A Critique of Mises's Praxeology (Part 1?)

Economics Economics Questions
21

I really recommend the Dewey book I cited, Human Nature and Conduct, for anyone who is interested in exploring these matters further. It can be read online here. I actually haven’t finished reading it myself, but I pulled a few more interesting quotes on ends and means that I didn’t have room for in my post:

It has been pointed out that the ends, objectives, of conduct are those foreseen consequences which influence present deliberation and which finally bring it to rest by furnishing an adequate stimulus to overt action. Consequently ends arise and function within action. They are not, as current theories too often imply, things lying beyond activity at which the latter is directed. They are not strictly speaking ends or termini of action at all. They are terminals of deliberation, and so turning points in activity. (223)

[…]

Ends are foreseen consequences which arise in the course of activity and which are employed to give activity added meaning and to direct its further course. They are in no sense ends of action. In being ends of deliberation they are redirecting pivots in action. (225)

[…]

Men shoot and throw. At first this is done as an “instinctive” or natural reaction to some situation. The result when it is observed gives a new meaning to the activity. Henceforth men in throwing and shooting think of it in terms of its outcome; they act intelligently or have an end. Liking the activity in its acquired meaning, they not only "take aim” when they throw instead of throwing at random, but they find or make targets at which to aim. This is the origin and nature of “goals” of action. They are ways of defining and deepening the meaning of activity. Having an end or aim is thus a characteristic of present activity. It is the means by which an activity becomes adapted when otherwise it would be blind and disorderly, or by which it gets meaning when otherwise it would be mechanical. In a strict sense an end-in-view is a means in present action ; present action is not a means to a remote end. Men do not shoot because targets exist, but they set up targets in order that throwing and shooting may be more effective and significant. (226)

22

@FotH: I’m going to have to join ranks with Aristippus at this point… you really do need to go read at least the first 150 pages of Human Action plus at least the first five chapters of The Ultimate Foundation of Economic Science (the two do overlap but are also complementary in many ways) before we can even begin to talk.

This is not to put you off simply because “you haven’t read the book”. Instead, it is because you have mistakenly concluded that you “get it” but it’s clear at this point that, really, you do not. Read HA, read UFoES and let’s go at it.

Clayton -

23

Fool on the Hill is a known troll, this is one example. Of course transportation to work is a production good. Whomever suggested otherwise? (real question; not rhetorical)

24

A lot of reading - most of which I just skimmed, and you’ve obviously put a lot of thought into this. I won’t offer anything detailed other than I agree with Ari and Clayton. Also, there is no real reason to look at Kant. If anything you could look more into neo-Kantians / quasi Nietzscheans (e.g. Max Weber), anti-psychologists / phenomonologists such as Husserl, or the Aristotlianism of Menger and Bohm-Bawerk, but it’s ultimately unimportant. What is important are the “exact laws” you can derive fromany dialectic or Hermeneutic you wish to use.

Furthermore, it ought be strongly encouraged that you dehomogenize Mises and Rothbard if you wish to do a critique on Mises himself. They are different.

Either way I don’t think critiques are all that important as “a critique for the sake of critiquing”. In fact, it probably does more harm than good. There is too big of a risk of everythingfalling on pure skepticism, which is pure gibberish. It’s best if you are critiquing the foundations of something, you lay your cards on the table if you want someone to be able to make sense of things. If that is pitting Kant vs Dewey, so be it.

25

Clayton: I’m going to have to join ranks with Aristippus at this point… you really do need to go read at least the first 150 pages of Human Action plus at least the first five chapters of The Ultimate Foundation of Economic Science (the two do overlap but are also complementary in many ways) before we can even begin to talk.

I’ve read all but the last 50 pages of Human Action. I will take a look at the latter.

26

vive la insurrection: Either way I don’t think critiques are all that important as “a critique for the sake of critiquing”. In fact, it probably does more harm than good. There is too big of a risk of everythingfalling on pure skepticism, which is pure gibberish. It’s best if you are critiquing the foundations of something, you lay your cards on the table if you want someone to be able to make sense of things. If that is pitting Kant vs Dewey, so be it.

I agree about some of this. I think, especially in the last section, that it does come across as too “skeptical.” My basic conception of economics (or praxeology, I guess) is that it concerns “durations” of time and how action occurs within them. This is fundamentally about actualizing one of many parallel states rather than aiming at something in the future. The appearance of aiming at something in the future is due to the conceptual extension of these parallel states further in time. It is from this basis which I wish to “critique” Mises. I’ve started to formulate a theory of value based on this durational conception here. My primary goal isn’t to refute Mises, but to establish a better foundation for the science of economics. If I am to publish this here, it obviously makes sense to reference Mises. Whenever I’ve disagreed with people here in the past, they’ve always told me to read Human Action. Now that I have, I feel like I ought to give a response.

27

@FotH: Oh. Then you need to work on reading comprehension because you’re not critiquing Mises’s ideas. You’re critiquing something else.

No, there is just one ultimate end: the alleviation of felt uneasiness.

