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« Austrian Founders | Main | The conflict between our moral intuitions and the moral demands of the 'Great Society' »

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What has the Austrian School done in the last 30 years? Because that methodologically confused mainstream has been done *a lot*, method or no method.

For a second there I entertained the hope that there will be something new coming out of "Austrianism", but alas, my hopes are in vain. More of the same, again and again.

Method! Method! Oh, sweet method!

Man acts and God kills a kitten every time someone writes a methodological essay.

I repeat what I said already in my postings under "Rush to philosophic judgment": some of Mises claims are obviously mistaken. This was recognized by at least one contemporary philosopher (Barry Smith), and implicitly by almost all economists who are not Misesians.
It doesn´t even take a lot of philosophical sophistication to understand this. Moreover, it would be in the interest of Austrian economists and of the advance of Austrian economics, to recognize this. It is simply ridiculous to deny the obvious.

Two questions for Pete (Boettke) & Pete (Leeson):

1. Pete & Pete endorse Mises's claim that human action is "conscious" (P&P 2. 253). But as Mises also recognized, there is much involuntary, unconscious human action, such as the beating of the human heart. So how do we know, a priori, the empirical relevance of an aprioristic analysis of human action that is premised on its being conscious?

Introspection reveals many things aside from consciousness: e.g., it reveals the sound of the beating heart, and cases in which one has acted as if on autopilot.

Weber pointed out that even actions that look conscious (unlike a beating heart) might in fact be semi-unconscious or unconscious "traditionalistic" or "affective" behavior. It's an empirical question whether any given action is conscious or not. Therefore, the applicability of Misesian apriorism to the real world may be small or nonexistent.

Officially, Mises allowed for this, but the effect of his allowance is to make it an open question whether Misesian apriorism has any applicability to the real world. Its applicability is limited to instances in which people behave consciously.

But Pete & Pete claim that Misesian apriorism is, in fact, supremely realistic. This is something that can be known only through Verstehende historical investigation of specific cases--not through blanket assertions about "universal laws."

On p. 261, Pete & Pete assert that we would be unable to understand the real-world economy without using the "law" of demand. Perhaps so, but that begs the question of whether our understanding of the real-world economy through the use of this "law" is an *accurate* understanding. Just as what looks like a perfect triangle might really be a rectangle seen through a drunken stupor, aprioristic economics could have only illusory application to the real world in any given instance, or many instances, or most instances.

2. Back on p. 253, Pete and Pete leap from characterizing human action as "conscious" in one sentence to characterizing it as "rational" in the next. And by the end of the paper, p. 263, Pete & Pete claim that "rational choice theory" is the basis of a "unified social science."

Question: Even when people are conscious, are they always rational, i.e., instrumentally rational? Consider another Weberian category: dutiful behavior, where action is consciously undertaken as an end in itself, not as instrumental to some other end.

Perhaps Pete & Pete are making a "mere tautological" claim: namely, that the "unified social science" of rational choice would apply only in cases--which may be many or may be few-- when Verstehende historical investigation demonstrates that people are, indeed, rational.
After all, economists are not expected to be psychologists, so they could leave to their colleagues in psychology departments the question of how rational people really are, in reality.

But in that case, the unified social science of rational choice might turn out to be nothing but the type of parlor-game speculation to which Mises objected. It all depends on the evidence, and economists would, in this view, be making no pronouncements about that evidence--let alone would they be proclaiming laws that have "universal applicability" (p. 263).

On p. 255, Pete & Pete claim that rationality is the "primary and distinguishing feature" of human beings. But the idea that human rationality is "primary" is an empirical claim about human psychology that can't be settled by mere assertion. On the other hand, saying that human rationality is "distinguishing"--that it is, in fact, the human "essence" (p. 256)--is empty verbiage.

Grant that the "essence" of "humanity" is "rational." Fine: then rational choice theory may still have zero applicability, in any given instance, to the behavior of mortal bipeds such as ourselves. The frequency with which human beings live up to their rational "essence" is still an empirical question, and rational choice theory is applicable only in the (possibly rare) cases when we do.

Jeff

I agree with Ludwig's claim that Mises' methodological program is flawed in several areas. Moreover, I also agree that it would be in the interest of Austrians to at least attempt to find problems with his approach, even if we believe (as most do) that his methodology is incorrigible. Peter Lewin's paper on interest theory is a good example.

Now, this is not to deny or ignore the enormously significant contributions Mises made to areas like historicism and scienticism. I am not questioning this. But one must critically examine not only the reasons why Mises objected to these ideological doctrines, but also the replacements he suggested.

