Economics Relies On Deductive Logic to Answer Titillating Questions Like “Was Karl Marx a Two-Headed Monster?”

In economics, we operate with deductive logic. (Bertrand Russell, a twentieth-century English philosopher, once said that there are two kinds of logic, deductive and bad).

Deductive logic is a tool of amazing power. Given a true statement, we can, by using deduction, obtain other true statements from it. These new statements not only are true—their truth is guaranteed! If the statements we started with are true, then our conclusions are also true.

Let’s look at a few examples:

• ALL COMMUNISTS ARE TWO-HEADED MONSTERS
• KARL MARX WAS A COMMUNIST
• THEREFORE, KARL MARX WAS A TWO-HEADED MONSTER

Does the conclusion, “Karl Marx was a two-headed monster,” follow from the premises (the statements it was deduced from)? Yes, it does. Then, if the premises are true, so is the conclusion. 

Have we proved that Karl Marx was a two-headed monster? Not so fast. All we know is that if the premises are true, then so is the conclusion. Unless both premises are in fact true, we can’t claim that they show the conclusion to be true.

What good is logic, then? Well, let’s go over the basic point again. We know that whenever the premises are true, the conclusion is true. An argument in which the conclusion is correctly deduced from the premises is called a valid argument. If we can (somehow) arrive at true premises, then we are guaranteed true conclusions. And, as you will discover in this book, sometimes obvious truths can have very startling consequences.

—David Gordon, An Introduction to Economic Reasoning (Auburn, AL: Ludwig von Mises Institute, 2000), 1-2.