WEBVTT NOTE XXXIX. Economics and the Essential Problems of Human Existence 1 00:00:00.000 --> 00:00:06.200 CHAPTER 39 ECONOMICS AND THE ESSENTIAL PROBLEMS OF HUMAN EXISTENCE 2 00:00:06.200 --> 00:00:09.200 1. 3 00:00:09.200 --> 00:00:12.060 SCIENCE AND LIFE 4 00:00:12.060 --> 00:00:17.280 It is customary to find fault with modern science because it abstains from expressing 5 00:00:17.280 --> 00:00:19.960 judgments of value. 6 00:00:19.960 --> 00:00:25.280 Living and acting man, we are told, has no use for Wertfreiheit. 7 00:00:25.280 --> 00:00:28.400 He needs to know what he should aim at. 8 00:00:28.400 --> 00:00:32.400 Science does not answer this question, it is sterile. 9 00:00:32.400 --> 00:00:35.400 However, the objection is unfounded. 10 00:00:35.400 --> 00:00:44.400 Science does not value, but it provides acting man with all the information he may need with regard to his valuations. 11 00:00:44.400 --> 00:00:51.400 It keeps silence only when the question is raised whether life itself is worth living. 12 00:00:51.400 --> 00:00:57.400 This question, of course, has been raised too, and will always be raised. 13 00:00:57.400 --> 00:01:06.400 What is the meaning of all these human endeavours and activities if in the end nobody can escape death and decomposition? 14 00:01:06.400 --> 00:01:09.400 Man lives in the shadow of death. 15 00:01:09.400 --> 00:01:18.400 Whatever he may have achieved in the course of his pilgrimage, he must one day pass away and abandon all that he has built. 16 00:01:18.400 --> 00:01:21.400 Each instant can become his last. 17 00:01:21.400 --> 00:01:27.400 There is only one thing that is certain about the individual's future. Death. 18 00:01:27.400 --> 00:01:36.400 Seen from the point of view of this ultimate and inescapable outcome, all human striving appears vain and futile. 19 00:01:36.400 --> 00:01:44.400 Moreover, human action must be called inane even when judged merely with regard to its immediate goals. 20 00:01:44.400 --> 00:01:53.400 It can never bring full satisfaction. It merely gives for an evanescent instant a partial removal of uneasiness. 21 00:01:53.400 --> 00:02:00.400 As soon as one want is satisfied, new wants spring up and ask for satisfaction. 22 00:02:00.400 --> 00:02:09.400 Civilization, it is said, makes people poorer because it multiplies their wishes and does not soothe but kindles desires. 23 00:02:09.400 --> 00:02:16.960 All the busy doings and dealings of hard-working men, their hurrying, pushing and bustling, 24 00:02:16.960 --> 00:02:22.240 are nonsensical, for they provide neither happiness nor quiet. 25 00:02:22.240 --> 00:02:29.560 Peace of mind and serenity cannot be won by action and secular ambition, but only by renunciation 26 00:02:29.560 --> 00:02:31.660 and resignation. 27 00:02:31.660 --> 00:02:38.120 The only kind of conduct proper to the sage is escape into the inactivity of a purely 28 00:02:38.120 --> 00:02:40.880 and the Contemplative Existence. 29 00:02:40.880 --> 00:02:47.280 Yet all such qualms, doubts and scruples are subdued by the irresistible force of man's 30 00:02:47.280 --> 00:02:49.000 vital energy. 31 00:02:49.000 --> 00:02:56.960 True, man cannot escape death, but for the present he is alive, and life, not death, 32 00:02:56.960 --> 00:02:58.960 takes hold of him. 33 00:02:58.960 --> 00:03:03.940 Whatever the future may have in store for him, he cannot withdraw from the necessities 34 00:03:03.940 --> 00:03:06.240 of the actual hour. 35 00:03:06.240 --> 00:03:13.640 As long as a man lives, he cannot help obeying the cardinal impulse, the élan vital. 36 00:03:13.640 --> 00:03:19.400 It is man's innate nature that he seeks to preserve and to strengthen his life, that 37 00:03:19.400 --> 00:03:25.920 he is discontented and aims at removing uneasiness, that he is in search of what may be called 38 00:03:25.920 --> 00:03:27.920 happiness. 39 00:03:27.920 --> 00:03:34.240 In every living being there works an inexplicable and non-analyzable id. 40 00:03:34.240 --> 00:03:41.920 This id is the impulsion of all impulses, the force that drives man into life and action, 41 00:03:41.920 --> 00:03:47.820 the original and ineradicable craving for a fuller and happier existence. 42 00:03:47.820 --> 00:03:54.920 It works as long as man lives, and stops only with the extinction of life. 43 00:03:54.920 --> 00:03:58.880 Human reason serves this vital impulse. 