Ludwig Von Mises - Theory and History

8/14/2019 Ludwig Von Mises - Theory and History

1/401

THEORY AND HISTORY

AN INTERPRETATION OF SOCIAL ANDECONOMIC EVOLUTION

LUDWIG VON MlSES

PREFACE BY MURRAY N . ROT HBA RD

Lubwiavon MisesInstituteAUBURN, ALABAMA


2/401


3/401

ContentsPREFAC E BY MURRAY N. ROTHBARD xi

INTRODUCTION1. M ethodological Du alism 12. Economics and M etaphysics 33. Reg ularity and Pred iction 44. The Concept of the Laws of N atu re 55. The Lim itations of H um an Knowledge 86. Re gularity and Choosing 97. M eans and End s 12

PART ONEVALUE

CHAPTE R 1. JUDGM ENTS OF VALUE1. Ju dg m en ts of Value and Propo sitions of Existence . . . .192. Valuation and Action 203. Th e Subjectivity of Va luation 224. The Logical and Syntactical Structure

of Jud gm en ts of Value 23CHA PTER 2. KNOWLEDGE AND VALUE

1. Th e Bias Do ctrine 262. Comm on Weal versu s Special In ter est s 283. Econom ics and Value 324. Bias and Intolera nce 34

CHAPTER 3. THE QUEST FOR ABSOLUTE VALUES1. Th e Issue 352. Conflicts w ith Society 37


4/401

vi CONTENTS

3. A Re m ark on th e Alleged Medieval Un anim ity 424. The Idea of N atu ral Law 445. Revelation 496. Atheistic Intu ition 507. The Idea of Ju stic e 518. The U tilitarian Doc trine Re stated 559. On A esthe tic Values 61

10. The Historical Significance of the Quest forAb solute Values 63CHAPTER 4. TH E NEGATION OF VALUATION

PART TWODETERMINISM AND MATERIALISM

CHAPTER 5. DETERMINISM AND ITS CRITICS1. De term inism 732. Th e Ne gation of Ideological Fac tors 753. Th e Free-W ill Co ntroversy 764. Fore ordination and Fatalism 785. De terminism and Penology 826. De terminism and Statistics 847. The Autonom y of th e Sciences of H um an Action 92

CHAPTER 6. MATERIALISM1. Two Va rieties of M ateria lism 942. Th e Secre tion Analogy 973. Th e Political Im plications of M aterialism 99

CHAPTER 7. DIALECTICAL MATERIALISM1. Dialectics an d M arxism 1022. The M aterial Prod uctive Forces 106


5/401

CONTENTS vii

3. The Class Strugg le 1124. The Ideological Im pre gn ation of Th ou ght 1225. The Conflict of Ideolog ies 1306. Ideas and Int ere sts 1337. Th e Class In ter es ts of the Bourgeoisie 1428. Th e Cr itics of M arxism 1479. M arxian M aterialism and Socialism 155

CHAPTER 8. PHILOSOPHY OF HISTORY1. The Them e of History 1592. Th e Th em e of th e Philosophy of Histo ry 1623. The Difference between the Point of View of History

and Th at of Philosophy of History 1664. Philosophy of History and th e Idea of God 1715. Activistic De term inism an d Fa talistic De term inism . . .177

PART THREEEPISTEMOLOGICAL PROBLEMS OF HISTORY

CHAPTER 9. THE CONCEPT OF HISTORICAL INDIVIDUALITY1. The U ltim ate Given of History 1832. The Role of th e Individua l in History 1843. The Ch imera of the Group M ind 1884. Pla nn ing History 195

CHAPTER 10. HISTORICISM1. The M eaning of Historicism 1982. Th e Rejection of Economics 2053. The Qu est for Laws of Historica l Cha nge 2104. Histo ricist Relativism 2145. Dissolving History 219


6/401

viii CONTENTS

6. Un doing Histo ry 2277. U ndo ing Economic Histo ry 234

CHAPTER 11 . TH E CHALLENGE OF SCIENTISM1. Positivism and Behav iorism 2402. Th e Collectivist Dogm a 2503. Th e Concept of th e Social Sciences 2564. The N ature of Mass Phenom ena 259

CHA PTER 12. PSYCHOLOGY AND THYMOLOGY1. N atu ralis tic Psychology and Thymology 2642. Thymology and Praxeology 2713. Thym ology as a H istorica l Discipline 2724. Histo ry and Fiction 2745. Rationalization 2806. Intros pectio n 283

CHAPTER 13. MEANING AND USE OF THE STUDY OF HISTORY1. Th e Why of H istory 2852. The Historical Situ ation 2863. Histo ry of th e Rem ote Pas t 2894. Falsifying Histo ry 2915. History and Hum anism 2936. H istory and th e Rise of Aggressive N ationalism 2967. H istory and Ju dg m en ts of Value 298

CHAPTER 14. THE EPISTEMOLOGICAL FEATURES OF HISTORY1. Pred iction in th e N at ur al Sciences 3032. Histo ry and Predictio n 3053. Th e Specific U nd ers tan din g of Histo ry 3094. Thymo logical Exp erience 3125. Real Types and Ideal Types 315


7/401

CONTENTS ix

PART FOURTHE COURSE OF HISTORY

CHAPTER 15. PHILOSOPHICAL INTERPRETATIONS OF HISTORY1. Philosophies of History and Philosophical

Inte rpr eta tion s of History 3232. Environmental ism 3243. The Eg ali tarians ' Interp retat ion of History 3264. The Racial Inte rpr eta tion of History 3325. Th e Secu larism of W estern Civilization 3376. The Rejection of Cap italism by An tisecularism 340

CHAPTER 16. PRESENT-DAY TR ENDS AND THE FUTUR E1. The Reversal of the Tre nd toward Freedom 3472. The Rise of the Ideology of Equality

in W ealth and Income 3513. The Ch ime ra of a Perfect St ate of M ankin d 3624. The Alleged Un broke n Tren d toward Prog ress 3675. The Suppression of "Economic" Freedom 3706. The Un certa inty of the F utu re 378

INDEX 381


8/401


9/401

Preface

LUDWIG von Mises published many books and articlesin his long and productive life, each of them makingimportant contributions to the theory and applicationof economic science. But there stands out among themfour towering masterpieces, immortal monuments tothe work of the greatest economist and scientist ofhuman action of our century. The first, which estab-lished Mises in the front rank of economists, was TheTheory of Money and Credit (1912), which for th e firsttime integ rated the theo ry of money and t he theo ry ofrelative prices, and outlined his later theory of thebusiness cycle. Mises's second great work was Social-ism (1922), which provided the definitive, comprehen-sive critique of socialism and demonstrated that asocialist order could not calculate economically. Thethird was his stupendous treatise Human Action(1949), which set forth an entire structure of econom-ics and analysis of acting ma n. All th re e of the se w orkshave made their mark in economics, and have beenfeatured in the "Austrian" revival that has flowered inthe United States over the past decade.

X I


10/401

xii PREFACE

But Mises's fourth and last great work, Theory andHistory (1957), has made remarkably little impact,and has rarely been cited even by the young econo-mists of the recent Austrian revival. It remains by farthe most neglected masterwork of Mises. And yet itprovides the philosophical backstop and elaboration ofthe philosophy und erlying Human Action. It is Mises'sgreat methodological work, explaining the basis of hisappro ach to economics, and providing scin tillating cri-tiques of such fallacious alternatives as historicism,scientism, and Marxian dialectical materialism.

It might be thought that, despite its great impor-tance, Theory and History has not made i ts markbecause, in this age of blind academic specialization,economics will have nothing to do with anything thatsmacks of the philosophic. Certainly, hyper-specializa-tion plays a part, but in the last few years, interest inmethodology and the basic underpinnings of econom-ics has blossomed, and one would think that at leastthe specialists in this area would find much to discussand absorb in thi s book. And econom ists are surely n otso far gone in jargon and muddled writing that theywould fail to respond to Mises's lucid and sparklingprose.It is likely, instead, that the neglect of Theory andHistory has more to do with the content of its philo-sophical message. For while man y people are aw are of

the long and lone struggle that Ludwig von Miseswaged against statism and on behalf of laissez-faire,few realize that there is far greater resistance in theeconomics profession to Mises's methodology than


