Monday, February 28, 2011

Limits of the Human Action Axiom

The foundational idea for the Austrian praxeology of Mises and Rothbard is the human action axiom. This proposition is that all human action is rational because all action is by definition purposeful. First, one should note that this is a peculiar re-definition of the term “rational.” But let’s accept the definition for the moment.

Some vulgar or “pop” Austrians make truly absurd claims on the basis of this axiom, such as that all inferences of Austrian economics must be true because they follow from the human action axiom. Not even Mises believed such rubbish:
“Every theorem of praxeology is deduced by logical reasoning from the category of action. It partakes of the apodictic certainty provided by logical reasoning that starts from an a priori category. Into the chain of praxeological reasoning the praxeologist introduces certain assumptions concerning the conditions of the environment in which an action takes place. Then he tries to find out how these special conditions affect the result to which his reasoning must lead. The question whether or not the real conditions of the external world correspond to these assumptions is to be answered by experience. But if the answer is in the affirmative, all the conclusions drawn by logically correct praxeological reasoning strictly describe what is going on in reality” (Mises 1978: 44).
In other words, praxeology relies on deduction and requires premises that are sometimes synthetic propositions, not ones true a priori.

The human action axiom says that all voluntary human action (by sane, non-mentally ill humans, of course!) is “purposeful,” and this is used in the early deductions of praxeology.

Can anyone see the problem here? I think it is very clear.

The human action axiom is a trivial observation that can also be held by Marxists, communists, Keynesians, neoclassicals, monetarists, or any other economist you care to name. And there is nothing significant you can deduce from it without other premises, since the most simple, useful deductive argument like the syllogism requires 2 premises to infer anything.

Moreover, as even Mises noted, once you get into praxeological arguments they quickly come to use synthetic propositions – either present or hidden – that can only be verified empirically (see “Mises’ Praxeology: A Critique,” October 1, 2010). Thus empirical evidence becomes very relevant indeed.

The “apodictic certainty” claimed for praxeology actually vanishes like a puff of smoke, if there is doubt about the truth of its synthetic stated and hidden assumptions or premises. And there certainly is. One example I have dealt with before is the argument for free trade by comparative advantage (see “Mises on the Ricardian Law of Association: The Flaws of Praxeology,” January 25, 2011).

The correct response to Austrians making idiotic claims about the human action axiom is this: you tell us what you can deduce from only one axiom. Do tell us - we’re fascinated...

Yet another problem with praxeology should be clear to anyone who has read Mises’ Human Action: it is a long, rambling book where it often unclear which arguments are Mises’ ranting and which ones are supposed to be praxeological arguments with apodictic certainty arrived at by deduction. Mises uses informal verbal arguments to lay out his deductions. If he were really a first-rate logician, then Mises would have set his arguments out formally, as was pointed out a long time ago by George J. Schuller:
“Acceptance of Mises’ stated axioms does not necessarily imply acceptance of the “principles” or “applications to reality” which he has drawn from them, even though his logic may be impeccable. When a logical chain grows beyond the limits set by stated assumptions, it uses unstated assumptions. The number of unstated assumptions (axioms, postulates, or other) in Human Action is enormous. If Mises denies this, let him try to rewrite his book as a set of numbered axioms, postulates, and syllogistic inferences using, say, Russell’s Principia or, closer home, Von Neumann’s Theory of Games as a model” (Schuller 1951: 188).
Addendum: Quine’s Philosophy is a Disaster for Praxeology
Another point is that any Austrian who adopts Quine’s idea that there is no meaningful distinction between analytic or synthetic propositions has destroyed the basis for the a priori status of the human action axiom. For Quine believed that no proposition is immune from possible revision of its truth by the test of experience and that there is in fact no real a priori knowledge of reality.


Mises, L. 1978 [1962]. The Ultimate Foundation of Economic Science: An Essay on Method (2nd edn, Sheed Andrews & McMeel, Kansas City.

Schuller, G. J. 1951. “Mises’ ‘Human Action’: Rejoinder,” American Economic Review 41.1: 185–190.


  1. LK, again, your "one example" (which is all I know of) of allegedly false praxeology assumptions describe Ricardo's assumptions, which have nothing to do with praxeology, and you should be very well aware of Mises/Rothbard's opinion on Smith/Ricardo works. There is no school that criticize them more harsly, so you might as well rebut Austrian School by rebutting Marxism.

    You've concluded before that apriorism sucks just because some guy Leibniz deduced false conclusions from false assumptions. Big deal, every religion does that, does that prove logic fallible? What a logic! But your strongest rebbutal against praxeology assumptions you can come up with is calling them names like "trivial", as if that's precisely what self-evident assumptions should not be, or "hidden", but you never give any example of "hidden", only one stated explicitely by Mises... I mean, c'mon. I can get Mike Huben's simplistic bias, accusing me of tu quoque just to use a tu quoque argument in his next post, but you really seem more sophisticated.

  2. "which have nothing to do with praxeology, and you should be very well aware of Mises/Rothbard's opinion on Smith/Ricardo works. There is no school that criticize them more harsly"

    Mises' Ricardian law of association is based on comparative advantage. That Mises criticises other parts of Smith/Ricardo works is a red herring.

