—–Original Message—–
From: AW
Sent: Mon 10/31/2016 10:07 AM
To: [email protected]
Subject: On Praxeology and Human Action
Hi Professor Block,
We’ve never met, but I admire a lot of the work you’ve done. Your debates, Privatization of Roads and Highways, etc. I just wanted to reach out to you about Mises’ Praxeology. I can’t seem to make sense of “Human Action”, and the idea that we can have certain knowledge about economics in an a-priori fashion. Whenever I hear debates or talks on the subjects it always sounds muddled and confusing, and the logic doesn’t flow neatly or intuitively. In libertarian ethics, for example, we have the Non-Aggression Principle, wherein if we follow a few rules we can deduce the rightful and wrongful actions in society in a way that is easy for anyone to understand. I don’t feel the same way at all about Mises’ Praxeology, wherein no one really seems to understand what Mises’ fundamental rules are, why they’re necessary, or how they’re being used to derive a fundamental understanding of economics.
Even prior to Human’s Acting, don’t we first value? So isn’t it the case that the fundamental axiom isn’t that we Act, but that we Value and then we Act in relation to those values?
What do Austrian Economists mean exactly when they say that we can know things “a-priori”? I think it’s important, of course, to have a good theory before experimentation, so that we don’t have absurd ideas like, “I’m not sure why unemployment didn’t rise after the minimum wage was increased, but since it didn’t that proves that raising the minimum wage doesn’t necessarily increase unemployment.”, but that doesn’t mean that economic theories are immune to falsification and testing, per se, just that certain logical deductions have already been so thoroughly tested that it’s pointless to continue to do so.
For example, one might say that 1+1=2 is a tautology, but it is conceivable that we could live in a universe in which this isn’t so. It could be the case that we take two things together an they make 3, we only know that it doesn’t do that through our own experimental understanding of the universe. Yes this is basic and intuitive and pointless to experiment on today, but that’s only because it’s already been so thoroughly tested in the past that we can safely take it for granted today. It doesn’t seem like there’s any particular distinction to be made with Economics. Demand curves sloping downward is pretty much a tautology at this point, but it isn’t “A-Priori” truth. So I guess my two major criticisms of Praxeology is that it doesn’t seem to quite arrive at the fundamental basis of economics, and it relies on an idea of “a-priorisms” that doesn’t seem to hold water. Am I understanding this right? Are there some sources that would help clarify this subject for me? AW
Dear AW: Yes, of course, we value before we act. However, it is only in action that we DEMONSTRATE our values. Without action, values would be merely subjective. We would have them, to be sure, but they would not be interpersonally available. I go further. Lots of times, ok, ok, sometimes, when offered an apple or a banana, or vanilla or chocolate ice cream, I think I like the former, but, when push comes to shove, actually pick the latter. Which am even I to believe, my lying thoughts, or my actual action? I think the latter. So, I think action is more fundamental. You are quite right about the non-aggression principle of libertarianism. We deduce our political philosophy and its applications from the NAP. But, something similar occurs in Austrian economics. Human action is basic. It cannot even be denied, since a denial is also a human action. As for the synthetic a priori, a statement that is apodictic, undeniable, necessarily true but also gives insight into the real (economic) world, these are indeed valid. I now voluntarily trade you my apple for your banana. It cannot be denied that in the ex ante sense we each value to possession of the other more than our own, and each gain the difference in our evaluation of both items. The economist who has done more in my opinion to explicate this sort of thing than anyone else now working is my friend Hans Hoppe (another friend of mine, David Gordon, should also be mentioned in this regard). Here is a passage from one of Hans’ publications that ought to clarify matters further:
“Now let us turn to some typical economic propositions. Consider the validation process of a proposition such as the following: Whenever two people A and B engage in a voluntary exchange, they must both expect to profit from it. And they must have reverse preference orders for the goods and services exchanged so that A values what he receives from B more highly than what he gives to him, and B must evaluate the same things the other way around.
“Or consider this: Whenever an exchange is not voluntary but coerced, one party profits at the expense of the other.
“Or the law of marginal utility: Whenever the supply of a good increases by one additional unit, provided each unit is regarded as of equal serviceability by a person, the value attached to this unit must decrease. For this additional unit can only be employed as a means for the attainment of a goal that is considered less valuable than the least valued goal satisfied by a unit of such good if the supply were one unit shorter.
“Or take the Ricardian law of association: Of two producers, if A is more productive in the production of two types of goods than is B, they can still engage in a mutually beneficial division of labor. This is because overall physical productivity is higher if A specializes in producing one good which he can produce most efficiently, rather than both A and B producing both goods separately and autonomously.
“Or as another example: Whenever minimum wage laws are enforced that require wages to be higher than existing market wages, involuntary unemployment will result.
“Or as a final example: Whenever the quantity of money is increased while the demand for money to be held as cash reserve on hand is unchanged, the purchasing power of money will fall.
“Considering such propositions, is the validation process involved in establishing them as true or false of the same type as that involved in establishing a proposition in the natural sciences? Are these propositions hypothetical in the same sense as a proposition regarding the effects of mixing two types of natural materials? Do we have to test these economic propositions continuously against observations? And does it require a never-ending trial and error process in order to find out the range of application for these propositions and to gradually improve our knowledge, such as we have seen to be the case in the natural sciences?
“It seems quite evident (except to most economists for the last forty years) that the answer to these questions is a clear and unambiguous. That A and B must expect to profit and have reverse preference orders follows from our understanding of what an exchange is. And the same is the case concerning the consequences of a coerced exchange. It is inconceivable that things could ever be different: It was so a million years ago and it will be so a million years hence. And the range of application for these propositions too is clear once and for all: They are true whenever something is a voluntary exchange or a coerced exchange, and that is all there is to it.”
2:43 pm on November 3, 2016
