Theory and History

I have said this before. Mises was an economist. But he was a philosopher too. If one understands this, one would not be surprised at subjects like epistemology, free will etc being covered in his books on economics and politics. To someone who only knows of economics as supply and demand, and who has absolutely no exposure to philosophy, all this will seem like Greek or Latin. But that’s how it is. All knowledge rests on philosophy. Every subject of human interest has philosophical implications, or roots in philosophy, be it physics, or economics, or computing.

I haven’t yet read any technical work of his – that will require quite a bit of effort and time. But some of his monographs, like the ones I keep linking to from time to time, are approachable and can be read in a couple of sittings. His Theory and History is not a monograph, and neither is it like his Human Action, or Theory of Money and Credit. (One must note that Mises seems* to be a Kantian when it comes to his epistemology, and is a utilitarian when it comes to his ethics.) It is a work of pure philosophy. From the introductory chapter-

Regularity and Prediction
Epistemologically the distinctive mark of what we call nature is to be seen in the ascertainable and inevitable regularity in the concatenation and sequence of phenomena. On the other hand the distinctive mark of what we call the human sphere or history or, better, the realm of human action is the absence of such a universally prevailing regularity. Under identical conditions stones always react to the same stimuli in the same way; we can learn something about these regular patterns of reacting, and we can make use of this knowledge in directing our actions toward definite goals. Our classification of natural objects and our assigning names to these classes is an outcome of this cognition. A stone is a thing that reacts in a definite way. Men react to the same stimuli in different ways, and the same man at different instants of time may react in ways different from his previous or later conduct. It is impossible to group men into classes whose members always react in the same way.

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

The Concept of the Laws of Nature
Experience is always experience of past happenings. It refers to what has been and is no longer, to events sunk forever in the flux of time.

The awareness of regularity in the concatenation and sequence of many phenomena does not affect this reference of experience to something that occurred once in the past at a definite place and time under the circumstances prevailing there and then. The cognition of regularity too refers exclusively to past events. The most experience can teach us is: in all cases observed in the past there was an ascertainable regularity.

From time immemorial all men of all races and civilizations have taken it for granted that the regularity observed in the past will also prevail in the future. The category of causality and the idea that natural events will in the future follow the same pattern they showed in the past are fundamental principles of human thought as well as of human action. Our material civilization is the product of conduct guided by them. Any doubt concerning their validity within the sphere of past human action is dispelled by the results of technological designing. History teaches us irrefutably that our forefathers and we ourselves up to this very moment have acted wisely in adopting them. They are true in the sense that pragmatism attaches to the concept of truth. They work, or, more precisely, they have worked in the past.

Leaving aside the problem of causality with its metaphysical implications, we have to realize that the natural sciences are based entirely on the assumption that a regular conjunction of phenomena prevails in the realm they investigate. They do not search merely for frequent conjunction but for a regularity that prevailed without exception in all cases observed in the past and is expected to prevail in the same way in all cases to be observed in the future. Where they can discover only a frequent conjunction—as is often the case in biology, for example—they assume that it is solely the inadequacy of our methods of inquiry that prevents us temporarily from discovering strict regularity.

The two concepts of invariable and of frequent conjunction must not be confused. In referring to
invariable conjunction people mean that no deviation from the regular pattern—the law—of conjunction has ever been observed and that they are certain, as far as men can be certain about anything, that no such deviation is possible and will ever happen. The best elucidation of the idea of inexorable regularity in the concatenation of natural phenomena is provided by the concept of miracles. A miraculous event is something that simply cannot happen in the normal course of world affairs as we know it, because its happening could not be accounted for by the laws of nature. If nonetheless the occurrence of such an event is reported, two different interpretations are provided, both of which, however, fully agree in taking for granted the inexorability of the laws of nature. The devout say: “This could not happen in the normal course of affairs. It came to pass only because the Lord has the power to act without being restricted by the laws of nature. It is an event incomprehensible and inexplicable for the human mind, it is a mystery, a miracle.” The rationalists say: “It could not happen and therefore it did not happen. The reporters were either liars or victims of a delusion.” If the concept of laws of nature were to mean not inexorable regularity but merely frequent connection, the notion of miracles would never have been conceived. One would simply say: A is frequently followed by B, but in some instances this effect failed to appear.

Nobody says that stones thrown into the air at an angle of 45 degrees will frequently fall down to earth or that a human limb lost by an accident frequently does not grow again. All our thinking and all our actions are guided by the knowledge that in such cases we are not faced with frequent repetition of the same connection, but with regular repetition.

