Hutchison on the History of Hayek’s Views on Economic Methodology

In “Hayek, Mises and the Methodological Contradictions of ‘Modern Austrian’ Economics,” T. W. Hutchison examines Hayek’s developing views on methodology in economics and the split on this issue within the Austrian school.

Hutchison (1994: 213) notes that Hayek’s original views on methodology were apparently derived from those of Friedrich Wieser and a kind of apriorism called “the psychological method.”

Hayek was then influenced by Mises and his circle and, according to Hutchison, held views close to Mises’ (Hutchison 1994: 215), although this does contradict Hayek’s later statements and his claims to have been a follower of Popper’s empiricism even from 1934 (Hutchison 1994: 216).

Hutchison (1994: 215), however, argues that no traces of this Popperian methodology can be found in Hayek’s writings before 1937, but Popper did recollect that Hayek read his book Logik der Forschung around September/October 1935 (Hutchison 1994: 217).

Hutchison (1994: 215–216) speculates that the economic controversies in the mid and late 1930s, especially about the role of expectations, stimulated Hayek to question his earlier views.

The public statement of his new views was in the talk “Economics and Knowledge” given in November 1936 and then published as an article in 1937 (see Hayek 1937; Hutchison 1994: 216).

But unfortunately Hayek’s break with Mises was so timid and weakly expressed that many, especially modern Austrians themselves, have missed the point of “Economics and Knowledge”:

“In the … letter to this writer of 15 May 1983, Hayek also stated that his ‘main intention’ in ‘Economics and Knowledge’ was ‘to explain gently to Mises why I could not accept his a priorism’. Unfortunately, the message to Mises, which it was Hayek’s ‘main intention’ to deliver in this celebrated article, was imparted so ‘gently’ that forty to fifty years later it had still not got through to most ‘Modern Austrians’, who, of course, found the fact of a vital, fundamental division of views between the two great patron saints of their movement difficult to accept.” (Hutchison 1994: 218).

The paper “Economics and Knowledge” also saw Hayek grappling with questions about how an economist could justify real world tendencies to general equilibrium, when this required perfect knowledge and foresight.

Hutchison (1994: 221–22) even contends that in later life Hayek questioned the characteristic Austrian idea of “methodological dualism.”

The break between (1) Hayek and some later Austrians who endorse some form of empiricist method in economics and (2) the Misesian apriorist praxeologists represents a serious division within, and incoherence in, the Austrian school (Hutchison 1994: 229–230).

Hutchison’s verdict on Misesian apriorism is difficult to fault:

“What Misesian, or ‘Modern Austrian’ praxeology succeeds in achieving is a quite unacceptable combination of dogmatic, ‘apodictic certainties’ with total empirical vacuity. Instead of being left with the traditional, full-knowledge ‘theory’, we are provided with the marvellously rich, enlightening and totally uninformative model—or Misesian ‘apodictic certainty’—that people act with whatever tastes, and whatever kind of knowledge and ignorance, which they happen to possess.” (Hutchison 1994: 228).

Addendum
Philip Pilkington has an interesting and critical post here on George A. Akerlof’s famous, but much overblown, paper “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism” (The Quarterly Journal of Economics 84.3: [1970]: 488–500), which can be related to the very issues that Hayek discussed in “Economics and Knowledge” – namely, the unrealistic nature of perfect information and general equilibrium models as related to the functioning of markets:

Philip Pilkington, “The ‘Information Asymmetry’ Paradigm is Vacuous,” Fixing the Economists, August 1, 2014.

BIBLIOGRAPHY
Hayek, F. A. 1937. “Economics and Knowledge,” Economica n.s. 4.13: 33–54.

Hutchison, Terence Wilmot. 1994. “Hayek, Mises and the Methodological Contradictions of ‘Modern Austrian’ Economics,” in T. W. Hutchison, The Uses and Abuses of Economics: Contentious Essays on History and Method. Routledge, London. 212–240.

Hutchison, Terence Wilmot. 1994. The Uses and Abuses of Economics: Contentious Essays on History and Method. Routledge, London.

Mises and Empiricism

Israel Kirzner relates an anecdote about Mises in his book Ludwig von Mises: The Man and his Economics (2001).

Kirzner once asked Mises how any individual person can know that other people really are “purposeful” in the sense of the human action axiom (Kirzner 2001: 88).

