Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

476 Money, Bank Credit, and Economic CyclesIn any case the definitive elimination of economic criseswill require a worldwide reform of the monetary system. Sucha reform is outlined in the ninth and final chapter of this book.18EMPIRICAL EVIDENCE FOR THE THEORY OF THE CYCLEIn this section we will study how the theory of the businesscycle presented in former sections fits in with the historyof economic events. In other words we will consider whetheror not our theoretical analysis provides an outline suitable foruse in interpreting the phenomena of boom and recessionwhich have occurred in history and still continue to occur.Thus we will contemplate how historical events, both those inthe distant past and those more recent, illustrate or fit in withthe theory we have developed.Nonetheless it is necessary to begin with a word of cautionregarding the historical interpretation of business cycles. Contraryto the assumptions of the “positivist” school, we do notconsider empirical evidence alone sufficient to confirm orrefute a scientific theory in the field of economics. We deliberatelystated that we aim to study how historical events “illustrate”or “fit in with” the theoretical conclusions reached inour analysis, not to carry out an empirical test allowing us tofalsify, confirm or demonstrate the validity of our analysis.Indeed though this may not be an appropriate place to reproducethe entire critical analysis of the logical inadequacies of“positivist methodology,” 80 it is clear that experience in the80 A summary of the critical analysis of positivist methodology, alongwith a brief bibliography of the most important writings on the topic,appears in our article, “Método y crisis en la ciencia económica,”Hacienda pública española 74 (1982): 33–48, reprinted in Jesús Huerta deSoto, Estudios de economía política (Madrid: Unión Editorial, 1994),chap. 3, pp. 59–82. See also our article, “The Ongoing Methodenstreitof the Austrian School,” pp. 75–113. The methodological ideas of theAustrian School evolved in parallel with the debate on socialist economiccalculation, and criticism of positivist methodology is one of the