“What is wrong with Western civilization is the accepted habit of judging political parties merely by asking whether they seem new and radical enough, not by analyzing whether they are wise or unwise, or whether they are apt to achieve their aims. Not everything that exists today is reasonable; but this does not mean that everything that does not exist is sensible.
The usual terminology of political language is stupid. What is “left” and what is “right”? Why should Hitler be “right” and Stalin, his temporary friend, be “left”? Who is “reactionary” and who is “progressive”? Reaction against an unwise policy is not to be condemned. And progress towards chaos is not to be commended. Nothing should find acceptance just because it is new, radical, and fashionable. “Orthodoxy” is not an evil if the doctrine on which the “orthodox” stand is sound. Who is anti-labor, those who want to lower labor to the Russian level, or those who want for labor the capitalistic standard of the United States? Who is “nationalist,” those who want to bring their nation under the heel of the Nazis, or those who want to preserve its independence?
What would have happened to Western civilization if its peoples had always shown such liking for the “new”? Suppose they had welcomed as “the wave of the future” Attila and his Huns, the creed of Mohammed, or the Tartars? They, too, were totalitarian and had military successes to their credit which made the weak hesitate and ready to capitulate. What mankind needs today is liberation from the rule of nonsensical slogans and a return to sound reasoning.”
- Austrian Economics Newsletter: Just so that we're clear, between the 1940s and the early 1970s, you were the only one that did serious scholarly work in Austrian economics?
- Murray N. Rothbard: Well, Henry Hazlitt did some excellent work. But then he was uncredentialed. Hutt did some, but it wasn't really Austrian. Kirzner had written some serious articles. But basically the tradition had stagnated. By the late seventies, Austrian economics was considered Hayekian, not Misesian. Without the founding of the Mises Institute, I am convinced the whole Misesian program would have collapsed.
“What if praxeology (deductive action theory in the tradition of Ludwig von Mises) is conceived as something much larger than merely the backstop for Austrian economics or a sort of pre-Austrian-economics warm-up act? In that case, economics ought to be better defined as one branch of praxeology among others. Since Mises kept mentioning economics as the “thus-far best-elaborated part” of praxeology, shouldn’t more thinkers be taking this up and working on advancing other such parts?
This is one of the questions addressed in my 2011 paper Action-Based Jurisprudence, which, among other things, sought to more explicitly define another branch that I am now calling the theory of legal concepts. I am now working on taking this approach further and in new directions, but meanwhile here is an update on the question of defining economic theory and other fields, as parts of praxeology. One element in what originally helped me get moving further in this direction of an enlarged vision for praxeology a couple years ago was Stephan Kinsella’s compilation of references, “Mises: Keep it interesting,” (Mises Economics Blog [RIP], October 16, 2010).
Since writing the original paper two years ago, I have taken note of the discussion in Guido Hülsmann’s 2003 introduction to the third edition of Epistemological Problems of Economics, entitled, “From Value Theory to Praxeology.” This describes Mises’s process of working backward from subjective value theory to arriving at his formal concept of action. It contains a descriptor at one point of economics as that part of praxeology that deals with action that uses economic calculation. On this basis, I might suggest for economics: the study of aspects of action as they arise uniquely only within the context of an exchange economy in that the latter enables economic calculation.
We can briefly test out this “exchange economy” proposal (or some other proposal) for the case of defining economics by playing a game of takeaway: “No exchange economy? No prices.” Check. “No exchange economy? No interest rates.” Check. And then on down the list of what we think ought to be considered part of “economics” proper. “No exchange economy? No time preference.” Well, no. Not so fast. There is time preference regardless of the presence/absence of an exchange economy, so this one doesn’t pass. It looks like it must belong more to a “core” area of praxeology rather than to any particular specialized branch of praxeological investigation.
We might also then see Mises’s classic statement on the impossibility of economic calculation under socialism, “Economic calculation in the socialist commonwealth,” (original German 1920) in a new light. It becomes a particular instance of playing the takeaway game: “No private factor-of-production ownership? No (real) factor prices and thus no profit/loss calculation.” Check.
My most recent thinking on the general issue is that praxeology is a tool that we can use as one element in the study of just about anything involving human action. The parts or branches should then simply be defined by the sets of subject matter that we are using praxeology to investigate. I was pleased to see some work in this direction in criminology as presented in Renaud Fillieule’s 2012 Mises Memorial Lecture, “Misesian praxeology: An illustration from the field of sociology of delinquency,” delivered at the Austrian Scholar’s Conference in Auburn, 10 March 2012, which I also recently mentioned here.
So we’re out here investigating what praxeology/thymology can show us if we apply it to issues x, y, and z, extending to all the things in the social sciences that we are interested in understanding better. This could become useful in the entirety of the social sciences—as opposed to the natural sciences—which I think is more what Mises had in mind with praxeology/thymology vis-à-vis natural science methods.
In other words, there ought to be plenty of work to do to carry forward the actual “program” that Mises launched, which was much larger than economics. It was a call for a revolution out of historicism (see especially Theory and History) and positivism (see especially The Ultimate Foundation of Economic Science) in the social sciences as such and was by no means limited to economics. Economics was Mises’s own primary specialization within praxeology; it doesn’t have to be everybody else’s.”