Kirzner relates that Mises’s answer surprised him greatly: Mises replied in effect that we know the existence of other human agents by observation (Kirzner 2001: 88).

Kirzner proceeds to use this answer to argue that Mises was not really the extreme apriorist that he is normally held to be (Kirzner 2001: 89).

However, Mises’s answer (if he really meant it) suggests another conclusion: Mises was just a confused and inconsistent thinker.

Elsewhere in his body of work, Mises regards the epistemological status of the human action axiom as synthetic a priori and a type of Kantian category prior to experience, as we can see here:

“… it is expedient to establish the fact that the starting point of all praxeological and economic reasoning, the category of human action, is proof against any criticisms and objections. No appeal to any historical or empirical considerations whatever can discover any fault in the proposition that men purposefully aim at certain chosen ends. No talk about irrationality, the unfathomable depths of the human soul, the spontaneity of the phenomena of life, automatisms, reflexes, and tropisms, can invalidate the statement that man makes use of his reason for the realization of wishes and desires. From the unshakable foundation of the category of human action praxeology and economics proceed step by step by means of discursive reasoning. Precisely defining assumptions and conditions, they construct a system of concepts and draw all the inferences implied by logically unassailable ratiocination. With regard to the results thus obtained only two attitudes are possible; either one can unmask logical errors in the chain of the deductions which produced these results, or one must acknowledge their correctness and validity.” (Mises 2008: 67).

“The human mind is not a tabula rasa on which the external events write their own history. It is equipped with a set of tools for grasping reality. Man acquired these tools, i.e., the logical structure of his mind, in the course of his evolution from an amoeba to his present state. But these tools are logically prior to any experience.

Man is not only an animal totally subject to the stimuli unavoidably determining the circumstances of his life. He is also an acting being. And the category of action is logically antecedent to any concrete act.

The fact that man does not have the creative power to imagine categories at variance with the fundamental logical relations and with the principles of causality and teleology enjoins upon us what may be called methodological apriorism.

Everybody in his daily behavior again and again bears witness to the immutability and universality of the categories of thought and action. He who addresses fellow men, who wants to inform and convince them, who asks questions and answers other people's questions, can proceed in this way only because he can appeal to something common to all men--namely, the logical structure of human reason. The idea that A could at the same time be non-A or that to prefer A to B could at the same time be to prefer B to A is simply inconceivable and absurd to a human mind. We are not in the position to comprehend any kind of prelogical or metalogical thinking. We cannot think of a world without causality and teleogy.” (Mises 2008: 35).

As I have argued here, this Misesian epistemology is entirely unconvincing.

One needs empirical evidence to determine what even constitutes a conscious and voluntary human act as defined in the action axiom.

In fact, the “action” as conceived by the human action axiom is to be strictly limited to:

(1) the conscious behaviour of humans;

(2) to exclude unconscious and involuntary behaviour, and

(3) (presumably) to non-mentally-ill human beings.

But Mises requires empirical evidence to demonstrate what these things even are and how to identify them.

To give an example: take sleep-walking. We observe human beings who perform complex physical tasks such as walking and (in extreme cases) driving motor vehicles while in a state of sleep. Such people cannot remember the experiences. Yet sleepwalkers’ eyes are open: presumably the visual system (retinas, optic nerve, visual cortices, etc.) is functioning and presumably the visual cortices show brain activity that is correlated with visual perception.

Are sleep-walkers engaged in action with a purpose? The Misesian might counter: no, because sleep-walkers are not conscious. But how on earth do we know that sleep-walkers are not conscious? Can we know it a priori?

We cannot do so, and need empirical evidence. For example, it could be that being in a sleepwalking state is like being in a dream state and involves some level of consciousness, but that most sleep-walkers simply forget the experience when they wake up. Would they then be engaged in action with a purpose?

However, it seems that most sleep-walking does not occur in REM sleep (when most people dream) but in the deepest, slow-wave sleep in which dreams are rare (Seager 1999: 34), so the idea that most sleepwalkers are genuinely unconscious is possible and probable. But, as noted above, it is empirical evidence and inductive argument that yields this type of a posteriori knowledge about sleep-walking, not a priori reasoning.

But it is far worse than this, for, as Kirzner noticed and Mises appears to have conceded, you need empirical evidence and inductive argument by analogy to make the case that other human minds even exist (Kirzner 2001: 88 even states that it is observation that convinces us to reject solipsism).

These insights are enough to damn the alleged synthetic a priori status of action axiom.

