Nearly all bourgeois economic theory - what is taught around the world - is essentially a language game. The greatness of Mises is to have intuited this: his misery is to have believed that it is a legitimate "theory". What is a language game? Take the bourgeois "theory" of economic life. You have individuals who own "goods". These goods are, by definition, available for "exchange" with other "individuals" who "own" other goods. The "exchange" occurs free of coercion among these "individuals" - this is "the market". "Market prices" are the ratios of "exchange" between these "individuals". Prices are set by "demand and supply" because the "utilities" of "individuals" are "given". Nothing is "produced" or created in this economy: it is a zero-sum game in which there is no "profit" except through inter-temporal exchanges leading to final equilibrium prices.
The ego is not
As you can see, all these categories - individuals, ownership, goods, exchange, market, prices, equilibrium, supply and demand - all these categories are "defined" in such a way that this economic theory constitutes a "game": and the rules of the game - its "language" - make it so that every element or rule of the game is defined consistently with every other element and rule. There is no "escape" from this "prison". A language game is a "false prison" when it is applied to a human reality - because it limits the scope pf human action to the artificial axiomatic rules set by the language game.
Such is bourgeois "economics"...and the world is starting to rebel against this false prison. Watch out!
The ego is not
sharply
marked off, its limits are very indefinite and
arbitrarily
displaceable. Only by failing to observe this
fact,
and by unconsciously narrowing those limits, while
at
the same time we enlarge them, arise, in the conflict
of
points of view, the metaphysical difficulties met with
in
this connexion.
As
soon as we have perceived that the supposed unities
"body"
and "ego " are only makeshifts, designed for
provisional
orientation and for definite practical ends (so
that
we may take hold of bodies, protect ourselves against
pain, and so forth), we find ourselves obliged, in
many
14 THE ANALYSIS OF
SENSATIONS"
more
advanced scientific investigations, to abandon them as
insufficient
and inappropriate. The antithesis between ego
and
world, between sensation (appearance) and thing, then
vanishes,
and we have simply to deal with the connexion of
the elements [sensations]…
Kant’s
critical idealism had sought to preserve the separation of Subject and Object:
by treating the Object as an unknowable and impenetrable “reality” – the
“thing-in-itself” – Kant had preserved the “autonomy” of the Subject, that is,
the ability of the Subject to initiate action in the lifeworld (in keeping with
St. Augustine’s dictum that “man was created so that there might be a
beginning”, ut initium esset). At the
same time, however, this very impenetrability of the Object gave the followers
of Kantian philosophy, the neo-Kantians from Hermann Cohen onwards, the
theoretical impulse to exclude the Object from the realm of human action
altogether – to push “physical reality” or “the thing-in-itself” to the realm
of “meta-physics”. In this specific context, Schopenhauer and Mach march
abreast with neo-Kantism. Not until Lukacs and Heidegger challenged this
extrusion of metaphysics from the sphere of human enquiry and action from very
different political and philosophical perspectives did the errors of Machian
and neo-Kantian positivism attract the attention of Western thinkers. But by
then this insipid formalism had spread through Austrian logical positivism and
even the early Wittgenstein to all spheres of thought, including economic
theory, as exemplified by the Neoclassical Revolution from Menger to Mises and
the rest of the Austrian School. In the words of Mach quoted above, once we
treat all human experience as confined to the sphere of “passive” sensations,
rather than “active” decision, “the antithesis between ego and world [between
appearance and reality] …vanishes”. Again, this is pure Schopenhauer. But it is
also pure neo-Kantism – because once the ability of human beings to act in and upon the world is denied
as being beyond the reach of “science” – when in fact such a denial is as
“metaphysical” as anything could ever be! -, then all that is left for science
to do is simply “to classify” the world, to pigeon-hole life into its various
“categories”.
For
science, nothing can ever be created – everything is transformed. Because
Machism obliterates the difference between acting Subject and passive Object in
the uniformity of “sensations” or phenomena, even the difference between dream
and reality evaporates:
The
facts are not to blame for that. In
these cases, to
speak
of "appearance" may have a practical
meaning,
but
cannot have a scientific meaning.
Similarly, the
question
which is often asked, whether the world is real
or
whether we merely dream it, is devoid of all scientific
meaning.
