Ludwig von Mises on Economic Laws - Is he epistemologically sound?

[ivanfoofoo]

From Human Action:

“Everything that economics asserts about demand and supply refers to every instance of demand and supply and not only to demand and supply brought about by some special circumstances requiring a particular description or definition. To assert that a man, faced with the alternative of getting more or Iess for a commodity he wants to sell, ceteris paribus chooses the high price, does not require any further assumption. A higher price means for the seller a better satisfaction of his wants. The same applies mutatis mutandis to the buyer. The amount saved in buying the commodity concerned enables him to spend more for the satisfaction of other needs. To buy in the cheapest market and to sell in the dearest market is, other things being equal, not conduct which would presuppose any special assumptions concerning the actor’s motives and morality. It is merely the necessary offshoot of any action under the conditions of market exchange.”

Is a higher price a way for the seller to get a better satisfaction of his wants? What if he is a believer of a religion which forbids to charge a higher price for that good?

I think Ludwig von Mises always falls into the idea that “most men strive for commodities and an improvement in their material well-being” (paraphrasing him) and that renders most of his analytical framework into a “a posteriori” science instead of being apodictic. I think that the idea that “a man, faced with the alternative of getting more or Iess for a commodity he wants to sell, ceteris paribus chooses the high price”, it does requiere further assumptions, which will somehow concern the actor’s motives, morality and many other aspects. Following this, I believe that there is no necessary offshoot under the conditions of market exchange.

Any ideas?

[ladyattis]

I think he’s (Mises) right in considering empirical and non-empirical in the argument he posits. I reason as such on the grounds that there’s no strict exclusiveness between the analytic or the synthetic (that which seems like analysis often is a form of synthesis, and vice versa).

[ivanfoofoo]

So, according to that, it’s no longer an apodictic law, it’s a positive one.

[Catalan]

I think that Mises is speaking generally, although the price of a good does not always have to be measured by a certain unit of money.

[ladyattis]

@ivanfoofoo

So, according to that, it’s no longer an apodictic law, it’s a positive one.

Should I care? If it’s true, it’s true, sorry.

[Jon_Irenicus]

Give Praxeology and Understanding a read. It’ll disabuse you of this notion. Long’s book on Wittengestein and Mises has a whole section devoted to this. The answer is no, it doesn’t render it any less apodictic, because the theory applies in conditions as specified by the theory, and does not where they do not. That simple ultimately. Thymology is the art of determining when an economic theory is applicable. The law of demand itself is a priori regardless.

[Smiling_Dave]

@ivanfoofoo

From Human Action:

“Everything that economics asserts about demand and supply refers to every instance of demand and supply and not only to demand and supply brought about by some special circumstances requiring a particular description or definition. To assert that a man, faced with the alternative of getting more or Iess for a commodity he wants to sell, ceteris paribus chooses the high price, does not require any further assumption. A higher price means for the seller a better satisfaction of his wants. The same applies mutatis mutandis to the buyer. The amount saved in buying the commodity concerned enables him to spend more for the satisfaction of other needs. To buy in the cheapest market and to sell in the dearest market is, other things being equal, not conduct which would presuppose any special assumptions concerning the actor’s motives and morality. It is merely the necessary offshoot of any action under the conditions of market exchange.”

Is a higher price a way for the seller to get a better satisfaction of his wants?

If he gets more money then he will be able to satisfy more wants. Thats what money is for.

What if he is a believer of a religion which forbids to charge a higher price for that good?

__That’s a very good point. It’s why Mises tossed in the phrase "__ceteris paribus" _into that second sentence. I looked it up, and apparently it means “all other things being equal”. Meaning that Mises is talking about when the only difference between the higher and lower price is exactly that, that one is lower and one is higher, but everything else is unchanged. Your interesting case is differfent from what he is discussing. You have introduced a new twist, that the higher price has a different religious flavor than the lower one. Saying "_ceteris paribus" is Mises’ way of saying “I’m talking about when religion doesn’t care which price he sells for.”

I think Ludwig von Mises always falls into the idea that "most men strive for commodities

That idea sounds pretty true to me. However, true or not, the Mises edifice of philosophy is NOT built on that. The poet who would rather write poetry, the saint who would rather help the unfortunate, the nutcase who would cut off his nose to spit his face, all are taken into consideration. And the axioms aplly to them as well.

and an improvement in their material well-being" (paraphrasing him)

I’m interested in the original that you paraphrased this from. Thanks to the miracle of copy and paste, should be no problem for you to display it.

and that renders most of his analytical framework into a “a posteriori” science instead of being apodictic.

To sum up your argument, you are saying A is true [A being your paraphrase above], and so B follows [that he’s doing a posteriori science].

But I think A is not true, as I tried to show. [Indeed the burden of proof is on you, because you are paraphrasing]. Thus B has no leg to stand on.

I think that the idea that “a man, faced with the alternative of getting more or Iess for a commodity he wants to sell, ceteris paribus chooses the high price”, it does requiere further assumptions, which will somehow concern the actor’s motives, morality and many other aspects.

The motives, morality and many other aspects are indeed important, sometimes crucial. However, good ole ceteris paribus strikes again here, as I explained at length above.

Following this, I believe that there is no necessary offshoot under the conditions of market exchange.

Once again we have the same skeleton. You claim C is true [it does require further assumptions] therfore D follows [that there is no offshoot].

But I hope I have shown C not to be true, and thus D has no support.

Any ideas?

A nice cold beer sounds like a good idea right now.

[Caley_McKibbin]

Do you know what ceteris paribus means?

[Smiling_Dave]

@Caley McKibbin

Do you know what ceteris paribus means?

In which language?

[Caley_McKibbin]

Not you.

[ivanfoofoo]

Yes, I do know what ceteris paribus means and that doesn’t apply to what I said.

Thanks Jon Irenicus for the great reply!

I’ll try to read what you told me, but as I was re-reading Mises I understood that he just uses the praxeologic categories and “fills them with values” that are known to be real (in the sense that people actually behave like that, for example, charging higher price when demand goes up). So, given that assumptions, those laws hold true, no matter what. There it lies its solid epistemological value.