Foreword

This essay is my attempt to describe the manner in which the fundamentals of Austrian economic thought affirm man’s ability to know this world through his rational faculty. Hence, I seek to represent the Austrian view and its implications as accurately as I can—which involves using terms and concepts which I, as an Objectivist, might not necessarily endorse. Unlike Ludwig von Mises, I do not adhere to Kantian epistemology—and do not believe in the synthetic-analytic dichotomy. However, I acknowledge that Misesian contributions to Kantian epistemology render the latter less flawed than it otherwise would have been. Mises and his intellectual successors recognize what many Kantians and post-Kantians did not: the existence of synthetic a priori true propositions—which serve as the crucial link between reason and observation. The Objectivist who rejects the synthetic-analytic dichotomy can simply refer to such propositions as axioms (or the derivatives of axioms). “Axioms/axiom-derivatives” and “synthetic a priori true propositions” are, for all real purposes, identical designations. Aside from this slight epistemological clarification, I fully endorse the endeavor of praxeology in its analysis of human action qua action and this idea’s implications.

Introduction

The discipline of praxeology—as formulated by Ludwig von Mises—affirms the ability of the human rational faculty to deductively obtain certain knowledge about aspects of reality. The starting point of praxeology, the action axiom, is both irrefutable and ubiquitously manifested in reality. The action axiom thus serves as a link between observation and reason, allowing the latter to accurately systematize and gain true insight into the former. Praxeology repudiates all doctrines which seek to sever reason from reality and contend that certain, rational knowledge is impossible—including empiricism and historicism.

The Action Axiom

Praxeology, the science of human action, begins with the action axiom. Action, exhibited by all humans, is “purposeful behavior” (Mises 11). An acting man perceives a certain set of ends as subjectively valuable and then chooses means that he thinks will attain those ends. The goal of all action is ultimately the satisfaction of the individual actor: “Acting man is eager to substitute a more satisfactory state of affairs for a less satisfactory. His mind imagines conditions which suit him better, and his action aims at bringing about this desired state” (Mises 14). In order for action to occur, two conditions must be met. The actor must be dissatisfied in some manner. Furthermore, the actor must consider himself capable of remedying his specific dissatisfaction. If this is so, then the actor will pursue the dissatisfaction’s elimination, provided that the benefit of eliminating it exceeds the disutility of his own labor in doing so.

From the perspective of the agent, all action is “rational” in the sense that it has reasons behind it: the agent thinks that the means he chooses will bring about the ends he desires. The acting man may be mistaken in his interpretation of the facts of reality and might therefore falsely perceive causality where none exists. In retrospect, he might realize his past mistake and adjust future actions accordingly. However, it remains true that he had a clear reason behind his past decision, based on false information though it might have been.

Furthermore, the action axiom encompasses any conceivable nature of a man’s means and ends. The ends can be goals of the mind or the body or both, moral or immoral or neither, and relying on any possible set of means accessible to a human being. According to Mises, “All ends and all means, both material and ideal issues, the sublime and the base, the noble and the ignoble, are ranged in a single row and subjected to a decision which picks out one thing and sets aside another” (3). The existence of human action implies that the actor arranges the entirety of the ends available to him on a single ordinal value scale: he pursues the end which he considers most valuable at a given time. Subjectively, the actor knows his value hierarchy and why he selected to pursue the end he did. For the observer, however, the only way to know that an actor valued X over Y at a given time is if the actor actually chose to pursue X rather than Y.  Acting is the way actors manifest the nature of their individual value scales.

Moreover, the abstinence from certain purposeful activity that an actor considers open to him also constitutes action: “A man who abstains from influencing the operation of physiological and instinctive factors which he could influence also acts. Action is not only doing but no less omitting to do what possibly could be done” (Mises 14). Volitional abstinence is action in that the actor deliberately chooses the consequences of non-interference with a given factor of reality over the consequences of interference. The former rank higher on his subjective value scale than the latter. Hence, where man has free will, he acts. If his free will chooses to do something, he acts; if it chooses not to do something, he also acts. Action is an inescapable corollary to man’s volitional nature.

Furthermore, the existence of action is axiomatic since even the very attempt to deny it will bring about its further affirmation (Hoppe, “Praxeology and Economic Science: Sec. I,” Economic Science and the Austrian Method). The attempted denial of the action is an action in itself. The agent undertaking it seeks an end: the disproof of the action axiom. He also selects a means toward this end: his argument. Of course, his choice of means indicates a misapprehension of reality on his part, since no argument can refute the action axiom. However, the agent believes at the time of his action that he can refute the action axiom by such means; hence, though his belief is false, he is still acting toward his chosen end.

