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Ludwig von Mises on the epistemological foundation for social sciences reconstructed

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Abstract

This paper focuses on Ludwig von Mises’s attempt to establish an epistemological/methodological foundation for the social sciences (praxeology). I reconstruct Mises’s writings by disentangling the distinct realms of ontology and epistemology in his arguments. Although Mises’s line of reasoning is squarely based on the distinction between ontology and epistemology, he nonetheless tends to mix ontological and epistemological viewpoints in his argumentation, thereby clouding the issue involved. I believe this is one reason why the writings of Mises appear to be so difficult and engendered different as well as competing readings amongst Austrian economists. Furthermore, this analysis also allows us to assess whether or not Mises offers a sound theory of knowledge. I conclude that praxeology displays internal tensions and explain the reasons for these tensions.

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Notes

  1. Indeed, Moss recognizes with some disfavour that ‘contemporary Austrians have largely abandoned the classic Austrian-style thought experiment for another entirely different style of argument—conjectural history’ (Moss 1997, 166).

  2. Selgin (1988, 20) holds that not only Caldwell, but also other prominent Austrian economists, such as ‘F.A. Hayek, G.L.S. Shackle, and Ludwig M. Lachmann [...] have cast suspicion upon the praxeological approach as it was originally conceived by Mises’.

  3. See also Hirsch (1986) and Rotwein (1986).

  4. Gunning (2005b) defended his point of view in a reply to Block’s criticism.

  5. In Theory and History he writes that the natural realm consists ‘in the ascertainable and inevitable regularity in the concatenation and sequence of phenomena’ (Mises [1957] 1958, 4). And later on in the same book he states that ‘[o]ur notion of nature refers to an ascertainable, permanent regularity in the concatenation and sequence of phenomena’ (Mises [1957] 1958, 90).

  6. It seems that there are several reasons why Mises uses the term ‘internal world’ synonymously for social world. First, the term ‘internal world’ represents an antonym to ‘external world’, and, second, the term ‘internal world’ fits to Mises’s claim that a social scientist can approach social phenomena ‘from within’ (see section 2.2). However, it may also generate confusion, as ‘internal world’ could suggest that all entities of the social sphere are internal to human beings, in a sense that they exist solely as constructions of individual actors or some such. In this section, it will become clear that Mises does not believe that all elements of the social world are reducible to individual attitudes and hence, his choice to use the term internal world to describe the social world appears to a bit unfortunate or even misleading.

  7. Later on in Human Action Mises ([1949] 1966, 233–234) writes that ‘the demand for goods is widely influenced by metaphysical, religious, and ethical considerations, by aesthetic value judgments, by customs, habits, prejudices, traditions, changing fashions, and many other things. To an economist who would try to restrict his investigations to “material” aspects only, the subject matter of inquiry vanishes as soon as he wants to catch it’.

  8. Notice that Mises uses the terms ‘social whole’ and ‘society’ interchangeably (see Mises [1949] 1966, 44–45).

  9. In Human Action he argues in a similar way: ‘As a thinking and acting being man emerges from his prehuman existence already as a social being. The evolution of reason, language, and cooperation is the outcome of the same process: they were inseparably and necessarily linked together’ (Mises [1949] 1966, 43).

  10. Elsewhere he states that ‘[w]e have inherited from our forefathers [...] ideas and thoughts, theories and technologies to which our thinking owes its productivity’ (Mises [1949] 1966, 178).

  11. Mises states: ‘He [individual man] is born the offspring and the heir of his ancestors, and the precipitate and sediment of all that his forefathers experienced are his biological patrimony. When he is born, he does not enter the world in general as such, but a definite environment. The innate and inherited biological qualities and all that life has worked upon him make a man what he is at any instant of his pilgrimage. They are his fate and destiny. His will is not “free” in the metaphysical sense of this term. It is determined by his background and all the influences to which he himself and his ancestors were exposed.

  12. Or, to put it differently, a method presupposes particular kinds of objects and may be expected to generate useful results, if a method is compatible with the object of analysis.