That Mises spent his life defending the Kantian synthetic a priori status of the action axiom but then casually and privately admitted to Kirzner that observation (a kind of empirical evidence) is needed to know that other purposeful human minds even exist only shows what a third rate philosopher and thinker Mises really was.

BIBLIOGRAPHY
Armstrong, D. M. 1963. “Is Introspective Knowledge Incorrigible?,” The Philosophical Review 72.4: 417–432.

Kirzner, Israel M. 2001. Ludwig von Mises: The Man and his Economics. ISI Books, Wilmington, Del.

Mises, L. 2008. Human Action: A Treatise on Economics. The Scholar’s Edition. Mises Institute, Auburn, Ala.

Seager, William. 1999. Theories of Consciousness: An Introduction and Assessment. Routledge, London and New York.

The Problem with Pure Mathematics

And with analytic a priori systems in general is not only that they do not give us necessary and irrefutable truth about reality, but also that they may be completely irrelevant to the real world:

“Unlike technology, … science is a form of curiosity, tempered by the requirement that its investigative activities lead to an accurate picture of things. This aim distinguishes it from many other disciplines, such as pure mathematics. A mathematician may construct a conceptual scheme of great elegance that has no application to reality. Yet that it doesn’t may not affect its [sc. pure] mathematical significance. But science is different. If a scientific idea doesn’t fit the facts it will eventually be discarded despite its ingenuity.” (Stroll 2009: 31).

Such is the nature of so many mathematical models in neoclassical economics: elegant models that have zero or virtually zero relevance to real world economies, because their assumptions – such as rational expectations, Ricardian equivalence, representative agents, neutral money, the quantity theory of money, the neutral rate of interest and tendencies to general equilibrium – are inapplicable to reality.

BIBLIOGRAPHY
Stroll, Avrum. 2009. Informal Philosophy. Rowman & Littlefield Publishers, Lanham, Md. and Plymouth.

A Simple Question for Austrian Apriorists

The Austrian school is famous for its apriorist economic method called praxeology. This, in its Misesian form, takes up the notion of Kantian synthetic a priori knowledge and holds that praxeology can arrive at economic theories that describe reality and in an a priori manner with necessary and apodictic truth, so that empirical evidence cannot refute praxeological theories.

A simple question can demonstrate the absurdity of his approach:

Can you sit in an armchair and use deduction from the action axiom to determine how all prices are actually set in real world capitalist economies and with apodictic truth?

The notion that anyone can do this is just ridiculous, and anyone who claims they can would quickly be shown to be deluded and mistaken.

One can no doubt construct abstract analytic a priori models, but those models must be given an empirical hearing and checked against reality to determine whether they do in fact describe the real world.

The point is that the really interesting and important questions about real world market economies can only be determined by hard empirical research and study, not by mere deduction from a few trivial axioms.

For more on Austrian praxeology and its failings, see here.

Hoppe’s Caricature of Empiricism

In all its befuddled glory:

“I would like to challenge the very starting point of the empiricists’ philosophy. There are several conclusive refutations of empiricism. I will show the empiricist distinction between empirical and analytical knowledge to be plainly false and self-contradictory. That will then lead us to developing the Austrian position on theory, history, and forecasting.

This is empiricism’s central claim: Empirical knowledge must be verifiable or falsifiable by experience; and analytical knowledge, which is not so verifiable or falsifiable, thus cannot contain any empirical knowledge. If this is true, then it is fair to ask: What then is the status of this fundamental statement of empiricism? Evidently it must be either analytical or empirical.

Let us first assume it is analytical. According to the empiricist doctrine, however, an analytical proposition is nothing but scribbles on paper, hot air, entirely void of any meaningful content. It says nothing about anything real. And hence one would have to conclude that empiricism could not even say and mean what it seems to say and mean. Yet if, on the other hand, it says and means what we thought it did all along, then it does inform us about something real. As a matter of fact, it informs us about the fundamental structure of reality. It says that there is nothing in reality that can be known to be one way or another prior to future experiences which may confirm or disconfirm our hypothesis.

And if this meaningful proposition is taken to be analytical, that is, as a statement that does not allow any falsification and whose truth can be established by an analysis of its terms alone, one has no less than a glaring contradiction at hand. Empiricism itself would prove to be nothing but self-defeating nonsense.

