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Epistemological Problems of Economics
Ludwig von Mises

1
The Task and Scope of
the Science of Human Action

IV. Utilitarianism and Rationalism and the Theory of Action

2. Myrdal's Theory of Attitudes

Still another example may help to show how vain are all objections raised against the atomism, individualism, utilitarianism, and rationalism of the science of action. No less clearly than in the case just discussed, it will be seen here too that attempts to explain human action in terms of such psychological factors as the striving for power are incapable of refuting the conclusions that economics reaches by cogent logical reasoning. Under the guise of nonpartisan criticism of all the social sciences hitherto developed, an effort is made to justify interventionism, a policy whose inexpedience and futility (as seen from the standpoint of the goals that its advocates hope to attain by it) has been demonstrated by economics.

Myrdal thinks one understands

the pathos of the labor movement poorly if one believes that it fights chiefly for higher real wages. Viewed from the standpoint of social psychology, something else is involved here . . . The demands for higher wages, shorter working time, etc. are, of course, important in and of themselves, but viewed more deeply, they are only an expression of far more general strivings for power and demands for justice on the part of a social class which simply feels oppressed. Even if there were no hope of forcing through higher wages, the battle would go on. Even if the workers had reason to believe that a decline in productivity and wages would result, they would nevertheless demand more power and codetermination in the conduct of business. In the last analysis, more is at stake for them than money; their joy of labor is involved, their self-esteem, or, if one will, their worth as men. Perhaps no great strike can be explained merely as a strike for higher wages.[14]

With this argument Myrdal, of course, believes he has deprived of its importance?from the point of view of the workers' judgment of the goals of trade unionism?the irrefutable proof provided by economics that trade-union policy can never permanently raise wages for all workers. For whoever knows how to examine the matter "more deeply" or from the standpoint of "social psychology" will realize, he thinks, that in the eyes of the workers organized in unions, what is at issue is by no means the height of wages or a question of money; on the contrary, quite different things are at stake, such as their "joy of labor," their "self-esteem," and their "worth as men."

If this were really so, it would be impossible to understand why union leaders and the socialists of the chair who give them support place so much emphasis on again and again upholding in their public declarations the contention, pronounced untenable by economics, that wages can be raised permanently for all workers by trade unionism; and why they so ardently endeavor to proscribe and silence all who are of a different opinion. The reason for this behavior on the part of union leaders and their literary allies is that the unionized workers expect an increase in their real income. No worker would join a union if he were unable to hope for a wage increase from it, but, on the contrary, would have to reckon with a loss of wages. Even the prospect of being compensated through joy of labor, self-esteem, human worth and the like could not make him a friend of the unions. Union leaders know quite well that the expectation of an increase in income is the one and only factor that has brought the unions into existence and still holds them together.

However, even if Myrdal were right in saying that the unions really do not fight chiefly for higher wages, but rather for other things, the statements of economics on the question of the influence that the combination of workers into trade unions has on the height of wages would remain unaffected. Economics is neither for nor against unions. It seeks only to show how the specific policy of trade unions affects the labor market.

Myrdal's position is not improved by his avoidance of plain and open speaking. In explaining that the demand for higher wages is "of course, important in and of itself," he no doubt thinks he has sufficiently protected himself against all criticism. We encounter here the vicious practice on the part of the socialists of the chair of concealing an inadequacy of logic by means of an imprecise and inexact mode of expression. Inasmuch as, in the further course of his argument, Myrdal goes so far as to assert that workers would adhere to trade unions even if they were to discover that this involved a sacrifice of wages, he holds the view that the wage increase?which, in his opinion and in that of all socialists of the chair and union leaders, union policy makes inevitable?is valued by the workers only as an agreeable, but secondary, success of measures directed at the attainment of other goals. However, such a statement makes no contribution whatever toward advancing the discussion of the question whether the employment of union tactics can result in a general and permanent wage increase, which is the only aspect of the matter that has any importance for economic theory and?as all unbiased critics will, of course, admit?in actual practice as well.

Myrdal is familiar with neither the history nor the present state of economics and is therefore fighting against windmills. According to him, economics maintains that only "economic interests" guide human action. By "economic interests" Myrdal understands "the desire for higher income and lower prices." This, he contends, is an error: "Regrettably?or perhaps fortunately?the motives of human action are not exhausted with the mere recording of economic interests."[15]

The economists of an earlier age took the view that there is a definable province of the "economic" and that it is the function of economics to investigate this province. Modern economists adhered to this view for some time, although the line of demarcation between "economic" and "noneconomic" ends must have appeared still less clearly visible in the light of their subjectivism than in that of the objectivism of the classical economists. Even today this view has not yet been given up by everyone. But more and more the realization is spreading that neither the motivations nor the ends of action can be differentiated as economic and noneconomic. What is economic is only the conduct of acting men. Economic action consists in the endeavor to remedy the state of dissatisfaction or, expressed differently, to satisfy wants as far as the scarcity of means allows.

It cannot be maintained that either of these two views saw in the pursuit of economic interests (in the sense in which Myrdal employs this term) the only motive of human action. The older view distinguished between economic and noneconomic goals. According to the modern view, all action is economic. Modern economics makes no distinction among ends because it considers them all equally legitimate, even those that the older view and the popular mode of expression (adopted also by Myrdal) regard as noneconomic. Modern economists do not want valuations to be smuggled into their science. For example, they do not want efforts to obtain "ideal" goods to be considered different in any way from the striving for "material" goods. The fact that frequently a financial gain is eschewed or expenditures are made in order to attain political or other ends, which are usually called noneconomic, is not only not denied, but emphasized.

Myrdal works with a concept of "interest" that he equates with that of "economic interest" and thus with "the desire for higher income and lower prices." The conduct of men, he maintains, is not determined by interests alone, but by "attitudes." The term "attitude" is to be understood as "the emotional disposition of an individual to respond in certain ways toward actual or potential situations." There are "happily," he adds, "enough men with attitudes which do not at all coincide with their interests."[16] It certainly does not require a book of over three hundred pages to point this out. No one has denied, least of all economists, that there are men who aim at other things besides "higher incomes and lower prices." Böhm-Bawerk, for instance, explicitly stated that he used the word "well-being" in the broadest sense, in which it does "not embrace merely the self-centered interests of a subject, but everything that appears to him worthy of pursuit."[17] All the arguments advanced by Myrdal against the utilitarianism of economics collapse completely, because he has not understood the fundamental ideas of the modern doctrines he undertakes to criticize.

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[14] Cf. Myrdal, Das politische Element in der nationale?konomischen Doctrinbildung, translated by Mackenroth (Berlin, 1932), pp. 299 f. [Translator's note: The quotations are from the German edition of Myrdal's book, published under the title cited. In the English-language edition, which, as the title indicates, was translated from the German by Paul Streeten and published by Routledge and Kegan Paul, Ltd. in London in 1953, the quoted passages, perhaps in consequence of von Mises' critique in this text, have been considerably weakened.]

[15] Myrdal, op. cit., p. 299.

[16] Myrdal, op. cit., p. 300.

[17] Böhm-Bawerk, Kapital und Kapitalzins (4th ed.; Jena, 1921), Part II, Vol. I, p. 236, footnote.

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