On The Limits Of The Misesian Criticism


“Mises’s contention came in setting the context for Human Action by explaining why people have had such a hard time accepting the validity of (Austrian) economics as a field of knowledge–it does not fit in with anything else.” – Konrad

Love you man, but I want to clean this up a bit. And I hope you will forgive me for using your statements as a jumping off point to articulate this subject a little more clearly than is usual in our field.

2) The first is your statements (a) “put into context” and (b) “human action”.

Praxeologically speaking, any statement regarding human action, not stated as human action, is untestable by praxeological analysis. As such, if you can’t say something in operational terms, then it is possible that you are mistaken, or misled, since only such operational language opens any statement to praxeological testing.

Mises was trying to refute socialism.
He was frustrated because there was not empirical means of demonstrating that it wouldn’t work. So he had to rely on rational deduction. He was attempting to show (as was popper by very different means) how socialism was impossible – particularly, the socialist method of production. Praxeology was his attempt to use the very clear, irrefutable, sympathetic test of the rational incentives of actors given their need to act in real time, to refute the theory that humans would act by the same means without money and prices. Without money and prices, and the incentives that they make possible, humans cannot rationally act. He suggested, and argued poorly, that humans literally could not think, in the same way that we would be radically impaired in our thinking, without the use of numbers, numeric operations, ratios, measurements, and the syllogism.

As such, if people cannot cooperate rationally using property, money, prices and time, then in fact, no science of economics is therefore possible. We cannot conduct a science predicated on a unit of measure dependent upon property and prices, if neither property nor prices no voluntary cooperation exist. That is non-logical.

We should note that this is an argument, now proven, both logically and by evidence, that the socialist method of production does not work, precisely as Mises predicted, because Calculation and it’s obverse, Incentives, are impossible.

But this is a limited criticism. We must understand that the limit of Misesian criticism, is the socialist mode of production.

It does not mean that progressive taxation, especially by simply increasing transaction costs at the high end, and redistributing the fees on those costs to consumers, or investing them into infrastructure violate the ability of people to think, plan, and coordinate their actions. The science of economics can in fact exist, if the logical method of measurement that it depends upon: voluntary cooperation using property, money and prices, does exist/

So the Misesian critique of economics as a discipline dependent upon human action is a refutation of the socialist mode of production, but it is not a refutation of the democratic socialist redistributive method of production.

(Although I am not sure anyone else has said so this clearly. I haven’t run across it if so. Caplans ‘Why I am not..” is an obscurant, and meaningless argument which he later took the teeth out of himself : there is no difference between economic calculation and incentives. They are mutually dependent concepts. An argument which I forgive him for, and attribute to the folly of his youth. )

2) The second problem you put forth is that people have a problem understanding Austrian Economics. And I’m afraid that’s just not demonstrably true.

(a) the argument from the mainstream economics profession is that the insights of the Austrians have been fully integrated into mainstream economics.

(b) The only remaining dispute that separates Austrian economists from mainstream economists today, is the theory of the business cycle, where by continuous distortions of the money supply, while long term neutral in affect on price, are non-neutral on the Sustainable Patters Of Specialization and Trade – largely due to little more than the fact that humans due to the process of youth, maturity, reproduction, decline in learning capacity (or increase in required repetitions), as well as normal aging, mean that not only are prices, and contracts ‘sticky’ but so are human lives and relations. And while we may ameliorate the problems caused by the stickiness of prices,we appear to have very little control over contracts, and the accumulated impact on individuals in the business cycle means that such cycles, the longer that they are perpetuated, force their members to become increasingly sticky, and if more than four years to nine years in duration, that it is no longer possible for individuals to transition at anywhere near the same quality of life. This may in fact be another argument against immigration which only exacerbates this problem severely.

The last argument, and the one made by conservative advocates of Austrian economics, is not just the utility of the lost human capital, but the loss of moral capital, and the increase in demand for the state as insurer, now that the individual citizens have been placed at risk by the use of credit and insurance by the state, rathe than allowing the natural, and frequent cycle of PSST to discourage people from over-investing in any given pattern, and instead, developing dynamic risk protection given the constant reordering of such patterns.

3) The point being the one I articulated in my first response to your post: that the Austrian method makes visible the involuntary transfer of property, and the behavior of individuals within patterns of sustainable specialization and trade IF WE MEASURE patterns of sustainable specialization and trade as our category of measurement. (industry networks are the highest level of meaningful aggregation). And investment in trade policy and industrial policy should outweigh any interest in monetary policy. If only because those policies have been in use since the dawn of human cities, and appear to have worked well. Whereas, the use of Keynesian aggregates and monetary policy does not localize distortions and those distortions that are caused by such policy are not measured, or even measurable.

Just as Einstein did not invent relativity(actually, constancy), Keynes did not invent his ideas either – he adapted them from Marx, and cut out the references to prevent criticism of what he had accomplished via even greater obscurant language than Marx: the forcible involuntary transfer of wealth and the consequential empowerment of the government as the vehicle for such transfer. All of which was justified as a means of decreasing unemployment.

The sacrifice of the west for reduction of unemployment and facilitation of the expansion of the reproduction of the lower classes that had been held in check by private property and manorialism for more than 2500 years.

The great weakness of human reason is our inability to disentangle multiple axis of complex relations.

Only analysis of the voluntary transfer of property allows us to disentangle heavily loaded propositions and reduce what appears to be many competing and overlapping axes of causality to one simple factor: whether property, which is the necessary device for cooperation, has been voluntarily expropriated or voluntarily exchanged.

This is probably worth sharing or saving for later reference.

Curt Doolittle
The Propertarian Institute


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