WEBVTT NOTE On Praxeology and the Praxeological Foundation of Epistemology: II 1 00:00:00.000 --> 00:00:09.600 On Praxeology and the Praxeological Foundation of Epistemology, Section 2, let me turn to Mises' solution. 2 00:00:30.000 --> 00:00:35.080 says it can only be employed as a means for the attainment of a goal that is considered 3 00:00:35.080 --> 00:00:42.160 less valuable than the least valuable goal previously satisfied by a unit of this good, 4 00:00:42.160 --> 00:00:48.000 or of the quantity theory of money, that whenever the quantity of money is increased, while 5 00:00:48.000 --> 00:00:54.160 the demand for money to be held in cash reserve on hand is unchanged, the purchasing power 6 00:00:54.160 --> 00:00:56.200 of money will fall. 7 00:00:56.200 --> 00:01:01.820 In formulating his answer, Mises faced a double challenge. On the one hand, there was the 8 00:01:01.820 --> 00:01:08.100 answer offered by modern empiricism. The Vienna Ludwig von Mises knew was in fact one of the 9 00:01:08.100 --> 00:01:14.200 early centers of the empiricist movement, a movement which was then on the verge of establishing 10 00:01:14.200 --> 00:01:19.880 itself as the dominant academic philosophy of the Western world for several decades, 11 00:01:19.880 --> 00:01:24.880 and which to this very day shapes the image that an overwhelming majority of economists 12 00:01:24.880 --> 00:01:26.780 have of their own discipline. 13 00:01:27.280 --> 00:01:31.680 Empiricism considers nature and the natural sciences as its model. 14 00:01:32.080 --> 00:01:37.080 According to empiricism, the aforementioned examples of economic 15 00:01:37.080 --> 00:01:42.580 propositions have the same logical status as laws of nature. 16 00:01:42.980 --> 00:01:46.980 Like laws of nature, they state hypothetical relationships between 17 00:01:46.980 --> 00:01:51.580 two or more events, essentially in the form of if-then statements. 18 00:01:51.580 --> 00:02:00.580 And like hypotheses of the natural sciences, the propositions of economics require continual testing vis-à-vis experience. 19 00:02:00.580 --> 00:02:07.580 A proposition regarding the relationship between economic events can never be validated once and for all with certainty. 20 00:02:07.580 --> 00:02:12.580 Instead, it is forever subject to the outcome of contingent future experiences. 21 00:02:12.580 --> 00:02:19.580 Such experience might confirm the hypothesis, but this would not prove the hypothesis to be true, 22 00:02:19.580 --> 00:02:42.780 Since the economic proposition would have used general terms in philosophical terminology universals, in its description of the related events, and thus would apply to an indefinite number of cases or instances, thereby always leaving room for possibly falsifying future experiences, all a confirmation would prove is that the hypothesis had not yet turned out wrong. 23 00:02:42.780 --> 00:02:46.460 On the other hand, the experience might falsify the hypothesis. 24 00:02:46.460 --> 00:02:50.540 This would surely prove that something was wrong with the hypothesis as it stood, 25 00:02:50.540 --> 00:02:55.020 but it would not prove that the hypothesized relationship between the specified events could 26 00:02:55.020 --> 00:03:00.700 never be observed. It would merely show that considering and controlling in one's observations 27 00:03:00.700 --> 00:03:06.060 only what up to now has been actually accounted for and controlled, the relationship had not yet 28 00:03:06.060 --> 00:03:11.740 shown up. It cannot be ruled, however, that it might show up as soon as some other circumstances 29 00:03:11.740 --> 00:03:16.620 have been controlled. The attitude that this philosophy fuels, and that has indeed become 30 00:03:16.620 --> 00:03:21.340 characteristic of most contemporary economists and their way of conducting their business, 31 00:03:21.340 --> 00:03:26.620 is one of skepticism. The motto being, nothing can be known with certainty to be impossible 32 00:03:26.620 --> 00:03:32.060 in the realm of economic phenomena. Even more precisely, since empiricism conceives of economic 33 00:03:32.060 --> 00:03:37.260 phenomena as objective data, extending in space and subject to quantifiable measurement, 34 00:03:37.260 --> 00:03:42.060 In strict analogy to the phenomena of the natural sciences, the peculiar skepticism 35 00:03:42.060 --> 00:03:48.220 of the empiricist economist may