The Methodology of Austrian Economics and Its Relevance to Institutionalism

. The methodology of Austrian economics's presented in the writings of Ludwig von Mises is described. The Misesian system is built on a priori categories (choice, causality, teleology, time, uncertainty) which Mises regarded as common to all human actors. He used these categories to describe how theories of social phenomena must be constructed if they are to be comprehensible to others. To interpret history, including economic history, one must invent models based on subsidiary assumptions and he or she must make bypotheseszbom the specific “intentions and expectations” of actors. One model is that of an “economic institution.” The meaning of the Misesian model of an institution is stated. It is said to have much in common with the models of phenomenologicai sociology. Finally, contrary to recent papers in this Journal, it is argued that (1) Misesian a priori categories are not alternatives to a priori assumptions described by institutionalists, (2) although a pure theory of choice does not lend itself to the evaluation of public policy, hypotheses about specific intentions and expectations do permit such evaluations, and (3) statements by Mises on institutions and the study of history resemble those made by many institutionalists.