11/401

PREFACE xiii

there is to his politics. Adherence to the free market,after all, is now not uncommon among economists(albeit not with M ises's un er rin g consistency), bu t feware ready to adopt the characteristically Austrianmethod which Mises systematized and named "praxe-ology."At the heart of Mises and praxeology is the conceptwith which he appropriately begins Theory and His-tory, methodological dualism, the crucial insight thathuman beings must be considered and analyzed in away and with a methodology that differs radically fromthe analysis of stones, planets, atoms, or molecules.Why? Because, quite simply, it is th e essence of h um anbeings th at they act, th a t they have goals and p urposes,and t ha t they try to achieve those goals. Stones, atoms,planets, have no goals or preferences; hence, they donot choose am ong altern ative courses of action. Atomsand planets move, or are moved; they cannot choose,select paths of action, or change their minds. Men andwom en can and do. Therefore, ato m s and ston es can beinvestigated, their courses charted, and their pathsplotted and predicted, at least in principle, to them inu test qu antita tive detail. People canno t; every day,people learn, adopt new values and goals, and changetheir minds; people cannot be slotted and predicted ascan objects without minds or without the capacity tolearn and choose.And now we can see why the economics professionhas put up such massive resistance to the basicapproach of Ludw ig von Mises. For economics, like th eother social sciences in our century, has embraced the


12/401

xiv PREFACE

myth of what Mises has properly and scornfullyreferred to as "scientism" the idea that the only truly"scientific" approach to the study of man is to ape theapproach of the physical sciences, in particular of itsmost prestigious branch, physics. To become truly"scientific" like physics and the other na tural sciences,then, economics must shun such concepts as purposes,goals and learning; it must abandon man's mind andwrite only of mere events. It must not ta lk of changingone's mind, because it must claim that events are pre-dictable, since, in the words of the original motto ofthe Econometric Society, "Science is prediction." Andto become a "hard" or "real" science, economics musttreat individuals not as unique creatures, each withhis or her own goals and choices, but as homogenousand therefore predictable bits of "data." One reasonorthodox economic theory has always had great diffi-culty with the crucial concept of the entrepreneur isthat each entrepreneur is clearly and obviouslyunique; and neoclassical economics cannot handleindividual uniqueness.

Furthermore, "real" science, it is alleged, must oper-ate on some variant of positivism. Thus, in physics, thescientist is confronted with a number of homogeneous,uniform bits of events, which can be investigated forquantitative regularities and constants, e.g., the rate a twhich objects fall to earth. Then, the scientist frameshypotheses to explain classes of behavior or motions,and then deduces various propositions by which he can"test" the theory by checking with hard, empiricalfact, with these observable bits of events. (Thus, the


13/401

PREFACE xv

theory of relativity can be tested by checking certainempirically observable features of an eclipse.) In theOld Positivist va rian t, he "verifies" th e theory by th isempirical check; in the more nihilistic neopositivismof Karl Popper, he can only "falsify" or "not falsify" atheory in this manner. In any case, his theories mustalways be held tentatively, and can never, at least notofficially, be embraced as definitively true; for he mayalways find that other, alternative theories may beable to explain wider classes of facts, that some newfacts may run counter to, or falsify, the theory. The sci-entist must always wear at least the mask of humilityand open-mindedness.

But it was part of the genius of Ludwig von Misesto see that sound economics has never proceeded inthis way, and to elaborate the good reasons for thiscurious fact. There has been much unnecessary confu-sion over Mises's rather idiosyncratic use of the terma priori, and the enthusiasts for modern scientificmethods have been able to use it to dismiss him as amere unscientific mystic. Mises saw that students ofhuman action are at once in better and in worse, andcertainly in different, shape from students of naturalscience. The physical scientist looks at homogenousbits of events, and gropes his way toward finding andtestin g explanatory or causal theo ries for thos e em pir-ical events. But in human history, we, as humanbeings ourselves, are in a position to know th e cause ofevents already; namely, the primordial fact thathuman beings have goals and purposes and act to


14/401


15/401

PREFACE xvii

has nothing to do with statistics or historical events.Furthermore, it is dependent on the fact that we areall hu m an beings and can therefore use this know ledgeto apply it to oth ers of th e sam e species. Still less is theaxiom of purposive action "falsifiable." It is so evident,once mentioned and considered, that it clearly formsthe very marrow of our experience in the world.

It is just as well that economic theory does not need"testing," for it is impossible to test it in any way bychecking its propositions against homogeneous bits ofuniform events. For there are no such events. The useof statistics and quantitative data may try to mask thisfact, but their seeming precision is only grounded onhistorical events that are not homogeneous in anysense. Each historical event is a complex, uniqueresultant of many causal factors. Since it is unique, itcannot be used for a positivistic test, and since it isunique it cannot be combined with other events in theform of statistical correlations and achieve any mean-ingful result. In analyzing the business cycle, forexample, it is not legitimate to treat each cycle asstrictly homogeneous to every other, and therefore toadd, multiply, ma nip ulate , and co rrelate data . To aver-age two time series, for example, and to proudly pro-claim that Series X has an average four-month leadcompared to Series Y at some phase of th e cycle, m ean snext to nothing. For (a) no particular time series mayeven have the four-month lead-lag, and the lags mayand will range widely; and (b) the average of any pastseries has no relevance to th e d ata of th e future, which


16/401

xviii PREFACE

will have its own ultim ately unpredictable differencesfrom the previous cycles.By demolishing the attempted use of statistics toframe or test theory, Ludwig von Mises has beenaccused of being a pure theorist with no interest in orrespe ct for history. On th e contrary, and th is is th e cen-

tral theme of Theory and History, it is the positivistsand behaviorists who lack respect for the unique his-torical fact by trying to compress these complex his-torical events into the Procrustean mold of move-ments of atoms or planets. In human affairs, the com-plex historical event itself needs to be explained byvarious theories as far as possible; but it can never becompletely or precisely determined by any theory. Theembarrassing fact that the forecasts of would-be eco-nomic sooth-sayers have always faced an abysmalrecord, especially the ones that pretend to quantitativeprecision, is met in mainstream economics by thedetermination to fine-tune the model once more andtry again. It is above all Ludwig von Mises who recog-nizes the freedom, of mind and of choice, at the irre-ducible hea rt of th e hu m an condition, and who realizestherefore that the scientific urge to determinism andcomplete predictability is a search for the impossibleand is there fore profoundly unscientific.

Among some younger Austrians, an unwillingnessto challenge the prevailing methodological orthodoxyha s led to either th e ou trigh t adop tion of positivism orelse the aba ndo nm ent of theory a ltogether on behalf of


17/401

PREFACE xix

a vaguely empirical institutionalism. Immersion inTheory and History would help both groups to realizeth a t t ru e the ory is not divorced from th e world of real,acting man, and that one can abandon scientisticmyths while still using the apparatus of deductive the-ory.Austrian economics will never enjoy a genuine ren-aissance unti l economists read and absorb th e vital les-sons of this unfortunately neglected work. Withoutpraxeology no economics can be truly A us trian or tru lysound.

Murray N. RothbardNew York City, 1985


18/401


19/401

Introduction

1. Methodological DualismM O R T A L M A N does not know how the universe and allthat it contains may appear to a superhuman intelli-gence. Perhaps such an exalted mind is in a position toelaborate a coherent and comprehensive monistic inter-pretation of all phenomena. Manup to now, at leasthas always gone lamentably amiss in his attempts tobridge the gulf that he sees yaw ning betw een m ind andmatter, between the rider and the horse, between themason and the stone. It would be preposterous to viewthis failure as a sufficient demonstration of the sound-ness of a dualistic philosophy. All that we can inferfrom it is that scienceat least for the time beingmust adopt a dualistic approach, less as a philosophicalexplanation than as a methodological device.

Methodological dualism refrains from any proposi-tion concerning essences and metaphysical constructs.It merely takes into account the fact that we do notknow how external eventsphysical, chemical, andphysiologicalaffect human thoughts, ideas, and judg-ments of value. This ignorance splits the realm ofknowledge into two separate fields, the realm of exter-nal events, commonly called nature, and the realm ofhuman thought and action.

Older ages looked upon the issue from a moral or1


20/401

2 INTRODUCTIONreligious point of view. Materialist monism was rejectedas incompatible with the Christian dualism of the Cre-ator and the creation, and of the immortal soul and themortal body. Determinism was rejected as incompatiblewith the fundamental principles of morality as well aswith the penal code. Most of what was advanced inthese controversies to support the respective dogmaswa s unessential and is irrelevant from the m ethodo logi-cal point of view of our day. The determinists did littlemore than repeat their thesis again and again, withouttrying to substantiate it. Th e indeterminists d enied theiradversaries' statements but were unab le to strike at theirweak points. The long debates were not very helpful.

The scope of the controversy changed when the newscience of econom ics entered the scene. Political partieswhich passionately rejected all the practical conclu-sions to which the results of economic thought inevita-bly lead, but were unable to raise any tenable objec-tions against their truth and correctness, shifted theargument to the fields of epistemology and method-ology. They proclaimed the experimental methods ofthe natural sciences to be the only adequate mode ofresearch, and induction from sensory experience theonly legitimate mode of scientific reasoning. They be-haved as if they had never heard about the logicalproblems involved in induction. Everything that wasneither experimentation nor indu ction wa s in their e yesmetaphysics, a term that they employed as synony-mous with nonsense.