be described as that of a social engineer who will not guarantee 36 00:03:48.220 --> 00:03:54.300 anything. The other challenge came from the side of the historicist school. Indeed, during Mises's 37 00:03:54.300 --> 00:04:00.140 life in Austria and Switzerland, the historicist philosophy was the prevailing ideology of the 38 00:04:00.140 --> 00:04:05.500 German-speaking universities and their establishment. With the upsurge of empiricism, this former 39 00:04:05.500 --> 00:04:11.320 and consumer prominence has been reduced considerably. But over roughly the last decade, historicism 40 00:04:11.320 --> 00:04:17.260 has regained momentum among the Western world's academia. Today, it is with us everywhere 41 00:04:17.260 --> 00:04:23.980 under the names of hermeneutics, rhetoric, deconstructionism, and epistemological anarchism. 42 00:04:23.980 --> 00:04:30.740 For historicism, and most conspicuously for its contemporary versions, the model is not 43 00:04:30.740 --> 00:04:32.740 are not nature, but a literary text. 44 00:04:32.740 --> 00:04:35.740 Economic phenomena, according to the historicist doctrine, 45 00:04:35.740 --> 00:04:39.740 are not objective magnitudes that can be measured. 46 00:04:39.740 --> 00:04:45.740 Instead, they are subjective expressions and interpretations unfolding in history 47 00:04:45.740 --> 00:04:48.740 to be understood and interpreted by the economist, 48 00:04:48.740 --> 00:04:54.740 just as a literary text unfolds before and is interpreted by its reader. 49 00:04:54.740 --> 00:04:58.740 As subjective creations, the sequence of their events 50 00:04:58.740 --> 00:05:05.220 follows no objective law. Nothing in the literary text and nothing in the sequence of historical 51 00:05:05.220 --> 00:05:11.140 expressions and interpretations is governed by constant relations. Of course, certain literary 52 00:05:11.140 --> 00:05:16.780 texts actually exist, and so do certain sequences of historical events, but this by no means implies 53 00:05:16.780 --> 00:05:21.380 that anything had to happen in the order it did. It simply occurred. In the same way, however, 54 00:05:21.380 --> 00:05:26.620 as one can always invent different literary stories, history and the sequence of historical 55 00:05:26.620 --> 00:05:29.620 and historical events, too, might have happened in an entirely different way. 56 00:05:29.620 --> 00:05:34.620 Moreover, according to historicism, and particularly visible in its modern hermeneutical version, 57 00:05:34.620 --> 00:05:40.620 the formation of these always contingently related human expressions and their interpretations 58 00:05:40.620 --> 00:05:43.620 is also not constrained by any objective law. 59 00:05:43.620 --> 00:05:47.620 In literary production, anything can be expressed or interpreted concerning everything, 60 00:05:47.620 --> 00:05:54.620 and along the same line, historical and economic events are whatever someone expresses or interprets them to be, 61 00:05:54.620 --> 00:05:59.460 and their description by the historian and economist is then whatever he 62 00:05:59.460 --> 00:06:04.260 expresses or interprets these past subjective events to have been. The 63 00:06:04.260 --> 00:06:08.900 attitude that historicist philosophy generates is one of relativism. Its motto 64 00:06:08.900 --> 00:06:13.660 is everything is possible, unconstrained by any objective law, for the 65 00:06:13.660 --> 00:06:19.300 historicist hermeneutition, history and economics, along with literary criticism, 66 00:06:19.300 --> 00:06:23.980 are matters of aesthetics, and accordingly his output takes on the form 67 00:06:23.980 --> 00:06:36.980 is a form of disquisition on what someone feels about what he feels was felt by somebody else, a literary form which we are only too familiar with, in particular in such fields as sociology and political science. 68 00:06:36.980 --> 00:06:44.980 I trust that one senses intuitively that something is seriously amiss in both the empiricists as well as the historicist philosophies. 69 00:06:44.980 --> 00:06:51.220 Theistemological accounts do not seem to fit even their own self-chosen models, nature 70 00:06:51.220 --> 00:06:54.620 on the one hand, and literary texts on the other. 71 00:06:54.620 --> 00:06:59.820 And in any case, regarding economic propositions such as the law of marginal utility or the 72 00:06:59.820 --> 00:07:03.700 quantity theory of money, their accounts seem to be simply wrong. 