8. Conception and Understanding
The task of the sciences of human action is the comprehension of the meaning and relevance
of human action. They apply for this purpose two different epistemological procedures,
conception and understanding. Conception is the mental tool of praxeology. Understanding
is the specific mental tool of history.
The cognition of praxeology is conceptual cognition.
It refers to what is necessary in human action.
It is cognition of universals and categories.
The cognition of history refers to what is unique and individual in each event or class
of events.
It analyzes first each object of its studies with the aid of the mental tools provided
by all other sciences.
Having achieved this preliminary work, it faces its own specific problem, the elucidation
of the unique and individual features of the case, by means of the understanding.
As was mentioned above, it has been asserted that history can never be scientific, because
historical understanding depends on the historian's subjective value judgments.
Understanding, it is maintained, is only a euphemistic term for arbitrariness.
The writings of historians are always one-sided and partial.
They do not report the facts.
They distort them.
It is, of course, a fact that we have historical books written from various points of view.
There are histories of the Reformation written from the Catholic point of view, and others
written from the Protestant point of view.
There are proletarian histories and bourgeois histories, Tory historians and Whig historians.
Every nation, party and linguistic group has its own historians and its own ideas about
history.
But the problem which these differences of interpretation offer must not be confused
with the intentional distortion of facts by propagandists and apologists parading as
historians.
These facts which can be established in an unquestionable way on the ground of the source
material available must be established as the preliminary work of the historian.
This is not a field for understanding.
It is a task to be accomplished by the employment of the tools provided by all non-historical
sciences.
The phenomena are gathered by cautious critical observation of the records available.
As far as the theories of the non-historical sciences on which the historian grounds his
critical examination of the sources are reasonably reliable and certain, there cannot be any
arbitrary disagreement with regard to the establishment of the phenomena as such.
What a historian asserts is either correct or contrary to fact, is either proved or disproved
by the Documents Available, or VIG because the sources do not provide us with sufficient
information.
The experts may disagree, but only on the ground of a reasonable interpretation of the
evidence available.
The discussion does not allow any arbitrary statements.
However, the historians very often do not agree with regard to the teachings of the
non-historical sciences.
Then of course, disagreement with regard to the critical examination of the records and
to the conclusions to be drawn from them can ensue.
An unbridgeable conflict arises.
But its cause is not an arbitrariness with regard to the concrete historical phenomenon.
It stems from an undecided issue referring to the non-historical sciences.
An ancient Chinese historian could report that the emperor's sin brought about a catastrophic
drought and that rain fell again when the ruler had atoned for his sin.
No modern historian would accept such a report.
The underlying meteorological doctrine is contrary to uncontested fundamentals of contemporary
natural science.
But no such unanimity exists in regard to many theological, biological and economic
A supporter of the racial doctrine of Nordic Aryanism will disregard as fabulous and simply
unbelievable any report concerning intellectual and moral achievements of inferior races.
He will treat such reports in the same way in which all modern historians deal with the
above-mentioned Chinese report.
No agreement with regard to any phenomenon of the history of Christianity can be attained
between people for whom the Gospels are wholly writ and people in whose eyes they are human
documents.
Catholic and Protestant historians disagree about many questions of fact because they
start from different theological ideas.
A mercantilist or neo-mercantilist must necessarily be at variance with an economist.
An account of German monetary history in the years 1914 to 1923 is conditioned by the author's
monetary doctrines.
The facts of the French Revolution are presented in a quite different manner by those who believe
in the sacred rights of the anointed king and those who hold other views.
The historians disagree on such issues not in their capacity as historians, but in their
Their application of the non-historical sciences to the subject matter of history.
They disagree as agnostic doctors disagree in regard to the miracles of lords, with the
members of the Medical Committee for the collection of evidence concerning these miracles.
Only those who believe that facts write their own story into the tabula rasa of the human
mind blame the historians for such differences of opinion.
They fail to realize that history can never be studied without presuppositions, and that
dissension with regard to the presuppositions, that is, the whole content of the non-historical
branches of knowledge, must determine the establishment of historical facts.
These presuppositions also determine the historian's decision concerning the choice of facts to
be mentioned and those to be omitted as irrelevant.
In searching for the causes of a cow's not giving milk, a modern veterinarian will disregard
entirely all reports concerning a witch's evil eye.
His view would have been different 300 years ago.
In the same way, the historian selects from the indefinite multitude of events that preceded
the fact he is dealing with, those which could have contributed to its emergence, or have
have delayed it, and neglects those which, according to his grasp of the non-historical
sciences, could not have influenced it.
Changes in the teachings of the non-historical sciences consequently must involve a rewriting
of history.
Every generation must treat anew the same historical problems because they appear to
it in a different light.
