and Significance
unceremoniously into the dustbin of history.[15]
For three decades, secure and unchallenged, the Friedman article
remained virtually the only written portrayal of official methodology
for modern economics.

It should be
noted that, as in the triumph of the Keynesian revolution and many
other conquests by various schools of economics, the Friedman article
did not win the hearts and minds of economists in the pattern of
what we might call the Whig theory of the history of science: by
patient refutation of competing or prevailing doctrines. As in the
case of the Mises-Hayek business-cycle theory dominant before Keynes’s
, the Robbins book was not refuted; it was simply
passed over and forgotten. Here the Thomas Kuhn theory of successive
paradigms is accurate on the sociology or process of economic thought,
deplorable as it might be as a prescription for the development
of a science. Too often in philosophy or the social sciences, schools
of thought have succeeded each other as whim or fashion, much as
one style of ladies’ hemlines has succeeded another. Of course,
in economics as in other sciences of human action, more sinister
forces, such as politics and the drive for power, often deliberately
skew the whims of fashion in their own behalf.

What Milton
Friedman did was to import into economics the doctrine that had
dominated philosophy for over a decade, namely logical positivism.
Ironically, Friedman imported logical positivism at just about
the time when its iron control over the philosophical profession
in the United States had already passed its peak. For three decades,
we have had to endure the smug insistence on the vital importance
of empirical testing of deductions from hypotheses as a justification
for the prevalence of econometric models and forecasting, as well
as a universal excuse for theory being grounded on admittedly
false and wildly unrealistic hypotheses. For neoclassical economic
theory clearly rests on absurdly unrealistic assumptions, such
as perfect knowledge, the continuing existence of a general equilibrium
with no profits, no losses, and no uncertainty, and human action
being encompassed by the use of calculus that assumes infinitesimally
tiny changes in our perceptions and choices.

In short,
this formidable apparatus of neoclassical mathematical economic
theory and econometric models, all rests, from the Misesian point
of view, upon the treacherous quicksand of false and even absurd
assumptions. This Austrian charge of falsity and unreality, if
noticed at all, was for decades loftily rebutted by pointing to
Friedman’s article and asserting that falsity of assumptions and
premises do not matter, so long as the theory “predicts” properly.
In its founding years in the early 1930s, the Econometric Society
emblazoned on its escutcheon the motto, “Science is prediction,”
and this was the essence of the Friedman-derived defense of neoclassical
theory. Austrians such as Mises and Hayek replied that the disciplines
of human action are not like the physical sciences. In human affairs,
there are no laboratories where variables can be controlled and
theories tested, while (unlike the physical sciences) there are
no quantitative constants in a world where there is consciousness,
freedom of will, and freedom to adopt values and goals and then
to change them. These Austrian contentions were dismissed by neoclassicals
as simply posing a greater degree of difficulty in arriving at
the human sciences, but not in offering a troublesome difference
in kind.

The neoclassical
synthesis, however, began, in the early 1970s, to lose its power
either to understand or to predict what was going on in the economy.
The inflationary recession that first appeared dramatically in the
1973 – 74 contraction put an end to a 35-year period of arrogant
and unquestioned hegemony by the Keynesian wing of the neoclassical
synthesis. For Keynesian theory and policy rested on the crucial
assumption that inflationary recession simply cannot happen. At
that point, Friedmanite monetarism came to the fore, but monetarism
has now come a cropper after making a rapid series of disastrously
wrong predictions from the beginning of the Reagan era until the
present. But he who lives by prediction is destined to die by prediction.

In addition
to these failures of Keynesianism and monetarism, the blunders
and errors of econometric forecasting have become too notorious
to ignore, and a wealthy and supremely arrogant profession, using
ever higher-speed computer models, seems to enjoy less and less
ability to forecast even the immediate future. Even governments,
despite the assiduous attention and aid of top neoclassical economists
and forecasters, seem to have great difficulties in forecasting
their own spending, much less their own incomes, let alone the
incomes or spending of anyone else.

Amid these
failures, there has been a chipping away at the neoclassical formalism
of Walrasian microeconomics, sometimes by disillusioned leaders
operating from within this ruling paradigm.

As a result
of these problems and failures, the last 10 or 15 years has seen
the development of a classic Kuhnian “crisis situation” in the
field of economics. As the positivist neoclassical orthodoxy begins
to crumble, competing paradigms have emerged. Sparked also by
Hayek’s receipt of a Nobel Prize in 1974, Austrian or Misesian
economics has enjoyed a revival since then, with numerous Austrians
teaching in colleges in the United States and Britain. Recently
there have even emerged five or six Austrian graduate programs
or centers in the United States.

