I was thinking about Mises’ definition of “rationality” and it seems pretty useless to me, it’s pretty much a tautology. It just seems that the neoclassical usage is both more fruitful and intuitive.
I can’t really spell out what I mean so I’m wondering if anybody else has any links or thoughts.
edit: who is it that keeps deciding to give my topcis 1 star the moment I post them?
Mises’ “rationality” is just the other side of the coin of subjective value theory. i.e. we can’t criticize some-ones ends directly on value terms, the best we can do is say, given his ends, how well we think his chosen means will achieve them for him.
not only is it so related to subjective value theory, but also, it is another way of saying that human action is goal oriented. the rationality of man, is in his reasoning about the means he has and about how to achieve the ends he has.
you’re not going to junk the action axiom just because neo-classicals tell you its tautological are you?
Indeed the tautological definitions of austrians are the basis of their praxeologic economic theory. In this way, austrians are always a priori and always right even though they sacrifice on predicting the specifics.
I think this is the main point of contention between austrians and the neoclassicals, that the NCs want to predict everything with eqns and the austrians are content to simply understand what is currently happening. I guess you can’t make any money or get any kred if you don’t at least pretend to know what the economy is going to do.
Fixed title, moved to appropriate forum.
Thanks, sorry for any inconveniences.
But neoclassicals don’t criticize the ends held by individuals. I agree, that neoclassicals are unsufficiently subjectivist in the sense that they take knowledge as a “given” (see Hayek’s “Economics and Knowledge”), but it’s just not true that they criticize the ends individuals hold. Caplan, for example, doesn’t say that people that people shouldn’t value protectionism, he just says that it’s rational for people to demand more of it when the price is low (or even negative).
Take a fairly simply example. An individual wants to satiate his hunger and thus decides to eat 20 chocolate bars. Given Mises’ definition it’s rational simply because he’s doing it. For the neoclassical it’s irrational for the obvious reason. It just seems that Mises’ definition is both useless and “unscientific”, any behaviour is rational.
How is the standard neoclassical approach not goal oriented?
Don’t neoclassicals use basically the same assumption of rationality? Individuals act to maximize their utility function, given their limited knowledge. Sometimes they use ideas like bounded rationality or other variants, but even in that case, it’s not clear that an individual can ever truly make an error. Even drug use is rational, according to this theory (check out Becker’s “A theory of rational addiction”). This version is just as much a tautology as the Misesian version (Caldwell has a few articles on the maximization principle, from a vaguely Austrian perspective).
Tautological does.
What I meant was that Austrians aren’t predicting things like GDP will be between 3% and 5% next year. If they do predict, it is very general. For example, Austrians typically say the federal reserve’s lending policies are unsound, and their continued application can only result in economic downturn. The where and when depends on the subjectivity of actors in the market.
Fools be runnin their mouths. They only claim they couldn’t predict the eco crisis AFTER they failed to. Neoclassicals do nothing but model the economy with equations and try to extrapolate trends.
Actions are means to achieve individual ends. His definition implies all means and action is rational to achieve any end, which is stupid.
no, human action is rational, a human behaviour may or may not be. instinct reflex e.t.c., are just givens and not directly analysed by praxeology..
have you read this?
he even mentions caplan
whats stupid about it?
There is nothing rational about raindancing.
you are confusing ignorance with irrationality.
Thanks, I’ll read it, just to be clear, I’m not attempting to refute the Misesian view here, it’s just something that I’ve found problematic for a long time. Granted, if I sneeze, it’s usually not a rational action and this poses problems in terms of application of theory to history. But that’s a seperate problem.
My point was, all action is rational because it’s defined in such a way, but I find the definition to be problematic. I mean, if I have to stock up food for my nuclear bombshelter in which I will have to live for a month, any choice I make from the Misesian definition will be rational. So if I choose to live of 1000 chocolate bars and 1 loaf of bread for a month, Mises et al would say “that’s rational”. But, the neoclassical would say, that’s just stupid the optimal bundle would be “X,Y”.
But ultimately it makes sense for a neoclassical to say “he acted irrationality”, for an Austrian economist that’s impossible.
Misesians still can call the means chosen stupid , easily done in thought experiments, harder in real life as gathering all the relevant facts is difficult. ; even if they call the inefficacious choice rational. stupid!=irrational. ignorance!=irrational.
yes, say that to an Austrian and you are pretty much saying a contradiction, that the person did not act at all. or that he wasn’t a person. etc.
still we can talk about efficacy, and of knowledge of alternative means etc, just remember there is no point even discussing such issues unless the rationality of the actors involved is presumed.
Here, Rothbard points out that Mises uses the word “rational” in a way that nobody else uses it. I’m surprised that it hasn’t been posted already.
Given the state of technology, raindancing might very well be rational. It’s not rational if you know that it does not work, and even then it’s only irrational if you try to bring rain by dancing. If you’re dancing just for the hell of it, and the dance is called a raindance, then, again, it’s completely rational.
There’s nothing irrational in acting accordingly to the state of knowledge you have - in fact, that’s the only way one can act.
What do you mean by ‘rational’? The agent believes that this will satiate some want, ergo carries out the action. The thinking is rational, i.e. conclusions following inferentially from premises, even if wrong/unsound. So at best one could say someone is holding to a flawed premise - you’d need to be able to say their ends are irrational to say they should not do so, and this is something Mises considers external to the orbit of economics.
I think the definition is fine as far as praxeology goes. There’s multiple meanings of the term and all are fine in a given context. When most people say ‘irrational’ they seem to mean ‘wrong’/unsound, but that isn’t the same thing.
Action is subjectively rational because it is believed to bring about the desired end. The perception might be flawed(as in the case of Indian raindances), the action chosen might be suboptimal; but in each case the problem is not a rationality one.
This ^^^.