Skip to main content
Log in

On certainty and uncertainty, or: How rational can our expectations be?

  • Articles
  • Published:
The Review of Austrian Economics Aims and scope Submit manuscript

The honest historicist would have to say: Nothing can be asserted about the future. Ludwig von Mises

The future is to all of us unknowable. Ludwig Lachmann

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.


  1. Ludwig von Mises,Theory and History (Auburn, Ala.: Ludwig von Mises Institute, 1985), p. 203.

    Google Scholar 

  2. Ludwig Lachmann, “From Mises to Shackle: An Essay on Austrian Economics and the Kaleidic Society,”Journal of Economic Literature 14 (1976): 55–59.

    Google Scholar 

  3. See Oskar Morgenstern, “Perfect Foresight and Economic Equilibrium,” inSelected Economic Writings of Oskar Morgenstern, A. Schotter, ed. (New York: New York University Press, 1976), esp. p. 175; Roger W. Garrison, “Austrian Economics as Middle Ground,” inMethod, Process, and Austrian Economics, Israel Kirzner, ed. (Lexington, Mass.: Lexington Books, 1982); idem Roger W. Garrison, “From Lachmann to Lucas: On Institutions, Expectations, and Equilibrating Tendencies,” inSubjectivism, Intelligibility and Economic Understanding: Essays in Honor of Ludwig M. Lachmann (New York: New York University Press, 1986).

    Google Scholar 

  4. See Frank Knight,Risk, Uncertainty, and Profit (Chicago: University of Chicago Press, 1971), esp. chap. 7; Richard von Mises,Probability, Statistics, and Truth (London: George Allen and Unwin, 1957), esp. chaps. 1 and 3; Ludwig von Mises,Human Action: A Treatise on Economics (Chicago: Henry Regnery, 1966), esp. chap. 6.

    Google Scholar 

  5. Ibid.,, p. 109.

    Google Scholar 

  6. See Ludwig Lachmann,The Market as an Economic Process (Oxford: Basil Blackwell, 1986), chap. 2, esp. pp. 27–29; also Gerald P O'Driscoll, Jr., and Mario J. Rizzo,The Economics of Time and Ignorance (Oxford: Basil Blackwell, 1985), chap. 2, esp. pp. 24–26.

    Google Scholar 

  7. See Hans-Hermann Hoppe,Kritik der kausalwissenschaftlichen Sozialforschung (Opladen: Westdeutscher Verlag, 1983); idem Hans-Hermann Hoppe,The Economics and Ethics of Private Property (Boston: Kluwer, 1993), chap. 7.

    Google Scholar 

  8. Likewise, it would be self-contradictory for me to state about my actions performed over the course of time what would have to be assumed if I wanted to consider them instances of insurable events (class probability): that I know nothing about any one of my actions except that they aremy actions (in the same way as one may legitimately say, for instance, that I know nothing about any singular outcome of a game of roulette except that each one is the outcome of the same roulette). In fact, I do know more about each of them. I know that each action is influenced by my knowledge, and that my knowledge will be changed dependent on the outcome of each action, such that each action will be performed by adifferent me and must be considered aunique event (forming an entire class by itself).

  9. On the methodological view of Frank Knight in particular, see hisThe Ethics of Competition and Other Essay. (New York: Harper Bros., 1935), and idem, Frank Knight,On the History and Method of Economics (Chicago: University of Chicago Press, 1956).

    Google Scholar 

  10. Lachmann,The Market as an Economic Process, p. 32.

  11. Ibid., Lachmann,The Market as an Economic Process, quoted in G.L.S. Shackle,Time in Economics (Amsterdam: North Holland, 1958), p. 105.

  12. Austrians from Carl Menger onward considered the German historicists as anti-economists and their intellectual foes. The historicists, in particular their leader Gustav Schmoller and his successor Werner Sombart, amply reciprocated this animosity.

