Mises, Hume, and A Popular Objection to "Austrian Economics"

Economics Political Theory
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So, as my introduction to this post, I just want to say that these views are all quite tentative and ambiguous. So I hope that you will bear with me or something.

From here is an example of one of the most “popular” criticisms of “Austrian Economics”:

That person did not attempt to cite any sources, to quote Mises or any other “Austrian” economist to substantiate his claim. But, when people like him do, they usually quote something like this, entirely out of the context, of course:

Now, if I were to not have any other knowledge of the views of Mises, I would see that statement, to say the least, as alarming. For surely any person who thinks like that is nothing besides a mystic! To understand what Mises is saying in that sentence, though, we should first ask the obvious yet often neglected question of, by “experience”, what does he even mean?

To answer that, though, I will first digress:

Now, again, if I were to not have any of knowledge of the views of Mises, I would think that he and Hume are quite opposed to each other, that Mises is a sort of radical “rationalist” and Hume a sort of radical “empiricist”, which, by definition, I guess, implies that they are radically opposed to each other. But it is plain that this is not the case. For they simply happen to employ the word “experience” in two very different ways. First, I will show how Mises used the term:

According to that quotation, Mises defined “reason” as what shows us our"internal world" and defined “experience” as what shows us our “external world”. So, for Mises, the word “experience” refers only to our viewing of the external world. But it is clear that Hume did not define “experience” like that; it is clear that the extension of his use of that term is greater:

The first passage is consistent with how Mises defines it. For he is discussing his experience of objects in his external world. But the second one in not. For he is discussing his experience of his impressions, which might or might not be of his external world, and his ideas, which certainly or not of his external world but instead are of his internal world. So, now that we established that, it is clear that the views of Mises and those of Hume might not be irreconcilable, after all. For, in the way that Hume defines “experience”, what Mises calls “a priori” is just what one experiences of his internal world. Here, we see an unfortunate example of how words mess people up so seriously, how people often act like words have a sort of objective, unimpeachable existence, like it is so impossible that two people use the same word in radically different ways that they do not even bother to question the definitions. Now I am not entirely sure, and I am not informed enough to make this assertion non-tentatively, but I think that the reason that Hume got his reputation as a “radical empiricist”, which sounds so against the views of Mises, is simply because of his direct, lucid, and frequent use of the words “experience” and “observation”, not the real substance of his views, which clearly show that he did not shun the facts and whatever of his internal world, like, for example, the “positivists” or neo-empiricists, whatever that means, do.

With that said, it is now appropriate to consider the most direct response of Mises to the original quotation that I provided:

I am pretty sure that this follows Kant in that he is explaining that whatever contradicts his theories of praxeology is not even a thing that he is able to “experience”. To substantiate this somewhat, I will quote an instance of one of points that Mises makes very often:

Notice that he is not saying that our minds somehow “impose” a certain structure onto “reality”. What he is saying is only that (a) a definite reality exists and (b) we able to make sense only of what the structure of our minds allow us to. Not only what our senses convey but also what our mind is equipped to make sense of restricts our possible experience:

Now it is not possible to “observe” the consciousness of other people, it is not possible to “see” choices, value, or any other thing like that; it is possible only to “observe” your own consciousness, form an idea of it, and then make the assumption that other people work in a similar way. (Our only reason why, our only “justification”, of the “faith” that other people are conscious is, to use the language of pragmatics, because it “works”, because, under that assumption, we are able to make sense of the movements of other people, but, not under it, we are not.) So the method of economics, to use the vocabulary of Hume, should be (a) to observe, experience, and create a systematic understanding of the workings of your internal world, which is “pure praxeology” is, and then (b) to assume that other people, in moving around, work in the same way, which is “applied praxeology” or, in most cases, “economics”. Now, if we understand this, it makes sense why, to use the vocabulary of Mises, “experience”, namely, that of our external world, is not able to falsify these theories. For our source of these theories is our internal world, not our external world. We see in the external world only what our lens, our theories developed in reference to our internal world, condition us to see, nothing more, nothing less:

What is able to “falsify” the theories of praxeology, then, is only our “experience” of our internal world.