Indeed, acting can be said to be a prerequisite for humanity: “[Man] is not only homo sapiens, but no less homo agens. Beings of human descent who either from birth or from acquired defects are unchangeably unfit for any action (in the strict sense of the term and not merely in the legal sense) are practically not human” (Mises 15). Indeed, if we grant that all human beings have free will, a man who does not act in some way is inconceivable. “Action is will put into operation and transformed into an agency” (Mises 3), and a man who does not act would either not have a will (i.e., not be a man) or not be able to transform it into an agency. Will without agency is meaningless: a hypothetical creature who possessed it would, for example, want to move its arm and direct it to move without actually moving it. It would want to form thoughts, but not be able to do so—since the actual deliberate construction of thoughts is an action in itself. Such an entity would not be able to direct itself either physically or mentally: its “will” would be severed from all of reality and, not having a relationship to anything else, would be practically nonexistent. Of course, such a creature cannot exist: one cannot have the ability to consciously, deliberately want without having the ability to think—a category of action. Thus, a creature with will but without agency is a contradiction in terms. Will implies agency; man, being volitional, acts. He acts both by doing and by not doing, provided that he has will—which we know he does.

We have thus analyzed the identity, universality, and incontrovertibility of the action axiom; we have demonstrated its inseparability from human nature itself. Now we shall show how it serves as a bridge between human reason and observation.

Reason and Observation

Via the action axiom, praxeology bridges a significant gap in Kantian epistemology: it explains how man’s reason can accurately interpret his observations and thereby know reality.

According to Austrian school economist Hans-Hermann Hoppe, the existence of action, like all axioms, is an a priori synthetic proposition: “Synthetic a priori propositions are those whose truth-value can be definitely established, even though in order to do so the means of formal logic are not sufficient (while, of course, necessary) and observations are unnecessary” (“Praxeology and Economic Science: Sec. I”). If we tried to purely deduce the existence of action from more basic starting premises, we would not be able to do so. The very use of logic (a means) for the purpose of proving the existence of action (an end) constitutes an action in itself; hence, we cannot use logic alone to prove that on which our very use of logic is already predicated. Furthermore, we cannot induce the action axiom purely from observing the data of external, physical reality. All that we would gather by such a method would be the movement of certain material entities: human beings and the objects they manipulate. We would obtain no understanding of those entities’ purpose by simply observing their exterior forms.

Yet, while we cannot deduce or induce the action axiom, we know that it is true. Immanuel Kant himself recognized that a priori synthetic propositions, despite being neither provable nor observable, are unavoidably correct: “Kant's answer is that the truth follows from self-evident material axioms… They are self-evident because one cannot deny their truth without self-contradiction; that is, in attempting to deny them one would actually, implicitly, admit their truth” (Hoppe,  “Praxeology and Economic Science: Sec. I”). If we know that a priori synthetic propositions are true, how, then, do we arrive at them?

 The way we know the truth of the action axiom is an alternative to both sides of the traditional reason-observation dichotomy and a means by which this dichotomy can be shattered. This method is introspection. According to Hoppe, “the truth of a priori synthetic propositions derives ultimately from inner, reflectively produced experience:” we know their validity by examining the nature and function of our own minds and their basic similarities to the minds of other men.  We know of the existence of action because we are actors ourselves; we constantly and consciously select ends to pursue and means by which to pursue them. Our minds are aware of our status as acting beings. Other humans communicate their choices of means and ends to us, and we recognize fundamental similarities between their modes of functioning and ours. When we observe them engaged in a certain activity, we know that they are acting; we know this because we can act and would have to act if we were engaged in the same activity as they.

Some might object to the inference that other people are volitional, acting beings like oneself. These critics would state that the attribution of will and agency to others is just a hypothesis on the observer’s part—not conclusively warranted by the mere observation of others’ physical movements. Their argument alleges the impossibility of conclusively knowing that other people have consciousness, volition, and agency. In the critics’ opinion, the hypothesis that other people act might be convenient in making sense of their physical movements, but it need not be the only true hypothesis—nor can it be verified with certainty.

These critics are mistaken: they fail to grasp that action is both a priori synthetic and physical. Even though external observation is not necessary to understand the existence and meaning of action, action applies to the external, physical reality: every man acts in that reality. The body and mind of the acting being are physical existents: a certain fundamental physical nature enables the human body and mind to act. By sheer introspection, any given acting man can conclude: “The way my body and mind are enables me to act. Any entity with the essentially same structures of body and mind—functioning in the same way—will also be capable of acting.” One can arrive at this insight without ever encountering another acting being. However, when one encounters beings with a fundamentally similar physical structure to one’s own, one knows—through introspection—that they, too, are acting entities.

