03 Sep 2013

There Is Only One Body of Economic Law: Mises Has Spoken

Mises 93 Comments

I just typed in this block quotation from page 68 (Scholar’s Edition) of Human Action:

The domain of historical understanding is exclusively the elucidation of those problems which cannot be entirely elucidated by the nonhistorical sciences. [The historian’s understanding] must never contradict the theories developed by the nonhistorical sciences. [Historical understanding] can never do anything but…establish the fact that people were motivated by certain ideas, aimed at certain ends, and applied certain means for the attainment of these ends, and…assign to the various historical factors their relevance…Understanding does not entitle the modern historian to assert that exorcism ever was an appropriate means to cure sick cows. Neither does it permit him to maintain that an economic law was not valid in ancient Rome or in the empire of the Incas.

I love it when Mises gets rough with the reader.

93 Responses to “There Is Only One Body of Economic Law: Mises Has Spoken”

  1. Murphs daddy says:

    What if the austrians are wrong? What if the theory is logically correct but just not applicable in the world?

    Maybe modern monetary theory works. Is human progress capable of buoying even the most deleterious social planning?

    There has been financial problems of the past where keynesianism has been used both to get into and out of the fray. The markets remain and everything continues to work. Meanwhile we austrians continue to toe a line that sees very little use in the real world. Is austrian theory just a pretty theory that has little to do with the real world?

    • Cosmo Kramer says:

      “Maybe modern monetary theory works.”

      Of course MMT “works”. It describes how fiat systems “really” function. MMT says that you can acquire purchasing power in a 3rd way (besides taxes and selling bonds), and that is to create additional currency. It ULTIMATELY relies on lawmakers to put that purchasing power to use. Either they do so more or less productively than otherwise would occur.

      MMT’ers are nice because they are almost the exact opposite of Austrians. They come at things from an inflationary standpoint and we come at it from a standpoint that would deflationary. I.E. you can get to full employment by increasing the price level(MMT) or by *letting* wage levels fall(Aus.) Both clearly work in theory, as there is a price vs wage mismatch that doesn’t allow employment markets to clear. It comes down to what happens to existing contracts and what citizens will do in reaction to either idealogy in place.

      I think Austrians can explain the monetary system much better than Mosler does. A lot of his statements are exploded the second we correctly define “taxes” as a forced loss of purchasing power to the gov’t. Thus, the government’s spending(amount of goods and services) is proof that there was purchasing power removed. Now this part of MMT is funny. Mosler say that Gov’t won’t push up prices as long as the government limits the price it pays for goods.

      The main issue with MMT is the unending contradictions. These mostly base on looking at $ balances. For instance, they see a huge benefit to suspending the payroll tax, then will admit that we should tolerate higher levels of inflation for full employment. (+ purchasing power, – purchasing power). Thus, it perverts existing contracts made in terms of $USD. I still don’t get why they say there is a level of employment that is “too low”. Maybe I’m just too evil? I just think employment rates should be what they end up being. Maybe Mosler’s biggest flaw is that he thinks Austrians are stuck in a world of fixed exchange rates. NO. We want free market money and the exchange rate should be decided by the market, as stocks vs the dollar. It doesn’t work when something is artificially overvalued. Maybe Mosler should bother reading “Man vs the Welfare State” by Hazlitt in the 60’s. All of his Criticisms are exploded in that book…….one written while we were still on that particular crummy gold standard. Or my favorite “Ethics of Money Production”.

      “There has been financial problems of the past where keynesianism has been used both to get into and out of the fray.”

      Careful there. Remember, we must always consider what would have been otherwise. We can look at a chart of GDP growth and (using correlation) determine that Obama saved the USA. Surely there is an alternate path with a steeper bottoming and a higher rate of growth following…..(leading to much higher future levels of productivity). Just as we can point to 20-21′ depression and conclude that Harding “caused’ that depression. Or we can blame a hangover on the decision to stop drinking.

    • Bharat says:

      Do human beings act, using means to achieve ends? Is this premise applicable to the real world? If so, aren’t all deductions applicable to the real world?

      If you’re going to question “what if the Austrians are wrong,” and accuse Austrian economics of the possibility of not having anything to do with reality, you should really point to some reasons why you think that.

      • Murphs daddy says:

        Big subject I’ve only begun thinking about.

        (I believe austrians are right.) But the markets can handle deviations from austrian theory that are mind blowing. Any modern economic data shows that. Another chapter of austrianism needs written that shows how the world really operates. The principles of austrianism pulls the market towards ‘reality’ (rationalism?), but there is something else at work that allows these wild deviations, and hardly ever comes back to the norm. There is something hidden in the darkness, perhaps sheer human progress. The point of markets is to handle all inputs though, and mmt, keynesianism is just another (hundred thousand) input(s). Maybe it doesn’t take into account the reality of life.

        • what says:

          “But the markets can handle deviations from austrian theory that are mind blowing.”
          “The principles of austrianism pulls the market towards ‘reality’ (rationalism?), but there is something else at work that allows these wild deviations, and hardly ever comes back to the norm.”

          What?

        • Anthony says:

          I totally think an Austrian book needs to be written about how the world “really” operates.

          In the end it is all about what to or what not to do. These core Austrian principles apply as usual, but we need to show how they still apply. I’d say Hazlitt and Guido Hulsmann do write in a way that Mosler is capable of understanding. Austrian critiques are often focused around us saying that social security is insolvent or can’t be paid. If we ignore nominal language and focus on the goods and services amount promised, then our statements hold their original weight just fine.

          Reading Mosler’s 7DIF is like reading a book in Espanol vs English. Many things are just described in different ways, but are true in multiple forms. Mosler’s prescriptions are not warranted given his description of our monetary system. His prescriptions are based on an economic theory that at its heart do not need a printing press to enable.

          It always comes down to proposing what the BEST way to maximize long term productivity is. No book can firmly prove a particular theory.

          For me though, government stupidity and waste is proof enough that MMT and Keynesian theories are destructive in nature. I think markets and humans self regulate. I faced large obstacles that I placed in front of myself. I could have gotten help, but I helped myself. I’ve been unemployed. I looked at what I needed to do to meet the requirements of open positions. I am horrified at the thought of living in a world of zero or much less personal responsibility and consequences.

          I’m trying to come up with better definitions of saving vs spending. If we break it down it is more interesting. We can call saving money at low velocity or deferred consumption. We can say that spending is a transfer of $ balances from one bank to another. It was savings, then it was “spent” and it is savings again. So if we go back to differing economic theories we can see that they want velocity to be higher or lower and they want $ channeled differently.

          • Anthony says:

            Forgot to put my preferred screen name into my phone

            Anthony = Cosmo.

    • Matt Tanous says:

      “What if the austrians are wrong?”

      Well, this particular quote wouldn’t be, at least.

      “What if the theory is logically correct but just not applicable in the world? ”

      This isn’t abstract mathematics. When you start with axioms about the way the world works and your logic is correct, the theory is not just logically correct but obviously applicable. If it is true that, for instance, business cycles are caused by credit expansion, then the prescriptions fall naturally (given the premise that one wants to end or at least minimize business cycles).