The theological worldview of older times led to a treatment of history other than the theorems
of modern natural science. Subjective economics produces historical works very different from
those based on mercantilist doctrines. As far as divergences in the books of historians
stem from these disagreements, they are not an outcome of alleged vagueness and precariousness
in Historical Studies, they are, on the contrary, the result of the lack of unanimity in the
realm of those other sciences which are popularly called certain and exact.
To avoid any possible misunderstanding, it is expedient to emphasize some further points.
The divergences referred to above must not be confused, one, with purposeful, ill-intentioned
Distortion of Facts, with attempts to justify or to condemn any actions from a legal or
moral point of view, with the merely incidental insertion of remarks expressing value judgments
in a strictly objective representation of the state of affairs.
A treatise on bacteriology does not lose its objectivity if the author, accepting the human
and Viewpoint considers the preservation of human life as an ultimate end, and applying
this standard labels effective methods of fighting germs good and fruitless methods
bad.
A germ writing such a book would reverse these judgments, but the material content of its
book would not differ from that of the human bacteriologist.
In the same way, a European historian dealing with the Mongol invasions of the 13th century
may speak of favorable and unfavorable events because he takes the standpoint of the European
defenders of Western civilization.
But this approval of one party's standard of value need not necessarily interfere with
the material content of his study.
It may, from the viewpoint of contemporary knowledge, be absolutely objective.
A Mongolian historian could endorse it completely, but for such casual remarks.
4.
With a representation of one party's action in diplomatic or military antagonisms, the
clash of conflicting groups can be dealt with from the point of view of the ideas, motives
and aims which impelled either side's acts.
For a full comprehension of what happened, it is necessary to take account of what was
was done on both sides. The outcome was the result of the interaction of both parties.
But in order to understand their actions, the historian must try to see things as they
appeared to the acting men at the critical time, not only as we see them now from the
point of view of our present-day knowledge. A history of Lincoln's policy in the weeks
This and months preceding the outbreak of the Civil War is, of course, incomplete.
But no historical study is complete.
Regardless of whether the historian sympathizes with the Unionists or with the Confederates,
or whether he is absolutely neutral, he can deal in an objective way with Lincoln's policy
in the spring of 1861.
Such an investigation is an indispensable preliminary to answering the broader question
of How the Civil War Broke Out.
Now finally, having settled these problems, it is possible to attack the genuine question,
is there any subjective element in historical understanding, and if so, in what manner does
it determine the result of historical studies?
As far as the task of understanding is to establish the facts that people were motivated
by Definite Value Judgments and aimed at definite means.
There cannot be any disagreement among true historians, that is, people intent upon cognition
of past events.
There may be uncertainty because of the insufficient information provided by the sources available.
But this has nothing to do with understanding.
It refers to the preliminary work to be achieved by the historian.
But understanding has a second task to fulfill.
It must appraise the effects and the intensity of the effects brought about by an action.
It must deal with the relevance of each motive and each action.
Here we are faced with one of the main differences between physics and chemistry on the one hand
and the sciences of human action on the other.
In the realm of physical and chemical events, there exist, or at least it is generally assumed
that there exist, constant relations between magnitudes, and man is capable of discovering
these constants with a reasonable degree of precision by means of laboratory experiments.
No such constant relations exist in the field of human action, outside of physical and chemical
Technology and Therapeutics.
For some time, economists believed that they had discovered such a constant relation in
the effects of changes in the quantity of money upon commodity prices.
It was asserted that a rise or fall in the quantity of money in circulation must result
in proportional changes of commodity prices.
Human economics has clearly and irrefutably exposed the fallaciousness of this statement.
Those economists who want to substitute quantitative economics for what they call qualitative economics
are utterly mistaken.
There are in the field of economics no constant relations, and consequently no measurement
is possible.
If a statistician determines that a rise of 10% in the supply of potatoes in Atlantis
at a definite time was followed by a fall of 8% in the price, he does not establish
anything about what happened or may happen with a change in the supply of potatoes in
another country or at another time.
He has not measured the elasticity of demand of potatoes.
He has established a unique and individual historical fact.
No intelligent man can doubt that the behavior of men with regard to potatoes and every other
commodity is variable.
Different individuals value the same things in a different way, and valuations change
with the same individuals, with changing conditions.
Outside of the field of economic history, nobody ever ventured to maintain that constant
Relations Prevail in Human History.
It is a fact that in the armed conflicts fought in the past between Europeans and backward
peoples of other races, one European soldier was usually a match for several native fighters.
But nobody was ever foolish enough to measure the magnitude of European superiority.
The impracticability of measurement is not due to the lack of technical methods for the
establishment of measure.
It is due to the absence of constant relations.
If it were only caused by technical insufficiency, at least an approximate estimation would be
possible in some cases.
But the main fact is that there are no constant relations.
Economics is not, as ignorant positivists repeat again and again, backward because it
is not quantitative.