Other creatures with different fundamental physical natures—including plants and the lower animals—lack the capacity to act, since they lack volition: their existence is sustained by instinct and reflex. The acting man sees that these creatures are fundamentally different from him in body and mind and therefore concludes that they cannot act. However, all humans share the same fundamental physical nature: their bodies exhibit a similar appearance—all particulars of bodily dimensions, color, gender, and miscellaneous small details notwithstanding. Furthermore, the essential physical structures of every man’s brain and sense organs are the same. An acting man encountering any other man will realize: “This man fulfills my previously arrived at criterion for acting beings—since he is fundamentally similar to me in his characteristics, and I know that I am an acting being.”

The universality of action among human beings is no mere hypothesis: it is a fact knowable with certainty. Just because we can only discover the existence of action by looking into our own minds does not mean that action is a product of our imagination, severed from reality.  On the contrary, “our mind is one of acting persons. Our mental categories have to be understood as ultimately grounded in categories of action. And as soon as this is recognized, all idealistic suggestions immediately disappear” (Hoppe, “Praxeology and Economic Science: Sec. I”). The existence of our actions in reality is the very reason why we can introspect to discover the fact that we act. Implicit in action is the pursuit of ends via real means: even if the ends the actor pursues are in fact non-existent—such as the favor of the great Rain Spirit in watering his crops—his means toward pursuing that end must exist in this reality. If he does a rain dance to obtain the fictitious spirit’s favor, he will be dancing with a real, physical body upon real ground, asking the Spirit to pour water on real crops.

If a man acts, he must necessarily be linked to reality and able to pursue real means—otherwise, he would not be able to act. Man understands the real nature of his actions through the use of his mind—through introspection. In fact, introspection is itself an action, as are all the fundamental processes of man’s mind: as “categories of action, they must be mental things as much as they are characteristics of reality. For it is through actions that the mind and reality make contact” (Hoppe, “Praxeology and Economic Science: Sec. I”). Action can be manifested in external reality, but it requires the mind to grasp. It cannot be solely a mental category detached from the outside world—since it is the prerequisite for and determinant of all human mental categories. Nor can action be a solely empirical category distinct from the operations of the individual actor’s mind, since the mind—aside from being necessary for introspection—assigns to acting man his choice of ends and means. Action can be grasped by neither reason nor observation alone; in bridging the two, however, it affirms the validity of both. Since man’s mind belongs to a being acting in reality, its analytical faculty—its reason—can accurately interpret human observation—or the data of reality as available to the human senses. Moreover, since every man is an acting being—every man has the capacity to reason accurately and make accurate observations, if he chooses to use that capacity.

Certain Knowledge

Since, following from the action axiom, man’s reason can accurately interpret his observations, it can thereby obtain fully correct, certain knowledge about aspects of reality. The science of praxeology consists of a systematic collection of certain knowledge derived from the action axiom and known to be true. Just as the action axiom is irrefutable, so are the propositions stemming from it. Man can know the truth of praxeological propositions fully and absolutely: no amount of further experimentation or empirical evidence can refute them.

Its statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification and falsification on the ground of experience and facts. They are both logically and temporally antecedent to any comprehension of historical facts. They are a necessary requirement of any intellectual grasp of historical events.  (Mises 32)

            Praxeology offers synthetic a priori insights about reality.  It requires no observation to arrive at, but nonetheless offers knowledge that no observation can possibly refute—and many observations will confirm. Furthermore, praxeology is synthetic a priori true, because its starting point—the action axiom—is irrefutably correct. Praxeology is not merely analytic a priori, since it requires more than the mechanisms of formal logic to confirm: one has to be an acting being oneself in order to know of action and praxeology. While formal logic is necessary in explicating praxeology, it is not sufficient: logic is a category of action and must be preceded by it. Axioms—like the proposition that humans act—cannot be proved by means of logic alone. They are the starting points of logical systems and thus cannot be arrived at from within the systems themselves. Their truth is known more fundamentally: any attempt to refute them implicitly confirms them.