As my last point, how, then, do people find that their theories do not match their experience of the external world, which does happen? Well, that confused me for a while. But I think that I thought of a sufficient answer: The theories that these people explicitly develop are not really what they ultimately hold. They say that their theory is X but it is so flawed, non-intuitive, or non-commonsensical that, at a point, they are not even able to believe it themselves. So their implicit theories condition their experience of the external world and, while their explicit theories do not, they contradict that experience. So, actually, in that way, what should we do when our experience of the external world contradicts the assertions of our theories? Well, just realize that we apparently are not using those theories somehow, we are “smuggling in” other, probably more “commonsensical”, theories.

So, per the above passage, an other misunderstanding is that, by “theories”, Mises probably means not only our “explicit”, systematic, and scientific theories but also those gained in our everyday interactions with people, our “implicit”, subconscious, unsystematic, and unscientific theories.

Mises ill-definition of Natural Law, why?
Praxeology: Economics and Evolution
What sort of empirical evidence would it take to contradict Austrian economics?
What sort of empirical evidence would it take to contradict Austrian economics?
Mises, Quine, and the analytic/synthetic distinction.
Mises, Quine, and the analytic/synthetic distinction.
Mises, Quine, and the analytic/synthetic distinction.
An Inconsistent Argument In Human Action.
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Very deep stuff.

First thing, let me apologize in advance if I misunderstood you, because if I did, then I will be unwittingly distorting your idea in what follows.

If I understood you right, you are saying it is impossible to falsify prax because we have built into our brains an understanding of the world that just won’t let us see the falsification.

If that is what you meant, then it’s not very comforting. Because it sounds like “Yeah it may be false, but we are color blind and won’t see the falsity.”

I think Mises meant something else entirely. What he means is that prax is composed of two pieces, the axioms and the conclusions that follow from the axioms.

As for the axioms, they are so solidly self evident that they cannot be denied. More on this later.

As for the theorems, they are consequences of that great font of undeniable wisdom, logic. And as such, they too cannot be denied. No one has EVER tried to say “Well, the theorems of Geometry follow logically from the axioms, and the axioms are true, but I still think the theorems are false.” Such a statement would contradict everything western civilization is based on.

Having disposed of the theorems, let’s get to the meat of the matter, the axioms. Why are the axioms so solidly self evident? I’ve seen an argument to the effect that one cannot deny the Fudnamental Axiom [that humans sometimes do things with a purpose in mind], without doing something with a purpose right then. OK. More on this later.

Here are the other axioms:

1. Different people sometimes want different things.

2. Some people like leisure

3. Non barter economies use a medium of exchange

4. Most of the time a business will try to make the most money

Source for all these axioms is here.

These axioms are clearly based on experince of the outside world. [3. is really a tautology, of course, not merely an axiom. The link explains a bit about that. Let’s put it aside]

So of course they are falsifiable. If everybody woke up and found they are identical clones of each other, and all matter was identical as well, that would falsify 1 totally. If nobody liked leisure, 2 would be falsified. If businesses stopped trying to make money, 4 would be falsified. For that matter, if all humans just sat there zombie like till the end of time, a Martian observer might have a good case that the Fundamental Axiom has been falsified.

So although in THEORY all the axioms are falsifiable [and that’s all you need to have a valid science, a possibility of falsification], in practice nobody in his right mind would ever believe it. If a newspaper headline ever claimed any one of those disproofs [All Humanity now Identical, for instance], not a single person on Earth would believe it for a second. Because our daily experience of the real world tells us millions of times a day that it can’t be.

I think that refutes the guy’s argument.

Nothing here that isn’t in that Rothbard article, IIRC.

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Intellectually thought provoking post. Thank you.

