Methodenstreit 1: The Axiom of Human Action
“Methodenstreit (German for “method dispute”), in intellectual history beyond German-language discourse, was an economics controversy commenced in the 1880s..." - Wikipedia, "Methodenstreit."
Overview: Austrian School economics is the foremost example of an axiomatic approach to human sciences, and though it is not ‘mainstream’ economics, it has withstood waves of attacks for over 150 years and will not just go away. Sections:
· What is Praxeology
· Methodological Dualism
· The Axiomatic Approach
· Axiom of Human Action
· Austrian School Economics is not a Psychology Theory
· Free Will
· Synthetic a priori
· In the Room
My late-in-life discovery of Austrian School Economics (opposed to classical or Keynesian Economics) combined with rediscovery of Professor Clarence Marsh Case’s early 20th century ‘orders of natural phenomenon’ framework (evolved from Comte) and arguments for legitimizing sociology, and Professor Frank Elwell’s criticisms of data-driven modern sociology (echoed by Prof. Jonathan Turner), crystalized the macrosocial ideas behind GGDM. GGDM had been drifting in that direction for years, but I had never previously considered (or even understood) the idea of an axiom-based sociology. Because it doesn’t exist.
While doing research circa 2018 for Gestalt-Genesis/Day Million macrosocial simulation game (hereinafter, “GGDM”), I learned about Austrian School economics and praxeology. And I wondered, ‘how is it that I have never heard of this’; I was then over 50 years old. I’d wager that you probably have never heard of praxeology either, and may or may not have heard of Austrian School economics.
It is difficult to find any separation currently between Ludwig von Mises’ Austrian School economics and praxeology, but there is a difference and Professor Broome’s excellent “Praxiology” article on Encyclopedia.com explains the independent origins of classical praxeology, and then places Mises’ Austrian School Economics within the framework of praxeology generally. Professor Broome suggests that praxeology was blocked from the West by the Cold War and only began to filter into the West following the renewed interest in Polish scholarship occasioned by the election of Pope John Paul II in 1978. In the meantime, John Dewey’s naturalism became dominant in the West and generally, led to the STS movement in the 1970s and STEM education emphasis of the 1980s. Professor Broome notes that naturalism in the West developed some of the same ideas as the original Warsaw Circle’s praxeology.
The Austrian School demonstrated how one could proceed from axioms in determining the truths of economics; could the same be done for sociology, or at least, macrosociology? The combination of diverse influences described in the opening paragraphs, may constitute an emergence across generations of the sort which makes civilizations, but are rarely understood by civilizations except in historical hindsight.
The following sections will introduce – through selected quotes – elements of Austrian School economics as a model for an axiom-based human sciences. This article is not an economics argument, nor am I an economist, I am not even an Austrian School expert, rather this introduces an epistemological argument. The quotes from Ludwig von Mises and later writers at the Mises Institute provide both a ‘summary’ and a ‘feel’ for the Austrian axiomatic argument.
What is Praxeology
“Praxiology, occasionally praxeology and rarely praxæology, is from the Greek praxis meaning goal-directed action, and logos in the sense of knowledge or information. Apparently having stipulative origins in French, namely, praxéologie (Mitcham), the lexical term praxiology was introduced by Tadeuz Kotarbiński (1886–1981) in 1965. Polish philosopher and co-founder, with Jan Łukasiewicz and Stanislaw Leśniewski of the Warsaw Center of Logical Research (Warsaw Circle), Kotarbiński used praxiology to reference an area in the philosophy of action that was distinguished from other such areas by its focus on efficient action.” – Professor Taft H. Broome, Jr. (Howard University), “Praxiology” article, Encyclopedia.com.
“Remaining intact and distinct, these disciplines join to produce novel subdisciplines. For example, when Ludwig von Mises made praxiology the method of the Austrian School of Economics, he crafted the subdiscipline that can be called praxiological economics.” Id., Broome
Methodological Dualism
“When Ludwig von Mises began to establish a systematic theory of economics, he insisted on what he called the principle of methodological dualism: the scientific methods of the hard sciences are great to study rocks, stars, atoms, and molecules, but they should not be applied to the study of human beings. In stating this principle, he was voicing opposition to the introduction into economics of concepts such as ‘market equilibrium,’ which were largely inspired by the physical sciences, and were perhaps motivated by a desire on the part of some economists to establish their field as a science on par with physics.
Mises remarked that human beings distinguish themselves from other natural things by making intentional (and usually rational) choices when they act, which is not the case for stones falling to the ground or animals acting on instinct. The sciences of human affairs therefore deserve their own methods and should not be tempted to apply the tools of the physical sciences willy-nilly.
In that respect, Mises agreed with Aristotle’s famous dictum that ‘It is the mark of an educated man to look for precision in each class of things just so far as the nature of the subject admits.’”