The action axiom makes possible the acquisition of a plethora of a priori knowledge about reality. A priori true economic propositions, however, are arrived at with especial directness: “Economic propositions flow directly from our reflectively gained knowledge of action; and the status of these propositions as a priori true statements about something real is derived from our understanding of what Mises terms ‘the axiom of action’” (Hoppe, “Praxeology and Economic Science: Sec. I”). Economics, as a subcategory of praxeology, is rationally knowable not merely because of the action axiom, but as a direct derivation from it. For example, the law of diminishing marginal utility can be deduced from the action axiom. In acting, a man uses a given economic good to fulfill a set of available ends. If he values a given end above all others, he will devote his first unit of the relevant good to that end—since his valuation of that end can only be observed via the actions he takes to pursue it. He will necessarily devote his second unit of the same good to the second most subjectively valued end he deems attainable via that good’s use. The value the actor derives from the use of the good’s second unit is thus necessarily less than the value obtained from using its first unit: the second most valuable end is necessarily less valuable than the first. Such reasoning can be extrapolated indefinitely, applicable to as many units of a good a given economic actor might have, no matter what the identity of the actor and of the good in question might be. The law of diminishing marginal utility holds for all time periods—past, present, and future—and no empirical datum could conceivably refute it. 

            But the propositions of economics are not the sole extent of a priori knowledge made possible by the action axiom’s existence. Indeed, to clearly delineate the bounds of knowledge that can be arrived at via an axiomatic-deductive approach, another a priori truth is needed: “that humans are capable of argumentation and hence know the meaning of truth and validity” (Hoppe, “On Praxeology and the Praxeological Foundations of Epistemology: Sec. III”). Hoppe’s axiom of argumentation, like the action axiom, cannot be consistently denied. One’s attempted refutation of the existence of human argumentation would itself be an argument.

Metaphysically, argumentation is a subclass of action: to argue is to select a set of verbal and logical means to pursue the end of demonstrating something to be true or false. However, epistemologically, argumentation is prior to action: “without argumentation nothing could be said to be known about action” (Hoppe, “On Praxeology and the Praxeological Foundations of Epistemology: Sec. III”). The only way one can use argumentation is if one is an acting being. However, the only way one knows that one is an acting being is by using his reason and exercising argumentation. If one did not use argumentation (including abstaining from attempting to deny one’s argumentative capacity), one would never know that one is an acting being—nor would one be able to articulate to himself or others why one pursued a given course of action. One would have to choose ends and means without knowing why one chose them. This is a contradiction in terms: the very concept of ends and means makes no sense without the actor’s exercise of reason. Saying or thinking, “I chose means X to get end Y,” constitutes an argument and a reason for one’s action. Without the ability to convey this reason to at least oneself, one would not be able to act at all. The capacity to act implies the capacity to use argumentation.

 Only through argumentation can one arrive at the action axiom and the praxeological knowledge following from it. But because argumentation is, in fact, based on action, it can arrive at certain truths: “the possibility of argumentation presupposes action in that validity claims can only be explicitly discussed in the course of an argumentation if the individuals doing so already know what it means to act and to have knowledge implied in action” (Hoppe, “On Praxeology and the Praxeological Foundations of Epistemology: Sec. III”). Since we are beings who act in reality, our argumentation—being a type of action—is also in and of reality.

It is possible to argue falsely: this would be a specific case of using improper means to achieve a desired end. However, correct argumentation is similarly possible, as is a more general case of using means that actually fulfill a given actor’s goals. If it were impossible to act correctly, then no means selected by humans would ever arrive at ends those human beings aimed at. Since we observe ubiquitously that human beings frequently select proper means to actually fulfill their ends, we know that a correct pairing of means and ends is possible. Since argumentation facilitates the pairing of means and ends, correct argumentation must be possible as well. If correct argumentation were impossible, so would any sort of eradication of dissatisfaction—which can only come about from reaching one’s chosen ends. Furthermore, if no human ends—including basic survival needs—were met, all humans would be long dead. We know that many humans exist and routinely remedy dissatisfactions; therefore, much of their action and argumentation must be correct.

 Since argumentation pertains to reality, man can obtain knowledge about reality by using argumentation correctly. Knowledge, the product of argumentation, is then itself a category of action.

            If argumentation is a subclass of action, then the realm of a priori, certain knowledge can be described as the realm of propositions that can be arrived at argumentatively, without being contingent on any additional external observations. According to Hoppe, the “task of epistemology [is] that of formulating those propositions which are argumentatively indisputable in that their truth is already implied in the very fact of making one's argument and so cannot be denied argumentatively” (Hoppe, “On Praxeology and the Praxeological Foundations of Epistemology: Sec. III”). According to Hoppe, epistemology must then “delineate the range of such a priori knowledge from the realm of propositions whose validity cannot be established in this way but require additional, contingent information for their validation, or that cannot be validated at all and so are mere metaphysical statements in the pejorative sense of the term metaphysical.” Proper epistemology will tell us which facts can be known through reasoning and introspection—and which require specific observations to verify; furthermore, it will tell us which propositions are absurd or altogether irrelevant to reality. The action axiom enables such an epistemology to claim that man can be certain in the accuracy of both his a priori knowledge and his observation—that no fact of reality is inherently off limits to human comprehension.