21/401

INTRODUCTION 3

2. Econom ics and MetaphysicsThe sciences of human action start from the fact thatman purposefully aims at ends he has chosen. It isprecisely this that all brands of positivism, behaviorism,and panphysicalism want either to deny altogether orto pass over in silence. Now, it would simply be silly

to deny the fact that man manifestly behaves as if hewere really aiming at definite ends. Thus the denial ofpurposefulness in man's attitudes can be sustainedonly if one assumes that the choosing both of ends andof means is merely apparent and that human behavioris ultimately determined by physiological events whichcan be fully described in the terminology of physicsand chemistry.Even the most fanatical champions of the "UnifiedScience" sect shrink from unambiguously espousing thisblunt formulation of their fundamental thesis. Thereare good reasons for this reticence. So long as no defi-nite relation is discovered between ideas and physicalor chemical events of which they would occur as theregular sequel, the positivist thesis remains an epistemo-logical postulate derived not from scientifically estab-lished experience but from a metaphysical world view.The positivists tell us that one day a new scientificdiscipline will emerge which will make good theirpromises and will describe in every detail the physicaland chemical processes that produce in the body ofman definite ideas. Let us not quarrel today about suchissues of the future. But it is evident that such a meta-


22/401

4 INTRODUCTIONphysical proposition can in no way invalidate the re-sults of the discursive reasoning of the sciences of hu-man action. The positivists for emotional reasons donot like the conclusions that acting man must neces-sarily draw from the teachings of economics. As theyare not in a position to find any flaw either in the rea-soning of economics or in the inferences derived fromit , they resort to metaphysical schemes in order to dis-credit the epistemological foundations and the method-ological approach of economics.

There is nothing vicious about metaphysics. Mancannot do without it. The positivists are lamentablywrong in employing the term "metaphysics" as asynonym for nonsense. But no metaphysical propositionmust contradict any of the findings of discursive rea-soning. Metaphysics is not science, and the appeal tometaphysical notions is vain in the context of a logicalexamination of scientific problems. This is true also ofthe metaphysics of positivism, to which its supportershave given the name of antimetaphysics.

3. Regularity and PredictionEpistemologically the distinctive mark of what we

call nature is to be seen in the ascertainable and inevita-ble regularity in the concatenation and seq uence of phe-nomena. On the other hand the distinctive mark ofwhat we call the human sphere or history or, better,the realm of human action is the absence of such auniversally prevailing regularity. Under identical con-ditions stones always react to the same stimuli in the


23/401

INTRODUCTION 5same way; we can learn something about these regularpatterns of reacting, and w e can make use of this knowl-edge in directing our actions toward definite goals. Ourclassification of natural objects and our assigning nam esto these classes is an outcome of this cognition. Astone is a thing that reacts in a definite way. Men re-act to the same stimuli in different ways, and the sameman at different instants of time may react in waysdifferent from his previous or later conduct. It is im-possible to group men into classes whose members al-ways react in the same way.

This is not to say that future human actions aretotally unpredictable. They can, in a certain way, beanticipated to some extent. But the methods appliedin such anticipations, and their scope, are logically andepistemologically entirely different from those appliedin anticipating natural events, and from their scope.

4. The Concept of the Laws of NatureExperience is always experience of past happenings.

It refers to what has been and is no longer, to eventssunk forever in the flux of time.The awareness of regularity in the concatenation andsequence of many phenomena does not affect this ref-erence of experience to something that occurred oncein the past at a definite place and time under the cir-cumstances prevailing there and then. The cognitionof regularity too refers exclusively to past events. Themost experience can teach us is: in all cases observedin the past there was an ascertainable regularity.


24/401

6 INTRODUCTIONFrom time immemorial all men of all races and civili-

zations have taken it for granted that the regularity ob-served in the past will also prevail in the future. Thecategory of causality and the idea that natural eventswill in the future follow the same pattern they showedin the past are fundamental principles of humanthought as well as of human action. Our material civili-zation is the product of conduct guided by them. Anydoubt concerning their validity within the sphere ofpast human action is dispelled by the results of tech-nological designing. History teaches us irrefutably thatour forefathers and we ourselves up to this very mo-ment have acted wisely in adopting them. They are truein the sense that pragmatism attaches to the concept oftruth. They work, or, more precisely, they have workedin the past.Leaving aside the problem of causality with its meta-physical implications, we have to realize that the nat-ural sciences are based entirely on the assumption thata regular conjunction of phenomena prevails in therealm they investigate. They do not search merely forfrequent conjunction but for a regularity that prevailedwithout exception in all cases observed in the past andis expected to prevail in the same way in all cases to beobserved in the future. Where they can discover only afrequent conjunctionas is often the case in biology,for examplethey assume that it is solely the inade-quacy of our methods of inquiry that prevents us tem-porarily from discovering strict regularity.

The two concepts of invariable and of frequentconjunction must not be confused. In referring to in-


25/401

INTRODUCTION 7variable conjunction people mean that no deviationfrom the regular patternthe lawof conjunction hasever been observed and that they are certain, as faras men can be certain about anything, that no suchdeviation is possible and will ever happen. The bestelucidation of the idea of inexorable regularity in theconcatenation of natural phenomena is provided by theconcept of miracles. A miraculous event is somethingthat simply cannot happen in the normal course ofworld affairs as we know it, because its happening couldnot be accounted for by the laws of nature. If none-theless the occurrence of such an event is reported, twodifferent interpretations are provided, both of which,however, fully agree in taking for granted the inexo-rability of the laws of nature. The devout say: "Thiscould not happen in the normal course of affairs. Itcame to pass only because the Lord has the power toact without being restricted by the laws of nature. It isan event incomprehensible and inexplicable for thehum an m ind, it is a mystery, a miracle." Th e rationalistssay: "It could not happen and therefore it did not hap-pen. The reporters were either liars or victims of adelusion." If the concept of laws of nature were tomean not inexorable regularity but merely frequentconnection, the notion of miracles would never havebeen conceived. One would simply say: A is frequentlyfollowed by B, but in some instances this effect failedto appear.

Nobody says that stones thrown into the air at anangle of 45 degrees will frequently fall down to earthor that a human limb lost by an accident frequently


26/401

8 INTRODUCTIONdoes not grow again. All our thinking and all our ac-tions are guided by the knowledge that in such caseswe are not faced with frequent repetition of the sameconnection, but with regular repetition.

5. The Limitations of Hum an KnowledgeHuman knowledge is conditioned by the power of

the human mind and by the extent of the sphere inwhich objects evoke human sensations. Perhaps thereare in the universe things that our senses cannot per-ceive and relations that our minds cannot comprehend.There may also exist outside of the orbit we call theuniverse other systems of things about which we can-not learn anything becau se, for the time being, no tracesof their existence penetrate into our sphere in a waythat can modify our sensations. It may also be thatthe regularity in the conjunction of natural phenomenawe are observing is not eternal but only passing, thatit prevails only in the present stage (which may lastmillions of years ) of the history of the universe and mayone day be replaced by another arrangement.

Such and similar thoughts may induce in a conscien-tious scientist the utmost caution in formulating theresults of his studies. It behooves the philosopher to bestill more restrained in dealing with the apriori cate-gories of causality and the regularity in the sequenceof natural phenomena.

The apriori forms and categories of human thinkingand reasoning cannot be traced back to something ofwhich they would appear as the logically necessary


27/401

INTRODUCTION 9conclusion. It is contradictory to expect that logic couldbe of any service in demonstrating the correctness orvalidity of the fundamental logical principles. All thatcan be said about them is that to deny their correctnessor validity appears to the human mind nonsensical andthat thinking, guided by them, has led to modes of suc-cessful acting.

Hume's skepticism was the reaction to a postulateof absolute certainty that is forever unattainable toman. Those divines who saw that nothing but revela-tion could provide man with perfect certainty wereright. Human scientific inquiry cannot proceed beyondthe limits drawn by the insufficiency of man's sensesand the narrowness of his mind. There is no deductivedemonstration possible of the principle of causality andof the ampliative inference of imperfect induction;there is only recourse to the no less indemonstrablestatement that there is a strict regularity in the conjunc-tion of all natural phenomena. If we were not to referto this uniformity, all the statements of the naturalsciences would appear to be hasty generalizations.

6. Regularity and ChoosingThe main fact about human action is that in regard

to it there is no such regularity in the conjunction ofphenomena. It is not a shortcoming of the sciences ofhuman action that they have not succeeded in discover-ing determinate stimulus-response patterns. What doesnot exist cannot be discovered.If there were no regularity in nature, it would be


28/401

10 INTRODUCTIONimpossible to assert anything with regard to the be-havior of classes of objects. One would have to studythe individual cases and to combine what one haslearned about them into a historical account.

