Human Action : Mises' view of Theory vs Applied economics.

The most misunderstood arguments in Mises are ones like this: "What assigns economics its peculiar and unique position in the orbit both of pure knowledge and of the practical utilization of knowledge is the fact that its particular theorems are not open to any verification or falsification on the ground of experience. "

To his critics, it makes it seem like there is never any reason to do empirical/applied work and that his system is a form of dogma.

I think those are wrong. This is his way of saying, somewhat ham-handedly, that empirical work in the humane sciences (especially history) is always dependent on theory. There is simply no unambiguous way to decide among alternative theories on the basis of "facts." All facts are theory-laden as the philosophers like to say. And this differentiates economics from the natural sciences, if not in kind as he believed, then in very large degree.

Later in the same section in Human Action that contains that quote, he says:

"But these effects never have that undisputable power of conviction which the experimental facts in the field of the natural sciences provide....

Yet sense experience speaks an easily perceptible language. There is no use arguing about experiments. The reality of experimentally established facts cannot be contested.

But in the field of praxeological knowledge neither success nor failure speaks a distinct language audible to everybody. The experience derived exclusively from complex phenomena does not bar escape into interpretations based on wishful thinking. The naïve man’s propensity to ascribe omnipotence to his thoughts, however confused and contradictory, is never manifestly and unambiguously falsified by experience. The economist can never refute the economic cranks and quacks in the way in which the doctor refutes the medicine man and the charlatan. History speaks only to those people who know how to interpret it on the ground of correct theories."

-- Mises, Human Action, 862-3