  13. Notice that here we are faced with a commonality between Mises and F.A. Hayek who also points to the difference between natural and social sciences in his Counter-Revolution of Science (see Hayek [1942–1944] 1955). In his later writings, however, Hayek distinguishes between simple and complex phenomena and respective methods for analysis (see Caldwell 1994, 308–309; Caldwell 2004). Furthermore, although Mises regards himself as standing in the tradition of Menger, the latter author’s opinion differs as regards Mises’s distinction between natural and social sciences. Menger is of the opinion that a phenomenon, whether natural or social, can be studied from a general (theoretical), individual, and practical perspective (Menger [1883] 1933, 3, 32). Hence, Menger argues that the term ‘natural-scientific method’ is misleading and should be replaced by ‘empirical method’ to show that the empirical method can be applied to ‘all fields of empirical knowledge’ (Menger [1871] 2004, 47), including also social phenomena. This difference between Mises and Menger is important for the analysis of Mises’s proposed praxeology, as we shall see later on.

  14. Of course, this is a very simplified explanation and could be elaborated, as Michael Friedman (1974, 5) did: ‘Water is made of tiny molecules in a state of constant motion. Between these molecules are intermolecular forces, which at normal temperature, are sufficient to hold them together. If the water is heated, however, the energy, and consequently the motion, of the molecules increase. If the water is heated sufficiently the molecules acquire enough energy to overcome the intermolecular forces—they fly apart and escape into the atmosphere. Thus, the water gives off steam’.

  15. Or elsewhere Mises states, ‘[i]n the empirical sciences the controlled experiment is indispensable for the a posteriori derivation of propositions whenever experience presents only complex phenomena in which the effect is produced by several interlinked causes’ (Mises [1933] 1981, 12).

  16. Mises holds that ‘[i]n the natural sciences man is able to observe in the laboratory experiment the effects brought about by a change in one factor only, all other factors the alteration of which could possibly produce effects remaining unchanged’ (Mises 1961, 137; see also Mises 1942, 5, 1962, 22).

  17. Notice that a person who uses means to reach ends also believes to know a causal relationship between things, e.g. that the use of means will bring about the desired ends (compare Mises [1949] 1966, 22). Therefore Mises argues that the category of teleology is just a supplement to the category of causality: ‘As no action could be devised and ventured upon without definite ideas about the relation of cause and effect, teleology presupposes causality’ (Mises 1962, 8).

  18. I borrowed the concept of internal and external relationships from Tony Lawson (1997): they support a better understanding of Mises’s position, although Mises himself does not use them.

  19. Ontological arguments are concerned with what exists and the nature of being. As Lawson puts it, an ontological orientation is one that inquires ‘into the nature of being, of existence, including the nature, constitution and structure of the object of study’ (Lawson 1997, 15).

  20. Epistemology is the study of knowledge, their features, conditions, limits and so forth. In other words, it concerns questions regarding what we know about the world or how we gain knowledge of the world. Methodology is that part of epistemology that is concerned with the acquisition of scientific knowledge.

  21. To the best of my knowledge, the term ‘ontology’ appears only once in the writings of Mises (in Theory and History chapter 7) where he discusses some aspects of Hegel’s philosophy (Mises [1957] 1958, 102). Notice, however, that Mises sometimes does use the word ‘ontological’ in his writings.

  22. Of course, there are further aspects that invite a realist interpretation of Mises’s writings. One of which is that Mises and Austrian economists more generally, are interested in ‘real’ or ‘realistic’ explanations of socio-economic problems (see Menger [1871] 2004, 46–47, [1883] 1933, 33, [1889] 1994, 12; Mises 1962, 41, 62, [1949] 1966, 6, 64–65; Hayek [1945] 1949, 91; Lachmann [1971] 1977, 185–86, [1976] 1977, 36–37, 1986, 34–35, [1991] 1994, 277; Birner 1990; Ebeling 1986, 52; Hülsmann 1999, 18). The Austrian economist Jörg Hülsmann, for example, praises the Austrian approach on the grounds that it is realistic in comparison to other approaches within the economic discipline. Hülsmann argues that Austrian economists have contributed for more than hundred years ‘to the great tradition of realist analysis [...] of which they are currently the only representatives’ (Hülsmann 1999, 18). A second aspect is, as Mäki states, that ‘most Austrian economists have thought that the economy exists, that economic theories about it are true or false, and that true theories are to be preferred to false ones’ (Mäki 1990, 292–293). Furthermore, Mäki (1992, 37) highlights another aspect, namely ‘the causal and processual structure of the Austrian theory of the market [which] invites a realist reading’. Thirdly, Mises appears to be close to a realist position when he highlights that entities exist independently of our recognition (this opinion of Mises applies certainly to entities of the natural world, however, it is not entirely clear if it is also valid for entities of the social world). Finally, also Barry Smith (1996, 179) argues that Austrians may be regarded as scientific realists, ‘a doctrine to the effect (i) that the world exists and (ii) that through the working out of ever more sophisticated theories our scientific picture of reality will approximate ever closer to the world as it really is.’ Elsewhere Smith quotes Gordon: ‘Austrian economics and realistic philosophy seem made for each other’ (Gordon in Smith 1994, 127). Notice, however, that in this essay, I am not so much interested in assessing to which extent the writings of Mises reflect realist, idealist, Kantian or whatsoever philosophical insights.

