von Mises doth protest too much. The real problem with him is not that his epistemology is poor, but that his explicitly avowed epistemology is poor. When he stops talking epistemology and starts to talk economics, he is brilliant. It does make his writing a little more difficult to grasp, because he occasionally will insert a protestation of his (poor) epistemology into what is otherwise great economics.
On values: of course there are many principles that hold true for values, considered in the broader sense (replace with the word “want” or something else if you prefer). So, I’m sympathetic to von Mises’s way of drawing the line around the subject of Economics. There are a whole lot of principles that we can learn about the pursuit of values, with many particulars of the values abstracted away. Take, for instance, the law of comparative cost advantage. A typical example of it is to show how a lawyer can achieve more of his values by hiring a clerk, even though the lawyer himself has clerical skills far better than any clerk. The same principle would apply if we say the person is a priest who is great at clerical work. Similarly, a whole host of other principles (Demand, prices, etc.) hold true even if we abstract away the specifics of the values being pursued. I think there is enough content in such principles for it to be a separate subject.
Further, (this is another point that von Mises makes) if we live in a world where people are pursuing irrational values, then that is the reality we have to deal with. We may want to change that reality, or protect ourselves from its negative consequences, etc. However, we must first understand it. For instance, it is good to know that governments should stay out of the economy, and that business cycles will be fewer or less severe without such meddling. However, we face a reality where governments do meddle – a lot. So, we also need to understand the consequences of that meddling, and understand how the business cycle actually does play out in the world as we find it.
While von Mises does a poor job at Ethics and Epistemology, he does make an implicit ethical/political assumption that individual values (as opposed to other people’s values imposed by force) ought to be upheld. He has an “individual subjectivist” conception of Ethics, and an individual-rights conception of Politics. He does not truly divorce economics from that Political assumption, even while trying so hard to claim that he makes no Ethical assumptions! Of course, Economics ought to be integrated with other knowledge. However, while it has to be integrated with other knowledge, the ethical judgement of the particular values need not be a part of the subject-matter of Economics. Heirarchically, Ethics must inform Economics, but we can still draw the line between the two. Such lines are matters of usefulness. Just as we draw lines around existents to form concepts, similarly we draw lines around principles to form subjects.
Knowledge has to be integrated. So, we must integrate our knowledge of all principles, including ethics. I don’t think such judgments should be part of the core subject matter of Economics, though they can be part of the border along which we integrate Economics with morality. I see Ethics and Politics as surrounding Economics. Heirarchically, we start from values and understand that they are objective, and can be and ought to be rational. Then, we have a core set of principles about values as such, with the particular moral evaluation abstracted away. Finally, we might have a conclusion that is integrated back to Ethics, when we make an overall judgement.
In summary, Economics is a separate science from Philosophy, but it is pointless to dwell on keeping the boundary really strict. It is fine to have a fuzzy boundary, and tighter integration.
The other epistemological mistake von Mises makes is his protestation that Economics is primarily deductive, and that many basic principles are known a priori. Unlike his approach to values, which is mostly an excessive focus on the unimportant, this mistake is simply wrong. Nevertheless, he does not let this impede his economics, only the clarity of his text. When one reads his actual economics, one will see that – despite his protestations – he actually looks to reality for his information. He makes the same mistake as folks who say that 1+1=2 is not something we get from reality. It is a mistake similar to those Objectivists who think that A is A is similarly an analytical rather than a synthetic fact.
On the whole, von Mises’s good far outweighs the bad. His Economics is excellent stuff. I cannot say the same about other Austrians.