Let us, for the sake of argument, assume that allthose physical quantities that we call constants arein fact continually changing and that the inadequacyof our methods of inquiry alone prevents us from be-coming aware of these slow changes. We do not takeaccount of them because they have no perceptible in-fluence upo n our conditions and do not noticeably affectthe outcome of our actions. Therefore one could saythat these quantities established by the experimentalnatural sciences may fairly be looked upon as constantssince they remain unchanged during a period of timethat by far exceeds the ages for which we may planto provide.

But it is not permissible to argue in an analogous w aywith regard to the quantities we observe in the field ofhum an action. These q uantities are man ifestly variable.Changes occurring in them plainly affect the result ofour actions. Every quantity that we can observe is ahistorical event, a fact which cannot be fully describedwithout specifying the time and geographical point.

The econometrician is unable to disprove this fact,which cuts the ground from under his reasoning. Hecannot help admitting that there are no "behavior con-stants." Nonetheless he wants to introduce some num-bers, arbitrarily chosen on the basis of a historical fact,as "unknown behavior constants." The sole excuse headvances is that his hypotheses are "saying only that


29/401

I N T R O D U C T I O N 1 1these unknown numbers remain reasonably constantthrough a period of years."* Now whether such aperiod of supposed constancy of a definite number isstill lasting or whether a change in the number has al-ready occurred can only be established later on. Inretrospect it may be possible, although in rare casesonly, to declare that over a (probably rather short)period an approximately stable ratio which the eco no-metrician chooses to call a "reasonably" constant ratioprevailed between the numerical values of two fac-tors. But this is something fundam entally different fromthe constants of ph ysics. It is the assertion of a historicalfact, not of a constant that can be resorted to in at-tempts to predict future events.

Leaving aside for the present any reference to theproblem of the human will or free will, we may say:Nonhuman entities react according to regular patterns;man chooses. Man chooses first ultimate ends and thenthe means to attain them. These acts of choosing aredetermined by thoughts and ideas about which, at leastfor the time being, the natural sciences do not knowhow to give us any information.

In the mathematical treatment of physics the dis-tinction between constants and variables makes sense;it is essential in every instance of technological compu-tation. In economics there are no constant relations be-tween various magnitudes. Consequently all ascertain-able data are variables, or what amounts to the same

1. See die Cowles Commission for Research in Economics, Reportfor Period, January 1, 1948-June 30, 1949 (University of Chicago),p. 7.


30/401

12 INTRODUCTIONthing, historical data. The mathematical economistsreiterate that the plight of mathematical economicsconsists in the fact that there are a great number ofvariables. The truth is that there are only variablesand no constants. It is pointless to talk of variableswhere there are no invariables.

7. Means and EndsTo choose is to pick one out of two or more possible

modes of conduct and to set aside the alternatives.Whenever a human being is in a situation in whichvarious modes of behavior, precluding one another, areopen to him, he chooses. Thus life implies an endlesssequence of acts of choosing. Action is conduct directedby choices.The mental acts that determine the content of achoice refer either to ultimate ends or to the means toattain ultimate ends. The former are called judgmentsof value. The latter are technical decisions derived fromfactual propositions.

In the strict sense of the term, acting man aims onlyat one ultimate end, at the attainment of a state ofaffairs that suits him better than the alternatives.Philosophers and economists describe this undeniablefact by declaring that man prefers what makes himhappier to what makes him less happy, that he aims athappiness.1 Happinessin the purely formal sense in

1. There is no need to refute anew the arguments advanced formore than two thousand years against the principles of eudaemonism,hedonism, and utilitarianism. For an exposition of the formal and sub-


31/401

INTRODUCTION 13which ethical theory applies the termis the onlyultimate end, and all other things and states of affairssought are merely means to the realization of thesupreme ultimate end. It is customary, however, toemploy a less precise mode of expression, frequentlyassigning the name of ultimate ends to all those meansthat are fit to produce satisfaction directly and imme-diately.

The characteristic mark of ultimate ends is that theydepend entirely on each individual's personal and sub-jective judgment, which cannot be examined, measured,still less corrected by any other person. Each individualis the only and final arbiter in matters concerning hisown satisfaction and happiness.

As this fundamental cognition is often considered tobe incompatible with the Christian doctrine, it may beproper to illustrate its truth by examples drawn fromthe early history of the Christian creed. The martyrsrejected what others considered supreme delights, inorder to win salvation and eternal bliss. They did notheed their well-meaning fellows who exhorted themto save their lives by bowing to the statue of the divineemperor, but chose to die for their cause rather than topreserve their lives by forfeiting everlasting happinessin heaven. What arguments could a man bring for-jectivistic character of the concepts "pleasure" and "pain" as em-ployed in the context of these doctrines, see Mises, Human Action(New Haven, Yale University Press, 1949, pp. 14-15), and LudwigFeuerbach, Euddmonismus, in Sammtliche Werke, ed. Bolin and Jodl(Stuttgart, 1907), 10, 230-93. Of course, those who recognize no"happiness" but that given by the orgasm, alcohol, and so forth con-tinue to repeat the old errors and distortions.


32/401

14 INTRODUCTIONward who wanted to dissuade his fellow from martyr-dom? He could try to undermine the spiritual founda-tions of his faith in the message of the Gospels and theirinterpretation by the Church. This would have been anattempt to shake the Christian's confidence in the ef-ficacy of his religion as a means to attain salvation andbliss. If this failed, further argument could avail noth-ing, for what remained was the decision between twoultimate ends, the choice between eternal bliss andeternal damnation. Then martyrdom appeared themeans to attain an end which in the martyr's opinionwarranted supreme and everlasting hap piness.

As soon as peo ple venture to question and to examinean end, they no longer look upon it as an end butdeal with it as a means to attain a still higher end. Theultimate end is beyond any rational examination. Allother ends are but provisional. They turn into meansas soon as they are weighed against other ends ormeans.

Means are judged and appreciated according totheir ability to produce definite effects. While judg-ments of value are personal, subjective, and final, judg-ments about means are essentially inferences drawnfrom factual propositions concerning the power of themeans in question to produce definite effects. Aboutthe power of a means to produce a definite effect therecan be dissension and dispute between men. For theevaluation of ultimate ends there is no interpersonalstandard available.

Choosing means is a technical problem, as it were,


33/401

INTRODUCTION 15the term "technique" being taken in its broadest sense.Choosing ultimate ends is a personal, subjective, indi-vidual affair. Choosing means is a matter of reason,choosing ultimate end s a matter of the soul and the wilL


34/401


35/401

PART ONE. VALUE


36/401


37/401

Chapter 1. Judgments of Value

1. Judgments of Value and Propositions of ExistenceP R O P O S I T I O N S asserting existence (affirmative existen-tial propositions) or nonexistence (negative existentialpropositions) are descriptive. They assert somethingabout the state of the whole universe or of parts of theuniverse. With regard to them questions of truth andfalsity are significant. They must not be confoundedwith judgments of value.

Judgments of value are voluntaristic. They expressfeelings, tastes, or preferences of the individual whoutters them. With regard to them there cannot be anyquestion of truth and falsity. They are ultimate and notsubject to any proof or evidence.

Judgments of value are mental acts of the individualconcerned. As such they must be sharply distinguishedfrom the sentences by means of which an individualtries to inform other people about the content of hisjudgments of value. A m an may have some reason to lieabout his valuations. We may describe this state ofaffairs in the following way: Every judgment of valueis in itself also a fact of the actual state of the universeand as such may be the topic of existential propositions.The sentence "I prefer Beethoven to Lehar" refers to ajudgment of value. If looked upon as an existentialproposition, it is true if I really prefer Beethoven and

19


38/401

20 VALUEact accordingly and false if I in fact prefer Lehar andfor some reasons lie about my real feelings, taste, orpreferences. In an analogous way the existential propo-sition "Paul prefers Beethoven to Lehar" may be trueor false. In declaring that with regard to a judgment ofvalue there cannot be any question of truth or falsity,we refer to the judgment as such and not to the sen-tences communicating the content of such a judgmentof value to other people.2. Valuation and Action

A judgment of value is purely academic if it does notimpel the man who utters it to any action. There arejudgments which must remain academic because it isbeyond the power of the individual to embark uponany action directed by them. A man may prefer a starrysky to the starless sky, but he cannot attempt to substi-tute the former state which he likes better for the latterhe likes less.

The significance of value judgments consists pre-cisely in the fact that they are the springs of humanaction. Guided by his valuations, man is intent uponsubstituting conditions that please him better for con-ditions which he deems less satisfactory. He employsmeans in order to attain ends sought.

Hence the history of human affairs has to deal withthe judgments of value that impelled men to act anddirected their conduct. What happened in history can-not be discovered and narrated without referring tothe various valuations of the aeting individuals. It is


39/401

JUDGMENTS OF VALUE 2 1not the task of the historian qua historian to pass judg-ments of value on the individuals whose conduct is thetheme of his inquiries. As a branch of knowledge his-tory utters existential propositions only. But these exis-tential propositions often refer to the presence or ab-sence of definite judgments of value in the minds of theacting individuals. It is one of the tasks of the specificunderstanding of the historical sciences to establishwhat content the value judgments of the acting indi-viduals had.