73 00:07:03.700 --> 00:07:09.260 The law of marginal utility certainly does not strike one as a hypothetical law, subject 74 00:07:09.260 --> 00:07:13.860 forever for its validation to confirming or disconfirming experiences popping up here 75 00:07:13.860 --> 00:07:20.260 are there, and to conceive of the phenomena talked about in the law as quantifiable magnitudes 76 00:07:20.260 --> 00:07:26.660 seems to be nothing but ridiculous. Nor does the historicist interpretation seem to be 77 00:07:26.660 --> 00:07:32.140 any better. To think that the relationship between the events referred to in the quantity 78 00:07:32.140 --> 00:07:37.780 theory of money can be undone if only one wished to do so seems absurd, and the idea 79 00:07:37.780 --> 00:07:42.540 appears no less absurd that concepts such as money, demand for money, and purchasing 80 00:07:42.540 --> 00:07:48.060 are formed without any objective constraints and refer merely to whimsical subjective creations. 81 00:07:48.620 --> 00:07:54.860 Instead, contrary to the empiricist doctrine, both examples of economic propositions appear to be 82 00:07:54.860 --> 00:08:02.620 logically true and to refer to events which are subjective in nature. And contrary to historicism, 83 00:08:02.620 --> 00:08:08.700 it would seem that what they state then could not possibly be undone in all of history and would 84 00:08:08.700 --> 00:08:13.780 would contain conceptual distinctions, which, while referring to subjective events, were 85 00:08:13.780 --> 00:08:19.680 nonetheless objectively constrained, and would incorporate universally valid knowledge. Like 86 00:08:19.680 --> 00:08:25.260 most of the better-known economists before him, Mises shares these intuitions. Yet in 87 00:08:25.260 --> 00:08:33.980 quest of the foundation of economics, Mises goes beyond intuition. He takes on the challenge 88 00:08:33.980 --> 00:08:40.280 posed by empiricism and historicism in order to reconstruct systematically the basis on 89 00:08:40.280 --> 00:08:44.260 which these intuitions can be understood as correct and justified. 90 00:08:44.260 --> 00:08:49.740 He thereby does not want to help bring about a new discipline of economics, but in explaining 91 00:08:49.740 --> 00:08:55.300 what formerly had only been grasped intuitively, Mises goes far beyond what had ever been done 92 00:08:55.300 --> 00:08:56.340 before. 93 00:08:56.340 --> 00:09:01.320 In reconstructing the rational foundations of the economist's intuitions, he assures 94 00:09:01.320 --> 00:09:06.960 empires us of the proper path for any future development in economics and safeguards us 95 00:09:06.960 --> 00:09:10.360 against systematic intellectual error. 96 00:09:10.360 --> 00:09:15.400 Empiricism and historicism, Mises notes at the outset of his reconstruction, are self-contradictory 97 00:09:15.400 --> 00:09:16.400 doctrines. 98 00:09:16.400 --> 00:09:21.740 The empiricist notion that all events, natural or economic, are only hypothetically related 99 00:09:21.740 --> 00:09:26.700 is contradicted by the message of this very basic empiricist proposition itself. 100 00:09:26.700 --> 00:09:39.700 For if this proposition were regarded as itself being merely hypothetically true, i.e. a hypothetically true proposition regarding hypothetically true propositions, it would not even qualify as an epistemological pronouncement. 101 00:09:39.700 --> 00:09:50.700 For it would then provide no justification whatsoever for the claim that economic propositions are not, and cannot be, categorically a priori true, as our intuition informs us they are. 102 00:09:50.700 --> 00:10:16.300 If, however, the basic empiricist premise were assumed to be categorically true itself, i.e. if we assume that one could say something a priori true about the way events are related, then this would belie its very own thesis that empirical knowledge must invariably be hypothetical knowledge, thus making room for a discipline such as economics, claiming to produce a priori valid empirical knowledge. 103 00:10:16.300 --> 00:10:21.460 Further, the empiricist thesis that economic phenomena must be conceived of as observable 104 00:10:21.460 --> 00:10:26.800 and measurable magnitudes, analogous to those of the natural sciences, is rendered inconclusive 105 00:10:26.800 --> 00:10:32.300 too on its own account, for obviously, empiricism wants to provide us with meaningful empirical 106 00:10:32.300 --> 00:10:37.880 knowledge when it informs us that our economic concepts are grounded in observations. 