      “Maybe modern monetary theory works. Is human progress capable of buoying even the most deleterious social planning? ”

      Two different statements here. The idea that human progress can get us past the harmful effects of state interference is not the same thing as that state interference “working”.

      “Meanwhile we austrians continue to toe a line that sees very little use in the real world. Is austrian theory just a pretty theory that has little to do with the real world?”

      If everyone ignored relativity and operated as though Newtonian classical physics worked perfectly regardless of speed, mass, etc. would relativity be “a pretty theory that has little to do with the real world” or would it still be the correct theory?

      • Murphs daddy says:

        Well said Matt.
        “This isn’t abstract mathematics. When you start with axioms about the way the world works and your logic is correct, the theory is not just logically correct but obviously applicable.” I agree with you wholeheartedly. I just don’t get:
        Why does the world continue on as though the ‘reality’ of austrianism doesn’t exist? It seems that everything is so far from the austrian norm that it almost nullifies austrian theory. Or the austrians haven’t yet explained why these major deviations can and do occur.
        For instance, in order to understand how the markets work you need to know austrian economics, then you’d have to figure out why the markets are capable of so much perversion, and if it will ever return to austrian normalcy.
        It would be like saying newton’s theory of gravity is correct, then when you watch the apple fall from the tree it hovers for a few minutes 2′ above the ground

        • guest says:

          In Austrian theory, the crash IS the return to normalcy – except that the government works against that return by printing money during a recession.

          Governments never let the crash run its course:

          Austrian Business Cycle Theory
          [WWW]http://www.youtube.com/watch?v=5K4Os5eXPw4

          See also this Austrian view of the so-called Deflationary Spiral:

          Answering the Same Old Arguments Against Sound Money | Thomas E. Woods, Jr.
          [WWW]http://www.youtube.com/watch?v=h-PxMzSyujw#t=23m36s

          … And these on the so-called Long Depressioin:

          Answering the Same Old Arguments Against Sound Money | Thomas E. Woods, Jr.
          [WWW]http://www.youtube.com/watch?v=h-PxMzSyujw#t=14m50s

          Smashing Myths and Restoring Sound Money | Thomas E. Woods, Jr.
          [WWW]http://www.youtube.com/watch?v=HAzExlEsIKk#t=33m58s

        • Matt Tanous says:

          “Why does the world continue on as though the ‘reality’ of austrianism doesn’t exist? It seems that everything is so far from the austrian norm that it almost nullifies austrian theory. Or the austrians haven’t yet explained why these major deviations can and do occur.”

          On the contrary, the Austrians have explained these deviations as the result of various forms of government interference. It’s more like a theory of how a chemical mixture might settle, but someone keeps mixing it around and spilling it, etc.

          • Murphs daddy says:

            “like a theory of how a chemical mixture might settle, but someone keeps mixing it around and spilling it”
            Correct. So how long does one go believing that the settled state of the mixture is (hoped for?) reality when the contents are continuously shaken? Seems the mixing is the actual state and the applicable thing; i.e. it is what needs to be understood. Austrianism leaves us (mostly) in the dark as to the mixing state. We hope of some future point where there will be no mixing, of course until it is mixed again.

        • Bharat says:

          You have to be more specific. What deviates from Austrian theory?

    • Bob Roddis says:

      From the new series, “Great Moments in Modern Monetary Theory” —
      Rohan Grey of Murphy/Mosler debate fame, promotes A.P. Lerner’s “market anti-inflation policy” [MAP] to Brad DeLong. MAP is:

      a market based incomes policy in which property rights in prices are set and individuals have to buy the right to change prices from others who change their price in the opposite direction.

      http://tinyurl.com/ntb9blg

      That’ll work. And it sounds like a lot of fun too.

    • Bob Roddis says:

      From the “oldies but goodies” file…

      David Colander, co-author of a 1980 book with the original Abba Ptachya Lerner (King of the MMTers, author of “The Economics of Control”) wrote that two years before his death, Lerner wanted to make it illegal to change prices without a permit in order to control “inflation”:

      Initially he [Lerner] toyed with various administrative wage and price control policies, but he found those lacking and soon gave them up. He replaced them, first, with a tax based incomes policy and ultimately, a market based[!!!] incomes policy in which property rights in prices are set and individuals have to buy the right to change prices from others who change their price in the opposite direction. It was this idea that formed the basis of our market anti inflation (MAP) book. (Lerner and Colander 1980) Under MAP, rights in value added prices would be tradable so that any firm wanting to change its nominal price would have to make a trade with another firm that wanted to change its nominal price in the opposite direction. Thus, by law, the average price level would be constant but relative prices would be free to change [page 12]

      http://cat2.middlebury.edu/econ/repec/mdl/ancoec/0234.pdf

      As John McEnroe used to say: You can’t be serious!

    • Bob Roddis says:

      Taylor Conant and Warren Mosler recently began an online debate on Mosler’s theories. Taylor Conant makes this most excellent and important point about the general MMT claim to have abolished scarcity with funny money:

      This is an incredibly important point overlooked by almost all participants in this debate. There are two things to note here. First, because the government hasn’t made any “real” promises (ie, “A 5lb. chicken in every senior citizen’s pot”), the real social safety net supposedly provided by Social Security, Medicare, etc., is ALWAYS up for negotiation within the political process, meaning that at any time what the political process actually decides to provide beneficiaries with and what they thought they were bargaining for when they contributed to the system (for example, what they gave up in real terms at the time in taxes versus what they get back out in real terms in benefits) might be vastly different. No explicit (real) promise can be kept because no explicit (real) promise has been given. Second, the fact that the government hasn’t made any promises in real terms doesn’t change the fact that whatever it ultimately gives out to beneficiaries in nominal terms WILL have a real cost to the non-beneficiaries in society as far as what they’ll have to forgo.

      I think this point bears dwelling on and repeating because time and time again I have seen the MMT disciples respond to concerns about this future resource allocation problem by attacking critics for being so simple-minded as to think we’d “run out of dollars” because it’s “just an accounting problem.” Ie, “Social Security can’t go insolvent because the government can create more dollars to satisfy the dollar-denominated obligations at will”. This is not what I, in being critical on this point, have ever been worried about (the supply of dollars). What I have been critical about is that in real terms the promises being made will either not be kept in the way future beneficiaries are expecting, or else they will not be kept in the way non-beneficiaries will be expecting. That is, in real terms, either future beneficiaries will get a lot less out of the system than they thought, or those funding the system will put in a lot more (and have a lot less to keep for themselves) than they thought. Either way, some group is going to be disappointed and there is no magic solution to leave both groups satisfied in real terms.

      http://publicdebates.blogspot.com/

  2. Nicholas Panayi says:

    Mises may very well be referring to Karl Polanyi and his legacy. Karl believed that ancient societies did not have markets as their main method of economic organisation, and that therefore economic theory was not applicable to them.

    Mises and Polanyi would have been familiar with each other because Karl was one of Mises opponents in the first German language economic calculation debate. Karl advocated a kind of guild socialism, which Mises replied to. Mises must have had a effect on Polanyi as well as in Polanyi’s best known work The Great Transformation he described Mises as the only consistent Liberal in Europe. Whose policy views if enacted would reduce that continent to smouldering Ruins.