– Michael Accad, M.D., “An introduction to praxeology and Austrian school economics,” alertandoriented.com (blog), April 13, 2016. (emphasis added)
“From that premise, and from a few other empirical and essentially self-evident propositions (e.g., that there is a diversity of ends that human beings choose for themselves, that there is a diversity of means in nature, and other basic notions such as these), Austrian economists develop an economic theory and identify ‘economic law’ that include the laws of utility and laws of returns. They then go on to develop an elaborate theory of money, of interest, and of the business cycle.” – Id., Michael Accad, M.D.
“The origin of the mathematization of economics is traced back to Swiss mathematical genius Daniel Bernoulli, who precisely conceived of utility in terms of the intensity of psychic effect. Murray Rothbard elaborated on the foundation of mathematical economics ... but it is worth noting that two hundred and fifty years after his death, Bernoulli’s probabilistic insights are also getting criticized by Nobel Prize winner Daniel Kahneman.” – Id., Michael Accad, M.D.
The Axiomatic Approach
“Ludwig von Mises in particular argued against empiricist approaches to the social sciences in general, because human events are unique and ‘unrepeatable,’ whereas scientific experiments are necessarily reducible.” – from Wikipedia article, “Praxeology,” citing to Human Action (1949).
“The law of diminishing marginal utility, as developed by Carl Menger (1840–1921), is axiomatic in nature; that is, it is irrefutably true. In mainstream economics, however, this fundamental economic law is typically interpreted as resting on psychology, namely the law of satiation of wants. Such an interpretation, however, does not actually conceive the law of diminishing marginal utility as a fundamental economic law – which has truth value irrespective of time and place – but as a fleeting explanation of certain economic phenomena, which may or may not hold in a given situation. Given the importance of the law of diminishing marginal utility for economic theory and policy, it is important to keep advertising that the law of diminishing marginal utility is irrefutably true – because it follows from the axiom of human action. For ignoring this truth leads to fallacious and erroneous conclusions, and eventually to false economic theory and economic policies.”
– Thorsten Polleit, “What Can the Law of Diminishing Marginal Utility Teach Us?” Mises Institute, February 11, 2011 (emphasis in original)
Axiom of Human Action
“Human action is purposeful behavior. Or we may say: Action is will put into operation and transformed into an agency, is aiming at ends and goals, is the ego’s meaningful response to stimuli and to the conditions of its environment, is a person’s conscious adjustment to the state of the universe that determines his life. Such paraphrases may clarify the definition given and prevent possible misinterpretations. But the definition itself is adequate and does not need complement of commentary.”
– Ludwig von Mises, Human Action (1949), p. 11. (emphasis added)
“[Ludwig von] Mises used the term praxeology to name the deductive science that begins with the premise that human beings act intentionally. This premise is often called the ‘axiom’ of praxeology. It is an axiom because, in order to disprove it, you have to engage in what the proposition affirms, i.e., you have to act intentionally to argue against the proposition. An intentional action identifies an end, or purpose, to the action, as well as certain means selected to achieve that end.”
– Michael Accad, M.D., “An introduction to praxeology and Austrian school economics,” alertandoriented.com (blog), April 13, 2016 (emphasis added).
“Because means are scarce – with respect to the ends that they could possibly serve – they must therefore be economized. As a result of scarcity, the actor has to allocate scarce means to serve the most desired ends, and so certain ends will have to remain unsatisfied. From this it follows that the larger the supply of means is, the more ends can be satisfied. As means are scarce, human action implies that individual actors must rank their alternative ends. Human action is therefore indicative of judgment and valuation – or, as [Murry N.] Rothbard said, demonstrated preferences: the highest-ranking ends are those which the actor values most highly.”
– Thorsten Polleit, “What Can the Law of Diminishing Marginal Utility Teach Us?” Mises Institute, February 11, 2011 (emphasis in original).
“Praxeology also emphasizes that human action is personal action. In other word[s], every economic and social behavior must be ultimately traced back to the actions of individuals. There is no ‘collective mind’ or collective entity that takes action independently of the actions of the individual members comprising the collectivity. When we say that Germany invaded Poland, or when we say that the government established a social security program, or that Apple is launching a new iPad, these expressions are all shorthand to describe the actions of individual persons within those organizations. That emphasis on personal action is often called methodological individualism. This concept may seem obvious but, in the mid-nineteenth century, it was common to believe in collective spirits embodied in ‘the nation’ or, under Hegelian and Marxist influence, in other collectivities such as ‘the bourgeoisie’ or ‘the proletariat.’”
– Michael Accad, M.D., “An introduction to praxeology and Austrian school economics,” alertandoriented.com (blog), April 13, 2016.