I think Popper was a far more eloquent critic of historicism than Mises. One's time is better spent reading "The Poverty of Historicism" than the first 100 pages of Human Action or Theory and History if one is interested in historicism. And I think the recent work being done in the philosophy of science and postmodernism in general are far better sources to consult on issues related to scientism than Mises' writings. The problem with Mises (and Hayek) is that he concedes a legitimate role for the practice of science in certain delineated areas. His objection concerns instead the viable scope of this alleged "objective" and "apodictic" science. The implication of this is that there is a certain domain in which science can yield instrinsically meaningful truths about social and natural phenomena. Other thinkers such as Richard Rorty in philosophy, Paul Feyerabend in science, and Hayden White in history question even this premise. There exists no firm foundation from which we can discover and subsequently articulate universal truths that are immune from criticism or revision. Mises should have recognized this. His statements of a priorism and apodictic certainty are a bit too dogmatic with respect to their commitment to Kantian idealism.

I am not suggesting that we abandon Mises' writings. That is not the point. I would suggest instead that we continue reading Mises, but with a critical eye. Let's not write papers reinforcing Mises' views (as the linked paper above clearly does). We should instead be involved in the activity of trying to challenge or even subvert the entire program of Mises' a priorism. This acccomplishes two things. First, it is likely to advance the Misesian program because it would not only force its supporters to respond vehemently to the criticisms, but it would also extend the scope of discussion into other areas concerned with similar issues. Second, it would also accomplish the overall program Popper himself tried to firmly establish among the scientific disciplines, that is, critical rationalism.

Jeffrey Friedman : Mises's category of rationality is synonymus with conscious action, i.e. the choosing of one mean over another for the attainment of a subjectively defined end. His concept is completely value-free and does not incorporate any normative aspect regarding proper or efficient behaviour. A dutiful behaviour is no less rational that an instrumental one form this perspective because it too is a choice of certain means to attain a certain end.

More broadly, Mises conceived praxeology as the basis upon which a fruitful Verstehen analysis, i.e. a historical description of the motives and ends of the acting individual(s) in a certain context, can be pursue.

While there are indeed border cases regarding conscious and unconscious actions, Mises asserted - rightly or wrongly - that choosing one course of action over another necessarily implies an evaluation of new ends and means, a minimum of conscious/rational - but subjective - choice.

Bogdan Enache writes:

"Mises's category of rationality is synonymus with conscious action, i.e. the choosing of one mean over another for the attainment of a subjectively defined end. His concept is completely value-free and does not incorporate any normative aspect regarding proper or efficient behaviour."

I would just like to ask, what could be more theory-laden than this statement? It is logically impossible for someone to make a value-free statement or observation.

And I am actually currently writing a paper on the verstehen doctrine, pointing out what I believe to be its major flaws. To do this, I am bringing in the concept of opportunity cost. If it is impossible to know precisely what alternatives a person sacrificed in making his decision, and the cost of any action is not the actual action performed, but the alternatives sacrificed, then how can we ever speak intelligently of verstehen (making sense of human action)? If we can never know the costs of any human action, then we can never come to understand or evaluate any action.

So here are two flaws in the Misesian program.
1. value-free praxeology
2. verstehen

A few comments on the run.

1. The method of praxeology is just fine, but the justification for it in terms of a priori truths is defective and confusing.

2. At the meta level there is a unity of method, that is the method of trial and error, conjecture and refutation, the approach to practical and intellectual problems by situational analysis to take account of the relevant variables.

3. At the lower level the methods of the different sciences diverge to take account of the different variables in play - so the human sciences have to consider the role of ideas, values, plans, intentions and purposes.

4. Popper challenged the idea that intuitive insight marks a difference between the sciences, because natural scientists have intuitive insights as well as the humanists and our intuitions are fallible in each case. There was an amusing exchange on this topic between Popper and a colleague:
Popper: Some people can't understand how some people don't like chocolate.
Colleague: Who can't understand that?
Popper: I can't.

5. As to what the Austrians have achieved in the last 30 years, well given the vanishingly small number of Austrains 30 years ago, check out the volume of work coming from the Mises Inst, Geo Mason and its cognates and others in public choice theory...The great thing is that there are enough people on the job to permit diversification including vigorous programs of historical case studies and current fieldwork in the developing world, filling the gap of empirical work that used to be thrown at the Austrians.

Rafe: Wonderful articulation!

I believe that what is missing from this discussion is that Mises - and the classical and contemporary Austrians (methinks) - used a more relaxed connotation of "rationality" (i.e., purposive action). That is, they (implicitly) recognize the difference between "rats and men (Buchanan)," but are fully aware that any attempt to discern when the former ends, and the latter begins is epistemologically problematic (Vaughn).

Praxeology encompasses the subjective nature of (opportunity) costs, yet pays due attention to the ontological considerations (e.g., traditions, rules, institutions, prejudices, etc.) of an actor; thus, praxeology is cagey about dealing with utility-maximizing automatons, and saves its investigation for the everyman! That is, one who MUST make decisions, yet makes them right along with her knowledge base (however imperfect) and socio-cultural makeup.