So perhaps we should choose the other available option and declare the fundamental empiricist distinction between empirical and analytical knowledge an empirical statement. But then the empiricist position would no longer carry any weight whatsoever. For if this were done, it would have to be admitted that the proposition – as an empirical one – might well be wrong and that one would be entitled to hear on the basis of what criterion one would have to decide whether or not it was. More decisively, as an empirical proposition, right or wrong, it could only state a historical fact, something like ‘all heretofore scrutinized propositions fall indeed into the two categories analytical and empirical.’ The statement would be entirely irrelevant for determining whether it would be possible to produce propositions that are true a priori and are still empirical ones. Indeed, if empiricism's central claim were declared an empirical proposition, empiricism would cease altogether to be an epistemology, a logic of science, and would be no more than a completely arbitrary verbal convention of calling certain arbitrary ways of dealing with certain statements certain arbitrary names. Empiricism would be a position void of any justification.” (Hoppe 2007: 33–34).

It would be difficult to pack so many non sequiturs and straw man arguments into so few paragraphs, but it is quite an achievement.

First, Hoppe conflates logical positivism, Popper’s Critical Rationalism, and other empiricist traditions. For instance, the (1) logical positivist verifiability criterion for meaningfulness is conflated with (2) Popper’s falsifiability criterion for scientific knowledge.

Secondly, Hoppe imputes to all his empiricist opponents a certain view of the logical positivists called the verifiability criterion for meaningfulness, but can’t even get that view right, and produces a garbled statement of it.

The logical positivists did not say that an analytic a priori statement is “scribbles on paper, hot air, entirely void of any meaningful content” or “self-defeating nonsense” at all. They said that of metaphysical propositions that were neither analytic a priori nor synthetic a posteriori, and that could not in principle be verified.

So the logical positivists did clearly think that mathematics and other valid analytic a priori statements had meaningful, cognitive content, although this content did not assert anything necessarily true about the real world. Moreover, Popper’s falsifiability criterion for scientific knowledge does not state that metaphysical propositions have no meaningful cognitive content, but only that they are not scientific statements.

And the fact is that the strict verifiability criterion for meaningfulness was quickly weakened and abandoned, and the type of empiricism defended in modern analytic philosophy has long since ceased to make any such extreme claims.

Then we have this:

“This is empiricism’s central claim: Empirical knowledge must be verifiable or falsifiable by experience; and analytical knowledge, which is not so verifiable or falsifiable, thus cannot contain any empirical knowledge. If this is true, then it is fair to ask: What then is the status of this fundamental statement of empiricism? Evidently it must be either analytical or empirical.”

And the answer is: that empiricist statement about epistemology is synthetic a posteriori.

But, when Hoppe considers this possibility, he commits a bizarre non sequitur:

“So perhaps we should choose the other available option and declare the fundamental empiricist distinction between empirical and analytical knowledge an empirical statement. But then the empiricist position would no longer carry any weight whatsoever. For if this were done, it would have to be admitted that the proposition – as an empirical one – might well be wrong and that one would be entitled to hear on the basis of what criterion one would have to decide whether or not it was. More decisively, as an empirical proposition, right or wrong, it could only state a historical fact, something like ‘all heretofore scrutinized propositions fall indeed into the two categories analytical and empirical.’ The statement would be entirely irrelevant for determining whether it would be possible to produce propositions that are true a priori and are still empirical ones. Indeed, if empiricism’s central claim were declared an empirical proposition, empiricism would cease altogether to be an epistemology, a logic of science, and would be no more than a completely arbitrary verbal convention of calling certain arbitrary ways of dealing with certain statements certain arbitrary names. Empiricism would be a position void of any justification.” (Hoppe 2007: 34).

According to Hoppe, just because the statement that

“Empirical knowledge must be verifiable or falsifiable by experience; and analytical knowledge, which is not so verifiable or falsifiable, thus cannot contain any empirical knowledge”

is synthetic a posteriori, then the “empiricist position” can “no longer carry any weight whatsoever,” and empiricism “would cease altogether to be an epistemology.”

Indeed, the defence of the original epistemological principle is empirical and its truth is only probable or highly probable, but the lack of certainty produces no such epistemological crisis for empiricism, for the reason that it never aimed at absolute necessary truth in the first place, as Hoppe demands. Our best scientific theories do not have apodictic truth, nor does the inductive method yield absolute certainty, yet modern science is incredibly successful.

The rejection of dogmatism and the willingness to regard any scientific theory as capable of revision or falsification are what give modern scientific epistemology its great strength.

