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A Methodenstreit is a debate in economics concerning the philosophy of social science. It involves the issue of which is the property method to pursue in the dismal science. Although this type of debate had its origins two centuries ago, the present paper is a contribution to a more modern Methodenstreit begun by Caplan (1999). It addresses some of the fundamental issues in economics: is this discipline best to be thought of along the lines of an empirical science, such as physics or chemistry (the view of the logical positivist school), or is it more properly described as a branch of logic or mathematics (the perspective of Austrian economics)? Is the argument synthetic a priori a coherent concept (the praxeological perspective), or a mere trivial tautology? Can empirical work (e.g., econometric regression equations) test economic axioms (are there any such things?), or merely illustrate them? These issues underlay the present debate over such issues as indifference (can there be any such thing in economics?), cardinality (is there room in economics for cardinal numbers, or is only ordinality to be tolerated?), continuity (are neoclassical findings the result of an artificial smooth curve assumption, or do they stem from real elements of the economy?), income and substitution effects (can there be backward bending supply curves and upward sloping demand curves?) and demonstrated preference and welfare economics (can government involvement in the economy possibly improve matters, or is this a logical contradiction in terms?)

Keywords: Caplan, Methodenstreit, Positivism school

How to cite this paper: Block, W. (2007). Reply to Caplan on Austrian economic methodology. Corporate Ownership & Control, 4(3-2), 312-322.