Uneasiness is implied in Human Action, not derived from it. If there was no uneasiness, there would be no need to act. You could simply rest indefinitely in the bliss of no felt uneasiness.

We call contentment or satisfaction that state of a human being
which does not and cannot result in any action. Acting man is eager
to substitute a more satisfactory state of affairs for a less satisfactory.
His mind imagines conditions which suit him better, and his action
aims at bringing about this desired state. The incentive that impels
a man to act is always some uneasiness? A man perfectly content
with the state of his affairs would have no incentive to change things.
He would have neither wishes nor desires; he would be perfectly
happy. He would not act; he would simply live free from care.

Mises - HA I.1.2

You’re conflating choice with action. While the two can often be used interchangeably, this should only be attempted when you are clear about the distinction. Choice is selection between the available courses of action. Action itself is purposeful behavior (see the first para of HA), it is choice with an end in view. We can say that an automated tester “chooses” whether to discard a part as faulty or keep it on the assembly line for packaging. But it does not act because it has no purpose of its own. It’s just a mechanical device.

You seem to think that foresight is not an intrinsic part of the human condition. We are not talking about a disembodied, universal action, we are talking about human action.

Pray tell, how so?

He says more or less what Mises says about means and ends. The ultimate end is the only end which is never a means to any other. And Mises is well aware of the fact that this is a definitional or tautological relationship. The purpose of making a distinction between means and ends is merely to facilitate analysis of the problems of human action. After all, what makes something a means is that is being used. And use is subjective, it is a subjective attitude about something. This is why man can act without actually making any visible motion. A man who passes a bid in a auction by remaining silent, for example, has acted. Silence was the instrument of his action.

You need to read up on methodological dualism - you are stuck in the crass physicalism of mainstream economics.

Clayton -

28

Gotcha. My head has become a bit muddled with straight Misean styled prax. lately - and I’ve been confusing various approaches to the field due to looking at other things.

Anyway I’m going to drop out of thisand suggest you discuss things with AdamKnott on this thread:

https://forum.freecapitalists.org/t/a-defense-of-misess-praxeology/23831

He’s a top notch Misean on the forum

29

I thought this would be : Step 1: Humans don’t Act…

30

I like this topic and I am very glad to take part in it! chnlove scam

31

To the charge that Mises is not the same as Rothbard, here is Mises on time and scarcity:

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.

However, he also has some better things to say:

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 [p. 102] 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.

Mises is correct in saying immortality would not eliminate scarcity. But why does he still say that time is scarce? I think there is a colloquial meaning of saying that time is scarce that makes sense. However, I think it is a mistake to say it is scarce in the same way that other goods are. Because scarcity refers to the relationships of things with time, either the things are scarce or the time, not both. When we are trying to get things done before sunset, we might say that time is scarce. But we really mean that daylight is scarce (i.e. it doesn’t fill all of the time we want it to).

32

Exchange

Mises refers to two kinds of exchange. The first he calls “autistic exchange,” which is exactly the same thing as the category of human action. But now he says we “exchange” one possible state for another rather than just choosing one rather than the other. This is an incredibly odd and idiosyncratic use of the word “exchange.” The second type of exchange for Mises is the “interpersonal exchange,” which is exactly what normal people mean by exchange.

The difference can be illustrated in graphs. The graph for autistic exchange is the same one as the one for the category of human action:

(Note: I made a change to hopefully make the graph clearer.)

The graph for interpersonal exchange looks quite a bit different:

Notice the entirely different shape of the graph. In autistic exchange, two lines diverge from a single point. In interpersonal exchange, the two lines begin at different points. In fact, interpersonal exchange really doesn’t concern “action” because it is not about choosing between alternatives. An interpersonal exchange is something that is chosen or can be chosen. An autistic exchange is simply the form of choice (with an end in view).

But the most interesting thing here is not that Mises derives exchange from action, but that he derives action from exchange. In interpersonal exchange, an object is at one point here and only at a later point over there. Thus, interpersonal exchange involves a movement through time. When trying to derive human action from this objective phenomena, one could end up with the wrongheaded view that action is somehow causative of movement through time—that the time is being exchanged in the same way that the spatial possession of the object is. When exchanging objects, one indeed prefers to have the one he is going to get over the one he currently has. Thus, when we consider the possession of the objects only, we might be able to say that one is better off after the trade than before. Even this, however, is not necessarily true. It’s quite possible to prefer the first object in the first time period, and prefer the second object in the second time period.

Production—actualization of possible states considered in relation to itself through time—is in fact more fundamental. It is not production that is a subset of exchange, but in fact exchange that is a subset of production.