Even the wildest dream is a fact as much as
any
other. If our
dreams were more regular, more connected,
more
stable, they would also have more practical
importance
for us. In our waking hours the relations of
the
elements to one another are immensely amplified in
comparison
with what they were in our dreams. We
recognize
the dream for what it is. When the process
is
reversed, the field of psychic vision is narrowed; the
contrast
is almost entirely lacking. Where there is no
contrast,
the distinction between dream and waking,
between
appearance and reality, is quite otiose and
worthless. (Analysis,
p.11.)
For
Mach as for Schopenhauer and for Neo-Kantians philosophers and Neo-Classical
economists later, there is no scientific difference between reality and dream,
between reality and appearance, between existing reality and human finality,
human action. All that remains are “sensations”, then. And sensations are
“facts” by definition. And because sensations are “passive”, then clearly all
“facts” are passive entities also. Human beings perceive the world “as they
find it”: reality, even social reality, cannot be changed, it can only be
trans-formed through new combinations of “elements” already in existence! This
conclusion which forms the essence of positivism will be the starting point of
Menger’s and Bohm-Bawerk’s Austrian economic theory.
Contrary
to its etymological meaning (from the Latin facere,
to do, to act), for positivist science “facts” are not what human beings create or initiate but what they are observed doing – as if human agents were
robotic mechanisms whose behavior can be ascribed to scientifically-determined
causes.
If
the Ego can be reduced to the sum of human sensations; if human behavior can be
explained by the regularities of
these sensations, then clearly the sphere of subjectivity, of creative human
action, vanishes. And so does the Ego understood not as an individual and not
even as “the Subject”, but even as the ineluctable reality of the primacy of
human action. But the disappearance of the Ego and the Subject does not entail
the disappearance of the “in-dividual” for Machian science and for neoclassical
economics. Individuals continue to count and to be counted by positivist
“science”, but their behavior is not taken to be “political action”; instead,
it is “measured” nomologically, in
pure positivist statistical terms that can yield “predictive regularities” for
the purposes of social policy. For the positivist, reality is not what human
beings make it but it is purely what individuals actually do; reality is what
individuals are observed doing – it
is “data”, that is, “givens”. And for
the positivist, science is the empirical ability to predict what human beings
will do. (Cf. on this, of course, Milton Friedman’s “The Methodology of the
Positive Sciences”.) But why do “individuals” act as they do? Why do they
engage in one kind of behavior rather than another? How did they evolve to
their present state? And how can we interpret “scientifically” what they
supposedly “do”? If, indeed, the nomological value of positivist social science
is to be able to predict social behavior, then certainly economic science has
achieved very little precisely because its predictive power is virtually
fallimentary.
Yet,
as Robbins pointed out, the aim of economic science is not merely
classificatory: it is not purely descriptive or taxonomic; nor is it
explicatory. Economic science – like all formalist positivism – does not tell
us “why” reality is what it is – because the sphere of ultimate explanation
belongs to “meta-physics”. Instead, the aim of economics is to establish a set
of rules that can have predictive power over existing “facts”; the aim of
economics is purely “functional” – it is quintessentially “caeteris paribus”, what happens to one variable when other
variables change assuming that everything else remains the same. Clearly,
therefore, this functional formalism must inevitably involve an unbridgeable
gap – an apory – between empirical
reality as it defines it for its own practical and strategic political
purposes, on the one hand, and, on the other hand, the logico-mathematical forms that positivist science develops to
describe “scientifically” the functional relations that it presumes to find
between “facts” seen as “data”, as
“givens”.
And
it is this unbridgeable irrational gap (Fichte’s projectio per hiatus irrationale), what Boettke and Leeson (‘Was Mises Right?’) call “this dichotomy”
in the passage below, between empirical
content and theoretical form that
is the bane of all bourgeois science, economics in particular. For Mises, who
was nothing if not a thorough theoretician, it was clear that the theoretical
form alone capable of maintaining a rigorous logical relation with empirical
content in economics had to be a tautology – because only a tautology can deal
with economic institutions, which are intrinsically historical, and yet claim
to have the status of a “science”, which can apply only to inert objects:
Mises eschewed the traditional analytic/synthetic dichotomy, successfully
both revealing the illegitimacy of the positivist approach and defending the
empirical relevance of ‘mere tautologies’ in economic science. (p.249)
But
this is precisely where Boettke and Leeson are totally wrong: Mises could not
perform this ambitious operation “successfully” for the simple reason that “mere
tautologies” can only yield a language
game: they can never ever have any “empirical relevance” at all, as both
Kant and Wittgenstein knew only too well. Kant himself was quite aware of Wittgenstein’s
central insight in the Tractatus. In
decrying Fichte’s Wissenschaftslehre (science
of knowledge) as an impossible oxymoron, Kant commented:
For the pure science of knowledge is
nothing more nor less than mere logic,
and the principles of logic cannot lead to any material knowledge. Since logic,
that is to say, pure logic, abstracts
from the content of knowledge the attempt to cull a real object out of logic is
a vain effort and therefore a thing that no-one has ever done,(in G. MacDonald
Ross, Kant and his influence, p.159).