44 00:03:58.880 --> 00:04:05.080 Man's biological function is to preserve and to promote life, and to postpone its extinction 45 00:04:05.080 --> 00:04:07.800 as long as possible. 46 00:04:07.800 --> 00:04:11.560 Thinking and acting are not contrary to nature. 47 00:04:11.560 --> 00:04:16.140 They are, rather, the foremost features of man's nature. 48 00:04:16.140 --> 00:04:22.400 The most appropriate description of man as differentiated from non-human beings is a 49 00:04:22.400 --> 00:04:28.800 being purposively struggling against the forces adverse to his life. 50 00:04:28.800 --> 00:04:34.520 Hence all talk about the primacy of irrational elements is vain. 51 00:04:34.520 --> 00:04:41.520 Within the universe, the existence of which our reason cannot explain, analyze or conceive, 52 00:04:41.520 --> 00:04:48.040 there is a narrow field left within which man is capable of removing uneasiness to some 53 00:04:48.040 --> 00:04:49.800 extent. 54 00:04:49.800 --> 00:04:56.320 This is the realm of reason and rationality, of science and purposive action. 55 00:04:56.320 --> 00:05:02.380 Neither its narrowness nor the scantiness of the results man can obtain within it suggests 56 00:05:02.380 --> 00:05:06.760 the idea of radical resignation and lethargy. 57 00:05:06.760 --> 00:05:12.800 No philosophical subtleties can ever restrain a healthy individual from resorting to actions 58 00:05:12.800 --> 00:05:17.700 which, as he thinks, can satisfy his needs. 59 00:05:17.700 --> 00:05:23.060 It may be true that in the deepest recesses of man's soul there is a longing for the 60 00:05:23.060 --> 00:05:28.940 undisturbed peace and inactivity of a merely vegetative existence. 61 00:05:28.940 --> 00:05:35.180 But in living man, these desires, whatever they may be, are outweighed by the urge to 62 00:05:35.180 --> 00:05:39.460 act and to improve his own condition. 63 00:05:39.460 --> 00:05:43.820 Once the forces of resignation get the upper hand, man dies. 64 00:05:43.820 --> 00:05:47.180 He does not turn into a plant. 65 00:05:47.180 --> 00:05:53.940 It is true, praxeology and economics do not tell a man whether he should preserve or abandon 66 00:05:53.940 --> 00:05:55.260 life. 67 00:05:55.260 --> 00:06:02.180 Life itself, and the unknown forces that originate it and keep it burning, are an ultimate given, 68 00:06:02.180 --> 00:06:06.180 and as such beyond the pale of human science. 69 00:06:06.180 --> 00:06:13.140 The subject matter of praxeology is merely the essential manifestation of human life, 70 00:06:13.140 --> 00:06:15.180 namely action. 71 00:06:15.180 --> 00:06:21.120 2. Economics and Judgments of Value 72 00:06:21.120 --> 00:06:26.980 While many people blame economics for its neutrality with regard to value judgments, 73 00:06:26.980 --> 00:06:33.320 other people blame it for its alleged indulgence in them. Some contend that economics must 74 00:06:33.320 --> 00:06:39.700 necessarily express judgments of value and is therefore not really scientific, as the 75 00:06:39.700 --> 00:06:44.660 The criterion of science is its valuational indifference. 76 00:06:44.660 --> 00:06:50.960 Others maintain that good economics should be and could be impartial, and that only bad 77 00:06:50.960 --> 00:06:55.220 economists sin against this postulate. 78 00:06:55.220 --> 00:07:00.960 The semantic confusion in the discussion of the problems concerned is due to an inaccurate 79 00:07:00.960 --> 00:07:05.000 use of terms on the part of many economists. 80 00:07:05.000 --> 00:07:12.000 An economist investigates whether a measure A can bring about the result P, for the attainment 81 00:07:12.000 --> 00:07:19.280 of which it is recommended, and finds that A does not result in P, but in G, an effect 82 00:07:19.280 --> 00:07:24.660 which even the supporters of the measure A consider undesirable. 83 00:07:24.660 --> 00:07:31.640 If this economist states the outcome of his investigation by saying that A is a bad measure, 84 00:07:31.640 --> 00:07:37.320 He does not pronounce a judgment of value. He merely says that from the point of view 85 00:07:37.320 --> 00:07:44.920 of those aiming at the goal P, the measure A is inappropriate. In this sense, the free 86 00:07:44.920 --> 00:07:51.200 trade economists attacked protection. They demonstrated that protection does not, as 87 00:07:51.200 --> 00:07:59.480 its champions believe, increase, but, on the contrary, decreases the total amount of products, 88 00:07:59.480 --> 00:08:04.720 It is therefore bad from the point of view of those who prefer an amplifier supply of 89 00:08:04.720 --> 00:08:07.580 products to a smaller. 