It is not quantitative and does not measure because there are no constants. Statistical
figures referring to economic events are historical data. They tell us what happened in a non-repeatable
historical case. Physical events can be interpreted on the ground of our knowledge concerning
constant relations established by experiments. Historical events are not open to such an
The historian can enumerate all the factors which cooperated in bringing about a known
effect and all the factors which worked against them, and may have resulted in delaying and
mitigating the final outcome.
But he cannot coordinate, except by understanding, the various causative factors in a quantitative
way to the effects produced.
We cannot, except by understanding, assign to each of n factors its role in producing
the effect P. Understanding is in the realm of history the equivalent, as it were, of
quantitative analysis and measurement. Technology can tell us how thick a steel plate must be
in order not to be pierced by a bullet fired at a distance of 300 yards from a Winchester
The Theory of Money and Credit
under a Republican Constitution.
Such problems do not allow any treatment other than that of understanding.
To every historical factor, understanding tries to assign its relevance.
In the exercise of understanding, there is no room for arbitrariness and capriciousness.
The freedom of the historian is limited by his endeavor to provide a satisfactory explanation
of reality.
His guiding star must be the search for truth.
But there necessarily enters into understanding an element of subjectivity.
The understanding of the historian is always tinged with the marks of his personality.
It reflects the mind of its author.
The a priori sciences, logic, mathematics and praxeology, aim at a knowledge unconditionally
be valid for all beings endowed with the logical structure of the human mind.
The natural sciences aim at a cognition valid for all those beings which are not only endowed
with the faculty of human reason, but with human senses.
The uniformity of human logic and sensation bestows upon these branches of knowledge the
character of universal validity.
Which at least is the principle guiding the study of the physicists.
Only in recent years have they begun to see the limits of their endeavors, and abandoning
the excessive pretensions of older physicists discovered the uncertainty principle.
They realize today that there are unobservables whose unobservability is a matter of epistemological
principle.
All understanding can never produce results which must be accepted by all men.
Two historians who fully agree with regard to the teachings of the non-historical sciences
and with regard to the establishment of the facts as far as they can be established without
recourse to the understanding of relevance may disagree in their understanding of the
relevance of these facts.
They may fully agree in establishing that the factors A, B and C worked together in
producing the effect P. Nonetheless, they can widely disagree with regard to the relevance
of the respective contributions of A, B and C to the final outcome.
As far as understanding aims at assigning its relevance to each factor, it is open to
the influence of subjective judgments.
Of course, these are not judgments of value.
They do not express preferences of the historian.
They are judgments of relevance.
Historians may disagree for various reasons.
They may hold different views with regard to the teachings of the non-historical sciences.
They may base their reasoning on a more or less complete familiarity with the records.
They may differ in the understanding of the motives and aims of the acting men and of
and the means applied by them.
All these differences are open to a settlement by objective reasoning.
It is possible to reach a universal agreement with regard to them.
But as far as historians disagree with regard to judgments of relevance, it is impossible
to find a solution which all sane men must accept.
The intellectual methods of science do not differ in kind from those applied by the common
and Man in his Daily Mundane Reasoning.
The scientist uses the same tools which the layman uses.
He merely uses them more skillfully and cautiously.
Understanding is not a privilege of the historians.
It is everybody's business.
In observing the conditions of his environment, everybody is a historian.
Everybody uses understanding in dealing with the uncertainty of future events to which
which he must adjust his own actions.
The distinctive reasoning of the speculator is an understanding of the relevance of the
various factors determining future events.
And let us emphasize it even at this early point of our investigations.
Action necessarily always aims at future and therefore uncertain conditions, and thus is
always speculation.
A young man looks, as it were, with the eyes of a historian, into the future.
Natural History and Human History Cosmogony, geology and the history of biological
changes are historical disciplines as they deal with unique events of the past.
However, they operate exclusively with the epistemological methods of the natural sciences
and have no need for understanding.
They must sometimes take recourse to only approximate estimates of magnitudes, but such
estimates are not judgments of relevance.
They are a less perfect method of determining quantitative relations than is exact measurement.
They must not be confused with the state of affairs in the field of human action, which
is characterized by the absence of constant relations.
If we speak of history, what we have in mind is only the history of human action, whose
specific mental tool is understanding.
The assertion that modern natural science owes all its achievements to the experimental
method is sometimes assailed by referring to astronomy.
Now modern astronomy is essentially an application of the physical laws experimentally discovered
on the earth to the celestial bodies.
In earlier days, astronomy was mainly based on the assumption that the movements of the
celestial bodies would not change their course. Copernicus and Kepler simply tried to guess
in what kind of curve the earth moves around the sun. As the circle was considered the
most perfect curve, Copernicus chose it for his theory. Later, by similar guesswork, Kepler
Never substituted the ellipse for the circle. Only since Newton's discoveries has astronomy
become a natural science in the strict sense.