The
problem however is that by classing logico-mathematical statements as synthetic
a priori Kant equated them
epistemologically with physical equations describing causal chains of events –
which do formulate “material knowledge”
– that is, they encapsulate it and facilitate it – although they too do not “lead” to it. The crucial and essential
difference between physical equations, on one side, and logico-mathematics on
the other side is that the former are not tautological because they merely
point to an experimental relation or link (loosely called “causal”) between two
different sets of phenomena, whereas logico-mathematics purely defines the same
concept “in other words”, and therefore is tautological. The “objects” of
physical science are inert bodies; the “objects” of logico-mathematics are
either abstract concepts or else they are categories that are applied to
“agents”. But any category that is applied to “agents” is ipso facto invalid because it is impossible to categorise
“scientifically”, that is “objectively”, agents
who are, by definition, not objects!
The
illustrious authors, keen “to illuminate the real world” with the embarrassment
of Misesian drivel, fail to understand that “praxeology” can have applicability
to “reality” only as a “language-game” – that is to say, only as a
strait-jacket, only as a Procrustean bed into which “reality” must fit if it is
to qualify as reality; and not – as
they sheepishly overextend themselves – as “analytical
narrative”, a “somewhere between”
formalism and empiricism. They are wrong because they fail to see that mathematical
identities applied to physical events have a categorically different status
from when they are applied to social institutions (including economic ones) that
are conventional in the sense that
they are not immutable but are political and therefore subject to
historical change. Only if we reify
social political and economic institutions – only if we turn them into
“objects” of study - can we hope to apply logical identities to them so that
they come to form part of a language-game. But in that case we are performing
an impermissible task: we are assuming that these institutions are “immutable
natural entities” when in fact they are pro-ducts or “facts” prone to social
transformation to which logical identities cannot validly be applied because to
do so deprives them of their very content! We would be creating, to use a
Wittgensteinian metaphor, “a false prison”! [Cf. discussion in
‘Eq&SocRlty’, quote from Arendt. Myrdal makes similar point.]
‘‘Praxeological reality is not the physical universe,’’ Mises argued,
‘‘but man’s conscious reaction to the given state of this universe.
Economics
is not about things and tangible material objects; it is about men,
their
meanings and actions. Goods, commodities, and wealth and all the
other
notions of conduct are not elements of nature; they are elements of
human
meaning and conduct’’ (1949: 92).
The colossal stupidity of this statement is just too much: ‘Assez!’ For
what Mises does is effectively “reduce/traduce” these “elements of human
meaning and conduct” such as “goods, commodities, and wealth” to precisely what
he says they are not, that is, “things and tangible material objects” or
“elements of nature”!
Additionally, in contrast to the natural sciences, Mises argued that
there
were no constant relationships in human action. As such no
universally valid
quantitative laws were possible in the
realm of human affairs. Standing
between the claims of methodological monism on the one side and
historicism on the other side, Mises sought to carve out a niche for
the
science of human action—one that agreed with the cultural critics of
methodological monism that the human sciences were unique, yet
resisted the
implication of these critics that there were no nomological laws
possible
in the human realm. Mises’s position was that while the science of
human
action (praxeology) was different from the natural sciences for the
reasons
enumerated above, it generated nomological laws that had the same
ontological claim on our attention as that of
the natural sciences. (P.254)
Unbelievable
leap from “language games” (with their tautological “inexorable laws”) to
physical reality – how can “purposeful action” (an open-ended multi-verse) have
the same “ontological status” let alone “claim” (!) as physical observation (of
the inanimate world)? As a minimum, one would expect Schopenhauer’s categorical
distinction between ‘Sinne’, “Reiz’ and ‘Motiv’ als Faktoren der Kausalitat
(Tchauscheff, p24).