Austrian School Economics is not a Psychology Theory
“Action is replacing ‘a more satisfactory state of affairs for a less satisfactory,’ and man must make use of means to attain ends. Means, in turn, are always scarce with regard to the attainment of ends. If means were not scarce, they wouldn’t be subject to economizing, and so there couldn’t be any action – and this is, of course, impossible to believe. It is in this sense that human action is purposeful action – that is, making use of means for attaining certain ends. And praxeology remains unconcerned about the content of certain ends or how concrete ends were motivated.”
– Thorsten Polleit, “Human Action Is Purposeful Action,” Mises Institute, August 19, 2011 (available free online), quoting Ludwig von Mises, Human Action (1949), Ch. 1 (emphasis added).
“The knowledge that human action is purposeful action has nothing to do with psychology. Stating that human action is purposeful action does not take recourse to assumptions about the actor’s concrete motivation. Non-purposeful behavior is, as far as praxeology is concerned, to be classified as external data, part of the general conditions under which human action takes place. It is outside the scope of praxeology.” – Id., Thorsten Polleit. (emphasis added)
“Note that Austrian theory does not care and makes no claim about the psychological state of mind of the actor, and whether the action is rational or not. This is also in contrast to mainstream neoclassical economics which rely on a ‘rational agent under constraint’ assumption for the economic actor, an assumption which is increasingly being recognized as seriously flawed or limited.”
– Michael Accad, M.D., “An introduction to praxeology and Austrian school economics,” alertandoriented.com (blog), April 13, 2016 (emphasis added).
“Is it possible to draw an exact line between purposeful and non-purposeful action? A human fetus, a human asleep, or a person under the influence of drugs may show action that seems – to an observer – non-purposeful rather than purposeful. However, the observer is in no position at all to come up with the conclusion that a person is not acting purposefully, no matter how non-purposeful, meaningless, or nonsensical a person’s action may appear to him. Even an insane person or a person under the influence of drugs acts, and thereby aims at achieving certain ends.”
– Thorsten Polleit, “Human Action Is Purposeful Action,” Mises Institute, August 19, 2011 (available free online), quoting Ludwig von Mises, Human Action (1949), Ch. 1. (emphasis added)
Free Will
“The denial of purposefulness in man’s attitudes can be sustained only if one assumes that the choosing both of ends and of means is merely apparent and that human behavior is ultimately determined by physiological events which can be fully described in the terminology of physics and chemistry. Even the most fanatical champions of the ‘Unified Science’ sect shrink from unambiguously espousing this blunt formulation of their fundamental thesis.
There are good reasons for this reticence. So long as no definite relation is discovered between ideas and physical or chemical events of which they would occur as the regular sequel, the positivist thesis remains an epistemological postulate derived not from scientifically established experience but from a metaphysical world view.… But it is evident that such a metaphysical proposition can in no way invalidate the results of the discursive reasoning of the sciences of human action.
The positivists for emotional reasons do not like the conclusions that acting man must necessarily draw from the teachings of economics. As they are not in a position to find any flaw either in the reasoning of economics or in the inferences derived from it, they resort to metaphysical schemes in order to discredit the epistemological foundations and the methodological approach of economics.”
– Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution (1957).
“Now Aristotle did believe, I think, that if it could be shown that it was a matter of necessity that men acted in one way rather than another, then our ordinary thought about action and responsibility would be undermined. If human actions were necessitated, there would indeed be something radically wrong with our notions of human action; but, he thought, it was quite certainly false that human actions were necessitated. If this is a correct account of Aristotle, we can see one reason why he does not confront the freewill problem. It is because he thinks that it cannot seriously be doubted that human actions are free from necessitation.”
– Bernard Williams, Freedom and The Will (1963), p. 3.
“The problem of freewill makes its first large-scale appearance in a religious context, when men had come to believe that here was one God, omnipotent, omniscient, and concerned with human action. The problem of freewill was first definitely stated as a problem of Christian theology. The problem arose, in fact, from a number of different roots in Christian belief: Christianity asserts on the one hand that man does freely choose his actions, but also asserts on the other hand statements not evidently compatible with this, for instance that God being omniscient knows from all eternity what actions a man will in fact perform.” – Id. Bernard Williams at p. 5.
Synthetic a priori
“Ludwig von Mises (1881–1973) reconstructed economics as an axiomatic science, which he called praxeology: the science of the logic of human action. The central element of praxeology is the axiom of human action.
The axiom of human action basically says that human beings act. This may sound trivial at first glance. However, at second glance it becomes obvious that Mises’s axiom of human action and its implications are far from being trivial:
To start with, an axiom is a (set of) proposition(s) presumed to be true on the basis of logical necessity; it serves as presenting different subject matters as formal and coherent theories, all of which are propositions which can be deduced from the axiom. For instance, Pythagoras’ theorem is deducible from the axioms of Euclidian geometry.