In a crisis
situation, of course, the bad jostles the good in the new atmosphere
of epistemological and substantive diversity. No one ever guaranteed
that if a hundred flowers should bloom, that they would all be
passing fair. On the left, the nontheory of institutionalism has
made a bit of a comeback, jostled by “post-Keynesians” (inspired
by Joan Robinson) and “humanistic” neo-Marxists who have substituted
a vague adherence to “decentralization” and protection of all
animal and vegetable life forms for the rigors of the labor theory
of value. Which brings us back to hermeneutics.

For in this
sort of atmosphere, even the underworld of hermeneutics will vie
for its day in the sun. Probably the most prominent hermeneutical
economist in the United States is Donald McCloskey, who calls
his viewpoint “rhetoric” and whose attack on truth occurs in the
name of rhetoric and of the eternal hermeneutical conversation.[16]
McCloskey, unfortunately, follows the modern path of rhetoric
run hog-wild and divorced from a firm anchor in truth, overlooking
the Aristotelian tradition of “noble rhetoric” as the most efficient
way of persuading people of correct and true propositions. For
Aristotelians, it is only “base” rhetoric that is divorced from
true principles.[17]
McCloskey is now organizing a center for rhetorical studies at
the University of Iowa, which will organize volumes on rhetoric
in a number of diverse disciplines.

Much as I deplore
hermeneutics, I have a certain amount of sympathy for McCloskey,
an economic historian who endured years as a drill instructor and
cadre leader in the Friedman-Stigler Chicago school’s positivist
ranks. McCloskey is reacting against decades of arrogant positivist
hegemony, of an alleged “testing” of economic theory that never
really takes place, and of lofty statements by positivists that
“I do not understand what you mean,” when they know darn
well what you mean but disagree with it, and who use their narrow
criteria of meaning to dismiss your argument. In this way, the positivists
for a long while were able to read virtually all important philosophical
questions out of court and consign them to the despised departments
of religion and belles lettres. In a sense, the rise of hermeneutics
is those departments’ revenge, retorting to the positivists that
if “science” is only the quantitative and the “testable,” then we
shall swamp you with stuff that is really meaningless.

It is more
difficult to excuse the path traveled by the major group of hermeneuticians
in economics, a cluster of renegade Austrians and ex-Misesians
gathered in the Center for Market Processes at George Mason University.
The spiritual head of this groupuscule, Don Lavoie, has reached
the pinnacle of having his photograph printed in his magazine
Market Process talking to the great Gadamer.[18]
Lavoie has organized a Society for Interpretive Economics (interpretation
is a code word for hermeneutics) to spread the new gospel, and
has had the effrontery to deliver a paper entitled “Mises and
Gadamer on Theory and History,” which, as a colleague of mine
has suggested, is the moral equivalent of my writing a paper entitled
“Lavoie and Hitler on the Nature of Freedom.”

It must be
noted that nihilism had seeped into current Austrian thought before
Lavoie and his colleagues at the Center for Market Processes embraced
it with such enthusiasm. It began when Ludwig M. Lachmann, who had
been a disciple of Hayek in England in the 1930s and who had written
a competent Austrian work entitled Capital
and Its Structure
in the 1950s, was suddenly converted
by the methodology of the English economist George Shackle during
the 1960s.[19]
Since the mid-1970s, Lachmann, teaching part of every year at New
York University, has engaged in a crusade to bring the blessings
of randomness and abandonment of theory to Austrian economics. When
Lavoie and his colleagues discovered Heidegger and Gadamer, Lachmann
embraced the new creed at the 1986 first annual (and, if luck is
with us, the last annual) conference of the Society of Interpretive
Economics at George Mason University. The genuine Misesian creed,
however, still flourishes at the Ludwig von Mises Institute at Auburn
University and in its publications: The Free Market, the
Austrian Economics Newsletter, and the Review of Austrian
Economics, which in its first issue included a critique of
a quasi-hermeneutical book by two ex-Misesians who claim to have
discovered the key to economics in the works of Henri Bergson.[20]

One of the
main motivations of the ex-Misesian hermeneuticians is that their
horror of mathematics, to which they react as to the head of Medusa,
leads them to embrace virtually any ally in their struggle against
positivism and neoclassical formalism. And so they find that,
lo and behold, institutionalists, Marxists, and hermeneuticians
have very little use for mathematics either. But before they totally
embrace the desperate creed that the enemy of my enemy is necessarily
my friend, our Market Process hermeneuticians should be warned
that there may be worse things in this world than mathematics
or even positivism. And second, that in addition to Nazism or
Marxism, one of these things may be hermeneutics.