107 00:10:37.880 --> 00:10:43.780 And yet, the concepts of observation and measurement themselves, which empiricism must employ in 108 00:10:43.780 --> 00:10:49.380 and claiming what it does, are both obviously not derived from observational experience in the sense 109 00:10:49.380 --> 00:10:55.380 that concepts such as hens and eggs or apples and pears are. One cannot observe someone making an 110 00:10:55.380 --> 00:11:01.620 observation or measurement. Rather, one must first understand what observations and measurements are 111 00:11:01.620 --> 00:11:07.460 in order to then be able to interpret certain observable phenomena as the making of an 112 00:11:07.460 --> 00:11:14.020 and Observation, or the Taking of a Measurement. Thus, contrary to its own doctrine, empiricism 113 00:11:14.020 --> 00:11:19.540 is compelled to admit that there is empirical knowledge which is based on understanding, 114 00:11:19.540 --> 00:11:24.460 just as according to our intuitions economic propositions claim to be based on understanding 115 00:11:24.460 --> 00:11:29.540 rather than on observations. And regarding historicism, its self-contradictions are no 116 00:11:29.540 --> 00:11:36.020 less manifest, for if, as historicism claims, historical and economic events, which it conceives 117 00:11:36.020 --> 00:11:50.020 If these other sequences of subjectively understood rather than observed events are not governed by any constant time-invariant relations, then this very proposition also cannot claim to say anything constantly true about history and economics. 118 00:11:50.020 --> 00:12:03.020 Instead, it would be a proposition with, so to speak, a fleeting truth value. It may be true now, if we wish it so, yet possibly false a moment later, in case we do not, with no one ever knowing anything about whether we do or do not. 119 00:12:03.020 --> 00:12:09.740 Yet if this were the status of the basic historicist premise, it too would obviously not qualify as an epistemology. 120 00:12:09.740 --> 00:12:14.060 Historicism would not have given us any reason why we should believe any of it. 121 00:12:14.060 --> 00:12:19.580 If, however, the basic proposition of historicism were assumed to be invariably true, 122 00:12:19.580 --> 00:12:23.820 then such a proposition about the constant nature of historical and economic phenomena 123 00:12:23.820 --> 00:12:27.100 would contradict its own doctrine denying any such constants. 124 00:12:27.100 --> 00:12:45.100 Furthermore, the historicists, and even more so its modern heir, the hermeneuticians, claim that historical and economic events are mere subjective creations, unconstrained by any objective factors, is proven false by the very statement making it. 125 00:12:45.100 --> 00:12:51.100 For evidently a historicist must assume his very statement to be meaningful and true. 126 00:12:51.100 --> 00:12:57.100 He must presume to say something specific about something, rather than merely uttering meaningless sounds like abracadabra. 127 00:12:57.100 --> 00:13:06.100 Yet if this is the case, then clearly his statement must be assumed to be constrained by something outside the realm of arbitrary subjective creations. 128 00:13:06.100 --> 00:13:12.100 Of course, I can say what the historicist says in English, German, or Chinese, or in any other language I wish, 129 00:13:12.100 --> 00:13:17.520 which, insofar as historic and economic expressions and interpretations may well be regarded as 130 00:13:17.520 --> 00:13:22.620 mere subjective creations, but whatever I say in whatever language I choose must be assumed 131 00:13:22.620 --> 00:13:27.940 to be constrained by some underlying propositional meaning of my statement, which is the same 132 00:13:27.940 --> 00:13:34.620 for any language and exists completely independent of whatever peculiar linguistic form may be 133 00:13:34.620 --> 00:13:57.020 in which it is expressed, and contrary to historicists' belief, the existence of such a constraint is not such that one could possibly dispose of it at will, rather it is objective, in that we can understand it to be the logically necessary presupposition for saying anything meaningful at all, as opposed to merely producing meaningless sounds. 