It is a task of history, for example, to trace back theorigin of India's caste system to the values whichprompted the conduct of the generations who devel-oped, perfected, and preserved it. It is its further taskto discover what the consequences of this system wereand ho w th ese effects influenced th e value judgm ents oflater generations. But it is not the business of the his-torian to pass judgm ents of value on th e system as such,to praise or to condemn it. He has to deal with its rele-vance for the course of affairs, he has to compare itwith the designs and intentions of its authors and sup-porters and to depict its effects and consequences. Hehas to ask whether or not the means employed were fitto attain the ends the acting individuals sought.

It is a fact that hardly any historian has fully avoidedpassing judgments of value. But such judgments arealways merely incidental to th e g enuine tasks of history.In uttering them the author speaks as an individualjudging from the point of view of his personal valua-tions, not as a historian.


40/401

22 VALUE

3. The Subjectivity of ValuationAll judgments of value are personal and subjective.

There are no judgments of value other than those as-serting I prefer, I like better , I wish.

It cannot be denied by anybody that various individ-uals disagree widely with regard to their feelings,tastes, and preferences and that even the same indi-viduals at various instants of their lives value the samethings in a different way. In view of this fact it is use-less to talk about absolute and eternal values.

This does not mean that every individual draws hisvaluations from his own mind. The immense majorityof people take their valuations from the social environ-ment into which they were born, in which they grewup, that moulded their personality and educated them.F ew m en have the pow er to deviate from the traditionalset of values and to establish their own scale of whatappears to be better and what appears to be worse.

What the theorem of the subjectivity of valuationmeans is that there is no standard available whichwould enable us to reject any ultimate judgment ofvalue as wrong, false, or erroneous in the way we canreject an existential proposition as manifestly false. Itis vain to argue about ultimate judgments of value aswe argue about the truth or falsity of an existentialproposition. As soon as we start to refute by argumentsan ultimate judgment of value, we look upon it as ameans to attain definite ends. But then we merely shiftthe discussion to another plane. We no longer view the


41/401

JUDGMENTS OF VALUE 2 3principle concerned as an ultimate value but as a meansto attain an ultimate value, and we are again faced withthe same problem. We may, for instance, try to show aBuddhist that to act in conformity with the teachingsof his creed results in effects which we consider disas-trous. But we are silenced if he replies that these effectsare in his opinion lesser evils or no evils at all comparedto what would result from nonobservance of his rulesof conduct. His ideas about the supreme good, happi-ness, and eternal bliss are different from ours. He doesnot care for those values his critics are concerned with,and seeks for satisfaction in other things than they do.

4. The L ogical and Syn tactical Structure ofJudgments of ValueA judgment of value looks upon things from the

point of view of the man who utters it. It does not as-sert anything about things as they are. It manifests aman's affective response to definite conditions of theuniverse as compared with other definite conditions.

Value is not intrinsic. It is not in things and condi-tions but in the valuing subject. It is impossible toascribe value to one thing or state of affairs only. Val-uation invariably compares one thing or condition withanother thing or condition. It grades various states ofthe external world. It contrasts one thing or state,whether real or imagined, with another thing or state,whether real or imagined, and arranges both in a scaleof what the author of the judgment likes better andwhat less.


42/401

24 VALUEIt may happen that the judging individual considers

both things or conditions envisaged as equal. He is notconcerned whether there is A or B. Then his judgmentof value expresses indifference. No action can resultfrom such a neutral disposition.

Sometimes the utterance of a judgment of value iselliptical and makes sense only if appropriately com-pleted by the hearer. "I don't like measles" means "Iprefer the absence of measles to its presence." Suchincompleteness is the mark of all references to freedom.Freedom invariably means freedom from (absence of)something referred to expressly or implicitly. The gram-matical form of such judgments may be qualified asnegative. But it is vain to deduce from this idiomaticattire of a class of judgments of value any statementsabout their content and to blame them for an allegednegativism. Every judgment of value allows of a formu-lation in which the more highly valued thing or stateis logically expressed in both a positive and a negativeway, although sometimes a language may not have de-veloped the appropriate term. Freedom of the press im-plies the rejection or negation of censorship. But, statedexplicitly, it means a state of affairs in which the authoralone determines the content of his publication as dis-tinct from a state in which the police has a right tointerfere in the matter.

Action necessarily involves the renunciation of some-thing to which a lower value is assigned in order toattain or to preserve something to which a higher valueis assigned. Thus, for instance, a definite amount of lei-sure is renounced in order to reap the product of a defi-


43/401

JUDGMENTS OF VALUE 2 5nite amount of labor. The renunciation of leisure is themeans to attain a more highly valued thing or state.There are m en whose nerves are so sensitive that theycannot endure an unvarnished account of many factsabout the physiological nature of the human body andthe praxeological character of human action. Such peo-ple take offense at the statement that man must choosebetween the most sublime things, the loftiest humanideals, on the one hand, and the wants of his body onthe other. They feel that such statements detract fromthe nobility of the higher things. They refuse to noticethe fact that there arise in the Me of man situations inwhich he is forced to choose between fidelity to loftyideals and such animal urges as feeding.

Whenever man is faced with the necessity of choos-ing between two things or states, his decision is ajudgment of value no matter whether or not it is ut-tered in the grammatical form commonly employed inexpressing such judgments.


44/401

Chapter 2. Knowledge and Value

1. The Bias DoctrineT H E A C C U S A T I O N of bias has been leveled againsteconomists long before Marx integrated it into his doc-trines. Today it is fairly generally endorsed by writersand politicians w ho , although they are in many respectsinfluenced by Marxian ideas, cannot simply be consid-ered Marxians. We must attach to their reproach ameaning that differs from that which it has in the con-text of dialectical materialism. We must therefore dis-tinguish two varieties of the bias doctrine: the Marxianand the non-Marxian. The former will be dealt with inlater parts of this essay in a critical analysis of Marxianmaterialism. The latter alone is treated in this chapter.

Upholders of both varieties of the bias doctrine rec-ognize that their position would be extremely weak ifthey were merely to blame economics for an allegedbias without charging all other branches of science w iththe same fault. Hence they generalize the bias doctrinebut this generalized doctrine we need not examinehere. We may concentrate upon its core, the assertionthat economics is necessarily not wertfrei but is taintedby prepossessions and prejudices rooted in value judg-ments. For all arguments advanced to support the doc-trine of general bias are also resorted to in the endeav-ors to prove the special bias doctrine that refers to

26


45/401

KNOWLEDGE AND VALUE 2 7economics, while some of the arguments brought for-ward in favor of the sp ecial bias doctrine are m anifestlyinapplicable to the general doctrine.

Some contemporary defenders of the bias doctrinehave tried to link it with Freudian ideas. Th ey contendthat the bias they see in the economists is not consciousbias. The writers in question are not aware of theirprejudgments and do not intentionally seek results thatwill justify their foregone conclusions. From the deeprecesses of the subconscious, suppressed wishes, un-known to the thinkers themselves, exert a disturbing in-fluence on their reasoning and direct their cogitationstoward results that agree with their repressed desiresand urges.

How ever, it does not matter which variety of the biasdoctrine one endorses. Each of them is open to the sameobjections.

For the reference to bias, whether intentional or sub-conscious, is out of place if the accuser is not in a posi-tion to demonstrate clearly in what the deficiency ofthe doctrine concerned consists. All that counts iswhether a doctrine is sound or unsound. This is to beestablished by discursive reasoning. It does not in theleast detract from the soundness and correctness of atheory if the psychological forces that prompted itsauthor are disclosed. The motives that guided thethinker are immaterial to appreciating his achieve-ment. Biographers are busy today explaining the workof the genius as a product of his complexes and libidi-nous impulses and a sublimation of his sexual desires.Their studies may be valuable contributions to psychol-


46/401

28 VALUEogy, or rather to thymology (see below p. 265), butthe y do not affect in any wa y the evaluation of the biog-raphee's exploits. The most sophisticated psychoana-lytical exam ination of P ascal's life tells us noth ing aboutthe scientific soundness or unsoundness of his mathe-m atical and philosophical doctrines.

If the failures and errors of a doctrine are unmaskedb y discursive reasoning, historians an d biographers m aytry to explain them by tracing them back to their au-thor's bias. But if no tenable objections can be raisedagainst a theory, it is immaterial what kind of motivesinspired its author. Granted that he was biased. Butthen we must realize that his alleged bias producedtheorems which successfully withstood all objections.