  13. Mises,Theory and History, pp. 199, 203–4.

  14. Lachmann,The Market as an Economic Process, pp. 30–31.

  15. See also Hoppe,Kritik der kausalwissenschaftlichen Sozialforschung, chap. 3, esp. p. 47.

  16. See Paul Lorenzen,Normative Logic and Ethics (Mannheim: Bibliographisches Institut, 1969), chap. 1. Lorenzen explains (p. 16): “I call a usage a convention if I know of another usage which I could accept instead ... However, I do not know of another behavior which could replace the use of elementary sentences. If I did not accept proper names and predicators, I would not know how to speak at all ... Each proper name is a convention, ... but to use proper names at all is not a convention: it is a unique pattern of linguistic behavior. Therefore, I am going to call it ‘logical’. The same is true with predicators. Each predicator is a convention. This is shown by the existence of more than one natural language. But all languages use predicators.” See also Wilhelm Kamlah and Paul Lorenzen,Logische Propaedeutik (Mannheim: Bibliographisches Institut, 1968), chap. 1.

    Google Scholar 

  17. Ludwig von Mises,The Ultimate Foundation of Economic Science (Kansas City: Sheed Andrews and McMeel, 1978), pp. 84–85.

    Google Scholar 

  18. Lachmann,The Market as an Economic Process, p. 31; for the similar views of Hayek see his “Economics and Knowledge,” in Friedrich A. Hayek,Individualism and Economic Order (Chicago: University of Chicago Press, 1948).

  19. See Arthur Pap,Semantics and Necessary Truth (New Haven, Conn.: Yale University Press, 1958); Brand Blanshard,Reason and Analysis (LaSalle, Ill.: Open Court, 1962); Friedrich Kambartel,Erfahrung und Struktur (Frankfurt/M.: Suhrkamp, 1968); Hoppe,The Economics and Ethics of Private Property, chap. 6.

    Google Scholar 

  20. Mises,The Ultimate Foundation of Economic Science, p. 70. Equally incomprehensible as the charge that praxeology is empirically empty because its propositions are non-falsifiable is the charge brought against Mises and Menger by O'Driscoll and Rizzo (The Economics of Time and Ignorance, p. 23), that the belief in the existence of “apodictic praxeological theorems” and “exact economic laws” implies the assumption of some sort of “rigid determinism!” And would one also have to give up the belief in the existence of universal and unchanging laws of logic if one were to adopt O'Driscoll's and Rizzo's indeterministic “dynamic subjectivism”?

  21. Ludwig Lachmann, “The Role of Expectations in Economics as a Social Science”, in idem,Capital, Expectations, and the Market Process (Kansas City: Sheed Andrews and McMeel, 1977).

    Google Scholar 

  22. See Ludwig von Mises, “‘Elastic Expectations’ and the Austrian Theory of the Trade Cycle,”Economica 10 (1943): 251–52; also George Selgin, “Praxeology and Understanding,”Review of Austrian Economics 2 (1988): 54.

    Article  Google Scholar 

  23. Mises,The Ultimate Foundation of Economic Science, p. 49.

  24. Mises,Theory and History, p. 311.

  25. For a similar assessment see Selgin, “Praxeology and Understanding.”

  26. See Mises,Human Action, p. 107.

  27. Mises,Human Action, pp. 107–10. Ibid., Mises,Human Action p. 59, Mises notes, that “historical events have one common feature: they are human action. History comprehends them as human actions; it conceives their meaning by the instrumentality cognition and understands their meaning in looking at their individual and unique features. What counts for history is always the meaning of the men concerned: the meaning that they attach to the state of affairs they want to alter, the meaning they attach to their actions, and the meaning they attach to the effects produced by the actions.

  28. Mises,Theory and History, p. 311.

  29. Mises,The Ultimate Foundation of Economic Science, pp. 49–50; and he continues then to say: “Compared with the seemingly absolute certainty provided by some of the natural sciences, these assumptions and all the conclusions derived from them appear as rather shaky; the postivists may ridicule them as unscientific. Yet they are the only available approach to the problems concerned and indispensable for any action to be accomplished in a social environment.”

  30. Mises,Theory and History, p. 316.

  31. Mises,The Ultimate Foundation of Economic Science, p. 48.

  32. See Lachmann,The Market as an Economic Process, pp. 34–42.

Download references


Additional information

Hans-Hermann Hoppe is professor of economics at the University of Nevada, Las Vegas and is co-editor ofThe Review of Austrian Economcis.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Hoppe, HH. On certainty and uncertainty, or: How rational can our expectations be?. Rev Austrian Econ 10, 49–78 (1997).

Download citation

  • Issue Date:

  • DOI: