Deductive logic provides one of the more powerful tools in the method of the Austrian school of economics. They develop true premises through the exercise of reason — the only way to develop beginning premises and the social sciences.
Once true premises have been established through reason the application of sound logic will lead only to valid conclusions. Deduction offers no alternative.
When empirical evidence seems to contradict the results of deductive reasoning, other influences must be at play. Such contradictions, however, do call for a re-examination of the underlying premises. If those premises continue to be sound, the error must be found in the empirical data.
We will discuss the power and importance of deductive reasoning further in pages that we add in the future.
Excerpted from Wikipedia
Deductive reasoning, also called deductive logic, is reasoning which constructs or evaluates deductive arguments. Deductive reasoning contrasts with inductive reasoning in that a specific conclusion is arrived at from a general principle. Deductive arguments are attempts to show that a conclusion necessarily follows from a set of premises or hypotheses. A deductive argument is valid if the conclusion does follow necessarily from the premises, i.e., the conclusion must be true provided that the premises are true. A deductive argument is sound if it is valid and its premises are true. Deductive arguments are valid or invalid, sound or unsound. Deductive reasoning is a method of gaining knowledge.
For the full entry at Wikipedia see here.
Logically sound arguments have very specific criteria, yet people discussing markets frequently ignore those criteria. Here’s a brief description of the makeup of a logically sound argument.
A huge part of the problem that people face in trying to understand economics consists of the fact that they have many flawed and fallacious ideas about the principles and theories that relate to economics. Based on a list of these flaws and fallacies that I have accumulated over the years I have drafted this document.
We are developing a list of logical errors that occur frequently in discussions about economics and free markets.