    See The Austrian Debate on Economic Calculation in a Socialist Economy by Gunther K Chaloupek in History of Political Economy Journal 1990 for more on the 1920’s German Language Debate

    https://sites.google.com/site/malthusstorage2/calculation-storage/1990—1999

    Apparently Polanyi’s view became orthodoxy and was not seriously challenged until Morris Silver’s work in the Journal of Economic History in 1980’s. ( Which I imagine is due to sociological reasons to do with left wing attraction to anthropology, a natural bias in anthropology and the rather strict formalism & specialisation of 20th century economics)

    • Jim PM says:

      Uggggh, Polanyi. I always rejected his premise that ancient peoples used to act for the good of the community instead of their own interests. This was how he concluded eventually that society trumps the markets always, that trade is not inherent, and that society should never suffer for the sake of free markets.

      Interestingly enough, when I studied this in college, it was Hayek that was featured in the textbook as the anti-Polanyi. This was how I was first exposed to his work.

  3. joe says:

    Then why the need to claim the govt inflation number is rigged?

    • Major_Freedom says:

      Is there something in this passage that would suggest it’s not?

  4. Lord Keynes says:

    Mises’s apriorist praxeology is nothing but an exhausted and discredited program.

    His economic laws — apart from a few obvious, trivial truths — do not have the status of natural laws, but even when some are confirmed as empirical regularities they are only contingent.

    In fact, it was clear that apriorist Rationalism was untenable years before Mises even published Human Action when it was demonstrated that all alleged synthetic a priori knowledge — like Euclidean geometry or mathematics — is non-existent.

    And as soon as any Austrian admits that the axioms of praxeology are empirical, the whole system and its theories become synthetic a posteriori, and verifiable/falsifiable by empirical evidence.

    • guest says:

      … when it was demonstrated that all alleged synthetic a priori knowledge — like Euclidean geometry or mathematics — is non-existent.

      How do you prove the non-existence of something using empirical evidence?

      • Lord Keynes says:

        If I say “there is no cat on this table”, and all empirical investigation of the table through our senses shows no cat on the table, is it your belief that this cannot “prove the non-existence of something”?

        Under any inductive argument, the statement that “there is no cat on this table” is adequately proven by such evidence in the sense that it is extremely probable, and hence reasonable and rational to believe.

        Of course, if you mean by “prove” demonstrate with apodictic certainty, then it does not prove it in that sense, but since no one thinks induction provides apodictic certainty, this isn’t a serious objection.

        E.g., you cannot even “prove” with apodictic certainty that the external world exists. We assume it does empirically by means of inductive argument as the most probable and best explanation of our sensory experiences.

        • guest says:

          True, the rule of thumb, “You can’t prove a negative”, doesn’t hold in cases where you are capable of ruling out all other alternatives;

          But there’s no reason to limit our search for a particular type of knowledge to a specific location, it is not possible to search every location at once, and knowledge is not a thing such that location would be a relevant category for research.

          I think if you’re saying that in order for us to know such things like laws of logic (which do not require continual testing), we must infer them from concepts first revealed to us through experience – such as: I can’t know I exist until I experience something, such as the perception of light and shapes – then I think we’re all in agreement.

          Rothbard’s statement that, “I would call all such laws “laws of reality,” which the mind apprehends from investigating and collating the facts of the real world”, suggests that this is what he had in mind.

    • Bob Roddis says:

      1. Rothbard differed with Mises’ description of the axioms of praxeology as “a priori” because Mises was an adherent of Kantian epistemology and Rothbard was not:

      Turning from the deduction process to the axioms themselves, what is their epistemological status? Here the problems are obscured by a difference of opinion within the praxeological camp, particularly on the nature of the fundamental axiom of action. Ludwig von Mises, as an adherent of Kantian epistemology, asserted that the concept of action is a priori to all experience, because it is, like the law of cause and effect, part of “the essential and necessary character of the logical structure of the human mind.” Without delving too deeply into the murky waters of epistemology, I would deny, as an Aristotelian and neo-Thomist, any such alleged “laws of logical structure” that the human mind necessarily imposes on the chaotic structure of reality. Instead, I would call all such laws “laws of reality,” which the mind apprehends from investigating and collating the facts of the real world. My view is that the fundamental axiom and subsidiary axioms are derived from the experience of reality and are therefore in the broadest sense empirical. I would agree with the Aristotelian realist view that its doctrine is radically empirical, far more so than the post-Humean empiricism which is dominant in modern philosophy. ****

      It should be noted that for Mises it is only the fundamental axiom of action that is a priori; he conceded that the subsidiary axioms of the diversity of mankind and nature, and of leisure as a consumers’ good, are broadly empirical.

      Modern post-Kantian philosophy has had a great deal of trouble encompassing self-evident propositions, which are marked precisely by their strong and evident truth rather than by being testable hypotheses, that are, in the current fashion, considered to be “falsifiable.”

      http://mises.org/rothbard/praxeology.pdf

      2. As I never tire of repeating, no non-Austrian ever becomes familiar with basic Austrian concepts. The reason for this IS BECAUSE THEY ARE SELF EVIDENTLY TRUE AND NONFALSIFIABLE. This would be obvious just by stating them in a fair and thorough manner which no Keynesian dares do .

      This is the reason that Lord “Fixprice” Keynes constantly and purposefully misstates Hayek’s explanation that “equilibrium” prices and interest rates cannot be measured because they will not come into existence unless and until the market is left to itself. This is the reason that Lord “Fixprice” Keynes falsely insists that Austrians claim that business people MUST ALWAYS slash prices instead of production and quantities in bad times. This is the reason that Lord “Fixprice” Keynes constantly and stupidly fussed that problems of economic calculation were only applicable to a pure socialist abolition of the market and not to Keynesian price distortions. This is the reason that Lord “Fixprice” Keynes still does not understand the simple concept of economic calculation. This is the reason the Krugman and the rest of them never note that the main problems with Keynesianism is mis-pricing and surreptitious wealth transfer.

      I’m still waiting for the results of LK’s testing which show that humans do not act.

      • Bob Roddis says:

        TYPO: This is the reason THAT Krugman and the rest of them never note that the main problems with Keynesianism ARE mis-pricing and surreptitious wealth transfer.

      • guest says:

        From the same source:

        If, in the broad sense, the axioms of praxeology are radically empirical, they are far from the post-Humean empiricism that pervades the modern methodology of social science. In addition to the foregoing considerations, (1) they are so broadly based in common human experience that once enunciated they become self-evident and hence do not meet the fashionable criterion of “falsifiability”; (2) they rest, particularly the action axiom, on universal inner experience, as well as on external experience, that is, the evidence is reflective rather than purely physical; and (3) they are therefore a priori to the complex historical events to which modern empiricism confines the concept of “experience.”[15]

      • Lord Keynes says:

        “As I never tire of repeating, no non-Austrian ever becomes familiar with basic Austrian concepts. The reason for this IS BECAUSE THEY ARE SELF EVIDENTLY TRUE AND NONFALSIFIABLE. “

        Yes, roddis, nobody in human history, outside the Austrian cult, has ever noticed that conscious human action has a purpose or aims at ends, or that people have certain needs (Human Action, pp. 96-97), or can rank goals ordinally (Human Action, pp. 92-98), or that time passes (Human Action, pp. 99-104), or humans face uncertainty (Human Action, pp. 96-97). Nor has anyone — say, neolcassical economists? — ever noticed the principle of diminishing marginal utility, and so on.

