WEBVTT NOTE 20. Praxeology: A New Start from Ludwig von Mises 1 00:00:00.000 --> 00:00:08.040 20. Praxeology – A New Start from Ludwig von Mises 2 00:00:08.040 --> 00:00:13.600 Ludwig von Mises created a whole new discipline based on extensive methodological deliberations 3 00:00:13.600 --> 00:00:19.720 which he called the Science of Human Action or Praxeology. He may have been inspired to 4 00:00:19.720 --> 00:00:25.280 a significant degree by a long-since forgotten over 1,000 page work, Die Wirtschaftliche 5 00:00:25.280 --> 00:00:31.240 d'Energie, 1893, Economic Energy. Written by Hungarian-born journalist and Menger student 6 00:00:31.240 --> 00:00:36.960 Julius Friedrich Kanz von Lüdersee, 1858, 1922, von Lüdersee suggested borrowing the 7 00:00:36.960 --> 00:00:44.200 cognitive foundations of economics from Immanuel Kant, 1724, 1804. He also casually provided 8 00:00:44.200 --> 00:00:50.800 an ultimate definition of economics. All actions have a purpose. They are therefore purposive. 9 00:00:50.800 --> 00:00:56.040 They are purposive, even when they do not seem so to a more astute economic mind, that 10 00:00:56.040 --> 00:01:00.900 is to say, they have been undertaken from the viewpoint of the acting individual in 11 00:01:00.900 --> 00:01:07.320 order to attain his objectives. Economic insights have to do with economic actions. 12 00:01:07.320 --> 00:01:13.320 Economic actions, however, are simply actions. They must adhere to laws which apply to actions 13 00:01:13.320 --> 00:01:18.760 in general. Economics is therefore the science of action. 14 00:01:18.760 --> 00:01:24.040 Ludwig von Mises' goal was to understand human action in general and, subsequently, 15 00:01:24.040 --> 00:01:29.800 to be able to clearly think through and present economic action as well. Such an all-encompassing 16 00:01:29.800 --> 00:01:36.160 praxeology must not be based on experiences bound by time and place, that is, on empirical 17 00:01:36.160 --> 00:01:42.860 data, but would have to be a science which, in all of its branches, is a priori. Because 18 00:01:42.860 --> 00:01:48.200 a universally valid science of human action is derived, like logic and mathematics, not 19 00:01:48.200 --> 00:01:53.880 Not from experience, it is prior to experience, it is, as it were, the logic of action and 20 00:01:53.880 --> 00:02:00.400 deed. Thus, the classical laws of economics were ultimately not derived from experience, 21 00:02:00.400 --> 00:02:05.360 but by deduction from the fundamental category of action, which has been expressed sometimes 22 00:02:05.360 --> 00:02:11.160 as the economic principle, that is, the necessity to economize, sometimes as the value principle 23 00:02:11.160 --> 00:02:17.520 or as the cost principle. Empirical research, said Mises, which gathers its knowledge, a 24 00:02:17.520 --> 00:02:23.960 Postury, or I, that is from experience, only allows for predictions in the form of hypotheses, 25 00:02:23.960 --> 00:02:30.760 which result from induction, that is, by generalizing individual observations. In order to gain empirical 26 00:02:30.760 --> 00:02:36.720 validity, they need to be investigated further, either by making new observations, or with 27 00:02:36.720 --> 00:02:42.160 the help of experiments with the goal of either discarding them as useless, or retaining them 28 00:02:42.160 --> 00:02:47.800 in a form of laws. Yet empirical laws never lose their hypothetical character in order 29 00:02:47.800 --> 00:02:54.480 to prove them conclusively, the process of validation would have to be continued at infinitum. 30 00:02:54.480 --> 00:02:59.660 It is always possible that hitherto unobserved cases would run contrary to the claim and 31 00:02:59.660 --> 00:03:06.160 thus falsify the original hypothesis. Thus empirical knowledge offers no ultimate certainty. 