An instructive example of the role of exchange in Austrian (and neoclassical) economics can be found in R. A. Radford’s account of a market economy that arose in a POW camp during World War II (see PDF). I had first heard of this fascinating article during an exchange that occurred between anthropologist David Graeber and Austrian economist Robert Murphy over the origins of money. In his book Debt: the First 5000 Years, Graeber argued that the account of the origins of money given by Adam Smith and Carl Menger was (more or less) wrong. Smith and Menger (and Mises) had maintained that money had originated from barter. But Graeber noted that primitive peoples rarely engaged in barter, but instead operated on an informal system of credit. According to Graeber, money originated in bureaucratic institutions—the state and its predecessors. The state would demand taxes to be paid in a certain commodity, and the universal need for this commodity created by taxation would create markets and turn this commodity into “money.” Part of Murphy’s response to Graeber was to point out Radford’s account of the prison economy and how money arose there from barter exactly in the way Menger described. It turns out that many other prisons also exhibit the same phenomena of money emerging from barter. Graeber’s response to this point was rather unfortunate. He argued that the prisoners reinvented money because they came from a society that used it. He should have pointed out a particular characteristic of prisons that make them unique as a form of society—that in a prison, the production of goods essentially does not occur.

The prison therefore is the perfect model of Misesian economics because it reduces all economic activity to the form of exchange. Scarcity takes the form of material scarcity and is thus alienated from its true basis in the temporality of human action. Scarcity appears as a given quantity of something—a quantity determined purely externally, without any relation to the activities of the economizing individuals, and without any apparent relation to the concept of time. Human action appears as consumption, and exchange exists for consumption, as the means for consumption. Value, which is determined by human action in relation to time, therefore takes the form of marginal consumption, or marginal utility. Outside of the prison, it is clear that things are different. Commodities do not simply exist in fixed quantity, but are converted into quantities by the specific quality of human action as it operates in the duration of time. In the prison economy, commodities are only obtained through human action by the means of exchange. But outside it, one can also obtain commodities by the means of production.

In the prison, price is determined by the tension between the opposing means of obtaining the same commodity. In this case, the opposing means are both forms of exchange. The fact that one can “buy” the same commodity from more than one “seller” forces the price down as the sellers compete with each other. But since the buyer’s “money” is also a use-value, a commodity—in Radford’s case, cigarettes—competition among buyers also forces the price in the other direction. Thus, the use-value as it enhances the temporal duration of consumption is opposed to the sheer quantity of goods in existence. One values one commodity over the other due solely to the gain it brings to the singular duration of consumption that the use of either commodity would occupy. In other words, “supply creates its own demand.”

Outside of the prison, price is also determined as a tension between the differing means of obtaining a commodity. But here the competing means are not only forms of exchange, but also forms of production. Thus one is faced with the choice: do I trade for the commodity or do I produce it myself? In the same manner as the competition between sellers, this tension too functions to drive the price down. Scarcity no longer appears as the pure quantity of an existing commodity whose being originates externally. Scarcity can now only refer to the effort—as the negative preference over parallel temporal states—needed to produce the commodity. Here one doesn’t merely choose between the relative merits of different periods of consumption but also between periods of production—both in relation to other periods of production and in relation to periods of consumption. In the prison economy, the price that a seller demands for a commodity is increased as the commodity increases his preference of the period of consumption of that commodity versus that same period with a different commodity. Outside of the prison, the price of the seller’s commodity increases as the buyer’s preference over the period of production of the commodity he sells exceeds the preference over the (ultimately unrealized for him) period of production of the commodity that he buys.

In summary, Mises forces the ideal abstractions of an exchange-only economy onto the real economy of production through the transformation of human action into exchange as “autistic exchange.” Thus, the inconsistencies that I noted earlier in Mises’s conception of human action in its purity do not stem from accidental mistakes. We see that human action is not the true starting point of Mises’s analysis but rather a result of its false beginnings in exchange (and—as we shall see—“profit”). So, for example, wages are explained—and justified—on the grounds that the laborer is exchanging “future” goods for “present” goods. The act of production is entirely abstracted away from the analysis. The fact that the laborer spends most of his time not consuming present goods but producing future ones is all but forgotten. Future goods are seen to be “gifts” from a divine prison warden who allocates them in equal share to each prisoner. It’s simply assumed “a priori” that the real world fits this ideal construction of an exchange-only economy. Even Austrian economists tacitly admit that there is something fundamentally different about the prison economy that allows it to fit their ideal models better than the actual economy that they’re supposed to explain. One “Austrian” laments with double irony that “Only Criminals Use Honest Money!”

33

Fool on the Hill

Unless someone can convince me otherwise, I’m going to argue that this is an example of some confusion on Mises’s part. Mises is not a prophet, and Mises is not perfect–he’s a human social scientist and he makes mistakes and misstatements.

"[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]."

As I read this, there may be some inadvertent equivocation going on in this passage.

Does “immediately” mean “all at the same time”, or merely “each sequentially, in the very near future” ??

If “immediately” means all at the same time, then Mises writes:

Although all his appetites could be satisfied ALL AT THE SAME TIME 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.

This seems to be a contradiction.

(I think we have to assume that “appetities” and “states of satisfaction” refer to the same thing, i.e., the “wants” of the actor concerned.)

If “immedately” means “each sequentially in the very near future”, then Mises writes:

Although all his appetites could be satisfied EACH SEQUENTIALLY IN THE VERY NEAR FUTURE without any expenditure of labor, he would have to arrange his time schedule, as there are states of satisfaction which are incompatible and CAN ONLY BE CONSUMATED EACH SEQUENTIALLY.