134 00:13:57.020 --> 00:14:01.900 The historicist could not claim to say anything if it were not for the fact that his expressions 135 00:14:01.900 --> 00:14:07.820 and interpretations are actually constrained by the laws of logic as the very presupposition 136 00:14:07.820 --> 00:14:13.020 of meaningful statements as such. With such a refutation of empiricism and historicism, 137 00:14:13.020 --> 00:14:18.060 Mises notices, the claims of rationalist philosophy are successfully re-established, 138 00:14:18.060 --> 00:14:22.940 and the case is made for the possibility of a priori true statements as those of economics 139 00:14:22.940 --> 00:14:29.580 seem to be. Indeed, Mises explicitly regards his own epistemological investigations as the continuation 140 00:14:29.580 --> 00:14:34.860 of the work of Western rationalist philosophy. With Leibniz and Kant, he stands opposite the 141 00:14:34.860 --> 00:14:40.380 tradition of Locke and Hume. He sides with Leibniz when he answers Locke's famous dictum, 142 00:14:40.380 --> 00:14:45.580 nothing is in the intellect that has not previously been in the senses, with his equally famous one, 143 00:14:45.580 --> 00:14:51.340 except the intellect itself. And he recognizes his task as a philosopher of economics, 144 00:14:51.340 --> 00:14:57.340 as strictly analogous to that of Kant as a philosopher of pure reason, i.e. of epistemology. 145 00:14:57.900 --> 00:15:03.820 Like Kant, Mises wants to demonstrate the existence of true a priori synthetic propositions, 146 00:15:03.820 --> 00:15:08.780 or propositions whose truth values can be definitively established, even though in order 147 00:15:08.780 --> 00:15:16.220 to do so the means of formal logic are insufficient and observations are unnecessary. My criticism 148 00:15:16.220 --> 00:15:21.340 of imperialism and historicism has proved the general rationalist claim. It has proved that we 149 00:15:21.340 --> 00:15:27.100 indeed do possess knowledge which is not derived from observation and yet is constrained by objective 150 00:15:27.100 --> 00:15:33.260 laws. In fact, our refutation of imperialism and historicism contains such a priori synthetic 151 00:15:33.260 --> 00:15:38.860 knowledge. Yet what about the constructive task of showing that the propositions of economics, 152 00:15:38.860 --> 00:15:43.740 such as the law of marginal utility and the quantity theory of money, qualifies this type 153 00:15:43.740 --> 00:15:54.740 In order to do so, Mises notices, in accordance with the strictures traditionally formulated by rationalist philosophers, economic propositions must fulfill two requirements. 154 00:15:54.740 --> 00:16:04.740 First, it must be possible to demonstrate that they are not derived from observational evidence, for observational evidence can only reveal things as they happen to be. 155 00:16:04.740 --> 00:16:09.740 There is nothing in it that would indicate why things must be the way they are. 156 00:16:09.740 --> 00:16:39.740 Instead, economic propositions must be shown to be grounded in reflective cognition, in our understanding of ourselves as knowing subjects, and secondly, this reflective understanding must yield certain propositions as self-evident material axioms, not in the sense that such axioms would have to be self-evident in a psychological sense, that is, that one would have to be immediately aware of them, or that their truth depends on a psychological feeling of conviction. On the contrary, like Kant before him, Mises very much 157 00:16:39.740 --> 00:16:45.000 Mises stresses the fact that it is usually much more painstaking to discover such axioms 158 00:16:45.000 --> 00:16:49.860 than it is to discover some observational truth, such as that the leaves of trees are green 159 00:16:49.860 --> 00:16:52.700 or that I am six foot two inches. 160 00:16:52.700 --> 00:16:58.220 Rather, what makes them self-evident material axioms is the fact that no one can deny their 161 00:16:58.220 --> 00:17:04.940 validity without self-contradiction, because in attempting to deny them, one already presupposes 162 00:17:04.940 --> 00:17:05.940 their validity. 163 00:17:05.940 --> 00:17:12.140 Mises points out that both requirements are fulfilled by what he terms the axiom of action, 164 00:17:12.140 --> 00:17:18.460 i.e. the proposition that humans act, that they display intentional behavior. 