        “Lord “Fixprice” Keynes constantly and purposefully misstates Hayek’s explanation that “equilibrium” prices and interest rates cannot be measured because they will not come into existence unless and until the market is left to itself. “

        I have never claimed any such thing. You’re lying.

        “his is the reason that Lord “Fixprice” Keynes falsely insists that Austrians claim that business people MUST ALWAYS slash prices instead of production and quantities in bad times. “

        Again, I have never claimed any such thing. You’re lying.

        “I’m still waiting for the results of LK’s testing which show that humans do not act.”

        Since I have never denied the empirical evidence that conscious human action by non-mentally ill human beings has ends in view or purposes, why would I need to demonstrate any such thing?

        Your straw man arguments demonstrate your intellectual bankruptcy, roddis.

        • Richie says:

          “Yes, roddis, nobody in human history, outside the Austrian cult,”

          Yes, Lord EUGENICS, speak to us about the Austrian cult.

        • Bob Roddis says:

          Regarding Hayek and “equilibrium” pricing*, we’ve had so many 300 comment discussions like this one.

          http://tinyurl.com/k62py3v

          I consider those discussions to have been fruitful because they so thoroughly demonstrate LK’s tactics of avoidance and distortion. There is no need for another 300 comment discussion on this point.

          *Specifically, this Hayek quote:

          The primary cause of the appearance of extensive unemployment, however, is a deviation of the actual structure of prices and wages from its equilibrium structure. Remember, please: that is the crucial concept. (Hayek 1975: 6–7).

          • Bob Roddis says:

            LK interprets the Hayek quote as Austrians claiming that these “equalibrium” prices are Somewhere Out There just waiting to be discovered:

            the whole notion that there exists a universal set of market-clearing values for prices and wages just waiting to be discovered by adjusting prices or Walrasian tâtonnement is itself little more than a quasi-theological superstition of modern neoclassical and Austrian economics, because no economist can prove that the law of demand is universally true.

            http://socialdemocracy21stcentury.blogspot.com/2013/05/misesian-economic-calculation-and.html

            • Lord Keynes says:

              Wow. This is supposed to be an example of my “distortions??

              So now you are seriously telling us that equilibrium prices cannot be discovered by human beings moving prices flexibly to clear markets!!

              You’ve just destroyed yourself, and proven that you do not even understand Hayek — or Austrian price theory.

              Bob roddis — ignorant of basic Austrian concepts.

              • guest says:

                So now you are seriously telling us that equilibrium prices cannot be discovered by human beings moving prices flexibly to clear markets!!

                I wish we could get ourselves to stop using the word “equilibrium” to describe prices that clear.

                For what it’s worth, here’s what I mean by market-clearing prices: Prices at which people will trade without coercion.

                There isn’t going to be a single price that clears, and it could be (assuming a scenario with no coercion) – and here I’ll use an extreme example to highlight the point I’m making – that at one point, the price at which a good is sold to one seller is $40, the next minute the same seller sells the same good to a different customer for $20, and the next minute he sells to a different customer for $60, and all of those prices would be “in equilibrium” in the Austrian sense.

                You see how using that word hurts our attempt to explain our position, of course.

                I believe we only use the word because Hayek’s (?) use of it in defense of Austrian theory had come under scrutiny by the Keynesians.

                Maybe we should use a different word, and just qualify what Hayek meant.

              • Bob Roddis says:

                I don’t have time to find my scanned version of Hayek, but page 7 here is what LK always distorts and where Hayek points out that these prices are what “we somewhat misleadingly call and equilibrium structure”.

                http://www.flickr.com/photos/bob_roddis/7534880182/in/set-72157630494776170/

              • Lord Keynes says:

                Hayek is saying that equilibrium prices and wages cannot be known beforehand, but are *discovered* by free price adjustment — precisely what I said.

                Hayek also says that the deviation of wages and prices from their equilibrium structure cannot be “measured statistically”, which has nothing to do with what I said or claimed.

                Roddis destroys himself again.

              • Bob Roddis says:

                LK falsely described what Hayek was saying as:

                the whole notion that there EXISTS [present tense] a UNIVERSAL SET of market-clearing values for prices and wages JUST WAITING TO BE DISCOVERED by adjusting prices.

                That is complete distortion of what Hayek meant. No one will know what the unadulterated supply or demand for anything will be until there are no market interventions and prices are set by voluntary exchange. That information is not presently floating out there somewhere in the ether just waiting to be “discovered” anymore than the demand for Beatles’ records in late 1964 was floating in the ether back in 1962 just waiting to be discovered.

                Like always, LK is compelled to distort.

              • Tel says:

                I wish we could get ourselves to stop using the word “equilibrium” to describe prices that clear.

                It’s just as much an equilibrium when markets don’t clear, it simply means the market participants have decided there is no value in trading.

              • Bob Roddis says:

                Tel: Isn’t it also true that during the long years of a Keynesian boom, the world is full of “market clearing prices”?

              • Lord Keynes says:

                “It’s just as much an equilibrium when markets don’t clear, it simply means the market participants have decided there is no value in trading.”

                The point at which abuse of language turns Austrians into a complete joke.

                If you can’t win in argument, then simply redefine the term so that you can win.

                ———

                “… That is complete distortion of what Hayek meant. . “

                No it isn’t.
                It’s an accurate summary.

                And since Hayek was

                (1) a statist who believed in limited government

                (2) limited social welfare provisions as in “the assurance of a certain minimum income for everyone”; government should “distribute its expenditure over time in such a manner that it will step in when private investment flags”

                (3) “Taxes as such and the absolute height of taxation are not a problem ”

                (4) “enforce “building regulations, pure food laws, the certification of certain professions, the restrictions on the sale of certain dangerous goods (such as arms, explosives, poisons and drugs), as well as some safety and health regulations for the processes of production; and the provision of such public institutions as theaters, sports grounds, etc.” and

                (5) FR banking, and so on, http://mises.org/daily/5747/

                Hayek would understand “no market interventions and prices are set by voluntary exchange” in a quite different sense from what you mean by it.

                And this would still be compatible with what I said.

              • Tel says:

                LK, you difn’t provide a definition for “equilibrium”, and it has been defined in manyvfifferent ways by many different people. Keynes said, “In the long run, we are all dead” so obviously he was only interested in what happens on the day. Austrians at least have been upfront about more than one definition being mesningful depending on context, but let me just offer a simple example… if a product cost $100 to make, and the most anyone wants to pay for this product is $5 then how do you calculate your equilibrium price? Use any definition you like.

              • Tel says:

                BTW iPhones don’t make great keyboards, but the primary use case for the device is that in many circumstances it is much better than nothing at all.

              • guest says:

                [Tel]: “It’s just as much an equilibrium when markets don’t clear, it simply means the market participants have decided there is no value in trading.”

