To Apply to Economics Methods of Analysis Drawn from Physics Was Itself an Unscientific Procedure

Not all economists were carried away by the tide of equilibrium theory which swept through the profession in the second half of the twentieth century. A tiny handful of dissenters, known as Austrians because they followed the teachings of the late nineteenth-century Austrian economist Carl Menger, refused to accept equilibrium theory. One of their leading members, Friedrich von Hayek, wrote a series of articles during the Second World War which questioned the foundations of equilibrium theory. He pointed out that to apply unthinkingly to a social science like economics, which dealt with the behaviour of human beings, methods of analysis drawn from physics, which dealt with inanimate objects, was itself an unscientific procedure. He warned that it was particularly foolish to suppose that future economic events could be predicted as if the economic system behaved like a machine.

—David Simpson, Rethinking Economic Behaviour: How the Economy Really Works (Houndmills, UK: Macmillan Press, 2000), 23-24.