32 00:03:06.160 --> 00:03:11.720 Furthermore, every observation necessarily involves theories which play a decisive role 33 00:03:11.720 --> 00:03:20.800 In empirical research, the observing subject is then necessarily involved in the observation 34 00:03:20.800 --> 00:03:25.520 process. The fear that empirical research would dominate and manipulate the theory and 35 00:03:25.520 --> 00:03:30.880 practice of economics in the future was on the forefront of Mises's mind. The notion 36 00:03:30.880 --> 00:03:37.320 of viewing human beings as mere test cases in order to put economic hypotheses into practice, 37 00:03:37.320 --> 00:03:43.280 to subsequently confirm them, manipulating human action within the scope of social political 38 00:03:43.280 --> 00:03:48.720 experiments and with the aid of government force, for example, was undoubtedly anathema 39 00:03:48.720 --> 00:03:54.280 to Mises. Economics therefore needed a secure foundation. 40 00:03:54.280 --> 00:03:59.920 In his search for the roots of scientific thinking, Mises came across Immanuel Kant, 41 00:03:59.920 --> 00:04:05.440 a philosopher who wanted to clearly dissociate the field of knowledge from those of faith 42 00:04:05.440 --> 00:04:12.500 and Conjecture. Going beyond Kant in his reflections, Mises eventually came up with a line of reasoning 43 00:04:12.500 --> 00:04:18.700 that would not stop until it reaches a point beyond which it cannot go. Scientific theories 44 00:04:18.700 --> 00:04:24.080 are different from those of the average man, only in that they attempt to build on a foundation 45 00:04:24.080 --> 00:04:27.640 that further reasoning cannot shake. 46 00:04:27.640 --> 00:04:33.840 In Critique of Pure Reason, 1781, Immanuel Kant developed the notion of there being two 47 00:04:33.840 --> 00:04:39.740 two different ways of classifying judgements. On the one hand, judgements could be either 48 00:04:39.740 --> 00:04:45.160 analytical or synthetic, whereby the truth value of analytical judgements, for example 49 00:04:45.160 --> 00:04:50.960 bachelors or unmarried men, can be sufficiently verified with the aid of logic. The truth 50 00:04:50.960 --> 00:04:56.840 value of synthetic judgements, however, cannot be verified with the aid of logic, for example, 51 00:04:56.840 --> 00:04:59.240 Today the weather is fine. 52 00:04:59.240 --> 00:05:05.000 On the other hand, judgments could be a priori or a posteriori. 53 00:05:05.000 --> 00:05:10.320 Observations are needed to confirm a posteriori judgment gained from experience, but not to 54 00:05:10.320 --> 00:05:15.320 confirm a priori judgments, which precede all experience. 55 00:05:15.320 --> 00:05:20.240 According to Kant, scientific knowledge would necessarily be valid and generic, whereby 56 00:05:20.240 --> 00:05:25.480 a priori analytical judgment always fulfilled these criteria. 57 00:05:25.480 --> 00:05:31.360 such as bachelors are unmarried men are necessarily and universally valid because it is impossible 58 00:05:31.360 --> 00:05:37.240 to say bachelors are married too, but a priori analytical judgments have the drawback of 59 00:05:37.240 --> 00:05:43.040 not delivering any real findings. They are tautological, that is, nothing new is added, 60 00:05:43.040 --> 00:05:47.520 which was not already clear and given from the outset. The crucial question according 61 00:05:47.520 --> 00:05:54.440 to Kant must therefore be, are a priori synthetic judgments possible? Kant himself was convinced 62 00:05:54.440 --> 00:06:09.040 According to Kant, the truth of a priori synthetic judgements could be derived from self-evident 63 00:06:09.040 --> 00:06:11.160 axioms. 64 00:06:11.160 --> 00:06:16.760 Axioms are self-evident when you cannot dispute their truth without contradicting yourself. 65 00:06:16.760 --> 00:06:21.600 These kinds of axioms could be found to the extent that we consider ourselves cognitive 66 00:06:21.600 --> 00:06:27.640 of Human Beings and thus understand the concept of our thought processes, the way our intellect 67 00:06:27.640 --> 00:06:32.240 works and ultimately how our thinking apparatus is constructed. 