9. On Ideal Types
History deals with unique and unrepeatable events, with the irreversible flux of human
affairs. A historical event cannot be described without reference to the persons involved
and to the place and date of its occurrence.
As far as a happening can be narrated without such a reference, it is not a historical event,
but a fact of the natural sciences.
The report that Professor X, on February 20, 1945, performed a certain experiment in his
laboratory is an account of a historical event.
The physicist believes that he is right in abstracting from the person of the experimenter
and the date and place of the experiment.
He relates only those circumstances which, in his opinion, are relevant for the production
of the result achieved, and when repeated, will produce the same result again.
He transforms the historical event into a fact of the empirical natural sciences.
He disregards the active interference of the experimenter and tries to imagine him as an
Indifferent Observer and Relator of Unadulterated Reality.
It is not the task of praxeology to deal with the epistemological issues of this philosophy.
The physicists themselves are at last on the way to discovering the flaw in the godlikeness
they used to arrogate to themselves.
Although unique and unrepeatable, historical events have one common feature.
They are human action.
History comprehends them as human actions.
It conceives their meaning by the instrumentality of praxeological cognition, and understands
their meaning in looking at their individual and unique features.
What counts for history is always the meaning of the men concerned, the meaning that they
attach to the state of affairs they want to alter, the meaning they attach to their actions,
and the meaning they attach to the effects produced by the actions.
The aspect from which history arranges and assorts the infinite multiplicity of events
is their meaning.
The only principle which it applies for the systemization of its objects, men, ideas,
institutions, social entities and artifacts, is meaning affinity.
According to meaning affinity, it arranges the elements into ideal types.
Ideal types are the specific notions employed in historical research and in the representation
of its results.
They are concepts of understanding.
As such, they are entirely different from praxeological categories and concepts and
from the concepts of the natural sciences.
An ideal type is not a class concept, because its description does not indicate the marks
whose presence definitely and unambiguously determines class membership.
An ideal type cannot be defined.
It must be characterized by an enumeration of those features whose presence by and large
decides whether, in a concrete instance, we are or are not faced with a specimen belonging
to the Ideal Type in Question.
It is peculiar to the ideal type that not all its characteristics need to be present
in any one example.
Whether or not the absence of some characteristics prevents the inclusion of a concrete specimen
in the ideal type in question depends on a relevance judgment by understanding.
The ideal type itself is an outcome of an understanding of the motives, ideas and aims
of the acting individuals and of the means they apply.
An ideal type has nothing at all to do with statistical means and averages.
Most of the characteristics concerned are not open to a numerical determination, and
for this reason alone they could not enter into a calculation of averages.
But the main reason is to be seen in something else. Statistical averages denote the behavior
of the members of a class or a type, already constituted by means of a definition or characterization
referring to other marks, with regard to features not referred to in the definition or characterization.
The membership of the class or type must be known before the statistician can start investigating
are treated without the aid of ideal types.
Even when the historian deals with an individual person or with a single event,
he cannot avoid referring to ideal types.
If he speaks of Napoleon, he must refer to such ideal types as commander, dictator, revolutionary leader.
And if he deals with the French Revolution, he must refer to ideal types such as
Revolution, Disintegration of an Established Regime, Anarchy.
It may be that the reference to an ideal type consists merely in rejecting its applicability
to the case in question.
But all historical events are described and interpreted by means of ideal types.
The layman, too, in dealing with events of the past or of the future, must always make
Make Use of Ideal Types and Unwittingly Always Does So
Whether or not the employment of a definite ideal type is expedient and conducive to an
adequate grasp of phenomena can only be decided by understanding.
It is not the ideal type which determines the mode of understanding, it is the mode
of understanding that requires the construction and use of corresponding ideal types.
The ideal types are constructed with the use of ideas and concepts developed by all non-historical
branches of knowledge.
Every cognition of history is, of course, conditioned by the findings of the other sciences,
depends upon them, and must never contradict them.
But historical knowledge has another subject matter and another method than these other
sciences, and they, in turn, have no use for understanding.
Thus, the ideal types must not be confused with concepts of the non-historical sciences.
This is valid also with regard to the praxeological categories and concepts.
They provide, to be sure, the indispensable mental tools for the study of history.
However, they do not refer to the understanding of the unique and individual events which
are the subject matter of history.
An ideal type can therefore never be a simple adoption of a praxeological concept.
It happens in many instances that a term used by praxeology to signify a praxeological concept
serves to signify an ideal type for the historian.
Then the historian uses one word for the expression of two different things.
He applies the term sometimes to signify its praxeological connotation, but more often
to signify an ideal type.
In the latter case, the historian attaches to the word a meaning different from its praxeological
meaning.
He transforms it by transferring it to a different field of inquiry.
The two terms connote different things.
They are homonyms.