90 00:08:07.580 --> 00:08:13.800 It is in this sense that economists criticize policies from the point of view of the ends 91 00:08:13.800 --> 00:08:15.480 aimed at. 92 00:08:15.480 --> 00:08:21.760 If an economist calls minimum wage rates a bad policy, what he means is that its effects 93 00:08:21.760 --> 00:08:27.880 are contrary to the purpose of those who recommend their application. 94 00:08:27.880 --> 00:08:33.440 From the same point of view, praxeology and economics look upon the fundamental principle 95 00:08:33.440 --> 00:08:40.400 of human existence and social evolution, namely, that cooperation under the social division 96 00:08:40.400 --> 00:08:48.880 of labor is a more efficient way of acting than is the autarkic isolation of individuals. 97 00:08:48.880 --> 00:08:54.400 Praxeology and economics do not say that men should peacefully cooperate within the frame 98 00:08:54.400 --> 00:09:01.960 of Societal Bonds, they merely say that men must act this way if they want to make their 99 00:09:01.960 --> 00:09:06.320 actions more successful than otherwise. 100 00:09:06.320 --> 00:09:11.400 Compliance with the moral rules which the establishment, preservation and intensification 101 00:09:11.400 --> 00:09:18.680 of social cooperation require is not seen as a sacrifice made to a mythical entity, 102 00:09:18.680 --> 00:09:25.560 but as the recourse to the most efficient methods of action, as a price expended for the attainment 103 00:09:25.560 --> 00:09:28.920 of more highly valued returns. 104 00:09:28.920 --> 00:09:35.440 It is against this substitution of an autonomous, rationalistic and voluntaristic ethics for 105 00:09:35.440 --> 00:09:41.720 the heteronomous doctrines both of intuitionism and of revealed commandments that the united 106 00:09:41.720 --> 00:09:49.220 forces of all anti-liberal schools and dogmatisms direct the most furious attacks. 107 00:09:49.220 --> 00:09:54.920 They all blame the utilitarian philosophy for the pitiless austerity of its description 108 00:09:54.920 --> 00:10:01.060 and analysis of human nature, and of the ultimate springs of human action. 109 00:10:01.060 --> 00:10:07.020 It is not necessary to add anything more to the refutation of these criticisms which every 110 00:10:07.020 --> 00:10:10.220 page of this book provides. 111 00:10:10.220 --> 00:10:15.980 Only one point should be mentioned again, because on the one hand it is the acme of 112 00:10:15.980 --> 00:10:22.740 the doctrine of all contemporary pied pipers, and on the other hand it offers to the average 113 00:10:22.740 --> 00:10:29.780 intellectual a welcome excuse to shun the painstaking discipline of economic studies. 114 00:10:29.780 --> 00:10:37.340 Economics, it is said, in its rationalistic pre-possessions, assumes that men aim only 115 00:10:37.340 --> 00:10:41.520 or First of All at Material Well-Being. 116 00:10:41.520 --> 00:10:47.300 But in reality, men prefer irrational objectives to rational ones. 117 00:10:47.300 --> 00:10:53.460 They are guided more by the urge to realize myths and ideals than by the urge to enjoy 118 00:10:53.460 --> 00:10:56.480 a higher standard of living. 119 00:10:56.480 --> 00:11:01.940 What economics has to answer is this, 1. 120 00:11:01.940 --> 00:11:08.460 Economics does not assume or postulate that men aim only or first of all at what is called 121 00:11:08.460 --> 00:11:11.700 material well-being. 122 00:11:11.700 --> 00:11:17.140 Economics as a branch of the more general theory of human action deals with all human 123 00:11:17.140 --> 00:11:24.340 action, that is, with man's purposive aiming at the attainment of ends chosen, whatever 124 00:11:24.340 --> 00:11:26.980 these ends may be. 125 00:11:26.980 --> 00:11:34.380 To apply the concept rational or irrational to the ultimate ends chosen is nonsensical. 126 00:11:34.380 --> 00:11:40.420 We may call irrational the ultimate given, namely those things that our thinking can 127 00:11:40.420 --> 00:11:45.940 neither analyze nor reduce to other ultimately given things. 128 00:11:45.940 --> 00:11:51.240 Then every ultimate end chosen by any man is irrational. 129 00:11:51.240 --> 00:11:57.580 It is neither more nor less rational to aim at riches like Croesus than to aim at poverty 130 00:11:57.580 --> 00:12:00.080 like a Buddhist monk. 131 00:12:00.080 --> 00:12:01.520 2. 