This seems to be a tautology. This seems to be the argument: Person A must arrange his time schedule, because X = X.

If you want to argue that Mises, and following him, Rothbard, provide an unsatisfactory treatment of the concept of time, I personally am not going to dispute you.

If my argument above holds (Mises’s statement is either a contradiction or a tautology), then this particular argument can’t be used to prove or demonstrate that “For this man, too, time would be scarce and subject to the aspect of sooner or later.” Mises would have to re-phrase or re-work the argument he is trying to make about the economization of time.

I think the concept of time is fairly difficult and there may be few philosophers who can provide a totally satisfactory treatment of it. As opposed to the attempt to conceive time in terms of “economizing,” I prefer the following insight about time Mises makes:

“It is acting that provides man with the notion of time and makes him aware of the flux of time. The idea of time is a praxeological category.”

(HA, 3rd rev. p.100)

If time is a category of action, then it cannot be “chosen,” or “economized,” or “arranged,” or acted upon in any other way. If time is a category of action, then in every action, we will find some aspect of that action corresponding to “time.”

Regarding scarcity, as mentioned previously, there is a conception of scarcity that is pefectly consistent with Misesian praxeology. Action is the actor’s attempt to replace the situation he is currently faced with, with a different situation. Any situation an actor attempts to attain, is thereby a sitation which the actor does not have “enough” of. His attempt to attain X, is identical to his not having “enough” of X. Thus, scarcity is “implied” in the concept of action.

34

Fool on the Hill:

Exchange

Mises refers to two kinds of exchange. The first he calls “autistic exchange,” which is exactly the same thing as the category of human action. But now he says we “exchange” one possible state for another rather than just choosing one rather than the other. This is an incredibly odd and idiosyncratic use of the word “exchange.” The second type of exchange for Mises is the “interpersonal exchange,” which is exactly what normal people mean by exchange.

Regarding the two types of exchanges, those are easily conceived as two possible classes of human action. There are at least four recognizeable classes of human action:

  1. physical action: the actor interacts with physical nature, including his own body.
  2. interpersonal action: the actor itneracts with another actor.
  3. mental action: the actor interacts with his own mind (i.e., thought, deliberation, imagination, etc.)
  4. catallactic action: the form of action Mises asserts is the subject matter of economic science (the object of the actor’s action is a price, a market, etc..)

Mises’s “autistic exchange” we may conceive as those actions an actor may perform that do not refer to another actor (another mind).

E.g., gardening (physical action), thinking (mental action), and making a purchase from a vending machine (catallactic action).

All these represent the actor’s attempt to replace the situation that currently faces him/her with another situation. These are all things an actor may do “in isolation,” i.e., without referring to the presence of another acting being.

By contrast, interpersonal action (interpersonal exchange) means that the actor acts with reference to another actor (another mind or consciousness). (telephone calls, conversation, arguing, coercing, etc.)

But now he says we “exchange” one possible state for another rather than just choosing one rather than the other.

  1. If this statement means or implies that in praxeology (strictly interpreted) we compare one state with another, then there will immediately arise the problem of intertemporal comparisons of the content of various actions. Praxeology does not deal with intertemporal comparisons of the content of several actions. (that is Thymology) Praxeology only deals with the universal categories that are part of each and every action.

  2. If one wanted to build on or extend Mises’s system, then one should interpret “exchange one possible state for another” as meaning the same thing as “choosing one rather than the other.” I.e., both will mean the actor’s attempt to replace the situation currently confronting him/her with a different situation.

The relationship between the different classes of action (which refer to content), and the pure categories of praxeology (which do not refer to particular content) is the following:

Every action is comprised of a perceptual (observable, sense-able, etc.) content, and an unobservable aspect. For example, if we assume that my physical action entails a ball, I see the front of the ball, but not the back of the ball. The back of the ball is not observable, but is part of my action in the sense that by indentifying this object as a ball, I imply it has a back that is similar to the front.

In interpersonal action, I may perceive or observe another person’s body, but I do not perceive or observe their mind or consciousness. When I identify another person as an actor similar to myself, I imply that this person (strictly speaking, this body), has a mind or consciousness similar in nature to what I experience as my mind or consciousness. But this mind or consciousness is not observable.

Thus, the categorial form of both types of action (in this example, physical action and interpersonal action) is the same. Both “classes” or “types” of action consist of a perceptual presence, and an unobservable aspect which is a necessary aspect of that action.

The difference is that in objective social science, or in natural science, we assume that we know the “real nature” of the unobservable aspect of every kind of action. By contrast, in praxeology, we don’t, or need not, consider the hidden aspect of each action from the point of view of its supposed “real nature” (an ontological-type question). Instead, we may consider the unobservable or un-perceivable aspect of every action as a singular category of action, and we may remain neutral with respect to a supposed perceivable “content” of such a category. The unobservable aspect of every action implies a category of unobservability which is part of every action.

