Human action is not all that is economically relevant

Economics Economics Questions
1

The edifice of Austrian economic theory is grounded in the axiom that all humans act; they use available means to achieve certain ends. I don’t dispute this at all, nor do I dispute the theories that have been deduced from the axiom of human action. What I do dispute is the seeming assumption that the only way humans can have an affect on the physical world and the economy is through purposeful action.

Mises states that action is necessarily rational; man can overcome instinctual tendencies and burning emotions to make decisions that are in the interest of removing the greatest amount of uneasiness felt. Of course, these decisions are made in light of ex ante considerations, and the actor may wish, ex post, that he’d made some other decision, but still, purposeful action is necessarily rational: no human makes a decision that he/she doesn’t think, ex ante, will remove the greatest amount of uneasiness felt.

That said, how is there any way of knowing whether a human’s interaction with the physical or economic world is rooted in purposeful decision-making? Let’s just take an extreme example: a man receives a call from the police that his son was murdered. Rage overcomes the father and he drives his fist through the wall. Mises would likely describe this as an instance where the man took into account the discomfort felt as a result of his rage and made a decision to best assuage the rage in a violent, cathartic, physical motion. As such, his decision to punch a wall was rational, in that the man thought, at the time, that it would be the best way to remove his uneasiness. Perhaps there is some truth to this, but as an observer, Mises would really be just speculating about what was the driving force that carried the man’s fist through the wall. Another likely alternative is that the brain does not always route all sensory information directly through the logical decision-making portion of the brain to arrive at a rational ex ante decision. It could be the amygdala’s hardwiring into the shoulder, arm, and hand that propelled the fist into the wall. It could be any number of biological mechanisms determined by evolution (or a higher power) to increase a human’s likelihood of survival in some dangerous situation. Either way, to observe any one human’s interaction with the physical world and categorize it as exactly A – falling entirely in the field of purposeful human action – or B – stemming from instinct or emotion that bypassed logical consideration – is nothing but baseless speculation. I do agree with Mises that often emotions can be weighed in when a human is deciding his next action, but I don’t think that happens anywhere near 100% of the time. Certainly there is no way of knowing to what degree emotions and instinctual urges are A) used as sensory input in a logical, decision-making process or B) routed directly to some physical action, but certainly there is more to what is economically relevant than what stems from human action.

A more economically relevant example might involve the way a trader reacts when he/she sees nothing but red numbers and down arrows in his/her portfolio. Add that to the fact that everyone around is yelling, “Sell, sell, sell!”, and it’s not entirely unlikely that the trader will have a similar, automatic reaction to the surrounding stimulus, and sells the entire portfolio. This could certainly be an instance of purposeful human action, where the trader overcomes the emotion of panic and still decides that selling is a wise idea, or it could be nothing but biological tendencies to follow the herd or a hardwiring from the amygdala to the index finger hanging delicately above the sell button. Again, it is impossible to know.

We do know that there is such a thing as human action, that it is aprioristic and that any logical deductions that follow must necessarily be true in the realm of human action. But perhaps human action isn’t all there is when it comes to humans impacting the physical or economic world. Our behaviors are rooted in more than just logical decision-making using emotions and instinctual urges as sensory inputs, and as such, I think it is appropriate to have a little humility about we know to be aprioristically true and leave a little room perhaps for the teaching of behavioral economics. There is more that is economically relevant than merely purposeful human action. It may not be aprioristically true, but to focus merely on human action may be to miss the whole picture.

Thoughts?

2

purposeful action (or rational action) means basically this: You act always in order to obtain a goal. It matters not what the goal is. If you act in order to hit a brick wall then your action was purposeful. Following a herd is a also action to obtain a goal.

3

’ Let’s just take an extreme example: a man receives a call from the police that his son was murdered. Rage overcomes the father and he drives his fist through the wall. Mises would likely describe this as an instance where the man took into account the discomfort felt as a result of his rage and made a decision to best assuage the rage in a violent, cathartic, physical motion. As such, his decision to punch a wall was rational, in that the man thought, at the time, that it would be the best way to remove his uneasiness.’

That isn’t an economic exchange or transaction

Your whole discussion doesn’t really concern praxeological truths. It concerns thymology or the understanding of action with your examples of ‘Why does the father punch the wall?’ and ‘Why does the stock market operator sell?’ Thymology is not apodictically certain. You can speculate on behavior but its not axiomatic.

4

DD5: You act always in order to obtain a goal. It matters not what the goal is. If you act in order to hit a brick wall then your action was purposeful. Following a herd is a also action to obtain a goal.

I’m thinking of circumstances where there really is no goal involved. Sometimes, your body reacts in a biologically determined manner with no regard for any sort of goal. Even Mises classifies this sort of reflex as outside the realm of human action, but he’s convinced that the kinds of things that can be classified as reflexes aren’t really economically relevant, and I think I disagree.

5

Mises understands that they are relevant.

They are relevant as are any other data…

you get angry and your power of volition disappears and you commit unspeakable acts against your fellow man, is just data like how electrically conductive some material is.

In the latter case an agent, lets say you, will factor that in when trying to manufacture electrical goods and earn a profit

in the former case an agent, lets say you, if he knows he has this flaw and does not want to face the consequences that would play out if it was not addressed, would seek medical help to keep anger at bay and volition at home.