165 00:17:18.460 --> 00:17:23.880 Obviously this axiom is not derived from observation, there are only bodily movements to be observed, 166 00:17:23.880 --> 00:17:30.640 but no such thing as actions, but stems instead from reflective understanding, and this understanding 167 00:17:30.640 --> 00:17:35.820 is indeed of a self-evident proposition, for its truth cannot be denied, since the denial 168 00:17:35.820 --> 00:17:40.820 would itself have to be categorized as an action, but is this not just plain trivial? 169 00:17:40.820 --> 00:17:45.240 And what has economics got to do with this? Of course, it had previously been recognized 170 00:17:45.240 --> 00:17:50.540 that economic concepts such as prices, costs, production, money, credit, etc. had something 171 00:17:50.540 --> 00:17:56.180 to do with the fact that there were acting people, but that all of economics could be 172 00:17:56.180 --> 00:18:01.780 grounded in and reconstructed on the basis of such a trivial proposition, and how is 173 00:18:01.780 --> 00:18:31.780 There is certainly anything but clear. It is one of Mises's greatest achievements to have shown precisely this, that there are insights implied in the psychologically speaking trivial axiom of action that were not themselves psychologically self-evident as well, and that it is these insights which provide the foundation for the theorems of economics as true a priori synthetic propositions. It is certainly not psychologically evident that with every action an actor pursues a goal, 174 00:18:31.780 --> 00:18:44.780 And whatever the goal may be, the fact that it was pursued by an actor reveals that he must have placed a relatively higher value on it than on any other goal of action that he could think of at the start of his action. 175 00:18:44.780 --> 00:18:58.780 It is not evident that in order to achieve his most highly valued goal, an actor must interfere or decide not to interfere, which of course is also an intentional interference, at an earlier point in time, in order to produce a later result. 176 00:18:58.780 --> 00:19:04.180 Nor is it obvious that such interferences invariably imply the employment of some scarce means, 177 00:19:04.180 --> 00:19:10.380 at least those of the actor's body, its standing room, and the time absorbed by the action. 178 00:19:10.380 --> 00:19:19.080 It is not self-evident that these means, then, must also have value, for an actor, a value derived from that of the goal, 179 00:19:19.080 --> 00:19:26.080 because the actor must regard their employment as necessary in order to effectively achieve the goal, 180 00:19:26.080 --> 00:19:34.080 and that actions can only be performed sequentially, always involving a choice, i.e. taking up that one course of action, 181 00:19:34.080 --> 00:19:43.080 which at some given time promises the most highly valued results to the actor, and excluding, at the same time, the pursuit of other, less highly valued goals. 182 00:19:43.080 --> 00:19:51.080 It is not automatically clear that as a consequence of having to choose and give preference to one goal over another, 183 00:19:51.080 --> 00:20:21.080 of not being able to realize all goals simultaneously, each and every action implies the incurrence of costs, i.e. forsaking the value attached to the most highly ranking alternative goal that cannot be realized, or whose realization must be deferred, because the means necessary to attain it are bound up in the production of other, even more highly valued goals, and lastly, it is not evident that at its starting point every goal of action must be considered worth more 184 00:20:21.080 --> 00:20:27.280 to the actor than its cost, and capable of yielding a profit, i.e. a result whose value 185 00:20:27.280 --> 00:20:32.940 is ranked higher than that of the foregone opportunity, and yet that every action is 186 00:20:32.940 --> 00:20:39.480 also invariably threatened by the possibility of a loss if an actor finds in retrospect 187 00:20:39.480 --> 00:20:44.880 that contrary to his expectations, the actually achieved result in fact has a lower value 188 00:20:44.880 --> 00:20:48.200 than the relinquished alternative would have had. 189 00:20:48.200 --> 00:20:54.000 All of these categories, which we know to be the very heart of economics—values, ends, 190 00:20:54.000 --> 00:21:00.240 means, choice, preference, cost, profit and loss—are implied in the axiom of action. 191 00:21:00.240 --> 00:21:03.880 Like the axiom itself, they are not derived from observation. 