Ludwig von Mises in his various works on praxeology argued that economics qua economics, was an a priori science. It was concerned with using the kind of reasoning employed by Kant in The Critique of Pure Reason to deduce laws of action. Economics could not tell us about morality – for that we must look elsewhere – but it could recommend a course of action for achieving particular goals. Whether those goals were desirable was for the one seeking advice to decide. Under this model, economics cannot give detailed predictions because humans are individuals with free will and specific, subjective perceptions. For example, if you create an environment that is conducive to business, you cannot predict which specific companies will do well in this environment, because those companies are composed of and managed by individual human actors, who can make bad choices as well as good ones. All you are doing is allowing people to use their free will, in the expectation that the overall effect is better than the alternative: you are not guaranteeing that people will use it wisely.
Is this approach worth the loss of predictive power? The question. argued von Mises, was false, because it presupposed that other economic methodologies were capable of absolute prediction – which they are not. (This was ironic because von Mises was prescient about the Great Depression.) An empirical approach is inductive, not deductive. It draws inferences from observation constructs hypotheses, which it then tests using human subjects or computer models. Such an inductive approach is not capable of absolute prediction because observations about how things currently are say nothing certain about how they will be. The accurate predictions made by science regarding the movement of astral bodies, for example, work because the universe appears to behave generally as if it were a closed material system. But science is not able to predict when its a posteriori laws will be suspended by miracles. Miracles are not predictable? Does this entail that they are not real? No, because empirical, a posteriori evidence confirms their existence (e.g. witness accounts in the Gospels). Just as natural science is limited in its ability to predict phenomena involving an element of free will (since miracles occur by the will of God or some other spiritual force), so economic science cannot accurately predict economic phenomena involving human free will.
“Free will is valuable.” This proposition cannot be verified by simple observation – it should not be confused with the proposition, “Some humans value free will.” It cannot be deduced from other statements. It lies beyond the scope of economic science. Value judgments, argued von Mises, lie elsewhere. If we know the truth of this proposition, we know it by revelation from God. Since God is the objective reality from which we are all derived, and on which our existence is contingent, this proposition if true, means, “God values free will.” We know the truth of this proposition from our relationship with God, from Scripture, and from a divine spark of intuition or inspiration. Given our commitment to free will as Christians, we ought to embrace an economic methodology that acknowledges this human trait and we ought to value and recommend an economic system grounded in liberty, holding to the axiom that state intervention should always be kept to the bare minimum.
Pursuing such a policy does not insulate us from hardship, however. Liberty does not entail comfort at all times. It must be gained and guarded with blood, sweat, and tears, through physical and intellectual action. The development of free market economies is hindered by wars and disease, which kill people, disrupt supply lines, and lead to economic and political migration. In all this discussion, it is important to ask the big metaphysical questions, otherwise we will be blindsided by disappointed expectations. Deciding that it is good to follow a free market approach does not entail that such an approach will bring about heaven on earth: it may simply be the best option available. My commitment to various eschatological propositions and deeper metaphysical ones, leads me to believe that only when Christ returns will all the tears be wiped from our eyes – not before.