                [LK]: The point at which abuse of language turns Austrians into a complete joke.

                I think what he means by “not clearing” is that one party will not sell below a certain price, and after his offer has been rejected he will stop trying to sell that good and reallocate his resources to produce something that will sell (or at least to some project that is less wasteful).

                I would say that this market HAS cleared because the would-be seller has accepted that he is the highest bidder and stops using his means to keep trying to sell.

        • Bob Roddis says:

          Lord “Fixprice” Keynes has decreed:

          That notion that business must lower prices to clear their market, even if the price falls below the cost of production, is a fundamental part of Austrian theory, because flexible prices adjusted to market clearing values are how demand and supply are equated.

          http://tinyurl.com/mjf33xq

          • Lord Keynes says:

            That statement is entirely correct: Mises’s and Rothbard’s ideas of economic coordination prescribe as the ideal the notion of market clearing by prices moved by human action towards market clearing levels:

            There is no reason why prices cannot fall low enough, in a free market, to clear the market and sell all the goods available. If businessmen choose to keep prices up, they are simply speculating on an imminent rise in market prices; they are, in short, voluntarily investing in inventory. If they wish to sell their “surplus” stock, they need only cut their prices low enough to sell all of their product. But won’t they then suffer losses? Of course, but now the discussion has shifted to a different plane. We find no overproduction, we find now that the selling prices of products are below their cost of production. But since costs are determined by expected future selling prices, this means that costs were previously bid too high by entrepreneurs.”

            Murray Newton Rothbard, America’s Great Depression (5th edn, 2008), pp. 56-57.

            “Mises conceives the market process as coordinative, ‘the essence of coordination of all elements of supply and demand.’ This means that the structure of realized (disequilibrium) prices, which continually emerges in the course of the market process and whose elements are employed for monetary calculation, performs the indispensable function of clearing all markets and, in the process, coordinating the productive employments and combinations of all resources with one another and with the anticipated preferences of consumers.”

            Salerno, Joseph T. 1993. “Mises and Hayek Dehomogenized,” Review of Austrian Economics 6.2: 113–146. at p. 124.

            • Bob Roddis says:

              Correct. HOWEVER, that is quite different than you claiming that Austrians insist that business people will ALWAYS tend towards slashing prices when faced with a Keynesian-induced crisis as opposed to cutting production and employment. Give up. We’ve been over this again and again and you lost.

              • Lord Keynes says:

                “HOWEVER, that is quite different than you claiming that Austrians insist that business people will ALWAYS tend towards slashing prices when faced with a Keynesian-induced crisis…

                I have claimed any such thing. You are a risible liar.

              • Lord Keynes says:

                I have claimed *NEVER* any such thing.

              • Lord Keynes says:

                Correction:

                I have *NEVER* claimed any such thing.

              • Major_Freedom says:

                LK:

                In your own words, what’s the difference between “must lower”, as in “the notion that businessmen must lower their prices to clear the market is fundamental to Austrian theory”, and “always”, as in “the notion that businessmen always have to lower their prices to clear the market is fundamental to Austrian theory”?

                There is nothing wrong with certain prices falling below costs, in a context of social coordination that requires it.

                And Tel did not redefine “equilibrium” by the way. The argument that prices REMAIN in a particular state that you would consider to be suboptimal, is in fact an argument of equilibrium.

                Equilibrium just means stasis. It doesn’t presuppose “positive” or “good” or “happy” equilibrium. There is such a thing as “bad” equilibrium.

                This is yet another point of which you have repeatedly contradicted yourself. You have claimed many times that the market cannot reach equilibrium, and can get “stuck” in a “deflationary death spiral”, etc. You don’t seem to realize that this is also an equilibrium.

                Being stuck in a deflationary equilibrium is an equilibrium.

                Being stuck out of equilibrium, is itself an equilibrium.

                Your attempt to deny this, through diverting attention away to your false definition of equilibrium, is easily seen.

        • Matt Tanous says:

          ““his is the reason that Lord “Fixprice” Keynes falsely insists that Austrians claim that business people MUST ALWAYS slash prices instead of production and quantities in bad times. “

          Again, I have never claimed any such thing. You’re lying.”

          You claim this every time you assert that fixprices somehow disprove the Austrian claims. It is inherent in your argument.

          • Lord Keynes says:

            It proves no such thing. That statement of mine does not imply that I think that “Austrians claim that business people MUST ALWAYS slash prices instead of production and quantities in bad times.”

            indeed the Rothbard quote above I cited already demonstrates that I know Austrians do not assert that latter claim.

            However, the widespread existence of administered prices certainly disproves the idea that markets will tend *generally* to adjust by price/wage movements as a tendency, even with exceptions. Even that does not imply I believe your absurd straw man.

            • Matt Tanous says:

              “However, the widespread existence of administered prices certainly disproves the idea that markets will tend *generally* to adjust by price/wage movements as a tendency”

              Supply and demand adjustments are simply the flip side of the coin. If I have fixed the price at $20/unit for a good, according to contract, and demand falls I will have a surplus unless I (a) reduce the price or (b) reduce production to match quantity demanded at $20/unit. There is no argument that has been made by Austrians (or anyone else, as far as I know) that the latter is not a free-market adjustment, does not occur, or doesn’t result in market clearing. In this case, it really has absolutely zero bearing on Austrian (or any other theory), regardless of your claims that “so much of neoclassical economics and Austrian economic theory simply collapses and must be abandoned once one understands its [administered prices] implications.”

              I mean, really, Austrian theory even explains why one might actually CHOOSE to have a surplus in such a case instead of adjusting (standard economists call this rare and mysterious phenomenon SPECULATING, if I recall correctly).

              • Matt Tanous says:

                In short, if I choose to have a surplus of unsold goods by not adjusting to changing market conditions, I am MYSELF part of the demand for the good. Note Rothbard here:

                “The cost of the seller’s action will be the highest utility forgone among the following alternatives: (a) the value in direct use of the horse given up or (b) the speculative value of selling at a higher price in the future or (c) the exchange-value of acquiring some other good for the horse. He will sell the horse if the expected revenue is greater; he will fail to sell if the ex­pected cost is greater. ”

                Specifically, opportunity cost (b) in the quote PERFECTLY accounts for fixprices – EVEN SUPPOSEDLY NON-ADJUSTING ONES. In reality, the economist who claims these present a problem (i.e. YOU) neglects the speculative utility of the producer/seller of the good in question.

    • Bob Roddis says:

      They used to show this movie from 1949 “It Happens Every Spring” on TV a lot in 1959-1961. A college professor accidentally invents a liquid that repels wood when applied to baseballs. He uses it to become a star pitcher. Watch this segment for 3 1/2 minutes to see a visual representation of the impact of Austrian concepts and analysis upon a Keynesian brain.

      http://www.youtube.com/watch?v=Yb3-P7f2aLM

    • Joseph Fetz says:

      “… like Euclidean geometry or mathematics — is non-existent.”

      I don’t know, but I’m pretty sure that you can ask anybody on the planet familiar with a triangle and that their answers will be the same ( or roughly conceptually so).