Thus, regarding this:

Thus, interpersonal exchange involves a movement through time. When trying to derive human action from this objective phenomena, one could end up with the wrongheaded view that action is somehow causative of movement through time…

We can see that this is not necessarily true. Interpersonal action (strictly conceived) does not entail movement through time, and does not entail any objective phenomenon. Interpersonal action entails a perception of something, and an unobservable aspect of that something, as all other “forms” of action do.

Interpersonal exchange (interpersonal action) exhibits the same form as autistic action or any other kind of action.

In interpersonal action, the actor believes or intends that the unobserable aspect of his action is the mind or consciousness of another actor.

This action has the same form as physical action, where, for example, the actor believes that the wall in front of him has another side, though the other side of the wall is not observable.

35

Clayton: No, there is just one ultimate end: the alleviation of felt uneasiness.

There are only two ways I can interpret this: as a tautology or as a metaphysical dogma. As a tautology, it merely refers to the end qua end. It says that the reason that we do something is a reason. As a dogma, its just an unsupported assertion. There’s no way it can be potentially falsified. If I’m playing the piano, I see no need to say that I am playing it to remove uneasiness. I’m playing it because I like the way that it sounds–that’s reason enough for me. Of course I could give reasons why I like the way it sounds. The reasons in turn could have other reasons, indicating an indefinite regress. But there is nothing wrong with such an indefinite regress, no need to posit an ultimate end or beginning. Kant explains this in the First Antinomy section of the Critique of Pure Reason–where the idea of an ultimate beginning or end in the temporal sense is rejected as dogma. To say that I prefer to be playing the piano to not playing the piano for the time I’m playing it is a tautology. It says nothing about why I prefer to play the piano, and thus says nothing about ends.

Uneasiness is implied in Human Action, not derived from it. If there was no uneasiness, there would be no need to act. You could simply rest indefinitely in the bliss of no felt uneasiness.

I don’t think bliss excludes action. Just because I am choosing and am aware of the state my choices will bring about doesn’t mean that I can’t be in a state of bliss at the same time. Originally I was going to have a section that used Nietzsche’s critique of asceticism against the concept of uneasiness. Part of Nietzsche’s project was to reconceive bliss as action–the “will to power.”

You’re conflating choice with action. While the two can often be used interchangeably, this should only be attempted when you are clear about the distinction. Choice is selection between the available courses of action. Action itself is purposeful behavior (see the first para of HA), it is choice with an end in view. We can say that an automated tester “chooses” whether to discard a part as faulty or keep it on the assembly line for packaging. But it does not act because it has no purpose of its own. It’s just a mechanical device.

Normally, I think of them as the other way around. I would more likely say that a machine acts than chooses. I think of action as of an empirical character, as being observable in the spatio-temporal world. Whereas I think choice pertains to reason and is always made with an end in view. However, I understand Mises conceives of action differently, and thus I have been using the terms interchangeably.

He says more or less what Mises says about means and ends. The ultimate end is the only end which is never a means to any other. And Mises is well aware of the fact that this is a definitional or tautological relationship. The purpose of making a distinction between means and ends is merely to facilitate analysis of the problems of human action. After all, what makes something a means is that is being used. And use is subjective, it is a subjective attitude about something. This is why man can act without actually making any visible motion. A man who passes a bid in a auction by remaining silent, for example, has acted. Silence was the instrument of his action.

The problem is that Mises uses his rigid means/ends distinction to explain certain economic categories. Capital, for example, simultaneously refers to investments which bring profits and goods that increase wealth. Take the following passage:

The penury of these miserable masses of–in the main colored–people is not caused by capitalism, but by the absence of capitalism. But for the triumph of laissez faire, the lot of the peoples of Western Europe would have been even worse than that of the coolies. What is wrong with Asia is that the per capita quota of capital invested is extremely low when compared with the capital equipment of the West. The prevailing ideology and the social system which is its off-shoot check the evolution of profit-seeking entrepreneurship. There is very little domestic capital accumulation, and manifest hostility to foreign investors. In many of these countries the increase in population figures even outruns the increase in capital available … It is false to blame the European powers for the poverty of the masses in their former colonial empires. In investing capital the foreign rulers did all they could do for an improvement in material well-being.

The suggestion seems to be that these former colonial countries simply aren’t investing enough in capital to lift them out of poverty. But it doesn’t necessarily follow that investing in capital (what we normally conceive of as capital) is the best way to maximize future wealth. If one is starving–as many people in these countries are–then investing in food is the best way to maximize future wealth. The same could be said of medicine or any number of other “consumer” goods. But since I’m sure Mises considers food to be consumption, this conflicts with his conception of consumption as a pure end. He would probably regard the statement that “we should increase our consumption to increase our future wealth” as a contradiction. But it isn’t necessarily.