Here
the authors clearly fall into a petitio
principii in that they presume to know what the “purpose” of a particular
“human action” is! This is what Hayek disputed. It is of no avail to invoke the
Vichian ‘verum ipsum factum’- a notion that goes back to Aquinas through to
Machiavelli and Hobbes to Vico. The “fact” that human beings make their own
history and are therefore capable of “reflecting” upon it (Mises’s
“introspection”) does not at all mean that human history has the same ontological
and epistemological status as “physical events” – for the exact reason that
human beings can “change”, “transform” or otherwise “revolutionise” their
social relations. This was precisely Hayek’s disagreement with Mises: - that
the “introspection” could only facilitate the interpretation of human behavior
but could not determine it positively or scientifically because in social
studies it is not the social scientist who decides but the “individuals” whom
he or she observes extrinsically but whose “minds” he or she cannot know –
however much he or she may try “to read” them!
From these categories implied in the axiom of action, Mises contends
we
can deduce the pure logic of choice. The theories thus arrived at,
because
they represent the elucidation and teasing out of the implications of
the
fact that man acts ‘‘are, like those of logic and mathematics, a
priori’’
(Mises 1949: 32). If no logical error has been made in the process of
deduction from the axiom of action, the theories arrived at are aprioristically
true and apodictically certain. Their aprioristic
quality, however, does not
render them irrelevant to the real world. ‘‘The theorems attained by
correct
praxeological reasoning are not only perfectly certain and
incontestable, like
the correct mathematical theorems. They refer, moreover with the full
rigidity of their apodictic certainty and incontestability to the
reality of
action as it appears in life and history. Praxeology conveys exact and precise
knowledge of real things’’ (Mises 1949: 39).(p258)
Complete garbage! That
is precisely what Mises does not and cannot have: - “knowledge of real things”! Because a “language game”
is only as good as the “game” it regulates: the ‘truth’ of its propositions is
non-existent. In fact, Mises would not apply praxeology to “real things”
(objects like physics), but rather to “human action” which is knowable through introspection and “thought-experiments”.
But applying logico-mathematical identities to “human action” can only yield
“language games” because, as Mises himself rightly pointed out, human beings do
not behave like objects – the “circumstances” of their actions cannot be
“reduced” to logico-mathematical identities. To the extent that they can,
“human action” has been “reified”, reduced to a “thing” – and “the world”
reduced to “the limit of language”. But the world is much more than language
can describe or indeed “circum-scribe”
or encapsulate!
(Kant
and Schopenhauer were aware of the ‘technical’-only validity of logic and
mathematics, and of the vital distinction between ‘logical form’ and ‘real
content’ – whence the primacy of perception in the drawing up of scientific
hypotheses. Of course, this is what the logical positivists were arguing – but
methinks they presumed too much, that is, “proof”!)
Mises
was mistakenly attributing the status of Kantian synthetic a priori status to
what is instead a strictly Vichian foundation, verum ipsum factum:
The social scientist, on the other hand, is in a relatively better
position, for
qua man, he is himself the very subject of
his study. This fortunate position
allows him to get inside
the mind of his subject. Thus, in the social sciences,
the
scientist begins
with
knowledge of the ultimate causes driving
his
subject’s behavior. And it
is in this sense that the social scientist is in a better
position for the study of
his field than the physical scientist in terms of
understanding causation. This fundamental difference between the relationship
of the physical scientist to his subject of inquiry and social scientist
to his
subject of study suggests a fundamental difference in the
epistemological
status of their insights and implies a methodological dualism in the
realm of
science. (p254)
This
essential difference between social and natural sciences is highlighted by
Hayek (CRS) (as L&B acknowledge in fn.12). But Hayek draws the exact
opposite conclusion, namely, that we must refrain from attributing to human agents motives arising from mere observation
– the case of “behaviourism” and “scientism” generally – or even through
Misesian “introspection”, which may apply to a single individual but not to interacting individuals. (Napoleoni
moves this objection to Robbins as did Hayek, but propounds that Pareto
optimality solves the problem for Walrasian equilibrium – which it does not
because individual utilities are heterogeneous.) Because the “concepts” adopted
to describe human behavior already involve “finality” (an implicit purpose),
Hayek cautioned against drawing conclusions about the real motives or knowledge
behind human use of the “objects” behind them, which can be illegitimately
manipulated by “the observer” (the social scientist) who is also using
“concepts” in the analysis. - Which is what Mises does, and Hayek wished to
avoid by the time he wrote CRS and what
led him to develop the concept of “spontaneous order”, precisely to be able “to
observe” economic behaviour “from the point of view of individuals, whose
motives for decisions are ‘inscrutable’” rather than manipulate it as in the
“omniscience” of equilibrium analysis. This is the entire basis of Hayek’s
“subjectivism”! This subtle yet essential difference between Mises and Hayek is
detected with characteristic brilliance by Festre’ in “Von Mises vs. Hayek”. Leeson and Boettke have clearly missed it –
but not Salerno (“Mises and Hayek
Dehomogenized”) who foolishly chastises Hayek about it, as does Rothbard
in his vituperation against Hayek. Hayek is more in line with (his cousin)
Wittgenstein, who was far too subtle to believe that there is any “rational/logical”
connection between what humans say and think and what they do. Indeed we may
regress to Schopenhauer and the Scholastic qualitates
occultae or “ultimate causes” or
aims, which he excluded from scientific inference both a priori and a
posteriori.