      But then, most of those people aren’t chasing UFOs

      Also, I think that it was Menger who clearly stated that he was using deduction to explain empirical facts (he saw the science of economics as purely empirical, more so than the inductive sciences), so there’s no contradiction there. However, this does not mean that economics is entirely a posteriori, because certainly not all people make the same choices at all times when it comes to scarce resources. The only possible way to come to laws about humans acting in such an arena is through pure deduction in the face of empirical facts by way of the a priori, not the induction of facts by way of the a posteriori.

      Essentially, you’re taking the position that one can look at a photograph, and from that conclude (without a doubt) that the person in the photo is angry.

      • Lord Keynes says:

        “I don’t know, but I’m pretty sure that you can ask anybody on the planet familiar with a triangle and that their answers will be the same”

        That is because that knowledge in pure geometry or pure mathematics is analytic a priori, not synthetic a priori.

        Is it your belief that the universe absolutely confirms to Euclidean geometry?

        Your comments suggest you’re just confused about basic epistemological issues.

        • Mike M says:

          “Your comments suggest you’re just confused about basic epistemological issues.”

          And what LK does your perpetual arrogance suggest?

        • Matt Tanous says:

          “Is it your belief that the universe absolutely confirms to Euclidean geometry?”

          Your failure is in your inability to recognize that one can deduce synthetic claims from analytic truths. Even if we accept your premise that the action axiom is not synthetic a priori.

          “[T]he proposition that humans act … fulfills the requirements precisely for a true synthetic a priori proposition. It cannot be denied that this proposition is true, since the denial would have to be categorized as an action — and so the truth of the statement literally cannot be undone.” – Hans-Hermann Hoppe

          Your argument elsewhere that the action axiom constitutes only one premise is also erroneous. The second premise – introduced literally JUST AFTER the action axiom in Rothbard’s Man, Economy, and State – is what I refer to as the “individual axiom”. It is the idea that “the first truth to be discovered about human action is that it can be undertaken only by individual “actors.” Only individuals have ends and can act to attain them.” This is proved identically to the action axiom – in order to attempt to refute that, one must act, and in order to attempt to refute the “individual axiom”, one must act AS AN INDIVIDUAL.

          In fact, if one were to read the first few pages of Man, Economy, and State they would see that there are many axioms related to the action axiom that are just as inherently true, which are all asserted and used in combination with the action axiom to derive the conclusions.

        • Joseph Fetz says:

          “Is it your belief that the universe absolutely confirms to Euclidean geometry?”

          Nope. Is it your belief that human actions can be observed and mathematical constants derived from the data? Oh wait, that is your position.

          • Lord Keynes says:

            “Is it your belief that human actions can be observed”

            Of course. If you deny that statement you are clearly deluded, lying, or ignorant

            “and mathematical constants derived from the data”

            What does that even mean?

            • Richie says:

              The two statements are linked, Lord Eugenics. Read closely.

    • Matt Tanous says:

      “it was demonstrated that all alleged synthetic a priori knowledge — like Euclidean geometry or mathematics — is non-existent.”

      LOL. How many triangles did you measure to determine that their angles sum to 180 degrees (or pi radians)?

      A better question is this: how do you demonstrate empirically that empirical knowledge is all that can be obtained? How do you demonstrate empirically that empirical evidence even WORKS – that laws of constancy, continuity, causality, etc. hold such that you can perform experimental observations to obtain knowledge and not just end up with a nice anecdote? “One time, I dropped a bowling ball and a feather in a vacuum and they fell at the same speed!”

      It is not Rationalism that is in error. It is the Empiricist that does not acknowledge his reliance on a priori axioms and rational deduction to even perform his empirical study.

      • Bob Roddis says:

        Since LK cannot address specific failings of Austrian analysis, he’s compelled to fuss about the deep philosophical basis of self evident propositions so that it will superficially appear to the anti-intellectual and intellectual incurious Keynesians and “progressives” that he’s refuted the Austrians.

      • Lord Keynes says:

        “How many triangles did you measure to determine that their angles sum to 180 degrees (or pi radians)?”

        You — like Joseph Fetz — cannot distinguish between (1) pure geometry and (2) applied geometry.

        Pure geometry is analytic a priori, has necessary truth, is indeed known a priori, but is purely tautological and non-informative: it tells you nothing necessary of the real world.

        Applied geometry is synthetic a posteriori, and when asserted of real space is empirically verifiable or falsifiable.

        It turns out that Euclidean geometry does not, as Kant believed, provide universal and a priori truth of real space. Euclidean geometry is a false theory of the whole universe, which requires non-Euclidean geometry.

        • Matt Tanous says:

          “Applied geometry is synthetic a posteriori, and when asserted of real space is empirically verifiable or falsifiable.”

          You confuse the existence of an empirical initial premise (whether the world conforms to Euclidean axioms) with a posteriori knowledge.

          If (Euclidean), then X, Y, Z, etc. is a priori knowledge. Only the initial premise, the question of whether a geometry is Euclidean, is a posteriori. And the Misesian study of economics doesn’t even have a conditional “if” – the action axiom is inherently true.

          I mean, really, would you’d be arguing that the laws of economics can’t be known a priori because, for instance, the conclusions on price ceilings only apply under a certain set of conditions (there is a price ceiling, the market price would have instead been higher, etc.)? Really? That we’d have to experience price ceilings to know what the law is behind it, and not just whether it applied in Situation X. Would you say math is empirical because we don’t know, without examining the situation, whether we actually are adding 2 and 2 in the first place?

          • Lord Keynes says:

            “You confuse the existence of an empirical initial premise (whether the world conforms to Euclidean axioms) with a posteriori knowledge.”

            I confuse nothing. Anybody saying that Euclidean geometry asserts synthetic a priori and necessary truth of the real world has been proven wrong by the empirical discovery of non-Euclidean space.

            Anyone who asks an “empirical initial premise” of “whether the world conforms to Euclidean axioms” has already conceded that Euclidean geometry, when asserted of real space, is synthetic a posteriori.

            If you simply assume that Euclidean geometry is true without any concern for whether it asserts truth of the world, all statements become analytic a priori and tautologous.

            • Matt Tanous says:

              “If you simply assume that Euclidean geometry is true without any concern for whether it asserts truth of the world, all statements become analytic a priori and tautologous.”

              On the contrary. Only the premises would be tautologous. The analytic-synthetic dichotomy is false, by the way. It utterly ignores those statements that are logically derived, and thus not tautological, but are also not “synthetic” (here defined as empirically validated, as you keep using it).

              ” Euclidean geometry, when asserted of real space, is synthetic a posteriori.”

              You are throwing in additional assertions that are not analogous to the comparison. Further, you are utterly wrong that the existence of an a posteriori conditional premise means that the knowledge obtained from logical derivation is not a priori.

              • Lord Keynes says:

                “Only the premises would be tautologous”

                lol.. how do you get non-tautologous conclusions from tautologies?

                “The analytic-synthetic dichotomy is false, by the way”

                It is not false. If you are referring to Quine’s argument against analytic truth, he was wrong.

                And even if Quine were right, Quine’s position would not help you, for it is totally incompatible with synthetic a priori truth.

                ” It utterly ignores those statements that are logically derived, and thus not tautological, but are also not “synthetic” (here defined as empirically validated, as you keep using it).”