Any denial of knowledge inextricably linked to the axioms of action and argumentation would entail a contradiction of one’s own argument and would be refuted by one’s very ability to argue. Furthermore, the realm of a priori knowledge is praxeologically constrained: it is only as broad as the categories of human action allow it to be. It is possible to have genuine a priori knowledge about something other than action, but the very pursuit knowledge can only be facilitated by action. Knowing is an end toward which deliberate physical and mental activity is a means. This praxeological constraint is in fact an assurance: it allows us to understand all genuine a priori knowledge as knowledge of reality, and not merely of the categories of our own minds. Hoppe explains: “Acting is a cognitively guided adjustment of a physical body in physical reality. And thus, there can be no doubt that a priori knowledge, conceived of as an insight into the structural constraints imposed on knowledge qua knowledge of actors, must indeed correspond to the nature of things”  (“On Praxeology and the Praxeological Foundations of Epistemology: Sec. III”). Because action necessarily exists in physical reality, a priori knowledge—being a subcategory of action—must also pertain to that reality. Action and, in particular, argumentation provide a figurative bridge through which the data of reality can enter our minds and reside there without being vulnerable to further disproof or rejection.

            The ability to arrive at certain a priori knowledge about reality deals a mortal blow to two doctrines denying the possibility of accurate axiomatic-deductive theoretical insights: empiricism and historicism.

            Refutation of Empiricism

            Empiricism claims that the only true knowledge about reality is empirical and observational; furthermore, such knowledge cannot be held with certainty, because it is always contingent on future observation. To the empiricist, every item of knowledge must be arrived at via some particular observation and must be potentially open to falsification by some other particular observation. The empiricist considers any certain knowledge to be by definition unfalsifiable and therefore meaningless and irrelevant to reality.

            Commenting on the practical consequences of empiricism, Mises notes that “[i]t is a mistake to set up physics as a model and pattern for economic research” (6). Indeed, the empiricist seeks to impose the methods which have apparently led to progress in the physical sciences upon all other disciplines. Empiricism’s consequences in the field of economics include the experimental testing of propositions that rightfully belong to the realm of praxeology. Instead of arriving at economic laws from irrefutable starting insights into the nature of human action, the empiricist proceeds to gather particular economic data first and create a contingent theoretical model on the basis of that data. The model is judged on its capacity to predict future economic events, rather than on its consistency with far more fundamental and reliable insights necessarily following from action itself.

            However, Mises realizes that the empiricist conceit of applying experimental methodology to all areas of study merely betrays an ignorance of the roles of logic and of all methods outside the scope of a laboratory scientist’s field of work: “The research worker in the laboratory considers it as the sole worthy home of inquiry, and differential equations as the only sound method of expressing the results of scientific thought. He is simply incapable of seeing the epistemological problems of human action. For him economics cannot be anything but a kind of mechanics” (Mises 9). Empiricism, in imitating the methods of the natural sciences, implicitly ignores the very existence of human action. So doing, it encounters a major problem: human beings are not readily experimented upon.

Man’s behavior, unlike that of inanimate nature, is not deterministic. Inanimate entities have specific natures which necessitate identical responses in identical circumstances. These entities cannot deliberately affect their own responses to make it different from what it otherwise would be. Furthermore, contrary to the assertions of quantum physicists—grounded in improper epistemology—no act of observation can magically alter the observed inanimate entities’ behavior without impacting physical causality and thus altering the entity’s circumstances. If a given act of observation alters physical causality, it will always do so in the same way and produce the same result with regard to the observed entity.

 Human beings, on the other hand, choose the course of action they will follow; they select their values and the means by which they will obtain or secure them. Tweaking a given variable does not necessarily guarantee a similar outcome for all human experimental subjects. Furthermore, unlike inanimate objects, humans can know that they are being experimented on and adjust their behavior accordingly. Human beings are autonomous agents, not mere passive respondents to the experimenter’s influences and designs. The behavior of other acting humans cannot be infallibly predicted except when it can be logically traced to the nature of action itself. The empiricist, by denying himself the latter pursuit, throws away the most powerful and accurate economic tool available to him.