  23. In more detail, the epistemic fallacy ‘consists in the view that questions about being can always be reduced to questions about our knowledge (of being), that matters of ontology can always be translated into epistemological terms. This fallacy assumes the form of an expectation that methods can be adopted from any sphere, and/or be of any kind—mathematical, evolutionary or whatever—and successfully applied irrespective of the nature of the object of study’ (Lawson 2003, 111).

  24. Indeed, Smith (1996, 191) makes a similar observation and believes that Mises follows the doctrine of what is now known under the heading of ‘scientific realism’.

  25. Signaling via raising a hand represents a social rule or convention, which needs to be shared by a number of actors. Hence a successful interpretation ‘from within’ may include social conventions.

  26. For example, parking a car appears to be instrumental action, as I can do it successfully without an audience. However, if I am also intending to annoy my neighbour by obstructing his view to my nice garden, my activity (parking a car) can be both instrumental and audience directed.

  27. Mises ([1949] 1966, 195) states: ‘Making one-sided presents without the aim of being rewarded by any conduct on the part of the receiver or of third persons is autistic exchange. The donor acquires the satisfaction, which the better condition of the receiver gives to him. The receiver gets the present as a God-sent gift. But if presents are given in order to influence some people’s conduct, they are no longer one-sided, but a variety of interpersonal exchange between the donor and the man whose conduct they are designed to influence’.

  28. Zilian nicely states: ‘Think of that familiar philosophical figure, the Alien: you may try to explain the game of cricket to him, but what if it transpires that he doesn’t understand the concept of a “game”? Here verbal and theoretical instruction might find its limits, and we would perhaps ask the alien to live with us for a while, to share our form of life, so to speak, till he has grasped the point of playing games’ (Zilian 1984, 130).

  29. Notice that Mises uses these terms (comprehending, grasping and conception) interchangeably in his writings.

  30. Mises ([1949] 1966, 51) writes: ‘Conception is the mental tool of praxeology; understanding is the specific mental tool of history’.

  31. The limited space of this essay does not allow discussing the vast literature that can be found on issues such as explanation, adequate explanation, kinds of explanation, explanatory power of an explanation, causal explanation, the relationship between understanding and explanation, etc. (see The Journal of Philosopy, Bromberger 1992; Runde 1998, Zilian 1984).

  32. To explain a phenomenon means to capture it as an exemplification of a law, according to Mises. In this respect, Mises’s position appears to be very close to the one of Menger, who argues that a complex phenomenon is explained theoretically as an exemplification of types and typical relationships (Menger [1883] 1933, 17).

  33. Notice that this type of explanation is closely related to reductionism in a sense that the behaviour of water is explained by reducing it to the behaviour of molecules.

  34. In fact, the D-N (deductive-nomological) model of explanation goes back to Karl Popper, and Carl Hempel may be regarded as the most passionate defender (see Lawson 1997). For an illustration of a D-N explanation, see Hempel (1942, 36).

  35. Lawson (1997, 17) describes deductivism as follows: ‘According to deductivist explanation [...] the explanandum must be deduced from a set of initial and boundary conditions plus universal laws of the form “whenever event x then event y”’.

  36. Notice that many scholars conflate the general position of methodological individualism with methodological atomism. It is important to distinguish the two because methodological atomism is merely a special case of methodological individualism that adopts an atomistic social ontology (see Zwirn 2007).

  37. Mises ([1949] 1966, 4) argues, for example: ‘Historicism aimed at replacing it [economic theory] by economic history; positivism recommended the substitution of an illusory social science, which should adopt the logical structure and pattern of Newtonian mechanics’. See also Selgin’s (1988) nice essay on praxeology and Mises’s critique of positivism and historicism.

  38. Indeed, Mises shares the view of Menger, who distinguishes between studying phenomena from a general (the task of theory) and individual (the task of history) perspective.