But if we adopted the same type of argument used by Hoppe, then we must conclude that modern science must “no longer carry any weight whatsoever” and “would cease altogether to be an epistemology.”

Secondly, the legitimate response of an empiricist to a Rationalist that “all heretofore scrutinized propositions fall indeed into the two categories analytical and empirical” can be defended as true. Hoppe’s point here carries no weight.

We need only look at the way Kant’s original synthetic a priori knowledge, such as Euclidean geometry, necessary and deterministic causation, or certain laws of logic have either been refuted by modern science or seriously questioned.

Hoppe’s next statement that the empiricist’s classification of knowledge “would be entirely irrelevant for determining whether it would be possible to produce propositions that are true a priori and are still empirical ones” is also a non sequitur, since, on the contrary, it is a defensible starting point for analysing all statements and all future statements and determining whether they could possibly provide synthetic truth but be known a priori. If, for example, some Rationalist asserts that statement x is a synthetic a priori truth, but we discover that the real world produces overwhelming empirical evidence against the proposition, then it is the Rationalist who is faced with an epistemological crisis.

And of course Hoppe seems totally unaware of recent developments in analytic epistemology, such as the Kripkean necessary a posteriori or (more controversially) the contingent a priori, which expand the range of epistemological types of knowledge, but which are of no comfort to the traditional Rationalist.


BIBLIOGRAPHY
Hoppe, Hans-Hermann. 2007. Economic Science and the Austrian Method. Ludwig von Mises Institute, Auburn. Ala.

What is the Epistemological Status of Praxeology and the Action Axiom?

A reading of the opening chapters of Mises’s Human Action does not provide straightforward answers.

First, consider these statements:

“Praxeology is a theoretical and systematic, not a historical, science. Its scope is human action as such, irrespective of all environmental, accidental, and individual circumstances of the concrete acts. Its cognition is purely formal and general without reference to the material content and the particular features of the actual case. It aims at knowledge valid for all instances in which the conditions exactly correspond to those implied in its assumptions and inferences. Its statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification and falsification on the ground of experience and facts. They are both logically and temporally antecedent to any comprehension of historical facts. They are a necessary requirement of any intellectual grasp of historical events” (Mises 2008: 32).

“Even the most faithful examination of a chapter of economic history, though it be the history of the most recent period of the past, is no substitute for economic thinking. Economics, like logic and mathematics, is a display of abstract reasoning. Economics can never be experimental and empirical. The economist does not need an expensive apparatus for the conduct of his studies. What he needs is the power to think clearly and to discern in the wilderness of events what is essential from what is merely accidental” (Mises 2008: 864).

“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. Of course, a measure suggested by sound economic reasoning results in producing the effects aimed at, and a measure suggested by faulty economic reasoning fails to produce the ends sought. But such experience is always still historical experience, i.e., the experience of complex phenomena. It can never, as has been pointed out, prove or disprove any particular theorem. The application of spurious economic theorems results in undesired consequences. But these effects never have that undisputable power of conviction which the experimental facts in the field of the natural sciences provide. The ultimate yardstick of an economic theorem’s correctness or incorrectness is solely reason unaided by experience” (Mises 1949: 858).

So here we are told that the “theorems” of praxeology “are not open to any verification or falsification on the ground of experience.” The “statements and propositions” of praxeology are “not derived from experience.” If this means that the deductions that constitute praxeological theories are true a priori, then Mises is saying that praxeology knowledge has necessary, a priori truth.

But, in addition to being valid and sound, a deductive argument could only have absolute certainty if its axioms and premises are all necessarily true.

But Mises admits that praxeology uses synthetic a posteriori premises and assumptions in its arguments:

“Man … can never be absolutely certain that his inquiries were not misled and that what he considers as certain truth is not error. All that man can do is to submit all his theories again and again to the most critical reexamination. This means for the economist to trace back all theorems to their unquestionable and certain ultimate basis, the category of human action, and to test by the most careful scrutiny all assumptions and inferences leading from this basis to the theorem under examination. It cannot be contended that this procedure is a guarantee against error. But it is undoubtedly the most effective method of avoiding error” (Mises 2008: 68).

“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).

The idea that every “theorem of praxeology is deduced by logical reasoning from the category of action” and thus has “apodictic certainty” could only be true if all premises – both hidden and stated – in deductions are also absolutely true (as merely analytic a priori propositions) and all arguments were valid and sound.