36

The suggestion seems to be that these former colonial countries simply aren’t investing enough in capital to lift them out of poverty. But it doesn’t necessarily follow that investing in capital (what we normally conceive of as capital) is the best way to maximize future wealth. If one is starving–as many people in these countries are–then investing in food is the best way to maximize future wealth. The same could be said of medicine or any number of other “consumer” goods. But since I’m sure Mises considers food to be consumption, this conflicts with his conception of consumption as a pure end. He would probably regard the statement that “we should increase our consumption to increase our future wealth” as a contradiction. But it isn’t necessarily.

He isn’t saying invest in a consumer’s good, but invest in producing more of said good. All investment aims at producing consumption goods ultimately, and a good can be both an investment good and a consumer’s good. I’ll leave the hair splitting to others but I don’t think you should leave Austrian economics quite yet.

Re the Graeber exchange, it turned out from the comments section that Graeber did not understand economics very well and he ignored/disregarded many obvious examples of barter, so I would not uncritically take his word on the matter. And as for this
:

In summary, Mises forces the ideal abstractions of an exchange-only economy onto the real economy of production through the transformation of human action into exchange as “autistic exchange.” Thus, the inconsistencies that I noted earlier in Mises’s conception of human action in its purity do not stem from accidental mistakes. We see that human action is not the true starting point of Mises’s analysis but rather a result of its false beginnings in exchange (and—as we shall see—“profit”). So, for example, wages are explained—and justified—on the grounds that the laborer is exchanging “future” goods for “present” goods. The act of production is entirely abstracted away from the analysis. The fact that the laborer spends most of his time not consuming present goods but producing future ones is all but forgotten. Future goods are seen to be “gifts” from a divine prison warden who allocates them in equal share to each prisoner. It’s simply assumed “a priori” that the real world fits this ideal construction of an exchange-only economy. Even Austrian economists tacitly admit that there is something fundamentally different about the prison economy that allows it to fit their ideal models better than the actual economy that they’re supposed to explain. One “Austrian” laments with double irony that “Only Criminals Use Honest Money!”

The act of production isn’t “abstracted” away. In fact in some jobs you could get paid daily even. The fact remains that the wage-earner is earning their wage well in advance and despite of whether the good sells or not, so they neither have to wait nor do they have to risk losses out of their own assets should the business flop. I don’t see what not abstracting from the act of “production” would alter since this remain exactly the same. To the degree that someone is trying to isolate an economic concept from all other concepts, abstraction is nonetheless perfectly suitable. Mises never said any real person is only a wage-earner/capitalist/entrepreneur/landowner. This would be facile and is not what he refers to, he is attempting to define the category of wage-earner in economic terms. You also put words in Mises’s mouth. If the wage-earner were to earn their wage on the spot the discounting would be even steeper. Insofar as “real people” act, praxeology fits their action, so no, it isn’t “simply assumed”. Austrians tend to abstract when analysing concepts in isolation, but I don’t think you’re even really hitting upon an instance of that here. You are rather foolishly assuming that he thinks that labour does not take place over time. It does, it simply is nowhere near the time it takes to fully bring a good to market.

As for playing the piano, you’re removing the felt uneasiness of not being happy, i.e. not playing it. Mises avoided the happiness formulation because not all action aims at making one happier, it can also have a preventative nature to it. Being happier is just one subset of the removal of felt uneasiness.

I am a bit baffled as to why you’d call this a critique when there are many points in it that are more the result of incomplete understanding on your part (e.g. the discussion of time seems to commit Austrians to positions they neither hold nor are they obliged to hold.) I think you’ll benefit from discussing the topic further with Mr Knott (or indeed, David Gordon) nonetheless.

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I am a bit baffled as to why you’d call this a critique when there are many points in it that are more the result of incomplete understanding on your part

Nailed it. Applies to FOTH’s critique of Hazlitt as well.

I have to hand it to you, FOTH. You have humility, willingness to learn, intelligence. So what’s stopping you? Is it an agenda you are not aware of, that Marx must be right at all costs?

Here is the acid test. Ask yourself this. Do you, before even opening an Austrian work, decide that should it prove to be correct, you will become an Austrian? Do you have a preconceived matrix of what the world is like [Labor theory of value, exploitation of the worker, dictatorship of the proletariat, nothing to lose but ones chains] that clouds the crystal clear purity of the Austrian analysis?

I wonder about Student as well. He’s no dummy, so why doesn’t he get it? How can he be duped by the idea that moving cash around or printing more of it results in increased production? Would love to thresh it out with him some time, in a non-confrontational way.

FOTH and Student, consider yourselves honored. Many Keynesians and Marxists here I see as irreedemable.

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Student as far as I can tell is merely here to be the resident contrarian. Perhaps it’s his way of learning. Regarding the OP, I’ll see if I get some time to mull through this thread but from skim reading it I don’t really see so much a critique of Mises as of points that have not fully digested.