The economic concept, entrepreneur, belongs to a stratum other than the ideal type, entrepreneur,
as used by economic history and descriptive economics.
On a third stratum lies the legal term, entrepreneur.
The economic term, entrepreneur, is a precisely defined concept, which, in the framework of
a theory of market economy, signifies a clearly integrated function.
The historical, ideal type, entrepreneur, does not include the same members. Nobody
in using it thinks of shoeshine boys, cab drivers who own their cars, small businessmen
and small farmers. What economics establishes with regard to entrepreneurs is rigidly valid
for all members of the class, without any regard to temporal and geographical conditions
and to the various branches of business.
What economic history establishes for its ideal types can differ according to the particular
circumstances of various ages, countries, branches of business and many other conditions.
History has little use for a general ideal type of entrepreneur.
It is more concerned with such types as the American entrepreneur of the time of Jefferson,
German heavy industries in the age of William II, New England textile manufacturing in the
last decades preceding the First World War, the Protestant haute finance of Paris, self-made
entrepreneurs and so on.
Whether the use of a definite ideal type is to be recommended or not depends entirely
on the mode of understanding.
It is quite common nowadays to employ two ideal types, left-wing parties, progressives and
right-wing parties, fascists.
The former includes the Western democracies, some Latin American dictatorships and Russian
Bolshevism.
The latter, Italian fascism and German Nazism.
This typification is the outcome of a definite mode of understanding.
mode would contrast democracy and dictatorship. Then, Russian Bolshevism, Italian Fascism
and German Nazism belong to the ideal type of dictatorial government, and the Western
systems to the ideal type of democratic government. It was a fundamental mistake of the historical
school of Wirtschaftliche Staatswissenschaften in Germany and of institutionalism in America
to interpret economics as the characterization of the behavior of an ideal type, the homo-economicus.
According to this doctrine, traditional or orthodox economics does not deal with the
behavior of man as he really is and acts, but with a fictitious or hypothetical image.
It pictures a being driven exclusively by economic motives, that is, solely by the intention
of Making the Greatest Possible Material or Monetary Profit.
Such a being does not have and never did have a counterpart in reality.
It is a phantom of a spurious armchair philosophy.
No man is exclusively motivated by the desire to become as rich as possible.
Many are not at all influenced by this mean craving.
It is vain to refer to such an illusory homunculus in dealing with life and history.
Even if this really were the meaning of classical economics, the homo economicus would certainly
not be an ideal type.
The ideal type is not an embodiment of one side or aspect of man's various aims and desires.
It is always the representation of complex phenomena of reality, either of men, of institutions
or of ideologies.
The classical economists sought to explain the formation of prices.
They were fully aware of the fact that prices are not a product of the activities of a special
group of people, but the result of an interplay of all members of the market society.
This was the meaning of their statement that demand and supply determine the formation
of prices.
However, the classical economists failed in their endeavors to provide a satisfactory
theory of value.
They were at a loss to find a solution for the apparent paradox of value.
They were puzzled by the alleged paradox that gold is more highly valued than iron, although
the latter is more useful than the former.
Thus, they could not construct a general theory of value and could not trace back the phenomena
of market exchange and of production to their ultimate sources, the behavior of the consumers.
This shortcoming forced them to abandon their ambitious plan to develop a general theory
of human action.
They had to satisfy themselves with a theory explaining only the activities of the businessman
without going back to the choices of everybody as the ultimate determinants.
They dealt only with the actions of businessmen eager to buy in the cheapest market and to
sell in the dearest.
The consumer was left outside the field of their theorizing.
Later, the epigones of classical economics explained and justified this insufficiency
as an intentional and methodologically necessary procedure.
It was, they asserted, the deliberate design of the economists to restrict their investigations
to only one aspect of human endeavor, namely to the economic aspect.
It was their intention to use the fictitious image of a man driven solely by economic motives,
and to neglect all others, although they were fully aware of the fact that real men are
driven by many other non-economic motives.
To deal with these other motives, one group of these interpreters maintained, is not the
task of economics, but of other branches of knowledge.
Another group admitted that the treatment of these non-economic motives and their influence
on the formation of prices was a task of economics also, but they believed that it must be left
to later generations.
It will be shown at a later stage of our investigations that this distinction between economic and
and Non-Economic Motives of Human Action is untenable.
At this point, it is only important to realize that this doctrine of the economic side of
human action utterly misrepresents the teachings of the classical economists.
They never intended to do what this doctrine ascribes to them.
They wanted to conceive the real formation of prices, not fictitious prices as they would
be determined if men were acting under the sway of hypothetical conditions different
from those really influencing them.
The prices they try to explain, and do explain, although without tracing them back to the
choices of the consumers, are real market prices.
The demand and supply of which they speak are real factors, determined by all motives,
instigating men to buy or to sell.
What was wrong with their theory was that they did not trace demand back to the choices
of the consumers.