In my opinion there is a tremendous lacking in logic courses. That’s pretty much it. From what I understand logic is no longer taught in high schools. And a person can get through a university without taking one philosophy course, aside from the fact that such a course if taken to fulfill a liberal arts requirement out of the many other choices in that same category doesn’t necessarily have to be a logic course. One could simply choose another philosophy course or not choose a philosophy course at all to meet the university requirements. Therefore the question for Mr. Sadowski is how much logic does he know? Does he understand that an axiom, ie. Aristotle’s first principles, or propositions as defined all the way back Aristotle involve an intellect that apprehends particulars of the world inductively and through that process of inductive apprehension universal or categorical classes are made. In short, an axiom is not only a mental exercise but involves empirical verification. Humans acting is not only preferences but are those preferences in action, ie. sleeping, walking, etc… which are all empirical in nature with the preference and choice ‘half’ or aspect of the axiom being self-evident in nature and the walking, sleeping, etc… being self-evidently acts of humans. It’s a knowledge gap on behalf of Mr. Sadowski and not necessarily his fault due to education standards but eventually responsibility is incumbent on any individual and they need to know the concepts they are using and in that regard it is Mr. Sadowski’s fault.

It’s clear by now that Mr. Sadowski doesn’t understand what an axiom is. And if it were to be shown that humans don’t act, then of course the axiom would be dropped. He’s not addressing human action though. He’s really only crossing wires and trying to address one set of standards with another set of standards.

He’s now talking about a “theory” and isn’t talking about the axiom of human action anymore. Does Mr. Sadowski realize that? If a theory doesn’t match up with the facts in the market, then of course the Austrian theory would go through the same truth statements that any other science would.

“Austrians seem…” So he really doesn’t know, but that’s ok who really knows the whole of the market anyways which is the point of epistemology and the friction between the market and central planners.

That’s what all science does, including Austrian economics. The point though is the starting point. Where do they start with numbers. How are looking at numbers going to say anything about human action? And aside from that any number correlations need to match the human action anyways so their process would be repetitive IF it would also take account of human action.

What is important to understand is by Mises stating human action is aprior is to then understand what aprior does. It’s not necessary for one individual to argue in full where axioms or propositions come from. A thought has to begin somewhere without having to revert to infinite regression or circular reasoning in which the thought never is finished and therefore no action is ever taken because nobody knows in full what they are doing. That isn’t reality because people do perform tasks even if we don’t fully understand the reality of what those tasks are. Trial and error is what society has done from the dawn of humankind and a remarkable data bank has been able to pass down the knowledge of what certain experiences are so each new generation doesn’t have to start all over again to figure it out. Also with this comes great discoveries in questioning what we already do and finding new innovative ways and knowledge about the world. It’s this aspect of a theory that fully recognizes logical propositions that makes it a science. It can be critiqued. It’s theories and thought-processes can be self-examined and the data can be looked at in different ways if it is found that the theories are lacking in fully being able to explain some ideas about some facts.

I say all of that because Mises does have a mental slant in his terminology at times. I’m currently reading the exact edition of a book Mises had recommended, Cohen’s “Intro. to Logic”. Cohen explains that propositions are embedded with abstractions and facts. The proposition, for example, Some tables are wooden is abstract in the sense of the words used to name tables and wooden but also there is no fact called some or are. Yet on the other hand without the fact that there are tables and not only wood but wooden tables is necessarily involved in the proposition. And ‘some’ and ‘are’ represent the quantitative and ontological representations of there is an amount of tables wooden (some) and they exist (are). Seeing that Mises recommended this book it would be difficult to challenge that Mises would disagree with the contents of the book, meaning, any mental slants Mises may take possibly are reconciled by understanding some of the terminology Mises used in greater detail. Propositions are not mental slants but are combinations of abstractions (mental) and data (empirical). [As a side note that’s why it is argued that logic is a science]

Absolutely. And also understand what a proposition is as a book Mises recommended explains in detail. That’s the division of labor in the intellectual community. Mises made the effort to explain the economics he was introducing with a philosophical grounding which is important for such a scientific undertaking that was unique in economics. He was grounding the economics in the logic and epistemology to describe the fuller theory. But this doesn’t mean Mises had to write a whole new “Intro. to Logic” book to define every single term he used. He pointed out other books many times for reference to his thought patterns.