Reference to a thinker's bias is no substitute for arefutation of his doctrines by tenable arguments. Thosewho charge the economists with bias merely show thatthey are at a loss to refute their teachings by criticalanalysis.

2. Common Weal versus Special InterestsEconomic policies are directed toward the attain-

ment of definite ends. In dealing with them economicsdoes not question the value attached to these ends byacting men. It merely investigates two points: First,whether or not the policies concerned are fit to attainthe ends w hich those recomm ending and applying themwant to attain. Secondly, whether these policies do notperhaps produce effects which, from the point of view


47/401

KNOWLEDGE AND VALUE 2 9of those recommending and applying them, are unde-sirable.It is true that the terms in which many economists,especially those of the older generations, expressed theresult of their inquiries could easily be misinterpreted.In dealing with a definite policy they adopted a mannerof speech which would have been adequate from thepoint of view of those who considered resorting to it inorder to attain definite ends. Precisely because theeconomists were not biased and did not venture toquestion the acting men's choice of ends, they pre-sented the result of their deliberation in a mode of ex-pression which took the valuations of the actors forgranted. People aim at definite ends when resorting toa tariff or decreeing minimum wage rates. When theeconomists thought such policies would attain the endssought by their supporters, they called them goodjustas a physician calls a certain therapy good because hetakes the endcuring his patientfor granted.

One of the most famous of the theorems developedby the Classical economists, Ricardo's theory of com-parative costs, is safe against all criticism, if we mayjudge by the fact that hundreds of passionate adver-saries over a period of a hundred and forty years havefailed to advance any tenable argument against it. It ismuch more than merely a theory dealing with the ef-fects of free trade and protection. It is a propositionabout the fundamental principles of human coopera-tion under the division of labor and specialization andthe integration of vocational groups, about the origin


48/401

30 VALUEand further intensification of social bond s be tw een men,and should as such be called the law of association. Itis indispensable for understanding the origin of civili-zation and the course of history. Contrary to popularconceptions, it does not say that free trade is good andprotection bad. It merely demonstrates that protectionis not a means to increase the supply of goods pro-duced. Thus it says nothing about protection's suita-bility or unsuitability to attain other ends, for instanceto improve a nation's chance of defending its independ-enc e in war.

Those charging the economists with bias refer totheir alleged eagerness to serve "the interests." In thecontext of their accusation this refers to selfish pursuitof the well-being of special groups to the prejudice ofthe common weal. Now it must be remembered thatthe idea of the common weal in the sense of a harmonyof the interests of all members of society is a modernidea and that it owes its origin precisely to the teach-ings of the Classical economists. Older generations be-lieved that there is an irreconcilable conflict of interestsamong men and among groups of men. The gain of oneis invariably the damage of others; no man profits butby the loss of others. We may call this tenet the Mon-taigne d ogma because in modern times it was firstexpounded by Montaigne. It was the essence of theteachings of Mercantilism and the main target of theClassical economists' critique of Mercantilism, to whichthey opposed their doctrine of the harmony of therightly understood or long-run interests of all membersof a market society. The socialists and interventionists


49/401

KNOWLEDGE AND VALUE 3 1reject the doctrine of the harmony of interests. Thesocialists declare that there is irreconcilable conflictamong the interests of the various social classes of anation; while the interests of the proletarians demandthe substitution of socialism for capitalism, those of theexploiters demand the preservation of capitalism. Thenationalists declare that the interests of the variousnations are irreconcilably in conflict.

It is obvious that the antagonism of such incompati-ble doctrines can be resolved only by logical reasoning.But the opponents of the harmony doctrine are notprepared to submit their views to such examination.As soon as somebody criticizes their arguments andtries to prove the harmony doctrine they cry out bias.The mere fact that only they and not their adversaries,the supporters of the harmony doctrine, raise this *e-proach of bias shows clearly that they are unable toreject their opponents' statements by ratiocination.They engage in the examination of the problems con-cerned with the prepossession that only biased apolo-gists of sinister interests can possibly contest the cor-rectness of their socialist or interventionist dogmas. Intheir eyes the mere fact that a man disagrees with theirideas is the proof of h is bias.

When carried to its ultimate logical consequencesthis attitude implies the doctrine of polylogism. Poly-logism denies the uniformity of the logical structure ofthe human mind. Every social class, every nation, race,or period of history is equipped with a logic that differsfrom the logic of other classes, nations, races, or ages.Hence bourgeois economics differs from proletarian


50/401

32 VALUEeconomics, German physics from the physics of othernations, Aryan mathematics from Semitic mathematics.There is no need to examine here the essentials of thevarious brands of polylogism.1 For polylogism neverwent beyond the simple declaration that a diversity ofthe mind's logical structure exists. It never pointed outin what these differences consist, for instance how thelogic of the proletarians differs from that of the bour-geois. All the cham pions of polylogism did was to rejectdefinite statements by referring to unspecified peculi-arities of their author's logic.3. Economics and Value

The main argument of the Classical harmony doc-trine starts from the distinction between interests in th eshort run and those in the long run, the latter beingreferred to as the rightly understood interests. Let usexamine the bearing of this distinction upon the prob-lem of privileges.

One group of men certainly gains by a privilegegranted to them. A group of producers protected bya tariff, a subsidy, or any other modern protectionistmethod against the competition of more efficient rivalsgains at the expense of th e consumers. But will the restof the nation, taxpayers and buyers of the protectedarticle, tolerate the privilege of a minority? They willonly acquiesce in it if they themselves are benefited byan analogous privilege. Then everybody loses as muchin his capacity as consumer as he wins in his capacity1. See Mises, Hum an Action, pp. 74-89.


51/401

KNOWLEDGE AND VALUE 3 3as producer. Moreover all are harmed by the substitu-tion of less efficient for more efficient methods of pro-duction.

If one deals with economic policies from the pointof view of this distinction between long- and short-runinterests, there is no ground for charging the economistwith bias. He does not condemn featherbedding of therailroadmen because it benefits the railroadmen at theexpense of other groups whom he likes better. He showsthat the railroadmen cannot prevent featherbeddingfrom becoming a general practice and that then, thatis9 in the long run, it hurts them no less than otherpeople.

Of course, the objections the economists advanced tothe plans of the socialists and interventionists carry noweight with those who do not approve of the endswhich the peoples of Western civilization take forgranted. Those who prefer penury and slavery to mate-rial well-being and all that can only develop wherethere is material well-being may deem all these objec-tions irrelevant. But the economists have repeatedlyemphasized that they deal with socialism and interven-tionism from the point of view of the generally ac-cepted values of Western civilization. The socialistsand interventionists not only have notat least notopenlydenied these values but have emphatically de-clared that the realization of their own program willachieve them much better than will capitalism.

It is true that most socialists and many intervention-ists attach value to equalizing the standard of living ofall individuals. But the economists did not question the


52/401

34 VALUEvalue judgment implied. All they did was to point outthe inevitable consequences of equalization. They didnot say: The end you are aiming at is bad; they said:Realization of this end will bring effects which youyourselves deem more undesirable than inequality.

4. Bias and IntoleranceIt is obvious that there are many people who let theirreasoning be influenced by judgm ents of value, and that

bias often corrupts the thinking of men. What is to berejected is the popular doctrine that it is impossible todeal with economic problems without bias and thatmere reference to bias, without unmasking fallacies inthe chain of reasoning, is sufficient to explode a theory.

The emergence of the bias doctrine implies in factcategorical acknowledgment of the impregnability ofthe teachings of economics against which the reproachof bias has been leveled. It was the first stage in the re-turn to intolerance and persecution of dissenters whichis one of the main features of our age. As dissenters areguilty of bias, it is right to "liquidate" them.


53/401

Chapter 3. The Quest for Absolute Values

1. The IssueI N D E A L I N G with judgments of value we refer to facts,that is, to the way in which people really choose ulti-mate ends. While the value judgments of many peopleare identical, while it is permissible to speak of certainalmost universally accepted valuations, it would bemanifestly contrary to fact to deny that there is diver-sity in passing judgm ents of value.

From time immemorial an immense majority of menhave agreed in preferring the effects produced bypeaceful cooperationat least among a limited numberof peopleto the effects of a hypothetical isolation ofeach individual and a hypothetical war of all againstall. To the state of nature they have preferred the stateof civilization, for they sought the closest possible at-tainment of certain endsthe preservation of life andhealthwhich, as they rightly thought, require socialcooperation. But it is a fact that there have been andare also men who have rejected these values and conse-quently preferred the solitary Me of an anchorite to Wewithin society.

It is thus obvious that any scientific treatment of theproblems of va lue judgments must take into full accountthe fact that these judgments are subjective and chang-ing. Science seeks to know what is, and to formulate

35


54/401

36 VALUEexistential propositions describing the universe as it is.W ith regard to judgm ents of value it cannot assert morethan that they are uttered by some people, and inquirewh at the effects of action gu ided by them must be. Anystep beyond these limits is tantamount to substitutinga personal judgment of value for knowledge of reality.Science and our organized body of knowledge teachonly what is, not what ought to be.