The Economization of Time
“Man is subject to the passing of time. He comes into existence, grows, becomes old, and passes away. His time is scarce. He must economize it as he economizes other scarce factors.
The economization of time has a peculiar character because of the uniqueness and irreversibility of the temporal order. The importance of these facts manifests itself in every part of the theory of action.
Only one fact must be stressed at this point. The economization of time is independent of the economization of economic goods and services. Even in the land of Cockaigne man would be forced to economize time, provided he were not immortal and not endowed with eternal youth and indestructible health and vigor. Although all his appetites could be satisfied immediately without any expenditure of labor, he would have to arrange his time schedule, as there are states of satisfaction which are incompatible and cannot be consummated at the same time. For this man, too, time would be scarce and subject to the aspect of sooner and later.”
“It is certainly not psychologically evident that with every action an actor pursues a goal; and that whatever the goal may be, the fact that it was pursued by an actor reveals that he must have placed a relatively higher value on it than on any other goal of action that he could think of at the start of his action.
It is not evident that in order to achieve his most highly valued goal an actor must interfere or decide not to interfere—which, of course, is also an intentional interference—at an earlier point in time in order to produce a later result; nor is it obvious that such interferences invariably imply the employment of some scarce means—at least those of the actor’s body, its standing room, and the time absorbed by the action.
It is not self-evident that these means, then, must also have value for an actor—a value derived from that of the goal—because the actor must regard their employment as necessary in order to effectively achieve the goal; and that actions can only be performed sequentially, always involving a choice, i.e., taking up that one course of action which at some given time promises the most highly valued results to the actor and excluding at the same time the pursual of other, less highly valued goals.
It is not automatically clear that as a consequence of having to choose and give preference to one goal over another—of not being able to realize all goals simultaneously—each and every action implies the incurrence of costs, i.e., forsaking the value attached to the most highly ranking alternative goal that cannot be realized or whose realization must be deferred, because the means necessary to attain it are bound up in the production of another, even more highly valued goal.
And lastly, it is not evident that at its starting point every goal of action must be considered worth more to the actor than its cost and capable of yielding a profit, i.e., a result whose value is ranked higher than that of the foregone opportunity, and yet that every action is also invariably threatened by the possibility of a loss if an actor finds, in retrospect, that contrary to his expectations the actually achieved result in fact has a lower value than the relinquished alternative would have had.”
“In order to do so, Mises notices in accordance with the strictures traditionally formulated by rationalist philosophers, economic propositions must fulfill two requirements:
- First, it must be possible to demonstrate that they are not derived from observational evidence, for observational evidence can only reveal things as they happen to be; there is no thing in it that would indicate why things must be the way they are. Instead, economic propositions must be shown to be grounded in reflective cognition, in our understanding of ourselves as knowing subjects.
- And secondly, this reflective understanding must yield certain propositions as self-evident material axioms. Not in the sense that such axioms would have to be self-evident in a psychological sense, that is, that one would have to be immediately aware of them or that their truth depends on a psychological feeling of conviction.
On the contrary like Kant before him, Mises very much stresses the fact that it is usually much more pain staking to discover such axioms than it is to discover some observational truth such as that the leaves of trees are green or that I am 6 foot 2 inches.”
— Hans-Hermann Hoppe
“I think the importance of praxeology is far from recognized. Mises said that it was the only truly new science since ancient times. Everything else had some precedent even in the ancient world; this is a totally new field of knowledge and people don’t know what to make of it yet, or even how to mentally recognize what it is.
It cannot be overemphasized what a radical development it is to say that there is definite knowledge about humanity that is not part of ethical or “ought” sciences, and is not merely contingent or conventional in nature.
People just cannot wrap their heads around this easily because they intuitively assume that free choice automatically removes all structural constrictions, which it does not. Of the six modes, core praxeology, at least the fundamentals, gives rise to a type of knowledge that is under the mode of necessity (Notwendigkeit), of what cannot be otherwise (nicht anders sein können), whereas most people would place anything to do with knowledge pertaining to people and societies (or any empirical knowledge at all) in the modes of either actuality and possibility (is or isn’t, could be or could not be; but never MUST BE!).
Here is the section in Human Action, p.1 (!). What do you put on page one of a book like Human Action? This:
I. Economics and Praxeology
- “Economics is the youngest of all sciences. In the last two hundred years, it is true, many new sciences have emerged from the disciplines familiar to the ancient Greeks. However, what happened here was merely that parts of knowledge which had already found their place in the complex of the old system of learning now became autonomous. The field of study was more nicely subdivided and treated with new methods; hitherto unnoticed provinces were discovered in it, and people began to see things from aspects different from those of their precursors. The field itself was not expanded. But economics opened to human science a domain previously inaccessible and never thought of. The discovery of a regularity in the sequence and interdependence of market phenomena went beyond the limits of the traditional system of learning. It conveyed knowledge which could be regarded neither as logic, mathematics, psychology, physics, nor biology.”