I’m going to stop here for now. I’ll read through the rest of the post and see if I have any further comments. I’m only doing this because I don’t want to make my post too long.

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#2 was worded different by Rothbard. The words “Some” in 2 and “Most” in 4 make them not self-evident because those propositions also imply that ‘some people don’t like leisure’ which means those types of people don’t find leisure to be self-evident as they don’t like it, but Rothbard didn’t word it this way so I’m not sure what you meant. Same would go for 4 since it’s “Most of the time” that would mean at other times it’s not self-evident. The other two I’m not sure they are axioms, but they are declarative propositions and are not arguable in that case they would be ‘self-evident’.

In general another good post Smiling Dave![Y]

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Great response; thank you.

Somewhat.

What you missed there, though, is that I was discussing theories, which we are able to change. So, yes, in a sense, if your theory is X, it determines how you interpret the movements of the people of your external world. But, if you find, based on your “experience” of your internal world, that X is false and Y is instead true, you are able to, indeed, you have to, substitute Y for X, and, in that way, change, at will, what conditions your “experience” or the external world. So, in that way, we are not, as your interpretion implies, helpless.

As the original post of one of my threads from a few months or something ago, I wrote this:

And then, later in the thread, I wrote this:

Now, what I was discussing in the originial post, and I should have been more explicit, was only the theories of “pure praxeology”, things like desire, choice, ends and means, scales of value, and whatever. Notice that, in the first quotation that I provided, I said that “Man, Economy, and State” begins “to implement into its body of theory and heavily rely on a few “empirical” claims just 70 or whatever pages into its 1,400 or more total pages”, which implies that, before that, in those 70 or whatever pages, he did not rely on any “empirical” claims, claims about the nature of the external world.

So, in this thread, I was discussing the ‘ultimate foundation’ of economics, our “experience” of our internal world. The “axioms” that you introduced all rely on the fact that we already know, for example, what “desire” is: notice, for example, that the axiom that “[s]ome people like leisure” already implies that we know what “like” means, which means desire of a moderate degree; and things like desire, we find them explicitly only in our internal world, not also in our external world. We do not see “choice” unless we analyze ourselves.

So when I said that “[w]hat is able to “falsify” the theories of praxeology, then, is only our “experience” of our internal world”, I meant only that "[w]hat is able to “falsify” the theories of [pure] praxeology[, the 'ultimate foundation of economics and, as I tried to show in this thread, evolutionary biology and the ‘evolution of institutions’,] is only our “experience of our internal world”.

But, on that foundation, we use well-known facts about the external world, which, as I explained it that quotation, are “falsifiable”, to build economics.

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I was using the word “some” the way “there exists” is used in logic, as a replacement for “at least one, possibly more, possibly everyone”. Thus “There exists a person who has feature X” is meant to be equivalent to “Not everyone in the universe under discussion lacks feature X.” That’s the problem with using a rich language like English, where words have slippery meanings.

I mean there might be workaholics who hate leisure, right?

Same with “most”. I meant it to mean “most and possibly all”. Rothbard gave an example there of a company hiring the boss’s nephew, even thought it will lose them money, which is why he said this axiom was not 100% true always. Which is why I used “most”.

I know this is an area of knowledge you know a lot about, so I’m flattered by your praise. Thank you.

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That’s a good point.

That’s very true.

Yes. And that already has a name, though, I’ve come across others such as ‘primitive sense’ for one. That name is common sense which is based in the individual apprehending the rest of the world. It’s where scientific theories, which are complex versions of common sense, emerge from, axioms and propositions come from, declarative statements, and categories, ie. class and case, take form.

Great insight.[:)]

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And your last post did a lot to clarify. Thanks.