The axiom of human action is of a special nature: It represents a synthetic a priori proposition, to use the terminology of Immanuel Kant (1724–1804). A synthetic a priori proposition is knowledge that (1) cannot be denied without running into an intellectual contradiction, and (2) is derived from reflection rather than observation.
The axiom of human action cannot be denied without running into an insoluble contradiction. This is because denying the axiom of human action implies human action – that is the human act of denying. Arguing that humans cannot act is thus a contradiction in itself, an absurdity.
Further, the axiom of action is derived from human reflection: it is independent of experience. This is because one cannot observe humans making an action per se. In order to know what ‘action’ means, one has to know what action is – which implies that knowledge about action exists prior to action.
That said, the axiom of human action fulfills both of Immanuel Kant’s requirements for qualifying as an a priori synthetic proposition: it is self-evidently true, and it is derived from reflection. That said, logical deductions from the axiom of human action must be also absolutely, or apodictically, true as well.
By developing praxeology, Mises showed that economic theory is the formal logic of the irrefutably true axiom of human action. According to Mises, economic theory is not concerned with psychology, but with the implications of the axiom of human action.”
– Thorsten Polleit, “What Can the Law of Diminishing Marginal Utility Teach Us?” Mises Institute, February 11, 2011. (emphasis added)
Future Uncertainty
“Since human beings are finite and temporal, praxeology pays attention to the time dimension of human action. From that attention to time, praxeology quickly hones in on the idea of future uncertainty. Uncertainty means that the future is ‘somewhat predictable,’ i.e., it is neither completely determined nor completely random. Future uncertainty is conclusively deduced from the axiom of intentional human action. If future outcomes were completely known with certainty, no ends would be chosen, as we would simply wait for those outcomes to occur. Conversely, if we thought the future were completely random, no means would be selected, since we would not think that means could help achieve ends.
The emphasis on time considerations and on future uncertainty is one of the main reasons Austrian economists typically reject basic neoclassical economic market models that invoke idealizations like ‘perfect knowledge’ or ‘perfect competition.’ Such models imply instantaneous adjustments to prices, which cannot conceivably occur in real human action. Austrian economists believe these models are flawed and must be rejected.”
– Michael Accad, M.D., “An introduction to praxeology and Austrian school economics,” alertandoriented.com (blog), April 13, 2016. (emphasis added)
“One may remark here that uncertainty may simply be a mind phenomenon and not a feature of reality, that reality is in fact completely determined, or that science may eventually allow us to understand the determination of all events. [Ludwig von] Mises had no problem with that possibility and, in fact, may have been a determinist himself. By insisting on methodological dualism, however, he was simply pointing out that at present time, empirical science does not shed light on the topic one way or another and, for human scientists studying human behavior, the intentionality of human action seems to be a valid and constructive premise on which to build a social science.” – Id., Michael Accad, M.D. (emphasis added)
In The Room
“The story I remember best happened at the initial Mont Pelerin meeting when he got up and said, ‘You’re all a bunch of socialists.’ We were discussing the distribution of income, and whether you should have progressive income taxes. Some of the people there were expressing the view that there could be a justification for it. Another occasion which is equally telling: Fritz Machlup was a student of Mises’, one of his most faithful disciples. At one of the Mont Pelerin meetings, Machlup gave a talk in which I think he questioned the idea of a gold standard; he came out in favor of floating exchange rates. Mises was so mad he wouldn’t speak to Machlup for three years. Some people had to come around and bring them together again. It’s hard to understand; you can get some understanding of it by taking into account how people like Mises were persecuted in their lives.”
– Milton Freidman interview, “Best of Both Worlds (Interview with Milton Friedman),” Reason, June 1995.
“At first we all felt he was frightfully exaggerating and even offensive in tone. You see, he hurt all our deepest feelings, but gradually he won us around, although for a long time I had to – I just learned he was usually right in his conclusions, but I was not completely satisfied with his argument.”
– Friedrich Hayek speaking about Ludwig von Mises, UCLA Oral History: Interview with Friedrich Hayek (1983), pp. 12-13 (available online). (emphasis added)
“Economist Murray Rothbard, who studied under Mises, agreed he was uncompromising, but disputes reports of his abrasiveness. In his words, Mises was ‘unbelievably sweet, constantly finding research projects for students to do, unfailingly courteous, and never bitter’ about the discrimination he received at the hands of the economic establishment of his time.”
– from Wikipedia article, “Ludwig von Mises” citing to Murray Rothbard, “The Future of Austrian Economics” on YouTube, 1990 talk at Mises University at Stanford, at Mises Media Youtube channel.
Preceding Substack Post: “Games People Play,” https://charleswphillips.substack.com/p/games-people-play (June 2, 2024).