But that argument will not work, because Mises has admitted that praxeological reasoning requires synthetic a posteriori propositions which can never be necessarily true or free from at least some small degree of doubt about their truth. Therefore no derived deduction or theory can have true “apodictic certainty”: this is a wild fantasy of Mises.

In Human Action (Mises 2008: 65–68) and The Ultimate Foundation of Economic Science (Mises 1978 [1962]: 44), Mises has tacitly conceded that praxeology’s deductive reasoning will sometimes rely on some empirical assumptions.

Now Mises believes in categories of the human mind and that the action axiom is a category:

“the problem of the a priori is of a different character. It does not deal with the problem of how consciousness and reason have emerged. It refers to the essential and necessary character of the logical structure of the human mind.

The fundamental logical relations are not subject to proof or disproof. Every attempt to prove them must presuppose their validity. It is impossible to explain them to a being who would not possess them on his own account. Efforts to define them according to the rules of definition must fail. They are primary propositions antecedent to any nominal or real definition. They are ultimate unanalyzable categories. The human mind is utterly incapable of imagining logical categories at variance with them. No matter how they may appear to superhuman beings, they are for man inescapable and absolutely necessary. They are the indispensable prerequisite of perception, apperception, and experience.” (Mises 2008: 34).

“The human mind is not a tabula rasa on which the external events write their own history. It is equipped with a set of tools for grasping reality. Man acquired these tools, i.e., the logical structure of his mind, in the course of his evolution from an amoeba to his present state. But these tools are logically prior to any experience.

Man is not only an animal totally subject to the stimuli unavoidably determining the circumstances of his life. He is also an acting being. And the category of action is logically antecedent to any concrete act.

The fact that man does not have the creative power to imagine categories at variance with the fundamental logical relations and with the principles of causality and teleology enjoins upon us what may be called methodological apriorism.

Everybody in his daily behavior again and again bears witness to the immutability and universality of the categories of thought and action. He who addresses fellow men, who wants to inform and convince them, who asks questions and answers other people's questions, can proceed in this way only because he can appeal to something common to all men--namely, the logical structure of human reason. The idea that A could at the same time be non-A or that to prefer A to B could at the same time be to prefer B to A is simply inconceivable and absurd to a human mind. We are not in the position to comprehend any kind of prelogical or metalogical thinking. We cannot think of a world without causality and teleogy.” (Mises 2008: 35).

“Aprioristic reasoning is purely conceptual and deductive. It cannot produce anything else but tautologies and analytic judgments. All its implications are logically derived from the premises and were already contained in them. Hence, according to a popular objection, it cannot add anything to our knowledge.

All geometrical theorems are already implied in the axioms. The concept of a rectangular triangle already implies the theorem of Pythagoras. This theorem is a tautology, its deduction results in an analytic judgment. Nonetheless nobody would contend that geometry in general and the theorem of Pythagoras in particular do not enlarge our knowledge. Cognition from purely deductive reasoning is also creative and opens for our mind access to previously barred spheres. The significant task of aprioristic reasoning is on the one hand to bring into relief all that is implied in the categories, concepts, and premises and, on the other hand, to show what they do not imply. It is its vocation to render manifest and obvious what was hidden and unknown before.” (Mises 2008: 38).

“The scope of praxeology is the explication of the category of human action. All that is needed for the deduction of all praxeological theorems is knowledge of the essence of human action. It is a knowledge that is our own because we are men; no being of human descent that pathological conditions have not reduced to a merely vegetative existence lacks it. No special experience is needed in order to comprehend these theorems, and no experience, however rich, could disclose them to a being who did not know a priori what human action is. The only way to a cognition of these theorems is logical analysis of our inherent knowledge of the category of action. We must bethink ourselves and reflect upon the structure of human action. Like logic and mathematics, praxeological knowledge is in us; it does not come from without.

All the concepts and theorems of praxeology are implied in the category of human action.” (Mises 2008: 64).