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“There are only two ways I can interpret this: as a [tautology] or as a metaphysical dogma. As a [tautology], it merely refers to the end qua end. It says that the reason that we do something is a reason. As a dogma, its just an unsupported assertion. There’s no way it can be potentially falsified. If I’m playing the piano, I see no need to say that I am playing it to remove uneasiness. I’m playing it because I like the way that it sounds–that’s reason enough for me. Of course I could give reasons why I like the way it sounds. The reasons in turn could have other reasons, indicating an indefinite regress. But there is nothing wrong with such an indefinite regress, no need to posit an ultimate end or beginning. Kant explains this in the First Antinomy section of the Critique of Pure Reason–where the idea of an ultimate beginning or end in the temporal sense is rejected as dogma. To say that I prefer to be playing the piano to not playing the piano for the time I’m playing it is a [tautology]. It says nothing about why I prefer to play the piano, and thus says nothing about ends.”

Fool on the Hill:

As I assume you already know, Mises explicitly states that praxeology is tautological in nature. A critique of Mises’s praxeology stating that praxeology is tautological in nature constitutes agreement with Mises, not disagreement with him.

“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.”

“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 unkown before.”

(Human Action, 3rd rev., p.38)

A tautology as intended by Mises is not the proposition that A = A. Rather, it is a proposition that expresses the sense in which A = B.

A simple illustrative example is the proposition:

In walking toward a location ( phenomenon A), I walk away from a location (phenomenon B).

Walking away from a location is implied in our walking to a location. But note this proposition is not identical to the proposition:

In walking toward a location (A), I walk toward a location (A).

The first proposition potentially adds something new to our knowledge, while the second proposition repeates the same thing twice.

This kind of tautological or analytical knowledge (something similar to the above) is what Mises has in mind.

“But the characteristic feature of a priori knowledge is that we cannot think of the truth of its negation or of something that would be at variance with it. What the a priori expresses is necessarily implied in every proposition concerning the issue in question. It is implied in all our thinking and acting.”

“If we qualify a concept or a proposition as a priori, we want to say: first, that the negation of what it asserts is unthinkable for the human mind and appears to it as nonesense; secondly, that this a priori concept or proposition is necessarily implied in our mential approach to all the problems concerned, i.e., in our thinking and acting concerning these problems.”

(The Ultimate Foundation of Economic Science, 2002, p. 18)

To paraphrase Mises, it is implied in our thinking and acting that in walking toward a location we walk away from a location.

“I see no need to say that I am playing it to remove uneasiness. I’m playing it because I like the way that it sounds”

Here is how Mises describes or defines praxeology:

“Praxeology is a theoretical and systematic, not a historical science. Its scope is human aciton 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.” (HA 3rd rev. p. 32)

“Praxeology is not concerned with the changing content of acting, but with its pure form and its categorial structure. The study of the accidental and envoronmental features of human action is the task of history.” (p.47)

“The cognition of praxeology is conceptual cognition. It refers to what is necessary in human action. It is cognition of universals and categories.” (p.51)

With these thoughts in mind, let’s look at what you have asserted. You refer to a content of action, playing the piano.

You assert that there is no reason to conceive that playing the piano is related to the actor’s uneasiness (dissatisfaction, unhappiness, displeasure, pain, etc., etc.). The actor could be playing the piano because he likes the sound.

But here again, you are in agreement with Mises, because you relate the object of action (playing the piano) with a categorial “attitude” of the actor toward playing the piano, i.e., “liking” it. As Mises conceives things, you are merely saying that you play the piano not to avoid or ameliorate dissatisfaction (uneasiness), but rather to gain or experience satisfaction. I believe Mises would consider “avoiding dissastisfaction” and “gaining satisfaction” as two different ways of saying the same thing.

In any case, you referred to the two primary categories of action in your critique of Mises. From our point of view, you tried to avoid the cateogial form:

(object of action) related to (attitude of actor = dissatisfaction)

By replacing it with:

(object of action) related to (attitude of actor = satisfaction)

You have simply proposed referring to “walking toward location A” as “walking away from location B”.

People who read Mises possibly overlook or ignore the passages in which he expresses that praxeology is only concerned with the categorial form of action. Here are some of the most important passages where he treats this subject. No single passage is more important to understanding the formal nature of Mises’s conception of praxeology than the “dictum of Jacobi” (as quoted by Bohm-Bawerk):

“We originally want or desire an object not because it is agreeable or good, but we call it agreeable or good because we want or desire it; and we do this because our sensuous or supersensuous nature so requires. There is, thus, no basis for recognizing what is good and worth wishing for outside of the faculty of desiring–i.e., the original desire and the wish themselves.”

(Epistemological Problems of Economics, 1976, p. 151)

A similar passage appears in Spinoza’s The Ethics:

“It is thus plain from what has been said, that in no case do we strive for, wish for, long for, or desire anything, because we deem it to be good, but on the other hand we deem a thing to be good, because we strive for it, wish for it, long for it, or desire it.”

(Digireads.com publishing, 2008, p. 56)

Two things of note. First, the object of desire (a “thing”) is contrasted or related to an attitude toward that object (strive, wish, long, desire, etc.). Other synonyms would include: want, try, attempt, aim, etc.. Second, this analysis of categories is independent of “Kantianism” and of Kant’s particular phylosophy. For example, to conceive these categories we need not refer to the idea of the “synthetic a priori.”