132 00:12:01.520 --> 00:12:08.340 What these critics have in mind when employing the term rational ends is the desire for material 133 00:12:08.340 --> 00:12:12.000 well-being and a higher standard of living. 134 00:12:12.000 --> 00:12:18.200 It is a question of fact whether or not their statement is true that men in general, and 135 00:12:18.200 --> 00:12:24.680 and our contemporaries especially, are driven more by the wish to realize myths and dreams 136 00:12:24.680 --> 00:12:29.360 than by the wish to improve their material well-being. 137 00:12:29.360 --> 00:12:34.480 Although no intelligent being could fail to give the correct answer, we may disregard 138 00:12:34.480 --> 00:12:36.000 the issue. 139 00:12:36.000 --> 00:12:42.200 For economics does not say anything either in favor of or against myths. 140 00:12:42.200 --> 00:12:47.400 It is perfectly neutral with regard to the labor union doctrine, the credit expansion 141 00:12:47.400 --> 00:12:53.720 Doctrine and all such doctrines, as far as these may present themselves as myths and 142 00:12:53.720 --> 00:12:57.560 are supported as myths by their partisans. 143 00:12:57.560 --> 00:13:02.840 It deals with these doctrines only as far as they are considered doctrines about the 144 00:13:02.840 --> 00:13:07.680 means fit for the attainment of definite ends. 145 00:13:07.680 --> 00:13:11.680 Economics does not say labor unionism is a bad myth. 146 00:13:11.680 --> 00:13:17.760 It merely says it is an inappropriate means of raising wage rates for all those eager 147 00:13:17.760 --> 00:13:20.020 to earn wages. 148 00:13:20.020 --> 00:13:25.600 It leaves it to every man to decide whether the realization of the labor union myth is 149 00:13:25.600 --> 00:13:32.820 more important than the avoidance of the inevitable consequences of labor union policies. 150 00:13:32.820 --> 00:13:39.760 In this sense, we may say that economics is apolitical or non-political, although it is 151 00:13:39.760 --> 00:13:45.400 is the foundation of politics and of every kind of political action. 152 00:13:45.400 --> 00:13:51.400 We may furthermore say that it is perfectly neutral with regard to all judgments of value 153 00:13:51.400 --> 00:13:58.680 as it refers always to means and never to the choice of ultimate ends. 154 00:13:58.680 --> 00:14:01.080 3. 155 00:14:01.080 --> 00:14:05.360 Economic Cognition and Human Action 156 00:14:05.360 --> 00:14:10.880 Man's freedom to choose and to act is restricted in a three-fold way. 157 00:14:10.880 --> 00:14:17.080 There are, first, the physical laws to whose unfeeling absoluteness man must adjust his 158 00:14:17.080 --> 00:14:20.280 conduct if he wants to live. 159 00:14:20.280 --> 00:14:26.940 There are, second, the individual's innate constitutional characteristics and dispositions, 160 00:14:26.940 --> 00:14:30.180 and the operation of environmental factors. 161 00:14:30.180 --> 00:14:35.800 We know that they influence both the choice of the ends and that of the means, although 162 00:14:35.800 --> 00:14:40.840 our cognizance of the mode of their operation is rather vague. 163 00:14:40.840 --> 00:14:46.760 There is finally the regularity of phenomena with regard to the interconnectedness of means 164 00:14:46.760 --> 00:14:54.080 and ends, namely the praxeological law as distinct from the physical and the physiological 165 00:14:54.080 --> 00:14:55.820 law. 166 00:14:55.820 --> 00:15:01.980 The elucidation and the categorical and formal examination of this third class of the laws 167 00:15:01.980 --> 00:15:10.940 of the universe is the subject matter of praxeology and its hitherto best developed branch, economics. 168 00:15:10.940 --> 00:15:17.420 The body of economic knowledge is an essential element in the structure of human civilization. 169 00:15:17.420 --> 00:15:24.660 It is the foundation upon which modern industrialism and all the moral, intellectual, technological 170 00:15:24.660 --> 00:15:29.780 and Therapeutical Achievements of the last centuries have been built. 171 00:15:29.780 --> 00:15:35.420 It rests with men whether they will make the proper use of the rich treasure with which 172 00:15:35.420 --> 00:15:40.720 this knowledge provides them, or whether they will leave it unused. 173 00:15:40.720 --> 00:15:46.980 But if they fail to take the best advantage of it and disregard its teachings and warnings, 174 00:15:46.980 --> 00:15:49.900 they will not annul economics. 175 00:15:49.900 --> 00:15:53.460 They will stamp out society and the human race.