            Hoppe offers another refutation of empiricism, starting from that doctrine’s fundamental premise: that no knowledge can be categorically a priori true. He proceeds to show how following this premise to its logical conclusion results in absurdity. A consistent empiricist would have to claim that even the central empiricist tenet itself is “merely hypothetically true, i.e., a hypothetically true proposition regarding hypothetically true propositions, [which] would not even qualify as an epistemological pronouncement” (“On Praxeology and the Praxeological Foundations of Epistemology: Sec. II”). The empiricist faces two options. Either he must assert the central empiricist tenet’s correctness categorically—hence laying claim to certain, unfalsifiable, a priori knowledge—or he must concede that the validity of empiricism itself is a mere hypothesis, open to falsification by later observations. The latter option also renders possible the existence of a priori knowledge: empiricism “would then provide no justification whatsoever for the claim that economic propositions are not, and cannot be, categorically, or a priori true, as our intuition informs us they are” (Hoppe, “On Praxeology and the Praxeological Foundations of Epistemology: Sec. II.”) If empiricism is a mere hypothesis, the empiricist would have no means to categorically assert that economic knowledge cannot be a priori true. Empiricism, under such an assumption, would become vulnerable to refutation by the first demonstration of true a priori knowledge to come along. We have already discussed some such evidence, including the a priori nature of action, argumentation, and the law of diminishing marginal utility. Because a priori economic laws are true ubiquitously, their predictive power, too, far exceeds the empiricists’ own contingent theories—and has done so since the Austrian school’s inception. Under the empiricists’ own basic assumption, such demonstration suffices to falsify the empiricist hypothesis.

            Furthermore, aside from praxeology itself, a vast quantity of a priori knowledge can be derived from logic, arithmetic, and geometry. The success of each of these disciplines demonstrates the falsehood of the empiricist hypothesis in practice. Hoppe posits the necessary consistency of logic with reality due to human action:

In each and every action, an actor identifies some specific situation and categorizes it one way rather than another in order to be able to make a choice… [S]imply by virtue of acting with a physical body in physical space we invariably affirm the law of contradiction and invariably display our true constructive knowledge of the meaning of ‘and’ and ‘or.’ (“On Praxeology and the Praxeological Foundations of Epistemology: Sec. III”)

Acting man knows the validity of the conjunction “and” because he can pursue one action, then pursue another. He can describe this succession of pursuits as pursuing action X and action Y. Furthermore, acting man knows the validity of the conjunction “or” because acting implies making choices on one’s value scale—prioritizing in pursuing higher-ranked values by devoting more attention to them than to lower-ranked values or ends that are of no value to the actor. Acting man always faces choices between some actions and others: he can pick action X or action Y, with X as the opportunity cost of Y and vice versa. “And” and “or” are necessary in describing action and thus are not only true but indispensable tools for fathoming reality.  Logical categorization is a part of action, which is a part of reality. Therefore, logical categorization, properly performed, is, too, a part of reality—and a means to an accurate understanding thereof.

            Similarly, to the empiricist, “the successful applicability of arithmetic in physics is an intellectual embarrassment” (Hoppe, “On Praxeology and the Praxeological Foundations of Epistemology: Sec. III”). Hoppe explains that the key to arithmetic is repetition—a repetition of a given action. In order to count an object, one must act. In order to count yet another object of the same type, one must act again in a manner fundamentally similar to the last. Arithmetic refers to an action being repeated in this manner as having been done twice; since the action referred to distinct entities—and  each repetition of the action counted one entity—arithmetic can say that two entities were registered via the counting procedure. The existence of action can be arrived at a priori. Because it is possible to repeat a given action in reality, the counting numbers—the foundation of arithmetic—must, too, be examples of true synthetic a priori knowledge.

            Hoppe claims that a consistent empiricist would seek “to establish the theorem of Pythagoras by actually measuring sides and angles of triangles. Just as anyone would have to comment on such an endeavor, mustn't we say that to think economic propositions would have to be empirically tested is a sign of outright intellectual confusion?” (“Praxeology and Economic Science: Sec. I”). The empirical testing of the Pythagorean theorem would be absurd because Euclidean geometry is both a priori true and remarkably successful: its insights can be perfectly applied to engineering and construction. The validity of geometry, too, follows from the existence of human action, since “[a]ction is the employment of a physical body in space” (Hoppe, “Praxeology and Economic Science: Sec. II”). The ultimate standard of measurement is the manner in which the human body exists and moves spatially. These positions and movements can be analyzed in terms of simpler components: points, lines, and planes. To measure these spatial properties, humans can create instruments on the basis of the ubiquitously known manner in which the body exists and moves in order to act. No specific measurement or observation can ever refute the validity of Euclidean standards of measurement: the standards are what make measurement itself possible. Euclidean geometry “is not only the very precondition for any empirical spatial description, it is also the precondition for any active orientation in space” (Hoppe, “On Praxeology and the Praxeological Foundations of Epistemology: Sec. III”). If the standards of Euclidean geometry were not valid and perfectly accurate in describing reality, the human body as a three-dimensional entity would not be able to exist and relate to other three-dimensional entities.