68 00:06:32.240 --> 00:06:39.040 Mises has been rightly called a Kantian because he agreed with Kant in all of these deliberations. 69 00:06:39.040 --> 00:06:43.380 But what he did not agree with was Kant's idealistic assumption that reality is a mere 70 00:06:43.380 --> 00:06:46.100 construction of the intellect. 71 00:06:46.100 --> 00:06:54.380 A thing as such, das Ding an sich, is unknowable. Reality can only be recognized as it appears 72 00:06:54.380 --> 00:07:01.340 to us by virtue of our reasoning, as we quasi-simulate or reconstruct it with the help of reasoning. 73 00:07:01.340 --> 00:07:08.620 Therefore no direct path to truth is available. Mises the realist and logician could not accept 74 00:07:08.620 --> 00:07:15.060 the idealistic outlook later adopted by constructivism. That thinking and reality are two separate 75 00:07:15.060 --> 00:07:34.060 In one simple clear step, Mises went further than Kant in his thinking. Based on self-evident actions, true, synthetic, a priori judgment are not purely cognitive constructs, and therefore conform to reality precisely because they are not just categories of reasoning but also categories of action. 76 00:07:34.060 --> 00:07:44.060 Our intellect is always within an acting person. It never appears in isolation as if it were a spirit, but within an acting human being. 77 00:07:44.060 --> 00:07:45.060 Planning. 78 00:07:45.060 --> 00:07:50.300 Therefore, the categories of our reasoning, for example, causality, ultimately have to 79 00:07:50.300 --> 00:07:53.900 be founded in the categories of our action. 80 00:07:53.900 --> 00:07:58.300 Action means intervening in reality at an earlier point in time in order to achieve 81 00:07:58.300 --> 00:08:01.620 results at a later point in time. 82 00:08:01.620 --> 00:08:06.060 Every acting person must assume that a constant relationship between cause and effect does 83 00:08:06.060 --> 00:08:08.020 indeed exist. 84 00:08:08.020 --> 00:08:12.160 In this way, causality is a basic prerequisite of action. 85 00:08:12.160 --> 00:08:17.280 As a true, a priori, synthetic judgement, it proves to be both a category of thinking 86 00:08:17.280 --> 00:08:23.880 and of acting, both in cognitive and real terms. The chasm between thinking and reality, 87 00:08:23.880 --> 00:08:28.560 and between the internal and external worlds which Kant had considered an insurmountable 88 00:08:28.560 --> 00:08:35.640 barrier had been bridged. Human action, Mises said, is conscious behaviour. Conceptually 89 00:08:35.640 --> 00:08:40.140 it can be sharply and clearly distinguished from unconscious activity, even though in 90 00:08:40.140 --> 00:08:45.220 In some cases it is perhaps not easy to determine whether given behavior is to be assigned to 91 00:08:45.220 --> 00:08:50.980 one or the other category. This is what distinguishes the general theory of action, praxeology, 92 00:08:50.980 --> 00:08:56.780 from psychology. The subject matter of psychology are the internal events that result or can 93 00:08:56.780 --> 00:09:03.260 result in a definite action. The theme of praxeology is action as such. Action, that 94 00:09:03.260 --> 00:09:09.880 is, conscious behavior, is thus, by definition, always rational. One is unwarranted in calling 95 00:09:09.880 --> 00:09:15.000 and goals of action irrational simply because they are not worth striving for from the point 96 00:09:15.000 --> 00:09:22.180 of view of one's own valuations. Such a mode of expression leads to gross misunderstandings. 