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You’re definitely using a logical format. What you say is true. I think to label “some” as an axiom though would differ from the meaning of axiom. For instance, the way Rothbard used leisure as a postulate was: “leisure is a consumer good”. To be a logical axiom the negation of the axiom would only affirm the axiom. In other words, the act of negation is self-refuting because to negate would entail using the axiom so thereby it can’t be negated. I think that’s why Rothbard called “leisure is a consumer good” a postulate but he said it is based on the fundamental axiom human action. To get into what postulations are because they, like axioms, are not demonstrated by deductions, is to move into the insight that I. Ryan concluded at the end of his post. It gets into the domain of common sense. It’s where categories are formed and declarative statements are made, which that postulate “leisure is a consumer good” is a declarative statement. The two terms postulate and declarative statement do not negate each other but are simply two different names for possibly the same thing, but this part is reaching into new territory for me so don’t take my word on these two terms overlapping in what their definition applies. But it appears so, but anyways this is a little besides the point.

Again, I’m not sure if Rothbard would have said that is an axiom. I’d have to check because it wouldn’t be true that it is an axiom. “most” and “possibly all” are categorical forms of quantity. It is making the assertion of the quantity of money making, in other words, how much it happens in a business. That conclusion is reached by a logical deduction which falls outside of the domain of what an axiom is. Axioms are used in deductions only as premises. Axioms themselves though are not reached by deductions. Yet they are used as premised in deductions to base conclusions on.

edit: yes, Rothbard called that a postulate not an axiom when I checked back through the article.

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This.

I’ve been listening to Human Action in my car, and I’ve heard that sentiment many times. And he’s spot-on. To expound, Mises asserted that all of the “rules” of a logically deduced system are already implied in their axioms. One example given (sorry if I butcher it) concerns right triangles and Pythagoras. Everything we know about the Pythagorean theorem and all the other “laws” of right triangles exist automatically because of the very idea of a right triangle. You cannot have one with the other. It may be a while before man realizes the consequences of his axioms, but they are nevertheless very real and very present.

I think Hoppe does a damn good job of pushing the deductive system to its limits, specifically in one of his more recent lectures vis-a-vis the Mises videos on iTunes – Mises Academy it’s called? (E.g. a priori knowledge can say things about the real world: no two straight lines can encompass a space.)

And isn’t all this positivism anyway? Wasn’t that dropped by the physical sciences over 60 years ago? Mises mentioned something to that effect in HA.

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From “Human Action”:

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Yes he did. And I stand corrected. I had no idea that “axiom” is used in some disciplines in the very limited sense you defined. My background is math, where of course no such claim is made for an axiom.

To show you how far it goes, the Axiom of Choice is known to be neither provable nor disprovable [from the other axioms of set theory]. LOL, very far removed from your definition of an axiom.

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I am pretty sure that it is accidental “positivism”. I showed in my original post that, for Hume, “experience” meant both of his internal world and of his external world, but that, for Mises, it meant only of his external world. So I think that, when people see him say things like “[the propositions of praxeology, which includes economics] are not subject to verification or falsification on the ground of experience and facts”, they think that he is being a mystic, shunning observation and just making things up, like how people see religions. So they attack him and say that it makes no sense to not ground economics in experience; and, in that sense, they are implying, if they are using his definition of the word “experience”, that he should shun his internal world and just formulate theories based on his observation of the external world, which he shows, in many places, is absurd and just amounts to an unscientific smuggling in of common-sense theories in the place of what he is trying to create, a systematic body of theories; and that is basically what positivism is, saying that we should pay attention only to the external world; and, clearly, that goes against Hume, who is apparently a “radical empiricist”. But what is probably happening is just that they are misunderstanding what Mises is saying and just launching premature, knee-jerk strikes at him based on their associations with what words he is using, not really with the substance of this arguments.

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Actually I have some back-peddling too. I looked up the term ‘postulate’ in my intro. to logic book. It’s not in the index. When I look it up in wikipedia it states axiom and postulate are interchangeable.

So it looks like it comes down to how I see it mixed in with a standard form.

All the axioms that I know of in Austrian economics and libertarian philosophy in the books I’ve read so far only refer to axioms being that which I defined it as, which had to do with negation efforts of an axiom are self-refuting. It’s how the axioms of consciousness, human action, property, life, and liberty have been defined in all the books I’ve read without one divergence. It’s also how Aristotle has defined first principles, ie axioms, which is that which can’t be disproved due to negative demonstration. While trying to demonstrate the axiom is wrong during the demonstration the axiom is negatively demonstrated or in other words, the axiom is implied during the demonstration. Since the topic is human’s who do the arguing and the topic is about human’s then all the axioms I’ve seen defined fall into this category.