The Limitations of Human Knowledge
Human knowledge is conditioned by the power of the human mind and by the extent of the sphere in which objects evoke human sensations. Perhaps there are in the universe things that our senses cannot perceive and relations that our minds cannot comprehend. There may also exist outside of the orbit we call the universe other systems of things about which we cannot learn anything because, for the time being, no traces of their existence penetrate into our sphere in a way that can modify our sensations. It may also be that the regularity in the conjunction of natural phenomena we are observing is not eternal but only passing, that it prevails only in the present stage (which may last millions of years) of the history of the universe and may one day be replaced by another arrangement.

Such and similar thoughts may induce in a conscientious scientist the utmost caution in formulating the results of his studies. It behooves the philosopher to be still more restrained in dealing with the apriori categories of causality and the regularity in the sequence of natural phenomena.

The apriori forms and categories of human thinking and reasoning cannot be traced back to something of which they would appear as the logically necessary conclusion. It is contradictory to expect that logic could be of any service in demonstrating the correctness or validity of the fundamental logical principles. All that can be said about them is that to deny their correctness or validity appears to the human mind nonsensical and that thinking, guided by them, has led to modes of successful acting.

Hume’s skepticism was the reaction to a postulate of absolute certainty that is forever unattainable to man. Those divines who saw that nothing but revelation could provide man with perfect certainty were right. Human scientific inquiry cannot proceed beyond the limits drawn by the insufficiency of man’s senses and the narrowness of his mind. There is no deductive demonstration possible of the principle of causality and of the ampliative inference of imperfect induction; there is only recourse to the no less indemonstrable statement that there is a strict regularity in the conjunction of all natural phenomena. If we were not to refer to this uniformity, all the statements of the natural sciences would appear to be hasty generalizations.

Regularity and Choosing
The main fact about human action is that in regard to it there is no such regularity in the conjunction of phenomena. It is not a shortcoming of the sciences of human action that they have not succeeded in discovering determinate stimulus-response patterns. What does not exist cannot be discovered.

If there were no regularity in nature, it would be impossible to assert anything with regard to the behavior of classes of objects. One would have to study the individual cases and to combine what one has learned about them into a historical account.

Let us, for the sake of argument, assume that all those physical quantities that we call constants are in fact continually changing and that the inadequacy of our methods of inquiry alone prevents us from becoming aware of these slow changes. We do not take account of them because they have no perceptible influence upon our conditions and do not noticeably affect the outcome of our actions. Therefore one could say that these quantities established by the experimental natural sciences may fairly be looked upon as constants since they remain unchanged during a period of time that by far exceeds the ages for which we may plan to provide.

But it is not permissible to argue in an analogous way with regard to the quantities we observe in the field of human action. These quantities are manifestly variable. Changes occurring in them plainly affect the result of our actions. Every quantity that we can observe is a historical event, a fact which cannot be fully described without specifying the time and geographical point.

The econometrician is unable to disprove this fact, which cuts the ground from under his reasoning. He cannot help admitting that there are no “behavior constants.” Nonetheless he wants to introduce some numbers, arbitrarily chosen on the basis of a historical fact, as “unknown behavior constants.” The sole excuse he advances is that his hypotheses are “saying only that these unknown numbers remain reasonably constant through a period of years.” Now whether such a period of supposed constancy of a definite number is still lasting or
whether a change in the number has already occurred can only be established later on. In retrospect it may be possible, although in rare cases only, to declare that over a (probably rather short) period an approximately stable ratio-—which the econometrician chooses to call a “reasonably” constant ratio—prevailed between the numerical values of two factors. But this is something fundamentally different from the constants of physics. It is the assertion of a historical fact, not of a constant that can be resorted to in attempts to predict future events.

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

In the mathematical treatment of physics the distinction between constants and variables makes sense; it is essential in every instance of technological computation. In economics there are no constant relations between various magnitudes. Consequently all ascertainable data are variables, or what amounts to the same thing, historical data. The mathematical economists reiterate that the plight of mathematical economics consists in the fact that there are a great number of variables. The truth is that there are only variables and no constants. It is pointless to talk of variables where there are no invariables.

*Rothbard calls his use of the term a priori “idiosyncratic.” Further, because Mises believes that some knowledge can be a priori in nature, just like Kant, it would not be wrong to state that his epistemology is Kantian.

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