Here are the passages in which Mises expresses, in his own words, what is expressed in the passage quoted from Jacobi above:

“The most common misunderstanding consists in seeing in the economic principle a statement about the material and the content of action. One reaches into psychology, constructs the concept of want, and then searches for the bridge between the want, the presentation of a feeling of uneasiness, and the concrete decision in aciton. Thus the want becomes a judge over action: it is thought that the correct action, the one corresponding to the want, can be contrasted to the incorrect action. However, we can never identify the want otherwise than in the action. The action is always in accord with the want because we can infer the want only from the action.”

(Epistemological Problems of Economics, 1976, p. 80)

“It was forgotten that we are able to infer the need only from the action. Hence, the idea of an action not in conformity with needs is absurd. As soon as one attempts to distinguish between the need and the action and makes the need the criterion for judging the action, one leaves the domain of theoretical science, with its neutrality in regard to value judgments…For there can be no doubt that [praxeology’s] subject matter is given action and only given action. Action that ought to be, but is not, does not come within its purview.”

(Epistemological Problems of Economics, p. 149)

Also:

“Everything that we say about action is independent of the motives that cause it and of the goals toward which it strives in the individual case.”

(Epistemological Problems of Economics, p. 34)

Mises conceives no separation between the action and the “want” or the “need” that is related to that action. We should thus conceive the “want” or the “need” (or the “satisfaction” or the “dissatisfaction”) as a categorial aspect of each and every action. There is the object of action on the one hand (the content of the action), and there is the attitude of the actor in relation to that object on the other hand (want, need, satisfaction, dissatisfaction, etc.).

Finally, to understand Mises, it is probably helpful to distinguish “pure” praxeology from historical narratives, which I believe Mises would have considered part of Thymology.

Praxeology, strictly speaking, consists of an analysis of the categories of action and their relations. Mises conceives a clear distinction between praxeology and thymology (between theory and history). If we assert “people X were not successful at Y, because of Z,” I believe Mises would have considered this history (thymology) and not praxeology.

If we consider this passage:

“Complex phenomena in the production of which various causal chains are interlaced cannot test any theory. Such phenomena, on the contrary, become intelligible only through an interpretation in terms of theories previously developed from other sources. In the case of natural phenomena the interpretation of an event must not be at variance with the theories satisfactorily verified by experiments. In the case of historical events there is no such restriction. Commentators would be free to resort to quite arbitrary explanations. Where there is something to explain, the human mind has never been at a loss to invent ad hoc some imaginary theories, lacking any logical justification.” (Human Action)

The “interpretation of complex phenomena” or “the interpretation of an event” would, I believe, refer to history or thymology, while the “theories previously developed from other sources” would refer to praxeology. There is pure theory on the one hand (praxeology), and there is the interpretation of historical events with the aid of pure theory on the other hand (thymology).

I believe that a critique of a historical interpretation is not identical to a critique of praxeology.

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Adam, thanks for the replies. Your knowledge is helpful.

Any situation an actor attempts to attain, is thereby a sitation which the actor does not have “enough” of. His attempt to attain X, is identical to his not having “enough” of X. Thus, scarcity is “implied” in the concept of action.

Maybe I misunderstand you, but I don’t think I agree. If we can return to the example of the piano, we notice that there is never a time when the pianist does not have enough notes. The fact that he doesn’t play all of the notes at the beginning does not suggest that he doesn’t have enough at that time–that he would like to play them all at once if he were able–rather he doesn’t want all the notes at that time. In fact, if he plays the piece correctly, he always has enough notes. He plays them exactly where he wants them.

  1. If one wanted to build on or extend Mises’s system, then one should interpret “exchange one possible state for another” as meaning the same thing as “choosing one rather than the other.” I.e., both will mean the actor’s attempt to replace the situation currently confronting him/her with a different situation.

Exactly, which is why the use of the word “exchange” is unnecessary and misleading.

We can see that this is not necessarily true. Interpersonal action (strictly conceived) does not entail movement through time, and does not entail any objective phenomenon. Interpersonal action entails a perception of something, and an unobservable aspect of that something, as all other “forms” of action do.

Interpersonal exchange (interpersonal action) exhibits the same form as autistic action or any other kind of action.

In interpersonal action, the actor believes or intends that the unobserable aspect of his action is the mind or consciousness of another actor.

I think I agree with this (and what you said previous to it), but I don’t think this is all that Mises is doing. First off, he clearly uses the term exchange and not action. As I noted, all exchanges involve action. So certainly the form of action applies in the cases of exchanges. But what the word “exchange” typically refers to is not the unseen but the seen portion of the action. A robot, for example, could be programmed to exchange things, but this would not constitute “acting” on the robot’s part. By doing this, I believe that Mises tries to transfer some of the particular characteristics of exchange to all of human action. I don’t think one could conceive of marginal utility (interpreting it in a way that is incompatible with the LTV) without thinking in this way. Indeed, as I argued, if things are only obtained through unproductive reception and exchange, then marginalism logically follows.