            The axioms of Euclidean geometry correspond to the physical world, whereas the axioms of geometric systems contrary to Euclid’s do not. (That is, they are not true axioms, since they can be elementarily refuted in the course of ubiquitous daily observation.) The human body can be measured by using three and only three spatial parameters—known as dimensions: any system of measurement claiming more or less than three dimensions will fail to adequately describe man’s physical form. All parts of the human body have boundaries, describing which necessitates the Euclidean constructs of points, lines, and planes. Furthermore, all human movement and interaction with other entities occurs three-dimensionally. Every possible path of motion can be described by adding three mutually perpendicular vectors of the proper magnitudes. Moreover, all spatial measuring instruments can only be built with Euclidean postulates at the foundation of their design:

Euclidean geometry… is no more and no less than the reconstruction of the ideal norms underlying our construction of such homogeneous basic forms as points, lines, planes and distances, which are in a more or less perfect but always perfectible way incorporated or realized in even our most primitive instruments of spatial measurements such as a measuring rod. (Hoppe, “On Praxeology and the Praxeological Foundations of Epistemology: Sec. III”)

No measurement can ever refute the validity of Euclidean geometry, since measuring tools themselves—as well as the bodies and movements of those who measure—are predicated upon the axioms of Euclid’s system.  If the spatial qualities of humans and all the objects they observe and interact with can be described and measured only through Euclid’s system, there is no point in asserting that any non-Euclidean geometry can also be true: it cannot be true if it describes nothing that exists!

            Empiricism denies the possibility of certain knowledge because it ignores the existence of human action. Empiricists systematically deride the valid and empirically successful branches of a priori knowledge—praxeology, logic, arithmetic, and Euclidean geometry—as meaningless formalisms devoid of actual information about reality. In so doing, the empiricists implicitly erect an impregnable barrier between the mind and reality. According to them, if X is a fact of reality, it cannot be conclusively grasped by the mind; if X was derived by the mind, it cannot be relevant to reality. The empiricists can claim this only by evading man’s identity as an acting being with a mind that exists and acts in reality. The mind of an agent in reality must necessarily have access to the external world and the capacity to comprehend existence by means of reason.  This access implies the mind’s ability to derive certain, irrefutable, unfalsifiable knowledge about its own nature and the nature of the world with which it interacts.

            Refutation of Historicism

            The insights of praxeology allow us to disprove another doctrine that denies the possibility of certain, objective economic knowledge: historicism. Hoppe describes historicism as the belief that economic events “are subjective expressions and interpretations unfolding in history to be understood and interpreted by the economist just as a literary text unfolds before and is interpreted by its reader” (Hoppe, “Praxeology and Economic Science: Sec. II”). To the historicist, no absolute, universal economic laws exist. All that exists is a set of past economic data as incorporated into historical texts. No past economic event occurred because it necessarily had to—as derived from insights into the nature of human action—but rather the events happened simply because they did. What is true for one historical era might not be true for another. The free market, according to the historicists, might have worked in the 19^th century, but it does not necessarily have to work today—nor would even basic economic principles, such as the law of diminishing marginal utility, have to be permanent, immutable, or universally applicable. To the historicist, there is not only no certain knowledge about the economic principles behind historical events—there is also no certain knowledge even about what historical events actually happened. Since historical economic events are not constrained by any universally valid laws, there is no way to objectively interpret and gain genuine knowledge from them:

[T]he formation of these always contingently related human expressions and their interpretations is also not constrained by any objective law… [H]istorical and economic events are whatever someone expresses or interprets them to be, and their description by the historian and economist is then whatever he expresses or interprets these past subjective events to have been. (Hoppe, “On Praxeology and the Praxeological Foundations of Epistemology: Sec. II”)

To the historicist, both history and economics ultimately become whatever a given historian or economist chooses to turn them into, with no definitive criterion of truth and falsity to verify or disprove a given economic theory. Mises was perhaps too generous to write that “[h]istoricism aim[s] at replacing [economics] by economic history…” (4). Rather, historicism replaces both economics and history with the historicist’s unsubstantiated wishes concerning what each discipline ought to have been. Hoppe describes the unscientific result: the historicist’s “output takes on the form of disquisitions on what someone feels about what he feels was felt by somebody else” (“On Praxeology and the Praxeological Foundations of Epistemology: Sec. II”).