They lacked a satisfactory theory of demand.
But it was not their idea that demand as they used this concept in their dissertations was
exclusively determined by economic motives as distinguished from non-economic motives.
As they restricted their theorizing to the actions of businessmen, they did not deal
Modern subjective economics starts with the solution of the apparent paradox of value.
It neither limits its theorems to the actions of businessmen alone, nor deals with a fictitious
homo economicus.
It treats the inexorable categories of everybody's action.
Its theorems concerning commodity prices, wage rates and interest rates refer to all
these phenomena without any regard to the motives causing people to buy or to sell,
or to abstain from buying or selling.
It is time to discard entirely any reference to the abortive attempt to justify the shortcomings
The Scope of Praxeology is the explication of the category of human action.
All that is needed for the deduction of all praxeological theorems is knowledge of the
essence of human action.
It is a knowledge that is our own because we are men.
No being of human descent that pathological conditions have not reduced to a merely vegetative
existence lacks it.
No special experience is needed in order to comprehend these theorems, and no experience,
however rich, could disclose them to a being who did not know a priori what human action
is.
The only way to a cognition of these theorems is logical analysis of our inherent knowledge
of the Category of Action.
We must be-think ourselves and reflect upon the structure of human action.
Like logic and mathematics, praxeological knowledge is in us.
It does not come from without.
All the concepts and theorems of praxeology are implied in the Category of Human Action.
The first task is to extract and to deduce them, to expound their implications and to
to define the universal conditions of acting as such.
Having shown what conditions are required by any action, one must go further and define,
of course in a categorical and formal sense, the less general conditions required for special
modes of acting.
It would be possible to deal with this second task by delineating all thinkable conditions
and deducing from them all inferences logically permissible.
Such an all-comprehensive system would provide a theory referring not only to human action
as it is under the conditions and circumstances given in the real world in which man lives
and acts.
It would deal no less with hypothetical acting, such as would take place under the unrealizable
conditions of imaginary worlds.
But the end of science is to know reality.
It is not mental gymnastics or a logical pastime.
Therefore, praxeology restricts its inquiries to the study of acting under those conditions
and presuppositions which are given in reality.
It studies acting under unrealized and unrealizable conditions only from two points of view.
It deals with states of affairs which, although not real in the present and past world, could
would possibly become real at some future date, and it examines unreal and unrealizable
conditions if such an inquiry is needed for a satisfactory grasp of what is going on under
the conditions present in reality.
However, this reference to experience does not impair the a prioristic character of praxeology
and economics.
This merely directs our curiosity toward certain problems and diverts it from other problems.
It tells us what we should explore, but it does not tell us how we could proceed in our
search for knowledge.
Moreover, it is not experience but thinking alone which teaches us that, and in what instances,
it is necessary to investigate unrealizable hypothetical conditions in order to conceive
The Disutility of Labor is not of a categorical and aprioristic character.
We can, without contradiction, think of a world in which labor does not cause uneasiness,
and we can depict the state of affairs prevailing in such a world.
But the real world is conditioned by the disutility of labor.
Only theorems based on the assumption that labor is a source of uneasiness are applicable
Experience teaches that there is disutility of labor, but it does not teach it directly.
There is no phenomenon that introduces itself as disutility of labor.
There are only data of experience which are interpreted on the ground of aprioristic knowledge
to mean that men consider leisure, that is, the absence of labor, other things being equal,
as a more desirable condition than the expenditure of labor.
We see that men renounce advantages, which they could get by working more, that is, that
they are ready to make sacrifices for the attainment of leisure.
We infer from this fact that leisure is valued as a good and that labor is regarded as a burden.
But for previous praxeological insight, we would never be in a position to reach this
conclusion.
A theory of indirect exchange, and all further theories built upon it, as of the theory of
circulation credit, are applicable only to the interpretation of events within a world
in which indirect exchange is practiced.
In a world of barter trade only, it would be mere intellectual play.
It is unlikely that the economists of such a world, if economic science could have emerged
at all in it, would have given any thought to the problems of indirect exchange, money
and all the rest.
In our actual world, however, it is an essential part of economic theory.
The fact that praxeology, in fixing its eye on the comprehension of reality, concentrates
Based upon the investigation of those problems which are useful for this purpose, does not
alter the aprioristic character of its reasoning, but it marks the way in which economics, up
to now the only elaborated part of praxeology, presents the results of its endeavors.
Economics does not follow the procedure of logic and mathematics.
does not present an integrated system of pure a prioristic ratiocination severed from any
reference to reality.
In introducing assumptions into its reasoning, it satisfies itself that the treatment of
the assumptions concerned can render useful services for the comprehension of reality.
It does not strictly separate in its treatises and monographs pure science from the application
It adopts for the organized presentation of its results a form in which aprioristic theory
and the interpretation of historical phenomena are intertwined.