192 00:21:03.880 --> 00:21:11.800 Rather, that one is able to interpret observations in terms of such categories requires that 193 00:21:11.800 --> 00:21:15.580 one already knows what it means to act. 194 00:21:15.580 --> 00:21:16.580 ividings. 195 00:21:16.580 --> 00:21:22.060 No one who is not an actor could ever understand them, as they are not given ready to be observed, 196 00:21:22.060 --> 00:21:27.860 but observational experience is cast in these terms as it is construed by an actor. 197 00:21:27.860 --> 00:21:33.780 And while they and their interpretations were not obviously implied in the action axiom, 198 00:21:33.780 --> 00:21:38.540 once it has been made explicit that they are implied and how, one no longer has any difficulty 199 00:21:38.540 --> 00:21:44.520 recognizing them as being a priori true in the same sense as the axiom itself is. 200 00:21:44.520 --> 00:22:05.520 For any attempt to disprove the validity of what Mises has reconstructed, as implied in the very concept of action, would have to be aimed at a goal requiring means excluding other courses of action, incurring costs, subjecting the actor to the possibility of achieving or not achieving the desired goal, and so leading to a profit or a loss. 201 00:22:05.520 --> 00:22:13.200 Thus, it is manifestly impossible to ever dispute or falsify the validity of Mises' insights. 202 00:22:13.200 --> 00:22:18.400 In fact, a situation in which the categories of action would cease to have a real existence 203 00:22:18.400 --> 00:22:23.800 could itself never be observed or spoken of, since to make an observation and to speak 204 00:22:23.800 --> 00:22:26.440 are themselves actions. 205 00:22:26.440 --> 00:22:33.200 All true economic propositions, and this is what praxeology is all about and what Mises' 206 00:22:33.200 --> 00:22:45.200 can be deduced by means of formal logic from this incontestably true material knowledge regarding the meaning of action and its categories. 207 00:22:45.200 --> 00:22:49.200 More precisely, all true economic theorems consist of 208 00:22:49.200 --> 00:22:52.200 a. an understanding of the meaning of action 209 00:22:52.200 --> 00:23:01.200 b. a situation or situational change assumed to be given or identified as being given and described in terms of action categories 210 00:23:01.200 --> 00:23:13.200 and C, a logical deduction of the consequences, again in terms of such categories, which are to result for an actor from this situation or situational change. 211 00:23:13.200 --> 00:23:30.200 The law of marginal utility, for instance, follows from our indisputable knowledge of the fact that every actor always prefers what satisfies him more over what satisfies him less, plus the assumption that he is faced with an increase in the supply of a good. 212 00:23:30.200 --> 00:23:36.360 A scarce means, whose units he regards as of equal serviceability by one additional unit. 213 00:23:36.360 --> 00:23:51.640 From this it follows, with logical necessity, that this additional unit can then only be employed as a means for the removal of an uneasiness that is deemed less urgent than the least valuable goal previously satisfied by a unit of such a good. 214 00:23:51.640 --> 00:23:57.480 Provided there is no flaw in the process of deduction, the conclusions which economic theorizing yields, 215 00:23:57.480 --> 00:24:03.240 no different in the case of any other economic proposition from the case of the law of marginal utility, 216 00:24:03.240 --> 00:24:11.640 must be valid a priori. These propositions' validity ultimately goes back to nothing but the indisputable axiom of action. 217 00:24:11.640 --> 00:24:17.880 To think, as empiricism does, that these propositions require continual empirical testing for their validation 218 00:24:17.880 --> 00:24:24.200 is absurd and a sign of outright intellectual confusion, and it is no less absurd and confused 219 00:24:24.200 --> 00:24:30.280 to believe, as historicism does, that economics has nothing to say about constant and invariable 220 00:24:30.280 --> 00:24:36.360 relations, but merely deals with historically accidental events. To say so meaningfully is to 221 00:24:36.360 --> 00:24:42.520 prove such a statement wrong, as saying anything meaningful at all already presupposes acting 222 00:24:42.520 --> 00:24:46.600 and a knowledge of the meaning of the categories of action.