97 00:09:22.180 --> 00:09:26.880 Instead of saying that irrationality plays a role in action, one should accustom oneself 98 00:09:26.880 --> 00:09:32.240 to saying merely, there are people who aim at different ends from those that I aim at, 99 00:09:32.240 --> 00:09:36.600 and people who employ different means from those I would employ in their situation. It 100 00:09:36.600 --> 00:09:41.320 It is not the task of the science of human action, Mises wrote in Human Action, to tell 101 00:09:41.320 --> 00:09:46.180 people what ends they should aim at. It is a science of the means to be applied for the 102 00:09:46.180 --> 00:09:52.320 attainment of ends chosen, not, to be sure, a science of the choosing of ends. Ultimate 103 00:09:52.320 --> 00:09:58.880 decisions, the valuations and the choosing of ends are beyond the scope of any science. 104 00:09:58.880 --> 00:10:04.080 Science never tells a man how he should act. It merely shows how a man must act if he wants 105 00:10:04.080 --> 00:10:09.320 to attain definite ends. As the science of human action is subjectivistic and takes the 106 00:10:09.320 --> 00:10:15.160 value of judgment of acting man as ultimate data not open to any further critical examination, 107 00:10:15.160 --> 00:10:20.760 it is itself above all strife of parties and factions. It is indifferent to the conflicts 108 00:10:20.760 --> 00:10:26.720 of all schools of dogmatism and ethical doctrines. It is free from valuations and preconceived 109 00:10:26.720 --> 00:10:33.700 ideas and judgments. It is universally valid and absolutely and plainly human. In the German 110 00:10:33.700 --> 00:10:39.540 and Predecessor of Human Action, Mises emphasized this more conspicuously. Value judgments, 111 00:10:39.540 --> 00:10:45.340 he said, can neither be proven nor justified and substantiated nor rejected and discarded 112 00:10:45.340 --> 00:10:51.520 in a way every logically thinking man needs to accept as valid. Value judgments are irrational 113 00:10:51.520 --> 00:10:57.360 and subjective. One can commend and condemn them, approve or disapprove them, but one 114 00:10:57.360 --> 00:11:00.280 One cannot call them true or false. 115 00:11:00.280 --> 00:11:05.840 Ultimately, it is important to become separated from the metaphysical systems of the philosophy 116 00:11:05.840 --> 00:11:07.440 of history. 117 00:11:07.440 --> 00:11:12.600 These systems presume to be able to detect the true and real essence behind the appearance 118 00:11:12.600 --> 00:11:16.120 of things which are hidden to the profane eye. 119 00:11:16.120 --> 00:11:21.220 They imagine themselves capable of discovering the final purpose of all mundane activity. 120 00:11:21.220 --> 00:11:25.480 They want to grasp the objective meaning of events which they maintain is different from 121 00:11:25.480 --> 00:11:29.800 and their subjective meaning, that is, the meaning intended by the actor himself. 122 00:11:29.800 --> 00:11:33.920 All religious systems and all philosophies of history proceed according to these same 123 00:11:33.920 --> 00:11:38.280 principles, notwithstanding the bitterness with which they fight each other. 124 00:11:38.280 --> 00:11:44.360 Marxian Socialism, German National Socialism and the non-German movements related to it, 125 00:11:44.360 --> 00:11:49.580 which have taken a variety of forms, are all in agreement on logical method, and it is 126 00:11:49.580 --> 00:11:55.060 worth noting that they can all be traced back to the same metaphysical foundation, namely 127 00:11:55.060 --> 00:12:02.660 It was patently clear to Mises that all those ideologies that were to turn the 20th century 128 00:12:02.660 --> 00:12:08.020 into a bloodbath were ultimately based on Hegel's philosophy of history. The philosophical 129 00:12:08.020 --> 00:12:14.020 counter-strategy that Mises developed, intended to debunk the dominating philosophy, was extreme 130 00:12:14.020 --> 00:12:21.280 sobriety. He didn't allow himself any excessive enthusiasm. Praxeology is unable to give any 131 00:12:21.280 --> 00:12:37.600 If one wanted to explore and describe human action, one would have to recognize that every 132 00:12:37.600 --> 00:12:43.060 action is preceded by thinking in so far as thinking is to deliberate beforehand over 133 00:12:43.060 --> 00:12:50.620 future action and to reflect afterward upon past action. Thinking and acting are inseparable. 