This distinction between a field of science dealingexclusively with existential propositions and a field ofjudgments of value has been rejected by the doctrinesthat maintain there are eternal absolute values whichit is just as much the task of scientific or philosophicalinquiry to discover as to discover the laws of physics.The supporters of these doctrines contend that there isan absolute hierarchy of values. They tried to definethe supreme good. They said it is permissible and nec-essary to distinguish in the same wa y b etw een true andfalse, correct and incorrect judgments of value as be-tween true and false, correct and incorrect existentialpropositions.1 Science is not restricted to th e descriptionof what is. There is, in their opinion, another fully le-gitimate branch of science, the normative science ofethics, whose task it is to show the true absolute valuesand to set up norms for the correct conduct of men.

The plight of our age, according to the supporters ofthis philosophy, is that people no longer acknowledgethese eternal values and do not let their actions beguided by them. Conditions were much better in the

1. Franz Brentano, Vom Ursprung sittlicher ErkenntrUs, 2d ed.Leipzig, 1921.


55/401

THE QUEST FOR ABSOLUTE VALUES 3 7past, when the peoples of Western civilization wereunanimous in endorsing the values of Christian ethics.In what follows, we will deal with the issues raisedby this philosophy.

2 . Conflicts within SocietyHaving discussed the fact that men disagree with

regard to their judgments of value and their choice ofultimate ends, we must stress that many conflictswhich are commonly considered valuational are ac-tually caused by disagreement concerning the choiceof the best means to attain ends about which the con-flicting parties agree. The problem of the suitability orunsuitability of definite means is to be solved by exis-tential propositions, not by judgments of value. Itstreatment is the main topic of applied science.

It is thus necessary to be aware in dealing with con-troversies concerning human conduct whether the dis-agreement refers to the choice of ends or to that ofmeans. This is often a difficult task. For the same thingsare ends to some pe ople, m eans to others.

With the exception of the small, almost negligiblenumber of consistent anchorites, all people agree inconsidering some kind of social cooperation betweenmen the foremost means to attain any ends they mayaim at. This undeniable fact provides a common groundon which political discussions between men becomepossible. The spiritual and intellectual u nity of all speci-mens of homo sapiens manifests itself in the fact thatthe immense majority of men consider the same thing


56/401

38 VALUEsocial cooperationthe best means of satisfying thebiological urge, present in every living being, to pre-serve the life and health of the individual and to propa-gate the species.

It is permissible to call this almost universal accept-ance of social cooperation a natural phenomenon. Inresorting to this mode of expression and asserting thatconscious association is in conformity with humannature, one implies that man is characterized as manby reason, is thus enabled to becom e aware of the greatprinciple of cosmic becoming and evolution, viz., dif-ferentiation and integration, and to make intentionaluse of this principle to improve his condition. But onemust not consider cooperation among the individualsof a biological species a universal natural phenomenon.The means of sustenance are scarce for every species ofliving beings. Hence biological competition prevailsamong the members of all species, an irreconcilableconflict of vital "interests/' Only a part of those whocome into existence can survive. Some perish becauseothers of their own species have snatched away fromthem the means of sustenance. An implacable strugglefor existence goes on among the members of each spe-cies precisely because they are of the same species andcompete with other members of it for the same scarceopportunities of survival and reproduction. Man aloneby dint of his reason substituted social cooperation forbiological competition. What made social cooperationpossible is, of course, a natural phenomenon, the higherproductivity of labor accomplished under the principleof the division of labor and specialization of tasks. But


57/401

THE QUEST TOR ABSOLUTE VALUES 3 9it was necessary to discover this principle, to compre-hend its bearing upon human affairs, and to employ itconsciously as a means in the struggle for existence.

The fundamental facts about social cooperation havebeen misinterpreted by the school of social Darwinismas well as by many of its critics. The former maintainedthat war among men is an inevitable phenomenon andthat all attempts to bring about lasting peace amongnations are contrary to nature. The latter retorted thatthe struggle for existence is not among members of thesame animal species but among the members of variousspecies. As a rule tigers do not attack other tigers but,taking the line of least resistance, weaker animals.Hence, they concluded, war among men , w ho are speci-mens of the same species, is unnatural.1

Both schools misunderstood the Darwinian conceptof the struggle for survival. It does not refer merely tocombat and blows. It means metaphorically the tena-cious impulse of beings to keep alive in spite of allfactors detrimental to them. As the means of sustenanceare scarce, biological competition prevails among all in-dividualswhether of the same or different specieswhich feed on the same stuff. It is immaterial whetheror not tigers fight one another. What makes every speci-men of an animal species a deadly foe of every otherspecimen is the mere fact of their Ltfe-and-death rivalryin their endeavors to snatch a sufficient amount of food.This inexorable rivalry is present also among animalsgregariously roaming in droves and flocks, among ants

1. On this controversy see Paul Barth, Die Philosophie der Ge-schichte ah Soziologie (4th ed. Leipzig, 1922), pp. 289-92.


58/401

40 VALUEof the same hill and bees of the same swarm, amongthe brood hatched by common parents and among theseeds ripened by the same plant. Only man has diepower to escape to some extent from the rule of thislaw by intentional cooperation. So long as there is socialcooperation and population has not increased beyondthe optimum size, biological competition is suspended.It is therefore inappropriate to refer to animals andplants in dealing with the social problems of man.Yet man's almost universal acknowledgment of theprinciple of social cooperation did not result in agree-ment regarding all interhuman relations. While almostall men agree in looking upon social cooperation as theforemost means for realizing all human ends, whateverthey may be, they disagree as to the extent to whichpeaceful social cooperation is a suitable means for at-taining their ends and how far it should be resorted to.

Those whom we may call the harmonists base theirargument on Ricardo's law of association and onMalthus' principle of population. They do not, as someof their critics believe, assume that all men are bio-logically equal. They take fully into account the factthat there are innate biological differences among var-ious groups of m en as well as among individuals b elong -ing to the same group. Ricardo's law has shown thatcooperation under the principle of the division of laboris favorable to all participants. It is an advantage forevery man to cooperate with other men, even if theseothers are in every respectmental and bodily capac-ities and skills, diligence and moral worthinferior.From Malthus' principle one can deduce that there is,


59/401

THE QUEST FOR ABSOLUTE VALUES 4 1in any given state of the supply of capital goods andknowledge of how to make the best use of naturalresources, an optimum size of population. So long aspopulation has not increased beyond this size, the addi-tion of newcomers improves rather than impairs theconditions of those already cooperating.

In the philosophy of the antiharmonists, the variousschools of nationalism and racism, two different linesof reasoning must be distinguished. One is the doctrineof the irreconcilable antagonism prevailing among var-ious groups, such as nations or races. As the antihar-monists see it, community of interests exists only withinthe group among its members. The interests of eachgroup and of each of its members are implacably op-posed to those of all other groups and of each of theirmembers. So it is "natural" there should be perpetualwar among various groups. This natural state of war ofeach group against every other group may sometimesbe interrupted by periods of armistice, falsely labeledperiods of peace. It may also happen that sometimes inwarfare a group cooperates in alliances with othergroups. Such alliances are temporary makeshifts ofpolitics. They do not in the long run affect the inexo-rable natural conflict of interests. Having, in coopera-tion with some allied groups, defeated several of thehostile groups, the leading group in the coalition turnsagainst its previous allies in order to annihilate them tooand to establish its own world supremacy.

The second dogma of the nationalist and racist phi-losophies is considered by its supporters a logical con-clusion derived from their first dogma. As they see it,


60/401


61/401

THE QUEST FOR ABSOLUTE VALUES 43tian creed was spread by voluntary conversions. Therewere also later voluntary conversions of individuals andof whole peoples. But from the days of Theodosius Ion, the sword began to play a prominent role in the dis-semination of Christianity. Pagans and heretics werecompelled by force of arms to submit to the Christianteachings. For many centuries religious problems weredecided by the outcome of battles and wars. Militarycampaigns determined the religious allegiance of na-tions. Christians of the East were forced to accept thecreed of Mohammed, and pagans inEurope and Amer-ica were forced to accept the Christian faith. Secularpower was instrumental in the struggle between theReformation and theCounter Reformation.