J. Friedman: I, too, believed that Misean praxeology was a mere tautology when I first read Human Action (about five years ago) until I read something by Weber, where he noted, "...sociology is privileged in comparison to the natural sciences because we are what we study..." That is to say, what moves praxeology - and its application in the human sciences - beyond the "tautological" is its communicative function; i.e., its ability to assist actors in the interpretation of rules, signs, and other social structures that allow for (socio)economic coordination. Therefore, praxeology may not yield clean predictions as "rational choice," but praxeology is an expansive theory ripe for the investigation of the intended and unintended consequences of human action.

(Bear in mind, too, that Mises - and Weber - were led to human science theory due to their dissatisfaction with mere (historical) data collection!)

Matthew Mueller: On the (non-probabilistic) Nature of Opportunity Costs. Have you ever gone to a movie, out to eat, etc., and wondered: Boy I could have be doing something else. But what else?
(1)Writing a paper on Verstehen?;
(2)Reading Popper?;
(3)Critiquing Mises and the Austrians?;
(4)Or you could have died in a car crash on your way to the computer lab to read The Austrian Economists.

Now this may seem far-fetched. But wasn't 9-11-01 far-fetched on 9-10-2001? I would bet, too, that the tragedy of 9-11-2001 would not have been on many peoples' "utility scale" on 9-10-2001 when they were thinking about their (opportunity) costs of not going to work the following day!

Of course we should go on reading Mises! I would like to defend several of Mises´ positions in the philosophy of the natural sciences. I agree with him on three points:
(1) Mises does not only talk about "apodictic certainty". He was also an outspoken pragmatist; he adhered to a pragmatist notion of truth. He says: we cannot expect our theories to provide us with ultimate truth; however, we accept them as "true" because they work.
(2) Except for one remark in The Ultimate Foundation and which is subject to interpretation, Mises was an inductivist. In the confrontation between falsificationists and Bayesians, he would have been on the side of the latter.
(3) From his remarks on probability and quantum mechanics, it is clear that he would have adhered to the de Broglie-Bohm interpretation of quantum mechanics againts the Copenhagen hegemony.
So he was a brilliant philosopher of natural science!

To Matthew Mueller: I agree only partly whith your proposal. We should not only try to subvert the Misesian program. I would also suggest that those who believe that praxeology is a deductive system with certain conclusions following from self-evident premisses wouldv try to make the logic of human action more explicit, perhaps even try to formalize it where possible. As things now stand, however, I believe the claim is clearly unsubstantiated. There is very little explicit deductive logic in human action. If it is there, it has remained largely implicit.
There are at least four ways in which knowledge can be organized:
(1) rigorous deductive reasoning;
(2) plausible reasoning;
(3) systematization of knowledege;
(4) mere description.
While some praxeologists would want to make us believe that praxeology is mainly of the kind (1), I believe most of the time it is (2) or (3).
But I do not exclude it can be made more rigorous. The burden of the proof is upon those who make the claim, however.

If Brian Pitt's reply was to my post, then a clarification: I was not criticizing praxeology or Austrian economics tout court. I was only criticizing the notion of "universal economic laws" based on postulates of conscious instrumental rationality--which cannot, in fact, be established as universally applicable via introspection.

I have nothing against a modest use of "deductive" praxeology which recognizes that the scope of its applicability to the real world is an empirical question--it could be 100 percent applicable, 0 percent, or something in between.

A fortiori, I was criticizing economic imperialists who assume that instrumentally rational conscious choice is a universal law in domains outside of "the economy," such that rational-choice theory can be the basis of a "universal social science," as Pete & Pete claim in the paper attached to Pete Boettke's post.

Jeff

Jeffery: There is something amiss about the claim that Mises (in the first 100 pgs. of Human Action) is speaking to "instrumental rationality." He is not. He is merely making known that insofar as the social sciences are theorizing about human beings, it has to come to grips with "rational/conscious" or purposive behavior.

As you note, Jeff, Mises was essentially "taking on" the historicists, the collectivists, and the strict instrumental-atomistic rationaltists of economics, and rational choice sociologists and political scientists. And in so doing, he put forward an ambitious philosophical/theoretical paradigm, homo agens, that acknowledges ontology and rationality (in its less strict connotation); and is appealing for historical investigation ascertaining meaning.

I think it is indeed potentially confusing to talk about praxeology in terms of "rational choice theory". Praxeology is the science of the formal implications of the fact THAT individuals act. It makes no assumptions about the "content" of action. Mainstream rational choice theory makes assumptions about the "content" of action, and thus can be put to empirical test. My opinion is that the two approaches are clearly distinct but not obviously contradictory.

Before leaving this discussion I make a last remark concerning the title of this section ("brilliant not absurd"). I cannot remember who said the first 100 pages of Human Action are absurd. Anyway it was not my claim, and my caim was not that they are not brilliant either. The true question relates to a third possibility, however, namely that A BRILLIANT FRAUD IS STILL A FRAUD.

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