134 00:12:50.620 --> 00:12:55.860 Every action is always based on a definite idea about causal relations. 135 00:12:55.860 --> 00:13:00.380 Action without thinking, practice without theory are unimaginable. 136 00:13:00.380 --> 00:13:05.620 The reasoning may be faulty and the theory incorrect, but thinking and theorizing are 137 00:13:05.620 --> 00:13:08.180 not lacking in any action. 138 00:13:08.180 --> 00:13:13.220 On the other hand, thinking is always thinking of a potential action. 139 00:13:13.220 --> 00:13:17.300 It is of no relevance for logic whether such action is feasible or not. 140 00:13:17.300 --> 00:13:23.860 The act of thinking is always purposeful, intentional. When action is eventually taken, it is not 141 00:13:23.860 --> 00:13:30.420 simply giving preference. Thus a man may prefer sunshine to rain and may wish that the sun 142 00:13:30.420 --> 00:13:35.580 would dispel the clouds. He who only wishes and hopes does not interfere actively with 143 00:13:35.580 --> 00:13:41.180 the course of events and with the shaping of his own destiny. But acting man chooses, 144 00:13:41.180 --> 00:13:46.900 determines and tries to reach an end, of two things both of which he cannot have together, 145 00:13:46.900 --> 00:14:04.900 Consequently, the acting individual applies the means to attain his ends. The use of one's own labour is generally included, but definitely not in every case. 146 00:14:04.900 --> 00:14:12.900 Under special conditions, a word is all that is needed. He who gives orders or interdictions may act without any expenditure of labour. 147 00:14:12.900 --> 00:14:18.460 To talk or not to talk, to smile or to remain serious may be action. 148 00:14:18.460 --> 00:14:23.580 To consume and to enjoy are no less action than to abstain from accessible consumption 149 00:14:23.580 --> 00:14:25.260 and enjoyment. 150 00:14:25.260 --> 00:14:28.780 For to do nothing and to be idle are also action. 151 00:14:28.780 --> 00:14:31.820 They too determine the course of events. 152 00:14:31.820 --> 00:14:36.580 The goal, purpose or end of all action is the result which ultimately is always the 153 00:14:36.580 --> 00:14:40.460 relief from a felt uneasiness. 154 00:14:40.460 --> 00:14:46.940 Man is eager to substitute a more satisfactory state of affairs for a less satisfactory. 155 00:14:46.940 --> 00:14:52.460 His mind imagines conditions which suit him better, and his action aims at bringing about 156 00:14:52.460 --> 00:14:54.340 this desired state. 157 00:14:54.340 --> 00:14:58.940 The incentive that impels a man to act is always some uneasiness. 158 00:14:58.940 --> 00:15:03.580 A man perfectly content with the state of his affairs would have no incentive to change 159 00:15:03.580 --> 00:15:04.580 things. 160 00:15:04.580 --> 00:15:05.660 He would not act. 161 00:15:05.660 --> 00:15:08.340 He would simply live free from care. 162 00:15:08.340 --> 00:15:13.500 So to make a man act, uneasiness and the image of a more satisfactory state alone are not 163 00:15:13.500 --> 00:15:14.500 sufficient. 164 00:15:14.500 --> 00:15:16.380 A third condition is required. 165 00:15:16.380 --> 00:15:21.400 The expectation that purposeful behavior has the power to remove or at least to alleviate 166 00:15:21.400 --> 00:15:23.860 the felt uneasiness. 167 00:15:23.860 --> 00:15:27.000 In the absence of this condition no action is feasible. 168 00:15:27.000 --> 00:15:30.220 These are the general conditions of human action. 169 00:15:30.220 --> 00:15:32.920 Man is the being that lives under these conditions. 170 00:15:32.920 --> 00:15:37.620 He is not only homo sapiens but no less homo agents. 