And just as
Professor McCloskey’s history may serve as a partial mitigation
of his embrace of hermeneutics, we may go further back and mitigate
the sins of the logical positivists. For, after all, the positivists,
much as they may be reluctant to admit it, also did not descend
upon us from Mount Olympus. They grew up in old Vienna, and they
found themselves in a Germanic world dominated by protohermeneutical
creeds such as Hegelianism as well as by the young Heidegger, who
was even then making his mark. After reading and listening to dialectics
and protohermeneutics day in and day out, after being immersed for
years in the gibberish that they were told constituted philosophy,
is it any wonder that they – including for our purposes Popper
as well as Carnap, Reichenbach, Schlick, et al. – should finally
lash out and exclaim that the whole thing was meaningless or that
they should cry out for precision and clarity in language? Is it
also any wonder that the nascent positivists, like McCloskey a half-century
later, should go too far and throw out the philosophic baby with
the neo-Hegelian bathwater?


Barnes, “A Kind of Integrity”; and David Gordon, “Hermeneutics
versus Austrian Economics” (Auburn, Ala.: Ludwig von Mises Institute,

Eric Voegelin, “The German University and the Order of German
Society: A Reconsideration of the Nazi Era,” Intercollegiate
Review 20 (Spring/Summer 1985): 11.

Barnes, “A Kind of Integrity,” p. 13.

Karl R. Popper, The
and its Enemies
, 4th ed. (New York: Harper &
Row, 1962), 2, p. 33.

Ibid, p. 30.

H.L. Mencken, “Professor Veblen,” A
Mencken Chrestomathy
(New York: Alfred A. Knopf, 1949),
p. 270.

Barnes, “A Kind of Integrity,” p. 12.

Don Lavoie and Jack High, “Interpretation and the Costs of Formalism”
(unpublished manuscript), p. 14.

Barnes, “A Kind of Integrity,” p. 13. For a critique of the triumph
of the ideal of “openness,” see Allan Bloom, The
Closing of the American Mind
(New York: Simon and Schuster,

Henry Veatch, “Deconstruction in Philosophy: Has Rorty Made
It the Dennouement of Contemporary Analytical Philosophy?” Review
of Metaphysics 39 (December 1985): 313 – 14, 316.

Arthur C. Danto, Nietzsche
as Philosopher
(New York: Columbia University Press,
1980), p. 12; cited in Veatch, “Deconstruction,” p. 312.

I am indebted for this point to Sheldon Richman of the Institute
for Humane Studies at George Mason University.

In a witty and perceptive article, the distinguished Yale philosopher
Harry Frankfurt calls this phenomenon “bullshit,” which he asserts
to be a greater enemy to the truth than an outright lie, since
a liar recognizes that he is violating the truth whereas the
bullshitter does not. Frankfurt writes:

The contemporary
proliferation of bullshit also has deeper sources, in various
forms of skepticism which deny that we can have any reliable
access to an objective reality and which therefore reject
the possibility of knowing how things truly are. These “antirealist”
doctrines undermine confidence in the value of disinterested
efforts to determine what is true and what is false, and even
in the intelligibility of the notion of objective inquiry.

See Harry
Frankfurt, “On Bullshit,” Raritan 6 (Fall 1986): 99
– 100.

Milton Friedman, “The Methodology of Positive Economics,” in Friedman,
in Positive Economics
(Chicago: University of Chicago
Press, 1953).

Lionel Robbins, An
Essay on the Nature and Significance of Economic Science

(London: Macmillan, [1932] 1935).

Donald N. McCloskey, The
Rhetoric of Economics
(Madison: University of Wisconsin
Press, 1985). For a comprehensive Misesian critique of McCloskey’s
work, see the book review essay by Hans-Hermann Hoppe, “In Defense
of Extreme Rationalism: Thoughts on Donald McCloskey’s The
Rhetoric of Economics,” Review of Austrian Economics 3 (1989):
179 – 214.

Cf. Richard M. Weaver, The
Ethics of Rhetoric
(Chicago: University of Chicago Press)
and Larry Arnhart, Aristotle
on Political Reasoning: A Commentary on “The Rhetoric”

(DeKalb: Northern Illinois University Press, 1981).

Market Process 4 (Fall 1986): 16.

Ludwig M. Lachmann, Capital
and Its Structure
(London: London School of Economics,
1956). The later, post-Shackelian or nihilist Lachmann may be
found in his “From Mises to Shackle: An Essay on Austrian Economics
and the Kaleidic Society,” Journal of Economic Literature
54 (1976).

Thus, see Charles W. Baird, “The Economics of Time and Ignorance:
A Review,” Review of Austrian Economics 1 (1987): 189
– 223.

N. Rothbard
(1926–1995) was dean of the Austrian School,
founder of modern libertarianism, and chief academic officer
of the Mises Institute. He
was also editor — with Lew Rockwell — of The
Rothbard-Rockwell Report
, and appointed Lew as his literary
executor. See
his books.

2012 by the Ludwig von Mises Institute.
Permission to reprint in whole or in part is hereby granted, provided
full credit is given.

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