    "You've concluded before that apriorism sucks just because some guy Leibniz deduced false conclusions from false assumptions."

    Ridiculous straw man. Try again.

  3. Mises' Ricardian law of association is based on comparative advantage

    Right, but you've never rebutted comparative advantage as such, you've only shown (by quoting... Mises) that some of Ricardian auxiliary assumptions do not hold. Praxeology does confirm some of (not all) classical liberal conclusions, but it does not share most classical liberal assumptions.

    Your argument against Austrian School is not any more sophisticated than all those ignorant "even Smith wanted taxes" ones, as if again, Austrian School has not spent so much time to debunk all the clasical liberal fallacies that are prevalent in mainstream economics even today (like, say, homo oeconomicus).

  4. "you've only shown (by quoting... Mises) that some of Ricardian auxiliary assumptions do not hold."

    I demonstrated that Mises and Ricardo's hidden assuptions are invalid, and without them the case for free trade does not work.

  5. You have merely quoted Mises saying Ricardian auxiliary assumptions are invalid. If Mises/Rothbard actually ever accepted Smith/Ricardo assumptions (like labor theory of value), Austrian School would be Marxist.

  6. Clearly you haven't read the post properly or you just refuse to engage with it.

    The labour theory of value is totally irrelevant to Ricardo's argument for free trade, by the way.

  7. But I'm engaging all right. It is relevant, because international immobility of factors of production is as false clasical liberal assumption as labor theory of value. Austrian School explicitely calls them false, as your Mises quotes show, so where's the Austrian School rebuttal? Just because Ricardo arrived at a true conclusion using false assumptions does not disprove the conclusion itself. Every mad man's rational action would then make rationality irrational. It's absurd. I can't see how repeating Mises' arguments against Ricardo's assumptions is supposed to rebut praxeology just because Mises has shared some of Ricardo's conclusions. Again, this is precisely as sophisticated as "even Smith wanted taxes" argument against Austrians.

  8. The hidden assumptions underlying the whole argument of Ricardo and Mises:

    (1) it does not matter what you produce, as long as you do it in a way that gives you comparative advantage;

    (2) technology is unchanging and uniform; and

    (3) there are no returns to scale.

    These hidden assumptions are the basis for the argument that free trade by comparative advantage is mutually benefical.

    They are false. Therefore the case for free trade in Ricardo and Mises is false, even if the stated assumptions are true.

  9. (1) Comparative advantage precisely says that it does matter what you produce. You should produce only products which you have comparative advantage to produce. I'm sure liberal theories can tell you specifically that the Japanese should make tv sets and Americans should make tv series. After all, that's the sort of knowledge behind all the protectionist measures correct? So it's actually you who say it does not matter what you produce, as long as your liberal theory says it should be produced.

    (2) As if it were libertarians and Austrians who wanted to protect old industries to save jobs...

    (3) Returns to scale are available to all, so they are irrelevant to comparative advantage (note the word comparative). Physics is same in Japan and US. But your point is actually a variant of the liberal "dumping" fallacy. Liberals forget returns to scale apply also lossess, not only to profits. When a liberal finds out about returns to scale, he thinks a big producer can squash smaller ones by selling products below costs. Correct economic theory (and historical evidence) clearly shows the bigger the producer, the quicker it will bleed out using such strategy. Entry costs are indeed higher because of economies of scale (because you have to invest heavily first), but then again if a startup entrepreneur can convince investors it actually has comparative advantage, it will be easy for him to get the required startup capital.

    I mean, c'mon, in all the 3 points you've accused Austrians of what are in fact inherently liberal arguments. Can it get even more absurd?

  10. "You should produce only products which you have comparative advantage to produce."

    And production of products in which you have comparative advantage does not necessarily provide a sustainable path to growth.

    Mongolia is a good exmaple of that.

    The rest of your comments are either (1) irrelevant or (2) true, but in no way refute what I have said.

  11. And production of products in which you have comparative advantage does not necessarily provide a sustainable path to growth.

    But who has ever claimed that heeding to comparative advantage is the only factor that guarantees a sustainable path to growth? Mongolia is supposed to be some another libertarian paradise, just after Somalia maybe? In fact, the poorer the country, the more it heeds to comparative advantage precisely because it is too poor to waste taxpayers money to do otherwise. All the liberal recommendations are applicable only after you have build up enough capital and funds to be wasted by "progressive" government.

  12. "Limits of the Human Action Axiom"

    But that's the point. Austrian Economics makes no real assumptions. It's just what remains once you realize that economics is not a real science and none of the leftist social engineering schemes have rigorous evidence behind them.

    1. "Austrian Economics makes no real assumptions. "

      It makes no assumptions! It that were true it would never have massive epistemological assumptions -- never adequately proven -- about the validity of Kantian synthetic a priori knowledge or apriorism. Yet Misesian praxoelogy does.

  13. The one axiom problem? You haven't reckoned with the fiendishly clever Major Freedom. He starts with the single axiom 1=2. All his results follow.