                What statements? Name them. What are they called in epistemological terms?

              • guest says:

                What statements?

                http://www.puzzles.com/Projects/LogicProblemsArchive.html

                You can’t *empirically* validate logical claims. You can only *exemplify* logical claims, empirically.

              • Lord Keynes says:

                “You can’t *empirically* validate logical claims.”

                lol.. All those logical puzzles are analytic a priori.

              • guest says:

                All those logical puzzles are analytic a priori.

                Yes, but analysis is what you do TO data – the data itself doesn’t prove anything.

            • Major_Freedom says:

              “Anybody saying that Euclidean geometry asserts synthetic a priori and necessary truth of the real world has been proven wrong by the empirical discovery of non-Euclidean space.”

              No they haven’t. The very machines, equipment and tools used to measure space as non-Euclidean are grounded on Euclidean geometry, not non-Euclidean geometry. You can’t claim that that which is built on Euclidean geometry, “disproves” Euclidean geometry.

              “Anyone who asks an “empirical initial premise” of “whether the world conforms to Euclidean axioms” has already conceded that Euclidean geometry, when asserted of real space, is synthetic a posteriori.”

              “If you simply assume that Euclidean geometry is true without any concern for whether it asserts truth of the world, all statements become analytic a priori and tautologous.”

              Tautologies are not necessarily flawed or wrong or useless. The Pythagorean theorem for example is a tautology, in that the relation directly follows from the premise of a plane right triangle. To speak of a plane right triangle IS to speak of the theorem/relation. Yet it would be absurd to claim that learning the relation does not expand our knowledge.

              • Lord Keynes says:

                “The very machines, equipment and tools used to measure space as non-Euclidean are grounded on Euclidean geometry”

                That stupid argument does not prove that Euclidean geometry is synthetic a priori.

                How do you know Euclidean geometry is useful in a limited domain? By empirical evidence. not a priori.

    • Hank says:

      In the pages of Human Action, does Mises ever claim that human action is synthetic a priori? No, he does not. Therefore, you are distorting Mises’ conception of a priori concepts. You might as well dig yourself a hole, and bury your head in it.

      I’ll do you a favor; listen to the last 20 minutes of this lecture:
      http://youtu.be/PJjSeCUK2uU

      • Lord Keynes says:

        (1) “(3) Mises affirms Hoppe’s interpretation regarding synthetic a priori truths (though not in these terms) when he writes,”

        ‘It is consequently incorrect to assert that aprioristic insight and pure reasoning do not convey any information about reality and the structure of the universe. ‘”
        Murphy, Robert P. and Amadeus Gabriel, Study Guide to Human Action, a Treatise on Economics., p. 26.

        (2) the full Mises quote is quite clear: he is thinking of Kantian synthetic a priori categories:

        ” The categories of human thought and action are neither arbitrary products of the human mind nor conventions. They are not outside of the universe and of the course of cosmic events. They are biological facts and have a definite function in life and reality. They are instruments in man’s struggle for existence and in his endeavors to adjust himself as much as possible to the real state of the universe and to remove uneasiness as much as it is in his power to do so. They are [p. 86] therefore appropriate to the structure of the external world and reflect properties of the world and of reality. They work, and are in this sense true and valid.

        It is consequently incorrect to assert that aprioristic insight and pure reasoning do not convey any information about reality and the structure of the universe. The fundamental logical relations and the categories of thought and action are the ultimate source of all human knowledge. They are adequate to the structure of reality, they reveal this structure to the human mind and, in this sense, they are for man basic ontological facts”
        Human Action, p. 86.

        (3) Even as late as 1962 Mises is trying to defend the existence of synthetic a priori :

        “The essence of logical positivism is to deny the cognitive value of a priori knowledge by pointing out that all a priori propositions are merely analytic. They do not provide new information, but are merely verbal or tautological, asserting what has already been implied in the definitions and premises. Only experience can lead to synthetic propositions. There is an obvious objection against this doctrine, viz., that this proposition that there are no synthetic a priori propositions is in itself a—as the present writer thinks, false—synthetic a priori proposition, for it can manifestly not be established by experience..
        Mises, Ludwig von. 1962. The Ultimate Foundation of Economic Science: An Essay on Method. Van Nostrand, Princeton, N.J. p. 5.

        • Hank says:

          I disagree that “Mises affirms Hoppe’s interpretation.”

          Mises, in that quote, is addressing the question of whether tautologies (“aprioristic insight and pure reasoning”) gives us new insights about the world or if they are worthless in the sense that they don’t give us any new information. Mises thinks they do in the sense that the deduction may be surprising and revealing. To deny this would be analogous to saying that the deductions in mathematics don’t reveal anything since they are mere tautologies.

          Again, Mises never uses the word “synthetic” in Human Action. Don’t you think he would be capable of using this word if it described his position? Instead he says, “They work, and are in this sense true and valid.” All that matters is that the action axiom is undeniable, so it works. Who cares whether it is synthetic a priori? Are you going to deny human action? I’ll be waiting.

          Now, in the second, 1962 quote he address synthetic a priori propositions. Yet he still doesn’t make the claim that human action is synthetic a priori, so this is irrelevant to our discussion.

          He says if you deny the existence of synthetic a priori propositions, this is itself an synthetic a priori proposition. This is nothing new. If you claimed that nothing can be known without testing it, this claim itself should be testable, but it isn’t. Does your brain hurt? Don’t worry, thinking is hard.

          • Lord Keynes says:

            “Again, Mises never uses the word “synthetic” in Human Action. Don’t you think he would be capable of using this word if it described his position? “

            He does not need to use the term “synthetic a priori” directly to speak of this very same concept, just I do not need to use “synthetic a posteriori” directly when speaking of a empirical truth (the same thing).

            Your position bizarrely entails that synonymy or circumlocution is never used by Mises.

            In fact, the very words “It is consequently incorrect to assert that aprioristic insight and pure reasoning do not convey any information about reality and the structure of the universe” are equivalent to “synthetic a priori” just as Murphy says they are.

            “To deny this would be analogous to saying that the deductions in mathematics don’t reveal anything since they are mere tautologies. “

            Mathematical statements are mere tautologies.

            • Bharat says:

              You’re saying mathematical statements are mere tautologies that don’t reveal anything?

            • Hank says:

              I am ecstatic that we agree mathematical statements are mere tautologies. Mises’ quote was saying the same about economic propositions, that they are mere tautologies (analytic a priori propositions). This is NOT equivalent to saying that human action is synthetic a priori. Tell me HOW or WHY that quote is equivalent to him saying human action is synthetic a priori.

              I am aware you think Bob Murphy disagrees with me, but I can also make an appeal to authority, namely David Gordon. In the lecture I linked to, this is the quote from the power point:

              “Note that Mises does not say that praxeology consists of synthetic a priori truths. A synthetic proposition is not a tautology.” 44:43

              What you say about Mises’ use of “synonymy or circumlocution” harms your argument. Wouldn’t be MORE likely for him to use the word “synthetic” since he makes such rich use of “synonymy or circumlocution?” #FACEPALM

              • Lord Keynes says:

                ” Mises’ quote was saying the same about economic propositions, that they are mere tautologies”

                He does not say that at all: he says they are synthetic, telling you something real and informative about the world.