There was religious uniformity in Europe of theMiddle Ages as both paganism and heresies were eradi-cated with fire and sword. All of Western and CentralEurope recognized the Pope as the Vicar of Christ. Butthis did not mean that all people agreed in their judg-ments of value and in the principles directing theirconduct. There were few people in medieval Europewho lived according to the precepts of the Gospels.Much has been said and written about the truly Chris-tian spirit of the code of chivalry and about the reli-gious idealism that guided the conduct of the knights.Yet anything less compatible with Luke 6:27-9 thanthe rules of chivalry can hardly be conceived. The gal-lant knights certainly did not love their enemies, theydid not bless those who cursed them, and they did notoffer the left cheek to him who smote them on the rightcheek. The Catholic Church had the power to prevent


62/401

44 VALUEscholars and writers from challenging the dogmas asdefined by the Pope and the Councils and to force thesecular rulers to yield to some of its political claims.But it could preserve its position only by condoningconduct on the part of the laity which defied most, ifnot all, of the principles of the Gospels. The values thatdetermined the actions of the ruling classes were en-tirely different from those that the Church preached.Neither did the peasants comply with Matthew 6:25-8.And there were courts and judges in defiance of Mat-thew 7:1: "Judge not, that y ou b e not judged."

4. The Idea of Natural LawThe most momentous attempt to find an absolute and

eternal standard of value is presented by the doctrineof natural law.The term "natural law" has been claimed by various

schools of philosophy and jurisprudence. Many doc-trines have appealed to nature in order to provide ajustification for their postulates. Many manifestly spuri-ous theses have b een advanced under the label of natu-ral law. It wa s not difficult to exp lode th e fallacies co m -mon to most of these lines of thought. And it is nowonder that many thinkers become suspicious as soonas natural law is referred to .

Yet it would be a serious blunder to ignore the factthat all the varieties of the doctrine contained a soundidea which could neither be compromised by connec-tion with untenable vagaries nor discredited by anycriticism. Long before the Classical economists discov-


63/401

THE QUEST FOR ABSOLUTE VALUES 4 5ered that a regularity in the sequence of phenomenaprevails in the field of human action, the champions ofnatural law were dimly aware of this inescapable fact.From the bewildering diversity of doctrines presentedunder the rubric of natural law there finally emer ged aset of theorems which no caviling can ever invalidate.There is first the idea that a nature-given order ofthings exists to which man must adjust his actions if hewants to succeed. Second: the only means available toman for the cognizance of this order is thinking andreasoning, and no existing social institution is exemptfrom being examined and appraised by discursive rea-soning. Third: there is no standard available for ap-praising any mode of acting either of individuals or ofgroups of individuals but that of the effects producedby such action. Carried to its ultimate logical conse-quences, the idea of natural law led eventually to ra-tionalism and utilitarianism.

The march of social philosophy toward this ines-capable conclusion w as slowed do wn b y many obstacleswhich could not be removed easily. There were nu-merous pitfalls on the way, and many inhibitions ham-pered the philosophers. To deal with the vicissitudes ofthe evolution of these doctrines is a task of the historyof philosophy. In the context of our investigation it isenou gh to m ention only two of these problems.

There was the antagonism between the teachings ofreason and the dogmas of the Church. Some philoso-phers were prepared to ascribe unconditional suprem-acy to the latter. Truth and certainty, they declared,are to be found only in revelation. Man's reason can


64/401

46 VALUEerr, and man can never be sure that his speculationswere not led astray by Satan. Other thinkers did notaccept this solution of the antagonism. To reject reasonbeforehand was in their opinion preposterous. Reasontoo stems from God, wh o end ow ed m an with it, so therecan be no genuine contradiction between dogma andthe correct teachings of reason. It is the task of philoso-phy to show that ultimately both agree. The centralproblem of Scholastic philosophy was to demonstratethat human reason, unaided by revelation and HolyWrit, taking recourse only to its proper methods ofratiocination, is capable of proving the apodictic truthof the revealed dogmas.1 A genuine conflict of faith andreason does not exist. Natural law and divine law donot disagree.

However, this way of dealing with the matter doesnot remove the antagonism; it merely shifts it to an-other field. The conflict is no longer a conflict betweenfaith and reason but between Thomist philosophy andother modes of philosophizing. We may leave aside thegenuine dogmas such as Creation, Incarnation, theTrinity, as they hav e no d irect bearing on the problemsof interhuman relations. But many issues remain withregard to which most, if not all, Christian churches anddenominations are not prepared to yield to secular rea-soning and an evaluation from the point of view ofsocial utility. Thus the recognition of natural law on thepart of Christian theology was only conditional. Itreferred to a definite type of natural law, not opposed

1. Louis Rougier, La Scholastique et le Thomisme (Paris, 1925),pp. 102-5, 116-17, 460-562.


65/401

THE QUEST FOR ABSOLUTE VALUES 4 7to the teachings of Christ as each of these churches anddenominations interpreted them. It did not acknowl-edge the supremacy of reason. It was incompatible withthe principles of utilitarian philosophy.

A second factor that obstructed the evolution ofnatural law toward a consistent and comprehensivesystem of human action was the erroneous theory ofthe biological equality of all men. In repudiating argu-ments advanced in favor of legal discrimination amongmen and of a status society, many advocates of equalitybefore the law overstepped the mark. To hold that "atbirth human infants, regardless of their heredity, areas equal as Fords" 2 is to deny facts so obvious that itbrought the whole philosophy of natural law into dis-repute. In insisting on biological equality the naturallaw doctrine pushed aside all the sound arguments ad-vanced in favor of the principle of equality before thelaw. It thus opened the way for the spread of theoriesadvocating all sorts of legal discrimination against in-dividuals and groups of individuals. It supplanted theteachings of liberal social philosophy. Stirring up hatredand violence, foreign wars and domestic revolutions, itprepared mankind for the acceptance of aggressive na-tionalism and racism.

The chief accomplishment of the natural law ideawas its rejection of the doctrine (sometimes called legalpositivism) according to which the ultimate source ofstatute law is to be seen in the superior military powerof the legislator who is in a position to beat into sub-

2. Horace M. Kallen, "Behaviorism," Encyclopaedia of the SocialSciences (Macmillan, 1930-35), 3, 498.


66/401

48 VALUEmission all those defying his ordinances. Natural lawtaught that statutory laws can be bad laws, and itcontrasted with the bad laws the good laws to whichit ascribed divine or natural origin. But it was an illu-sion to deny that the best system of laws cannot beput into practice unless supported and enforced bymilitary supremacy. The philosophers shut their eyesto manifest historical facts. They refused to admit thatthe causes they considered just made progress onlybecause their partisans defeated the defenders of thebad causes. The Christian faith owes it success to along series of victorious battles and campaigns, fromvarious battles between rival Roman imperators andcaesars down to the campaigns that opened the Orientto the activities of missionaries. The cause of Americanindependence triumphed because the British forceswere defeated by the insurgents and the French. Itis a sad truth that Mars is for the big battalions, notfor the good causes. To maintain the opposite opinionimplies the belief that the outcome of an armed con-flict is an ordeal by combat in which God always g rantsvictory to the champions of the just cause. But such anassumption would annul all the essentials of the doc-trine of natural law, whose basic idea w as to contrast tothe positive laws, promulgated and enforced by thosein power, a "higher" law grounded in the innermost na-ture of m an.

Yet all these deficiencies and contradictions of thedoctrine of natural law must not prevent us from rec-ognizing its sound nucleus . Hidden in a heap of illusionsand quite arbitrary prepossessions was the idea that


67/401

THE QUEST FOR ABSOLUTE VALUES 4 9every valid law of a country was open to critical exam-ination by reason. About the standard to be appliedin such an examination the older representatives of theschool had only vague notions. They referred to natureand were reluctant to admit that the ultimate standardof good and bad must be found in the effects producedby a law. Utilitarianism finally completed the intellec-tual evolution inaugurated by th e Greek Sophists.

But neither utilitarianism nor any of the varieties ofthe doctrine of natural law could or did find a way toeliminate the conflict of antagonistic judgments ofvalue. It is useless to emphasize that nature is the ulti-mate arbiter of what is right and what is wrong. Naturedoes not clearly reveal its plans and intentions to man.Thus the appeal to natural law does not settle the dis-pute. It merely substitutes dissent concerning the inter-pretation of natural law for dissenting judgments ofvalue. Utilitarianism, on the other hand, does not dealat all with ultimate ends and judgments of value. Itinvariably refers only to means.

5. RevelationRevealed religion derives its authority and authen-ticity from the communication to man of the SupremeBeing's will. It gives the faithful indisputable certainty.

However, people disagree widely about the contentof revealed truth as well as about its correctorthodox interpretation. For all the grandeur, majesty, and sub-limity of religious feeling, irreconcilable conflict existsamong various faiths and creeds. Even if unanimity


68/401

50 VALUEcould be attained in matters of the historical authentic-ity and reliability of revelation, the problem of the ve-racity of various exegetic interpretations would stillremain.

Every faith claims to possess absolute certainty. Butno religious faction knows of any peaceful means thatwill invariably induce dissenters to divest themselvesvoluntarily of their error and to adopt the true creed.

If people

Ludwig Von Mises - Theory and History

Documents

Transcript of Ludwig Von Mises - Theory and History