  39. If ‘general theory’ is taken as an abstract, discursive, logical explanation of social phenomena, which starts with axioms and subsidiary assumptions, ‘science’ as a systematic collection of theories, and methodology not only as a collection of methods, but rather as a rationale that includes philosophical views that underlie specific analysis, then, I think, it is also safe to say that praxeology refers to methodology, as some authors do (e.g. Selgin (1988, 20) writes from ‘the praxeological approach’). I am grateful to Peter Boettke, who drew my attention to the problem that praxeology is sometimes taken to be a method or methodology, rather than a science, which, as stated above, may not always be erroneous. Notice, however, that Mises himself is not very precise as regards the use and definition of praxeology. Indeed, praxeology, the general theory of human action, includes also history, according to Mises, which studies not general but individual phenomena.

  40. Roger Koppl identifies five crucial features of Mises’s position, which appear in his praxeological approach. That is ‘loose apriorism, methodological dualism, understanding, methodological individualism, and economic law’ (Koppl 2002, 32). ‘Loose apriorism’ refers to the action axiom (see sections 4.1 and 4.2). ‘Methodological dualism’ refers to the distinct methods of the natural and social sciences (see section 2.2). ‘Methodological individualism’ refers to the entry point of social explanation: the individual actor (see section 4.2). ‘Understanding’ has been discussed in section 3.2.. The last element identified by Koppl (‘economic law’) will be discussed in section 4.3.

  41. According to Mises ‘[a] definite mode of behavior is an action only if these distinctions [between what are ends and what are means, between success and failure or profit and loss] are present in the mind of the man concerned’ (Mises 1962, 9).

  42. Elsewhere he states that action ‘only implies that the performer of the action believes that the means applied will produce the desired effect’ (Mises [1949] 1966, 37).

  43. That there is no common state of knowledge (e.g. the individual state of knowledge changes over time, different individuals have different knowledge, have access to different information and if it is the same information, different individuals interpret it differently, etc.) and that individuals are in different situations with different discomforts, is not explicitly articulated by Mises but by some of his disciples such as Hayek and Lachmann.

  44. As the Austrian economist Hans H. Hoppe (1995) nicely states: ‘People can learn. It is absurd to assume that one could predict in the present what one will know tomorrow and in what way tomorrow’s knowledge will or will not be different from today’s’.

  45. Rothbard, a prominent and close fellow of Mises, holds: ‘Action implies that the individual’s behavior is purposive, in short, that it is directed toward goals. Furthermore, the fact of his action implies that he has consciously chosen certain means to reach his goals. Since he wishes to attain these goals, they must be valuable to him; accordingly he must have values that govern his choices. That he employs means implies that he believes he has the technological knowledge that certain means will achieve his desired ends [...]. Action therefore implies that man does not have omniscient knowledge of the future; for if he had such knowledge, no action of his would make any difference. Hence action imples that we live in a world of an uncertain, or not fully certain, future’ (Rothbard 1997, 59–60).

  46. Economics, or what Mises calls catalactics, represents just one particular strand of research within praxeology (see Mises [1949] 1966, 3). In comparison to praxeology, economics is not concerned about all types of action: ‘Catalactics is the analysis of those actions which are conducted on the basis of monetary calculation’ (Mises [1949] 1966, 234).

  47. Mises argues that ‘praxeology abstracts from the concrete content of the ends men are aiming at. It is history that deals with the concrete ends’ (Mises 1962, 43). For Mises, ‘choosing means is a matter of reason, choosing ultimate ends a matter of the soul and the will’ (Mises [1957] 1958, 15).

  48. Whereas Mises holds that ‘[p]raxeology—and consequently economics too—is [not only] a deductive system [but also that i]t draws its strength from the starting point of its deductions, from the category of action’ (Mises [1949] 1966, 68).

  49. As regards the imaginary construction of an isolated individual actor, Mises holds: ‘If praxeology speaks of the solitary individual, acting on his own behalf only and independent of fellow men, it does so for the sake of a better comprehension of the problems of social cooperation. We do not assert that such isolated autarkic human beings have ever lived [...] The isolated asocial man is a fictitious construction’ (Mises [1949] 1966, 165).