                It is consequently incorrect to assert that aprioristic insight and pure reasoning do not convey any information about reality and the structure of the universe. The fundamental logical relations and the categories of thought and action are the ultimate source of all human knowledge. They are adequate to the structure of reality, they reveal this structure to the human mind and, in this sense, they are for man basic ontological facts”
                Human Action, p. 86.

                If Mises believed that the propositions of praxeology are analytic a priori he has damned praxeology as saying nothing about the real world.

              • Major_Freedom says:

                LK:

                “Mises’ quote was saying the same about economic propositions, that they are mere tautologies”

                “He does not say that at all: he says they are synthetic, telling you something real and informative about the world.”

                False on multiple levels.

                First, Mises did in fact argue that human action is a tautology.

                Mises wrote:

                Praxeology is indifferent to the ultimate goals of action. Its findings are valid for all kinds of action irrespective of the ends aimed at. It is a science of means, not of ends. It applies the term happiness in a purely formal sense. In the praxeological terminology the proposition: man’s unique aim is to attain happiness, is tautological. It does not imply any statement about the state of affairs from which man expects happiness. – Human Action, pg 15(!).

                and

                Aprioristic reasoning is purely conceptual and deductive. It cannot produce anything else but tautologies and analytic judgments. All its implications are logically derived from the premises and were already contained in them. Hence, according to a popular objection, it cannot add anything to our knowledge. – ibid, pg 38.

                and

                In the concept of money all the theorems of monetary theory are already implied. The quantity theory does not add to our knowledge anything which is not virtually contained in the concept of money. It transforms, develops, and unfolds; it only analyzes and is therefore tautological like the theorem of Pythagoras in relation to the concept of the rectangular triangle. However,
                nobody would deny the cognitive value of the quantity theory. To a mind
                not enlightened by economic reasoning it remains unknown. A long line of abortive attempts to solve the problems concerned shows that it was certainly not easy to attain the present state of knowledge.
                – ibid, pg 38.

                The reason you remain utterly confused is because you fallaciously believe that if X is a tautology, then X does not expand our knowledge over the world.

                The word “tautology” seems to give you a mental breakdown every time you think of it.

              • Hank says:

                “If Mises believed that the propositions of praxeology are analytic a priori he has damned praxeology as saying nothing about the real world.”

                Then why isn’t this true for math? Let’s replace “praxeology” with “mathematics”.

                “If Mises believed that the propositions of [mathematics] are analytic a priori he has damned [mathematics] as saying nothing about the real world.”

                Ironically, in the quote you keep bringing up in every reply (btw, have you watched David Gordon’s lecture? no), Mises is arguing against this sort of nonsense. THAT IS THE WHOLE POINT OF THE QUOTE!

                “aprioristic insight and pure reasoning” = making analytic a priori propositions. LK, you have been defeated. LAY DOWN YOUR ARMS, SIR.

            • Major_Freedom says:

              LK:

              Any argument for the validity of empiricism is a tautology, in that it would have to presuppose empiricism as true, in order to prove empiricism is true.

              Tautologies are not what you think they are. To speak of tautologies does not mean the conversation is over, that you’ve shown an argument useless or wrong, or that you have exposed any flaw or shortcoming. Tautologies are just a particular category of knowledge.

              Synthetic a priori tautologies tell us truths about the real world.

              • Major_Freedom says:

                Tautologies are, logically speaking, just formulae that are true in every possible interpretation.

                It should not be surprising that the action axiom tautology is true in every possible interpretation, since interpretation is itself an action!

                In other words, if a person interprets interpretation, then of course they will always come to the same conclusions!

                Absolutely true propositions should have, and do have, this character.

    • Major_Freedom says:

      LK:

      “Mises’s apriorist praxeology is nothing but an exhausted and discredited program.”

      This is not an argument. It’s kicking sand in the sandbox.

      Discredited by who? Those who are wrong? Exhausted? What does that even mean?

      “His economic laws…”

      They aren’t “his” laws. They are laws that apply to everyone who acts.

      “— apart from a few obvious, trivial truths”

      If they are so trivial, why do you have such tremendous difficulty with them?

      “— do not have the status of natural laws, but even when some are confirmed as empirical regularities they are only contingent.”

      Of course they are “contingent.” They are contingent upon the existence of human actors, or more accurately, actors as such. If there are no actors, then there are no laws grounded on praxeology.

      “In fact, it was clear that apriorist Rationalism was untenable years before Mises even published Human Action when it was demonstrated that all alleged synthetic a priori knowledge — like Euclidean geometry or mathematics — is non-existent.”

      Demonstrated by whom? Do you even grasp the fact that “proof”, “existence”, and “non-existence” all have a priori rationalist grounding?

      Rationalism has shown historicism is untenable. Who showed this? Many. Mises. Strauss. Kant. Liebniz. The list goes on and on.

      “And as soon as any Austrian admits that the axioms of praxeology are empirical, the whole system and its theories become synthetic a posteriori, and verifiable/falsifiable by empirical evidence.”

      Austrians cannot “admit” what isn’t true.

      Empiricism is a self-contradictory epistemology, as many philosophers of the mind have shown. The concept “observation” cannot itself be validated by observation, for it would beg the question. The concepts “confirmation” (note: it’s not “verification”, that’s something else) and “falsification” presuppose a non-historical, non-empirical law of nature, namely, that the laws of nature themselves do not change over the course of time. A theory proposed in the past, tested in the present, and treated as confirmed or falsified in the future, presupposes that what is true in the past, is true in the present as well as true in the future. This assumption is not borne out of empiricism itself. Empiricism assumes it. Rationalism is inescapable.

      You’re wrong for the millionth time on this score.

      • Lord Keynes says:

        “Demonstrated by whom?”

        MF shows us his ignorance of non-Euclidean geometry and the modern scientific evidence that the universe has non-Euclidean space.

        The claim that Euclidean geometry is a universal truth of space known a priori and synthetic was overthrown.

  5. Eduardo Bellani says:

    Roderick Long’s book is relevant to this discussion IMHO -> mises.org/journals/scholar/long.pdf

  6. Ken Pruitt says:

    This blog needs far more Mises quotes!

  7. Bob Roddis says:

    Hiding about halfway up the page, LK makes the argument that Hayek really does not see economic calculation the way we do because Hayek was a limited government statist.

    http://consultingbyrpm.com/blog/2013/09/there-is-only-one-economic-law-mises-has-spoken.html#comment-72974

    See, this was all worth it.

    • Major_Freedom says:

      I once thought I understood 2+2=4.

      But then I changed my mind about universal healthcare, and it went straight out the window.

      LK is nothing but a political hack.

  8. Economic Therapist says:

    “presuppose a non-historical, non-empirical law of nature, namely, that the laws of nature themselves do not change over the course of time”

    The assumption that there are laws of nature which don’t change over time is the foundation of modern science, which has produced the internal combustion engine, skyscrapers, aeroplanes, telecommunication systems, computers, modern medicine, plastics, ceramics, metallurgy….

    Remind me again of what praxeology has produced, apart from a lot of words?

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