6

You can go further than you are in the OP, it’s possible that there are explanations that don’t even hinge on the actions of individuals. Indeed, in the words of Nozick:

We might note in passing that the notion of filtering processes enables us to understand one way in which the position in the philosophy of social sciences known as methodological individualism might go wrong. If there is a filter that filters out (destroys) all non-P Q’s, then the explanation of why all Q’s are P’s (fit the pattern P) will refer to this filter. For each particular Q, there may an explanation of why it is a P, how it came to be P, what maintains it as P. But the explanation of why all Q’s are P will not be the conjunction of these individual explanations, even thought these are all the Q’s there are, for that is what is part of what is to be explained.

(Anarchy, State and Utopia, page 22)

Hayek apparently had similar thoughts and rejected strict methodological individualism and made use of concepts such as group selection in “Law, Legislation & Liberty” and “The Fatal Conceit”

7

I’m not sure what all that was about but let me ask this.

If there is a filter that filters out (destroys) all non-P Q’s, then the explanation of why all Q’s are P’s (fit the pattern P) will refer to this filter.

why is that true?

8

I have not read the full text so my undrestanding of the book may be a little weak. I think that Ludwig Von Mises put a little too much faith in the notion that the individual always acts purposefully. He wanted to achieve a general law approach to understanding human action. I would say, that, perhaps that humans may not always act purposefully, but for the most part they act in according to some interest of theirs, or the interests of others.

I would say that they act for reasons, but, not perhaps, because they purposefully want to do it. They may be forced to do things in some circumstances. I remember his thoughts about why slaves don’t want to rebel (it’s their choice), and, I disagreed with his idea completely. They just can’t rebel at the moment, it’s not that they don’t want to. But my understanding could be wrong.

9

But my understanding could be wrong.

I’m afraid it is. I forget Mises’ terminology but there is “non-action behavior” or autonomous behavior, like one’s heart beating or breathing (usually). We’re constantly exchanging one state of affairs for another by way of our actions.

This is a really good chapter from HA regarding what you said on slaves.

The power that calls into life and animates any social body is always ideological might, and the fact that makes an individual a member of any social compound is always his own conduct. This is no less valid with regard to a hegemonic societal bond. It is true, people are as a rule born into the most important hegemonic bonds, into the family and into the state, and this was also the case with the hegemonic bonds of older days, slavery and serfdom, which disappeared in the realm of Western civilization. But no physical violence and compulsion can possibly force a man against his will to remain in the status of the ward of a hegemonic order. What violence or the threat of violence brings about is a state of affairs in which subjection as a rule is considered more desirable than rebellion. Faced with the choice between the consequences of obedience and of disobedience, the ward prefers the former and thus integrates himself into the hegemonic bond. Every new command places this choice before him again. In yielding again and again he himself contributes his share to the continuous existence of the hegemonic societal body. Even as a ward in such a system he is an acting human being, i.e., a being not simply yielding to blind impulses, but using his reason in choosing between alternatives.

What differentiates the hegemonic bond from the contractual bond is the scope in which the choices of the individuals determine the course of events. As soon as a man has decided in favor of his subjection to a hegemonic system, he becomes, within the margin of this system’s activities and for the time of his subjection, a pawn of the director’s actions. Within the hegemonic societal body and as far as it directs its subordinates’ conduct, only the director acts. The wards act only in choosing subordination; having once chosen subordination they no longer act for themselves, they are taken care of.

In the frame of a contractual society the individual members exchange definite quantities of goods and services of a definite quality.

In choosing subjection in a hegemonic body a man neither gives nor receives anything that is definite. He integrates himself into a system in which he has to render indefinite services and will receive what the director is willing to assign to him. He is at the mercy of the director. The director alone is free to choose. Whether the director is an individual or an organized group of individuals, a directorate, and whether the director is a selfish maniacal tyrant or a benevolent paternal despot is of no relevance for the structure of the whole system.

The distinction between these two kinds of social cooperation is common to all theories of society. Ferguson described it as the contrast between warlike nations and commercial nations;[2] Saint Simon as the contrast between pugnacious nations and peaceful or industrial nations; Herbert Spencer as the contrast between societies of individual freedom and those of a militant structure;[3] Sombart as the contrast between heroes and peddlers.[4] The Marxians distinguish between the “gentile organization” of a fabulous state of primitive society and the eternal bliss of socialism on the one hand and the unspeakable degradation of capitalism on the other hand.[5] The Nazi philosophers distinguish the counterfeit system of bourgeois security from the heroic system of authoritarian Führertum*.* The valuation of both systems is different with the various sociologists. But they fully agree in the establishment of the contrast and no less in recognizing that no third principle is thinkable and feasible.

10

Following the herd out of irrational fear is an action with a purpose. Mises stands.

You have attempted to divide “rational, thinking man” from “emotional, feeling man” there is no distiction. Rationality allows man to achieve what he desires, emotions inform him what to desire. Both are evolutionarily useful.

11

If there is a filter that filters out (destroys) all non-P Q’s, then the explanation of why all Q’s are P’s (fit the pattern P) will refer to this filter.

why is that true?

Is this a serious question?

12

Is this a serious question?

indeed.

13

Forget my other reply. I see your point better now.

What examples of reflexes that are economically relevant do you have? I don’t consider panic to be a reflex, it requires the person to be aware of the situation and to seek relief.

Sleep walking could be a reflex (purposeless action), but I don’t see how its economically relevant.