  50. What Mises believes to be a proper application of an unrealistic imaginary construction emerges somehow from the following quote: ‘The main formula for designing of imaginary constructions is to abstract from the operation of some conditions present in actual action. Then we are in a position to grasp the hypothetical consequences of the absence of these conditions and conceive the effects of their existence. Thus we conceive the category of action by constructing the image of a state in which there is no action [...]’ (Mises [1949] 1966, 237). Or later on he ([1949] 1966, 356) writes that logical economics (a part of praxeology) ‘resorts to imaginary constructions of changelessness merely for the elucidation of the phenomena of change’.

  51. Elsewhere, Rothbard states: ‘[...] the praxeologist can say, with absolute certainty, that if the demand for butter increases, and the supply remains the same, the price of butter will rise; but he does not know whether the public’s demand for butter will in fact rise or fall, let alone by how much it will change’ (Rothbard 1997, 37).

  52. Mises ([1949] 1966, 66) states: ‘It [economics] does not strictly separate in its treatises and monographs pure science from the application of its theorems to the solution of concrete [...] problems.’

  53. Mises makes a similar statement in his Ultimate Foundation. He argues that praxeology ‘starts from the a priori category of action and develops out of it all that it contains. For practical reasons praxeology does not as a rule pay much attention to those problems that are of no use for the study of the reality of man’s action, but restricts its work to those problems that are necessary for the elucidation of what is going on in reality. Its intent is to deal with action taking place under conditions that acting man has to face’ (Mises 1962, 41).

  54. Or a bit later on Mises repeats that ‘[f]or epistemology there is something that it must take as unchanging, viz., the logical and praxeological structure of the human mind’ (Mises 1962, 2).

  55. By a priori Mises means that a different definition of action, for example, ‘appears to the human mind as unthinkable and self-contradictory (Mises 1962, 54). Notice that a priori concepts, such as action, can be acquired independently of experience.

  56. Later on in Human Action Mises [1949] 1966, 646) writes: ‘praxeological knowledge is precise or exact knowledge of reality’.

  57. Of course, teleological reasoning is ultimately connected to causality (see section 2.2 and footnote 19). However, let me give you another example, where the connection between teleology and causality emerges nicely. Mises ([1949] 1966, 22) describes individual reasoning as follows: ‘where and how must I interfere to divert the course of events form the way it would go in the absence of my interference in a direction which better suits my wishes? In this sense man raises the question: who or what is at the bottom of things?’

  58. Notice that Smith calls this position the impositionist view of apriorism and distinguishes it from a reflectionist view (Smith 1990, 275). Also Lachmann (1976, 56) and Rothbard (see 1957, 318) regard Mises as standing in the neo-Kantian tradition.

  59. Similarly, it may sound confusing that Mises’s description of action is connected to or even implies the reality of choice and uncertainty (see section 4.1), while, at the same time, he holds that within the imaginary construction of an evenly rotating economy, 1) action becomes reaction (Mises [1949] 1966, 249) and 2) actors neither have choice nor face uncertainty (Mises [1949] 1966, 248). Again, this apparent contradiction can be resolved if it is recognised that Mises provides an ontological description of action in the former case and talks about epistemology in the latter.

  60. Recall that conception is related to theory and understanding to history, according to Mises. However, Mises’s sharp distinction between the two is hard to sustain, as correct understanding presupposes conception, a shared logical structure of the mind and conventions. Notice that this criticism has already been raised by Koppl and Whitman (2004, 299), who argue that ‘[t]he sharp distinction Mises drew between conception and understanding does not withstand scrutiny’.

  61. Menger offers the notion of the practical sciences, which teach us how we should proceed and/or interfere into social reality in order to reach goals most efficiently (Menger [1883] 1933, 9, 255f, [1889] 1994, 6).

  62. Mäki (1997, 479) states: ‘Types as recurring aspects of things are the universals, which are exemplified by concrete entities and phenomena, the particulars. To put it in classical terms, a universal is the one, particulars are the many, and consequently economic theory, being concerned with economic types like money and price, is about the one in the many’.

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Acknowledgement

I am grateful to Thierry Aimar, Peter Boettke, Bruce Caldwell, Pierre Garrouste, participants of the Austrian Research Seminar at the University of Paris I Panthéon-Sorbonne, two anonymous referees and especially to Jochen Runde for helpful comments and suggestions. The usual disclaimer applies.

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Zwirn, G. Ludwig von Mises on the epistemological foundation for social sciences reconstructed. Rev Austrian Econ 22, 81–107 (2009). https://doi.org/10.1007/s11138-008-0046-4

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