The Precariousness of Forecasting in Human Affairs; Economic Prediction and the Trend Doctrine-Mises

From the book: The Ultimate Foundation of Economic ScienceAn Essay On Method

Chapter 4

5. The Precariousness of Forecasting in Human Affairs
In forecasting what may or will happen in the future, man
can either be right or mistaken. But his anticipation of future

events cannot influence the course of nature. Whatever man may
expect, nature will go its own way unaffected by any human
expectations, desires, wishes, and hopes.
It is different in the sphere in which human action can operate.
Forecasting may prove mistaken if it induces men to proceed
successfully in a way that is designed to avoid the happening of
the forecast events. What impels people to listen to the opinions
of soothsayers or to consult with them is frequently the desire
to avoid the emergence of undesirable events that, according to
these prophecies, the future has in store for them. If, on the
other hand, what the oracle promised them agreed with their
wishes, they could react to the prophecy in two ways. Trusting
to the oracle, they could either become indolent and neglect
doing what had to be done in order to bring about the end
forecast. Or they could, full of confidence, double their effort to
attain the goal desired. In all such cases the content of the
prophecy had the power to divert the course of affairs from the
lines that it would have pursued in the absence of an allegedly
authoritative forecast.
We may illustrate the issue by referring to business forecasting.
If people are told in May that the boom going on will continue
for several months and will not end in a crash before December,
they will try to sell as soon as possible, at any rate before
December. Then the boom will come to an end before the day
indicated by the prediction.
6. Economic Prediction and the Trend Doctrine

Economics can predict the effects to be expected from
resorting to definite measures of economic policies. It can answer
the question whether a definite policy is able to attain the ends
aimed at and, if the answer is in the negative, what its real
effects will be. But, of course, this prediction can be only “qualitative.” It cannot be “quantitative” as there are no constant relations between the factors and effects concerned. The practical value of economics is to be seen in this neatly circumscribed power of predicting the outcome of definite measures.

Those rejecting the aprioristic science of economics on account
of its apriorism, the adepts of the various schools of Historicism
and Institutionalism, ought from the point of view of their own
epistemological principles to be prevented from expressing any
judgment about the future effects to be expected from any
definite policy. They cannot even know what a definite measure,
whenever resorted to, brought about in the past. For what happened was always the result of the joint operation of a multitude of factors. The measure in question was only one of many factorscontributing to the emergence of the final outcome. But even if these scholars are bold enough to assert that a definite measure
in the past resulted in a definite effect, they would not—from the
point of view of their own principles—be justified in assuming
that therefore the same effect will be attained in the future too.
Consistent Historicism and Institutionalism would have to refrain
from issuing any opinion about the—necessarily future—effects
of any measure or policy. They would have to restrict their
teachings to the treatment of economic history. (We may pass
over the question how economic history could be dealt with
without economic theory.)

However, the public’s interest in the studies labeled as economic is entirely due to the expectation that one can learn something about the methods to be resorted to for the attainment of definite ends. The students attending the courses of the professors of “economics” as well as the governments appointing “economic”
advisers are anxious to get information about the future, not
about the past. But all that these experts can tell them, if they
remain faithful to their own epistemological principles, refers to
the past.

To comfort their customers—statesmen, businessmen, and
students—these scholars have developed the trend doctrine. They
assume that trends that prevailed in the recent past—inappropriately often dubbed the present—will also continue in the future. If they consider the trend as undesirable, they recommend measures to change it. If they consider it as desirable, they are inclined to declare it as inevitable and irresistible and do
not take into account the fact that trends manifested in history

can change, often or rather always did change, and may change
even in the immediate future.

The Ultimate Foundation of Economic ScienceA Essay on Method; pp. 66-69, Ludwig von Mises


Book: The Ultimate Foundation of Economic Science-Mises