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Epistemological Problems of Economics
Ludwig von Mises

1
The Task and Scope of
the Science of Human Action

I. The Nature and Development of the Social Sciences

6. The Logical Character of the Universally Valid Science of Human Action

The science of human action that strives for universally valid knowledge is the theoretical system whose hitherto best elaborated branch is economics, In all of its branches this science is a priori, not empirical. Like logic and mathematics, it is not derived from experience; it is prior to experience. It is, as it were, the logic of action and deed.[13]

Human thought serves human life and action. It is not absolute thought, but the forethought directed toward projected acts and the afterthought that reflects upon acts done. Hence, in the last analysis, logic and the universally valid science of human action are one and the same. If we separate them, so as to contrast logic and practice, we must show at what point their paths diverge and where the special province of the science of action is to be found.

One of the tasks with which thought must cope in order to fulfill its function is that of comprehending the conditions under which human action takes place. To treat these in their concrete detail is the work of the natural sciences and, in a certain sense, also of history and the other historical sciences. Our science, on the other hand, disregarding the accidental, considers only the essential. Its goal is the comprehension of the universal, and its procedure is formal and axiomatic. It views action and the conditions under which action takes place not in their concrete form, as we encounter them in everyday life, nor in their actual setting, as we view them in each of the sciences of nature and of history, but as formal constructions that enable us to grasp the patterns of human action in their purity.

Only experience makes it possible for us to know the particular conditions of action in their concrete form. Only experience can teach us that there are lions and microbes and that their existence can present definite problems to acting man; and it would be absurd, without experience, to indulge in speculations about the existence or nonexistence of some legendary beast. The existence of the external world is given through experience; and if we pursue definite plans, only experience can teach us how we must act vis-?-vis the external world in concrete situations.

However, what we know about our action under given conditions is derived not from experience, but from reason. What we know about the fundamental categories of action?action, economizing, preferring, the relationship of means and ends, and everything else that, together with these, constitutes the system of human action?is not derived from experience. We conceive all this from within, just as we conceive logical and mathematical truths, a priori, without reference to any experience. Nor could experience ever lead anyone to the knowledge of these things if he did not comprehend them from within himself.

As an a priori category the principle of action is on a par with the principle of causality. It is present in all knowledge of any conduct that goes beyond an unconscious reaction. "In the beginning was the deed." In our view the concept of man is, above all else, also the concept of the being who acts. Our consciousness is that of an ego which is capable of acting and does act. The fact that our deeds are intentional makes them actions. Our thinking about men and their conduct, and our conduct toward men and toward our surroundings in general, presuppose the category of action.

Nevertheless, we are quite incapable of thinking of this fundamental category and the system deduced from it without also thinking, at the same time, of the universal prerequisites of human action. For example, we are unable to grasp the concept of economic action and of economy without implying in our thought the concept of economic quantity relations and the concept of an economic good. Only experience can teach us whether or not these concepts are applicable to anything in the conditions under which our life must actually be lived. Only experience tells us that not all things in the external world are free goods. However, it is not experience, but reason, which is prior to experience, that tells us what is a free and what is an economic good.

Consequently, it would be possible to construct, by the use of the axiomatic method, a universal praxeology so general that its system would embrace not only all the patterns of action in the world that we actually encounter, but also patterns of action in worlds whose conditions are purely imaginary and do not correspond to any experience. A theory of money would still be meaningful even if throughout history there had never been any indirect exchange. That such a theory would have no practical importance in a world that did not use money would in no way detract from the truth of its statements. Because we study science for the sake of real life?and, it should be remembered, the desire for pure knowledge for its own sake is also a part of life?and not as a form of mental gymnastics, we generally do not mind forgoing the gratification that could be offered by a perfect, comprehensive system of the axioms of human action, a system so universal that it would comprise all thinkable categories of the conditions of action. Instead, we are satisfied with the less universal system that refers to the conditions given in the world of experience.

Nevertheless, this reference to experience in no way changes the aprioristic character of our knowledge. In this connection, experience is of absolutely no concern to our thinking. All that we owe to experience is the demarcation of those problems that we consider with interest from problems that we wish to leave aside because they are uninteresting from the point of view of our desire for knowledge. Hence, experience by no means always refers to the existence or nonexistence of the conditions of action, but often only to the presence of an interest in the treatment of a problem. In experience there is no socialist community; nevertheless, the investigation of the economy of such a community is a problem that in our age arouses the greatest of interest.