Here, in a nutshell, we have the difference between
Hayek’s “homo quaerens” (where
equilibrium is an approximate real state, the result of an empirical quest for prices or “price discovery”,
and only a “heuristic” device for
empirical observation until equilibrium is attained); and Mises’s “homo agens” where equilibrium is a
logical language game schema indispensable for the “caeteris paribus Gedenkenexperimenten” of logical analysis but
unattainable in fact – indeed, for Mises, profit depends on the impossibility
of a competitive market process that leads to equilibrium: for him, competition and equilibrium are antithetical notions for profit to be possible. It may be said that here Hayek adopts
Machian methodology and Mises adopts Neo-Kantian aetiology precisely in that
“practical” sphere in which Kant could admit only of ethical and not causal
relations.
According to Mises our nature as actors—beings who purposefully
act—is
known through introspection. Reflection on what it means to be human
reveals that purposeful behavior is our primary and distinguishing
feature.
This knowledge is aprioristic. We do not become aware of our uniquely
human characteristic through experience because we cannot, in fact,
‘‘experience’’ without purpose. Thus, ‘‘man does not have the
creative
power to imagine categories at variance’’ with the category of action
(Mises 1949: 35). In taking action as the starting point for all of
economic
13 Economic laws are deduced
from the axiom of action aprioristically with the aid of the ceteris paribus
assumption that enables a
sort of controlled mental experiment. And theoretical progress in the human
sciences, according to Mises, occurs by way of these mental
experiments. Mises goes as far as to say that
the method of praxeology is the method of imaginary constructions
(Mises 1949: 237 – 238).
WAS MISES RIGHT?
255
theory, Mises roots the logic of choice in the broader logic of
action he calls
praxeology. (Boettke and Leeson,‘Was
Mises Right?’ p.254)
The
fatal flaw in Mises’s “praxeology” is that he seeks to turn “human historical
institutions” (goods, money, demand, supply, competition, individuals) into
“reified” eternal or immutable natural entities subject to controlled
experimentation – whilst at the same time protecting his fantastic theory from
scientific examination by saying that it is not subject to experimentation
because it arises “apodictically a priori from mental introspection”! But Mises
cannot have it both ways! Either
human institutions (including economic ones) are “reified” and capable of
“logico-mathematical analysis” (the pure logic of choice), in which case we are
brutally and violently imposing the present economic institutions as an
ineluctable “destiny” of humanity; or
else we admit that these are “historical institutions” that are not subject
to logico-mathematical analysis except in the most brutal and repressive sense
of adopting this analysis and its “categories” so as to preserve the
established order!
Indeed,
Mises’s quite pathetic and ridiculous attempt to attribute the “reification” of
human institutions to some absurd “evolutionary process” (a foolhardy attempt
undertaken first by his mentor Carl Menger) is the conclusive proof of the
colossal stupidity of his entire undertaking!
In examining the a priori nature of these logical categories, Mises (1949,
1978) offers a speculative history as to how they evolved as part of
the
human mind. According to Mises the a
priori categories evolved along
with humans in a Darwinian fashion. We have the categories of the
mind
that we do today precisely because they were best able to impart
accurate
information about the real world to us necessary for our survival.
The categories are subject to future evolution as improved variations
enable us to better understand the world or the underlying reality of
the
world itself changes. This hypothesized evolutionary process helps
explain the necessary connection of the starting point of action, and
the
categories that it implies, to the real world. If they were not
connected in
this way to the world, humans possessing them could not have evolved
as they have. There is a mutually interactive process between our
minds
and the world, forming a feedback loop between the evolution of our
a priori mental categories that
determine the world we experience, and the
reality of the world that conditions our way of thinking and
understanding
reality.(p257)
Of course, this is the “psychologism” that
Frege, Husserl and Wittgenstein refuted.
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