While re-reading Shimon Malin’s “Nature Loves to Hide” I was trying to get a better grasp of the distinction between Ernst Mach’s philosophy that theory comes from observable magnitudes alone and what Einstein told Heisenberg: “It is the theory that decides what we can observe.” This turns Mach’s view upside-down.

My question is: Where do theories comes from? I am especially interested if one takes Einstein’s position that the theory tells us what we can observe.