It is obvious that this mode of procedure is enjoined upon economics by the very nature
and essence of its subject matter.
It has given proof of its expediency.
However, one must not overlook the fact that the manipulation of this singular and logically
somewhat strange procedure requires caution and subtlety, and that uncritical and superficial
minds have again and again been led astray by careless confusion of the two epistemologically
different methods implied.
There are no such things as a historical method of economics, or a discipline of institutional
economics.
There is economics, and there is economic history.
The two must never be confused.
All theorems of economics are necessarily valid in every instance in which all the assumptions
presupposed are given.
Of course, they have no practical significance in situations where these conditions are not
is established.
The theorems referring to indirect exchange are not applicable to conditions where there
is no indirect exchange.
But this does not impair their validity.
The issue has been obfuscated by the endeavors of governments and powerful pressure groups
to disparage economics and to defame the economists.
Princes and democratic majorities are drunk with power.
They must reluctantly admit that they are subject to the laws of nature, but they reject
the very notion of economic law.
Are they not the supreme legislators?
Don't they have the power to crush every opponent?
No warlord is prone to acknowledge any limits other than those imposed on him by a superior
armed force.
Servile scribblers are always ready to foster such complacency by expounding the appropriate
doctrines.
They call their garbled presumptions historical economics.
In fact, economic history is a long record of government policies that failed because
they were designed with a bold disregard for the laws of economics.
It is impossible to understand the history of economic thought if one does not pay attention
to the fact that economics as such is a challenge to the conceit of those in power.
An economist can never be a favorite of autocrats and demagogues.
With them, he is always the mischief-maker, and the more they are inwardly convinced that
his objections are well-founded, the more they hate him.
In the face of all this frenzied agitation, it is expedient to establish the fact that
the starting point of all praxeological and economic reasoning, the category of human
and Action is proof against any criticisms and objections.
No appeal to any historical or empirical considerations whatever can discover any fault in the proposition
that men purposefully aim at certain chosen ends.
No talk about irrationality, the unfathomable depths of the human soul, the spontaneity
of the Phenomena of Life, automatisms, reflexes and tropisms can invalidate the statement
that man makes use of his reason for the realization of wishes and desires.
From the unshakable foundation of the category of human action, praxeology and economics
proceed step by step by means of discursive reasoning.
Precisely defining assumptions and conditions, they construct a system of concepts and draw
all the inferences implied by logically unassailable ratiocination.
With regard to the results thus obtained, only two attitudes are possible.
Either one can unmask logical errors in the chain of the deductions which produce these
results, or one must acknowledge their correctness and validity.
It is vain to object that life and reality are not logical.
Life and reality are neither logical nor illogical.
They are simply given.
But logic is the only tool available to man for the comprehension of both.
It is vain to object that life and history are inscrutable and ineffable, and that human
reason can never penetrate to their inner core.
The critics contradict themselves in uttering words about the ineffable and expounding theories,
of course spurious theories, about the unfathomable.
There are many things beyond the reach of the human mind, but as far as man is able
to attain any knowledge, however limited, he can use only one avenue of approach, that
opened by reason.
So less illusory are the endeavors to play off understanding against the theorems of
economics.
The domain of historical understanding is exclusively the elucidation of those problems
which cannot be entirely elucidated by the non-historical sciences.
Understanding must never contradict the theories developed by the non-historical sciences.
Understanding can never do anything but, on the one hand, establish the fact that people
were motivated by certain ideas, aimed at certain ends, and applied certain means for
the attainment of these ends, and, on the other hand, assign to the various historical
factors their relevance, so far as this cannot be achieved by the non-historical sciences.
Ludwig does not entitle the modern historian to assert that exorcism ever was an appropriate
means to cure sick cows.
Neither does it permit him to maintain that an economic law was not valid in ancient Rome
or in the empire of the Incas.
Man is not infallible.
He searches for truth, that is, for the most adequate comprehension of reality as far as
Man can never become omniscient.
He can never be absolutely certain that his inquiries were not misled, and that what he
considers a certain truth is not error.
All that man can do is submit all his theories again and again to the most critical re-examination.
This means for the economist to trace back all theorems to their unquestionable and certain
ultimate basis, the category of human action, and to test by the most careful scrutiny all
assumptions and inferences leading from this basis to the theorem under examination.
It cannot be contended that this procedure is a guarantee against error, but it is undoubtedly
Probably the most effective method of avoiding error.
Praxeology and consequently economics, too, is a deductive system.
It draws its strength from the starting point of its deductions, from the category of action.
No economic theorem can be considered sound that is not solidly fastened upon this foundation
by an irrefutable chain of reasoning.
A statement proclaimed without such a connection is arbitrary and floats in mid-air.
It is impossible to deal with a special segment of economics if one does not encase it in
a complete system of action.