171 00:15:37.620 --> 00:15:43.480 A means, according to Mises, is what serves to the attainment of any end, goal or aim. 172 00:15:43.480 --> 00:15:48.640 Means are not in the given universe. In this universe there exists only things. A thing 173 00:15:48.640 --> 00:15:53.820 becomes a means when human reason plans to employ it for the attainment of some end and 174 00:15:53.820 --> 00:16:00.160 Human Action really employs it for this purpose. Thinking man sees the serviceableness of things, 175 00:16:00.160 --> 00:16:05.560 that is, their ability to minister to his ends, and acting man makes them means. Means are 176 00:16:05.560 --> 00:16:29.880 Step by step, Mises subsequently described a science of rigorous universality, like those 177 00:16:29.880 --> 00:16:34.960 Those of logic and mathematics formulated sentences that were logically derived from 178 00:16:34.960 --> 00:16:40.320 the basic concept of action and that revealed nothing that was not already present in the 179 00:16:40.320 --> 00:16:41.320 prerequisites. 180 00:16:41.320 --> 00:16:47.160 With the concept of action, Mises said, we simultaneously grasp the closely correlated 181 00:16:47.160 --> 00:16:53.240 concepts of path and goal, means and end, cause and effect, beginning and end, and thus 182 00:16:53.240 --> 00:16:58.700 also of value, wealth, exchange, price and cost. 183 00:16:58.700 --> 00:17:02.740 All of these are inevitably implied in the concept of action, and along with them the 184 00:17:02.740 --> 00:17:10.140 concepts of valuing, scale of value and importance, scarcity and abundance, advantage and disadvantage, 185 00:17:10.140 --> 00:17:13.340 success, profit and loss. 186 00:17:13.340 --> 00:17:18.700 Also included is the notion of temporal sequence. What distinguishes the praxeological system 187 00:17:18.700 --> 00:17:23.860 from the logical system epistemologically is precisely that it implies the categories 188 00:17:23.860 --> 00:17:31.320 is both of time and of causality. The praxeological system, too, is a prioristic and deductive. 189 00:17:31.320 --> 00:17:37.020 As a system it is out of time, but change is one of its elements. The notions of sooner 190 00:17:37.020 --> 00:17:43.060 and later, and of cause and effect, are among its constituents. 191 00:17:43.060 --> 00:17:47.340 Anteriority and consequence are essential concepts of praxeological reasoning. So is 192 00:17:47.340 --> 00:17:53.300 the irreversibility of events. To put it simply, praxeology was thus nothing but logic plus 193 00:17:53.300 --> 00:17:59.900 as time within the framework of causality. Accordingly, praxeology enables us to make 194 00:17:59.900 --> 00:18:05.500 predictions about future events. Admittedly, these predictions necessarily lack quantitative 195 00:18:05.500 --> 00:18:11.080 precision because the allocation of scarce resources to want satisfaction in various periods 196 00:18:11.080 --> 00:18:15.780 of the future is determined by value judgments and indirectly by all those factors which 197 00:18:15.780 --> 00:18:21.740 constitute the individuality of the acting man. In the closing words of his Nationale 198 00:18:21.740 --> 00:18:29.360 The German predecessor of human action, Mises explicated succinctly what that implies. Praxeological 199 00:18:29.360 --> 00:18:35.460 and economic insights cannot inform us about the future of society and of human culture 200 00:18:35.460 --> 00:18:41.100 or about the course of future events. These facts may disappoint some people and make 201 00:18:41.100 --> 00:18:47.820 them underestimate the significance of praxeological and economic insights. However, man has to 202 00:18:47.820 --> 00:18:53.220 to accept that there are limits to his mind's thinking and research. We will never know 203 00:18:53.220 --> 00:18:59.220 what the future has in store for us, it cannot be any other way, because if we knew in advance 204 00:18:59.220 --> 00:19:06.580 what the future would unalterably bring, we could no longer act. That men act, and that 205 00:19:06.580 --> 00:19:12.500 they do not know the future, are not two independent matters, but only two different modes of the 206 00:19:12.500 --> 00:19:13.500 The same fact.