A theory of action could conceivably be constructed on the assumption that men lacked the possibility of understanding one another by means of symbols, or on the assumption that men?immortal and eternally young?were indifferent in every respect to the passage of time and therefore did not consider it in their action. The axioms of the theory could conceivably be framed in such universal terms as to embrace these and all other possibilities; and it would be conceivable to draw up a formal praxeological system patterned after the science of logic or the science built upon the axioms of, for example, Hilbertian geometry.[14] We forgo these possibilities because conditions that do not correspond to those we encounter in our action interest us only in so far as thinking through their implications in imaginary constructions enables us to further our knowledge of action under given conditions.

The method actually employed by economists in the treatment of their problems can be seen with particular clarity in the case of the problem of imputation. Conceivably it would be possible to formulate the theory of the appraisement and pricing of the factors of production (goods of higher order, producers' goods) in the broadest generality so that, for one thing, we would work only with an unqualified concept, viz., means of production. We could then elaborate the theory in such a way that the three factors of production that are enumerated in the customary presentation would appear as special cases. But we proceed differently. We do not bother to furnish a universal imputation theory of the means of production as such, but proceed immediately to the treatment of the three categories of means of production: land, labor, and capital. This practice is altogether warranted by the object of our investigation, of which we must never lose sight.

However, the renunciation of axiomatic universality and precision also conceals many dangers, and it has not always been possible to avoid them. It is not only the Marxist theory of classes[15] that has failed to grasp the categorial character of each of these specific groups of factors of production. To be sure, it was noted that the peculiarity of land as a factor of production lies in the difference in the usefulness of individual pieces of land from the point of view of the goals of action; the theory of ground rent never lost sight of the fact that land is appraised differently according to its quality and location. However, the theory of wages did overlook the fact that labor too is of different quality and intensity and that on the market there is never a supply of or a demand for "labor" as such, but only a supply of and a demand for labor of a definite kind. Even after this fact was recognized, an attempt was made to evade its consequences by assuming that what forms the bulk of the supply and is chiefly in demand is unskilled labor and that it is permissible to ignore, as quantitatively negligible, skilled, "higher" labor. The theory of wages would have been spared many errors had it been kept in mind what function the special treatment of labor in the theory of distribution is called upon to fulfill and at what point it becomes necessary to speak no longer simply of labor, but of labor of a definite quality that is offered or sought at a given time in a given place. It was still more difficult for the theory of capital to free itself of the idea of abstract capital, where the categorial difference between land, labor, and capital is no longer in question, but where the appraisement of definite capital goods, supplied or demanded in a definite place at a definite time, is to be considered. Likewise in the theory of distribution and in the theory of imputation, it was not easy to shake off the influence of the universalist view.[16]

Our science deals with the forms and patterns of action under the various categories of its conditions. In pointing this out we are not drafting a plan for a future science. We do not maintain that the science of human action should be made aprioristic, but that it is so already. We do not want to discover a new method, but only to characterize correctly the method that is actually used. The theorems of economics are derived not from the observation of facts, but through deduction from the fundamental category of action, which has been expressed sometimes as the economic principle (i.e., the necessity to economize), sometimes as the value principle or as the cost principle. They are of aprioristic derivation and therefore lay claim to the apodictic certainty that belongs to basic principles so derived.

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[13] Several great economists were at the same time great logicians: Hume, Whately, John Stuart Mill, and Stanley Jevons.

[14] Cf. Slutsky, "Ein Beitrag zur formal-praxeologischen Grundlegung der ?konomik," Annales de la classe des sciences sociales-?conomiques (Kiev: Acad?mie Oukra?enne des Sciences, 1926), Vol. IV.

[15] On this point cf. my Socialism, trans. by J. Kahane (new ed.; New Haven, 1951), pp. 331 f.

[16] On the universalist view cf. below pp. 153 f. For a special application of the reasoning outlined in the text to the theory of capital, cf. below pp. 217 ff.

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