In math, I don’t know how axioms can be standardized by such a criteria, ie negative demonstration. I don’t know how any math exercise refutes itself when it tries to negate an axiom but has to use the axiom in the negation. You would know about that more than I.

Rothbard did point out the postulates all came from that fundamental axiom. Therefore to come from appears to be a deduction or he was very aware not to call those postulates, ‘axioms’, because he was making category distinctions. And that’s how I see it. By using two different terms it necessarily doesn’t mean he was deducting those postulates from the axiom, which retains their ‘axiomatic’ intension and common definition. Yet by using two different terms, and this is how I was concluding it to begin with, Rothbard was making a class distinction. Postulates and axioms are non-logical conclusions. They are of common sense, but within common sense there are a variety of categorical forms that ones intellect can surmise. These classes are still examined by logic though because the classes involve implications of what any particular or universal class is consisted.

For example, the species of the genus Homo is a class (generic use of class). Another class is the specie Australopithecus. Those classes are determined by logical implications of what similarities of bone structure, animal tissue, genes, etc… a whole load of factual data. Everything that consists of a given class is based on determined facts that are similar and thus logically implied by all those attributes. What is implied or similar puts such a thing in any given class. Those classes are not necessarily logically deducted but have logical implications. Now whatever is of those classes, the content, can be logically deducted and further implications can be made and hypothesis can be formed to further test if those classes hold true.

So anyways, the postulates are axioms in the general sense you were probably using the terms, but in the way that all the axioms that I encounter in praxeological literature all that is named axiom involves negative demonstration so Rothbard to show the difference, since those postulates can’t be negatively demonstrated, he used such a different term only for categorical purposes.

Did that make sense?

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‘experience’ in Aristotelian is how Hume uses it. Carl Menger was an Aristotelian, but Mises didn’t have that much access to Aristotle from the literature I’ve read. The Aristotle that was smuggled into Mises theories, for the good, was through his reading and understanding of Menger’s works.

I wholeheartedly agree. It takes more research to understand Mises and at least in the U.S., not many people are even given the intellectual tools in their education to have some basis of getting close to what Mises had to offer. And since Mises isn’t taught at the university level that much and not many philosophers focus and do research on him, then it is all the more strikes against Mises getting the word out. But that appears to be turning around thanks to the Mises Institute and many other campaigns that are helping to bring this treasure to other people.

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It did indeed, and I suspect you are right that Rothbard used two different words for a reason.

No such thing in math as negative demonstration. [Of course, there is Proof by Contradiction, but that’s a different animal entirely].An axiom just means an assumption that will be assumed, [not caring if it is true or false], in order to draw conclusions from it.

That’s part of the reason Bertrand Russell said “Mathematics may be defined as the subject in which we never know what we are talking about, nor whether what we are saying is true.” Because the intial axiom is never investigated for truth or falsity, just assumed.

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Ah. That makes sense. The difference between the two (and physics too classed in with math in this example) is with axioms of human nature there is more certainty due to the axioms are demonstrated. They are demonstrated either in argumentation and/or body. Aristotle had demonstrated the argumentation part. I wouldn’t doubt he also did in body, ie. acting is walking, sleeping, etc…, but I would have to look it up. This is how Hoppe came to the conclusion of argumentation ethics. It’s really just another step that Aristotle had already demonstrated. Hoppe added in the ethical part (I don’t know enough about Hoppe’s argumentation ethics to go any further in detail on how it came about other than what I had said here). It’s the human nature aspect of this that allows for the negative demonstration and why axioms in human nature, ie. causality, consciousness, human action, property, etc…, are declared to be more certain than physics and I would surmise math. You’ve undoubtedly read about that and I believe we were in another thread discussing this before in which the forum student physicists made some posts, etc… Do you remember that thread? It’s come full circle I believe.[:)]