The empirical sciences start from singular events and proceed from the unique and individual
to the more universal.
Their treatment is subject to specialization.
They can deal with segments without paying attention to the whole field.
The economist must never be a specialist.
In dealing with any problem, he must always fix his glance upon the whole system.
Historians often sin in this respect.
They are ready to invent theorems ad hoc.
They sometimes fail to recognize that it is impossible to abstract any causal relations
from the Study of Complex Phenomena.
Their pretension to investigate reality without any reference to what they disparage as preconceived
ideas is vain.
In fact, they unwittingly apply popular doctrines long since unmasked as fallacious and contradictory.
11.
The Limitations on Praxeological Concepts.
The praxeological categories and concepts are devised for the comprehension of human action.
They become self-contradictory and nonsensical if one tries to apply them in dealing with
conditions different from those of human life.
The naive anthropomorphism of primitive religions is unpalatable to the philosophic mind.
However, the endeavors of philosophers to define neatly the attributes of an absolute
being free from all the limitations and frailties of human existence by the use of praxeological
concepts are no less questionable.
Scholastic philosophers and theologians, and likewise theists and deists of the Age of
Reason, conceived an absolute and perfect being, unchangeable, omnipotent and omniscient,
and yet planning and acting, aiming at ends and employing means for the attainment of
of these ends.
But action can only be imputed to a discontented being, and repeated action only to a being
who lacks the power to remove his uneasiness once and for all at one stroke.
An acting being is discontented, and therefore not almighty.
If he were contented, he would not act, and if he were almighty, he would have long since
radically removed his discontent.
For an all-powerful being there is no pressure to choose between various states of uneasiness.
He is not under the necessity of acquiescing in the lesser evil.
Omnipotence would mean the power to achieve everything and to enjoy full satisfaction
without being restrained by any limitations.
But this is incompatible with the very concept of action.
For an Almighty Being, the categories of ends and means do not exist.
He is above all human comprehension, concepts and understanding.
For the Almighty Being, every means renders unlimited services.
He can apply every means for the attainment of any ends.
He can achieve every end without the employment of any means.
It is beyond the faculties of the human mind to think the concept of all-mightiness consistently
to its ultimate logical consequences.
The paradoxes are insoluble.
Has the Almighty being the power to achieve something which is immune to his later interference?
If he has this power, then there are limits to his might, and he is no longer Almighty.
If he lacks this power, he is by virtue of this fact alone, not almighty.
Are omnipotence and omniscience compatible?
Omniscience presupposes that all future happenings are already unalterably determined.
If there is omniscience, omnipotence is inconceivable.
Impotence to change anything in the predetermined course of events would restrict the power
of any agent.
Man is a display of potency and control that are limited.
It is a manifestation of man who is restrained by the circumscribed powers of his mind, the
physiological nature of his body, the vicissitudes of his environment, and the scarcity of the
external factors on which his welfare depends.
It is vain to refer to the imperfections and weaknesses of human life if one aims at depicting
The very idea of absolute perfection is, in every way, self-contradictory.
The state of absolute perfection must be conceived as complete, final, and not exposed to any
change.
Change could only impair its perfection and transform it into a less perfect state.
The mere possibility that a change can occur is incompatible with the concept of absolute
perfection.
But the absence of change, that is, perfect immutability, rigidity and immobility, is
tantamount to the absence of life.
Life and perfection are incompatible, but so are death and perfection.
The living is not perfect because it is liable to change.
The dead is not perfect, because it does not live.
The language of living and acting men can form comparatives and superlatives in comparing
degrees.
But absoluteness is not a degree, it is a limiting notion.
The absolute is indeterminable, unthinkable, and ineffable.
It is a chimerical conception.
There are no such things as perfect happiness, perfect men, eternal bliss.
Every attempt to describe the conditions of a land of cocaine or the life of the angels
results in paradoxes.
Where there are conditions, there are limitations and not perfection.
There are endeavors to conquer obstacles.
There are frustration and discontent.
After the philosophers had abandoned the search for the absolute, the utopians took it up.
They weave dreams about the perfect state.
They do not realize that the state, the social apparatus of compulsion and coercion, is an
institution to cope with human imperfection, and that its essential function is to inflict
punishment upon minorities in order to protect majorities against the detrimental consequences
of certain actions.
With perfect men, there would not be any need for compulsion and coercion.
But utopians do not pay heed to human nature and the inalterable conditions of human life.
Godwin thought that man might become immortal after the abolition of private property.
Charles Fourier babbled about the ocean containing lemonade instead of salt water.
Marx's economic system blithely ignored the fact of the scarcity of material factors
of Production, Trotsky revealed that in the proletarian paradise the average human type
will rise to the heights of an Aristotle, a Goethe or a Marx, and above this ridge new
peaks will rise. Nowadays the most popular chimeras are stabilization and security. We
We will test these catchwords later.