And then this on p.4:
- “In the new science everything seemed to be problematic. It was a stranger in the traditional system of knowledge; people were perplexed and did not know how to classify it and to assign it its proper place. But on the other hand they were convinced that the inclusion of economics in the catalogue of knowledge did not require a rearrangement or expansion of the total scheme. They considered their catalogue system complete. If economics did not fit into it, the fault could only rest with the unsatisfactory treatment that the economists applied to their problems.”
 For the mode references, Nicolai Hartmann. Möglichkeit und Wirklichkeit, 1938, pp. 33; way overdue English translation of this book to come out in the next few months.
It’s a rare few who read, understand and fully appreciate ESAM. For those who already have a solid grasp of the literature I cannot recommend it enough. Those that do accept the challenge often cannot help but marvel at just how important and cutting edge this body of knowledge — praxeology — really is.
Essentially your comment touches upon what this blog is partially about — planting seeds. Further to this will follow several recent remarks and quotes that expand upon the above over the next few days.
A follow up to some of the top posts of 2011 with a similar criteria.
- Ron Paul: The Top 50 [Image] 788 notes
- Stateless Society - Inception [Image] 278 Notes
- The Kony Kollection [Image + Text] 245 Notes
- A Libertarians New Years Resolution [Text] 178 Notes
- You Know You’re an Austrian When [Text] 157 Notes
- The Vast Criminal Organization [Quote] 157 notes
- No Traffic Lights vs. Traffic Lights [Video] 147 Notes
- Politicans pretty much irrelevant - RP [Quote] 118 Notes
- Traffic Congestion? Ban All Cars! [Quote] 111 Notes
- Education: More Subsidised, Less Free [Quote] 94 notes
- Capitalism For Hipsters [Video] 90 Notes
- Socialism vs. Capitalism [Image] 76 Notes
- Cooperatives Can’t Compete [Text] 75 Notes
- No Confidence in American System - RP [Quote] 68 Notes
- Minarchism to Voluntarism in 10 Easy Steps [Text] 66 Notes
- The Taste of Freedom [Quote] 64 Notes
- The State Has it’s Own Agenda [Quote] 61 Notes
- An Axiom You Can’t Refute [Image] 58 Notes
- What is the Free Market? [Quote] 51 Notes
- Frasier Crane vs. American Politics [Video] 47 Notes
Hopefully these help defend / spread the message in some capacity.
“The single best analogy for the Austrian business-cycle theory comes from Mises himself, and I will take some creative liberties with his original exposition for our purposes.
“Imagine a master builder. He has at his disposal the labor of many workers, as well as a collection of bricks, shingles, panes of glass, and so on. Mises then asks us to suppose that the subordinate in charge of counting the available supply of bricks inflates the number by 10 percent. Thus the master builder draws up the blueprint for the house, erroneously thinking he has more bricks to work with than he really does. Because of this error, he embarks on a building plan that is unsustainable; there are not enough bricks to finish the house as it is designed on the blueprint.
Now obviously, the sooner the builder learns of the mistake, the better. If he finds out immediately after the excavators have dug the hole for the foundation, the waste will consist merely of the extra labor and gasoline needed to use the earth movers to put back some of the dirt and make the hole smaller.
But suppose the builder doesn’t find out until after he has already laid the foundation and erected the frame of the whole house. Now of course the waste is much worse. Given the materials at his disposal—and we assume that he can’t go onto the market and buy more—the builder must now make some very tough choices. He probably will decide to leave the foundation as is, even though it is bigger than he would have designed it, had he known the true number of bricks from the beginning. He will have to redo the blueprints, naturally, and scale down the size of the house, though keeping the same size foundation. Some of the lumber already used might be salvageable, though some will have to be torn down and discarded. And of course, the finished house will be inferior in quality to the house the builder would have designed originally, had he known the true amount of his various supplies.
Now consider the scenario where the subordinates realize their mistake, but the master builder has not yet discovered it. They decide to deceive him as long as possible, by using tarps to cover up gaping holes in the stockpile of remaining bricks. “After all,” they convince themselves, “look at how happy everyone on the site is, coming to work in the morning and building this fine house! Imagine how furious the master would be, if he learned that we don’t have as many bricks as the blueprint calls for! Why, whole teams of the construction crew might be thrown out of work if that happened! He’s got three guys alone working on the paneling for the third-floor balcony, but there might not even be a third floor in the revised plan. So let’s just keep the good times going as long as possible, lest we end up with a bunch of guys standing around with nothing to do.”
In Mises’s story, it is clear that the builder’s error is not overinvestment, but malinvestment, of resources. It isn’t a question of how many bricks should be used on the house as a whole. Rather, the mistake is that the builder allocated too many bricks to the first floor. With each subsequent brick that his men put in place, following the original (and flawed) blueprint, the options for salvaging the project become narrower and narrower. In the worst—case scenario, the builder would only learn of the inflated brick count the moment he had laid the last brick—at this point, no subterfuge by his subordinates could deny the fact that they were physically out of bricks. And at that horrible point, the builder would have to survey the remaining materials littering the yard, hoping to be able to at least seal the unfinished house to keep the rain out. Whatever the outcome, the builder would have sorely preferred learning of the brick shortage much earlier.”