“… it is expedient to establish the fact that the starting point of all praxeological and economic reasoning, the category of human action, is proof against any criticisms and objections. No appeal to any historical or empirical considerations whatever can discover any fault in the proposition that men purposefully aim at certain chosen ends. No talk about irrationality, the unfathomable depths of the human soul, the spontaneity of the phenomena of life, automatisms, reflexes, and tropisms, can invalidate the statement that man makes use of his reason for the realization of wishes and desires. From the unshakable foundation of the category of human action praxeology and economics proceed step by step by means of discursive reasoning. Precisely defining assumptions and conditions, they construct a system of concepts and draw all the inferences implied by logically unassailable ratiocination. With regard to the results thus obtained only two attitudes are possible; either one can unmask logical errors in the chain of the deductions which produced these results, or one must acknowledge their correctness and validity.” (Mises 2008: 67).

From these statements, it is clear that Mises is influenced by a Kantian or, more correctly, neo-Kantian epistemology (Lachmann 1976: 56; Rothbard 2011: 108) of the Marburg school.

The human action axiom can be stated as follows:

(1) All human action is rational.

That statement when asserted without defining “rational” is likely to provoke derision, because if by “rational” we mean consistent with the laws of logic and characterised by valid and sound deductive and inductive reasoning, then there are manifestly many examples of irrational human behaviour.

But Mises has his own idiosyncratic definition of “rational”: he means with a purpose, or end in mind.

Therefore the proposition is to be rewritten:

(1) All human action is purposeful, in the sense of having a purpose or end in mind.

But even here problems exist. What about unconscious and involuntary behaviour? What about behaviour of mentally ill human beings? What about nervous tics?

Mises is already required to carefully limit what he means by “human action”:

“Human action is purposeful behavior. Or we may say: Action is will put into operation and transformed into an agency, is aiming at ends and goals, is the ego’s meaningful response to stimuli and to the conditions of its environment, is a person’s conscious adjustment to the state of the universe that determines his life. Such paraphrases may clarify the definition given and prevent possible misinterpretations. But the definition itself is adequate and does not need complement of commentary.

Conscious or purposeful behavior is in sharp contrast to unconscious behavior, i.e., the reflexes and the involuntary responses of the body’s cells and nerves to stimuli. People are sometimes prepared to believe that the boundaries between conscious behavior and the involuntary reaction of the forces operating within man’s body are more or less indefinite. This is correct only as far as it is sometimes not easy to establish whether concrete behavior is to be considered voluntary or involuntary. But the distinction between consciousness and unconsciousness is nonetheless sharp and can be clearly determined.

The unconscious behavior of the bodily organs and cells is for the acting ego no less a datum than any other fact of the external world. Acting man must take into account all that goes on within his own body as well as other data, e.g., the weather or the attitudes of his neighbors. There is, of course, a margin within which purposeful behavior has the power to neutralize the working of bodily factors. It is feasible within certain limits to get the body under control. Man can sometimes succeed through the power of his will in overcoming sickness, in compensating for the innate or acquired insufficiency of his physical constitution, or in suppressing reflexes. As far as this is possible, the field of purposeful action is extended. If a man abstains from controlling the involuntary reaction of cells and nerve centers, although he would be in a position to do so, his behavior is from our point of view purposeful.

The field of our science is human action, not the psychological events which result in an action. It is precisely this which distinguishes the general theory of human action, praxeology, from psychology. The theme of psychology is the internal events that result or can result in a definite action. The theme of praxeology is action as such. This also settles the relation of praxeology to the psychoanalytical concept of the subconscious. Psychoanalysis too is psychology and does not investigate action but the forces and factors that impel a man toward a definite action. The psychoanalytical subconscious is a psychological and not a praxeological category. Whether an action stems from clear deliberation, or from forgotten memories and suppressed desires which from submerged regions, as it were, direct the will, does not influence the nature of the action.” (Mises 2008: 11–12).

It follows that “human action” is to be strictly limited to:

(1) the conscious behaviour of humans;

(2) to exclude unconscious and involuntary behaviour, and

(3) (presumably) to non-mentally ill human beings.

But Mises requires empirical evidence to demonstrate that all these things do not constitute voluntary behaviour with a purpose.

How does Mises know that normal functioning of the organs or blinking of the eyes is not conscious behaviour with a purpose? He might appeal to intuition and personal experience, but his critic can reply (rightly, in my view) that this is just a type of empirical evidence. And, ultimately, it is through empirically-based science that we have good grounds for understanding these things to be involuntary, or for understanding that certain mentally ill people do things with no conscious purpose in mind.

Another example is nervous tics: these are perfect examples of involuntary and compulsive behaviour with no discernible purpose or end in mind. Yet we can only know that nervous tics are involuntary neurological disorders after scientific investigation of such phenomena.

Let us now look at the proposition again:

(1) All human action is purposeful, in the sense of having a purpose or end in mind.

After these careful restrictions on the definitions of terms and the empirical evidence for excluding certain people and actions, the proposition cannot be considered as true a priori or as synthetic a priori: it is a synthetic a posteriori proposition.

It is, frankly, no surprise that the whole fairy tale of praxeology built on a neo-Kantian category or as synthetic a priori knowledge was abandoned by Murray Rothbard who regarded the axioms of praxeology as having a “broadly empirical nature” (Rothbard 2011: 65).

But once one admits that one’s starting axiom is only true a posteriori there is serious problem. Rothbard cannot then claim that all derived inferences and theories of praxeology have apodictic truth because something known a posteriori can never have absolute or apodictic truth: there must be always, even in the most convincing inductive argument, some small degree of doubt or uncertainty about the truth of the induction given the fact that the foundational axiom is not necessarily true. The further consequence that all other axioms of the system are only true a posteriori requires that the theory is indeed grounded in empirical matters of contingent fact, and that, ultimately, must be tested against reality and also describe reality.

I end with some serious questions about Mises’s competence in logic.

Hans Albert points out the following:

“Mises gives a Kantian answer to the question of how the a priori character of praxeological knowledge and its apodictic certainty is to be explained. This knowledge apparently can be reduced to the logical structure of the human mind which is supposed to be the basis for thought and action. ... On the one hand he seems to suggest that he is introducing with his principle of action a synthetic a priori proposition, as he ascribes informational content to the principle. On the other hand, he declares the question of whether the respective propositions are synthetic or analytic to be purely verbal and therefore uninteresting. This seems to show that he was not aware of the connection between analyticity and informational vacuity. He permanently compares his allegedly a priori knowledge with logical and mathematical knowledge and gives such a description of the respective propositions and their mode of derivation that one comes to suspect them to be analytic. He confounds the analytical character of propositions with the logical character of the relationships between propositions in a deduction. But the fact that particular propositions are deducible from particular sets of premises does not render them analytic. For instance, in physics propositions from geometry get an empirical interpretation, and, interpreted in this way, they are synthetic. But propositions which are the result of the ‘logical unfolding’ of certain concepts contain no information. They are analytic not because they are derived, but because they follow from definitions which do not carry information themselves. When Mises tells us that the concept of money already implies all theorems of the theory of money, the alleged certainty of the basis of this derivation does not help him to establish a nonvacuous economic theory. The theory of money as he envisages it here would be without informational content and could not be used to explain anything.” (Albert 1999: 131–132).

Finally, the human mind has been given a certain structure and way of interpreting the world and certain intuitions, which roughly correspond to Kant’s categories, but this structure is undoubtedly the product of Darwinian evolution (Albert 1999: 132), and has been adapted to the experience of an external environment to allow survival and success in that environment. Mises himself acknowledges the role of evolution in this respect (Mises 2008: 33). But our knowledge of these facts and the structure of the mind cannot consist of analytic propositions: it has been discovered by empirical science.


BIBLIOGRAPHY
Albert, H. 1999. Between Social Science, Religion and Politics: Essays in Critical Rationalism, Rodopi, Amsterdam.

Barrotta, P. L. 1996. “A Neo-Kantian Critique of von Mises’s Epistemology,” Economics and Philosophy 12: 51–66.

Gontier, Nathalie. 2006. “Evolutionary Epistemology”
http://www.iep.utm.edu/evo-epis/

Lachmann, L. M. 1976. “From Mises to Shackle: An Essay on Austrian Economics and the Kaleidic Society,” Journal of Economic Literature 14.1: 54-62.

Martin, Anne. 1964. “Empirical and a Priori in Economics,” The British Journal for the Philosophy of Science 15.58: 123–136.

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

Mises, L. 2008. Human Action: A Treatise on Economics. The Scholar’s Edition. Mises Institute, Auburn, Ala.

Oakley, Allen. 1997. The Foundations of Austrian Economics: From Menger to Mises. Edward Elgar, Cheltenham, UK.

Rothbard, R. 1976. “Praxeology: The Methodology of Austrian Economics,” in Edwin Dolan (ed.), The Foundations of Modern Austrian Economics. Sheed & Ward, Kansas City. 19–39.

Rothbard, M. N. 2011. Economic Controversies. Ludwig von Mises Institute, Auburn, Ala.