            The fundamental premise of historicism can be refuted in a similar manner to the fundamental premise of empiricism. Historicism claims that there are no permanent, constant economic laws transcending a given era and location. That premise itself, however, is held by the historicists to be a constant and time-invariant relation. That is, we cannot say of any era and location that its economic events follow a universally applicable, logically deducible set of laws. The historicist is faced with two alternatives. Either he admits that his basic premise constitutes a time-invariant relation, whereby he implicitly rejects historicism’s blanket denial of such relations and concedes the possibility of a priori, logical, universally valid economics. Or he denies that this premise is a time-invariant relation, which means that we can never ascertain its absolute truth. Historicism can be true for one era, but not for another—and does not have to be true for any era. Hoppe describes the sorry state the historicist premise would attain under such an assumption: “it may be true now, if we wish it so, yet possibly false a moment later, in case we do not, with no one ever knowing anything about whether we do or do not” (“On Praxeology and the Praxeological Foundations of Epistemology: Sec. II”). If the historicist premise—under a consistent application of historicism—can possibly be false, that, too, leaves open the possibility of using logical, a priori methods for arriving at economic truths.

            Moreover, the analysis of historical data alone is sufficient in obtaining any understanding of economics. According to Hoppe, “observational evidence can only reveal things as they happen to be; there is nothing in it that would indicate why things must be the way they are” (“On Praxeology and the Praxeological Foundations of Epistemology: Sec. II”). When we examine a succession of economic statistics or an account of who traded with whom or what government policies correlated with what effects on industry—we only know that given events happened. We cannot, from sheer observation—know why they happened; we cannot have any comprehensive understanding of causality, since causality is a category of action. All we can effectively understand from observing historical data alone is what physical movements individuals happened to make in a given time and place. In order to form any meaningful theory that accurately interprets the historical events, man must introspect and reflect upon those events using the methods available to his rational faculty. There is no way to interpret historical events if one conceives of them as mere meaningless, contingent physical movements. The movements must be analyzed within the framework of action: the economist knows that the events are actions because he, too, is an acting being, and his mind is linked to reality via his status as such. As soon as one concedes that historical events are actions, the entire body of propositions derivable from that fact—indeed, the whole science of praxeology—can be applied to them.

Only the logical, a priori methods of praxeology can reveal any meaning to historical economic events. For example, let us presume that in year X the government of a country set an artificial ceiling on the price of widgets. A shortage of widgets occurred. However, in year Y, the government established a similar ceiling and no shortage took place. The historicist would hasten to claim that we cannot know with certainty that government price ceilings have negative effects: after all, in year Y, no shortage happened. Only the methods of praxeology could show the historicist that a government price ceiling is always detrimental under a given set of conditions—namely, when the government tries to restrict a good’s price below the market equilibrium.

 The praxeologist would know that the widget shortage did not occur only because of the positive influence of some other factor beside the price ceiling. In year Y, the widget manufacturers’ technological capacity increased—independent of government regulation—to enable them to mass-produce widgets on a scale previously impossible. The shift in technological capacity happened to occur at the same time as the government was in the process of imposing its price ceiling. However, because of the increased supply of widgets from mass production, the equilibrium price of widgets was pushed below the government price ceiling; hence, the restriction was plainly irrelevant to the widget price: it was tantamount to the government forbidding anyone to charge more than $500 for a bottle of milk. This particular historical event does not negate the universal truth that, whenever the government artificially pushes a good’s price below market equilibrium, shortages will result—since the number of goods consumers demand at the lower price will exceed the number of goods producers are willing to supply at that price. The praxeological insight concerning the origin of shortages does not require the analysis of an open set of historical data in order to be validated with certainty; all one needs to know is the nature of supply, demand, and market equilibrium—arrived at via the action axiom. However, once understood, the praxeological truth can be applied to any relevant historical event and give the economist certain, irrefutable knowledge about it. Unlike historicism, which seeks to negate the objective truth of both economics and history, praxeology renders the study of both disciplines meaningful and crucial to man’s understanding of reality.

Conclusion

We have demonstrated how praxeology—the science of human action—affirms the validity of an entire type of human knowledge—synthetic a priori truths—without which cognition of reality would be unattainable. The action axiom, the starting point of praxeology, is also an indispensable link between reason and observation, for humans have the minds of entities acting in the absolute reality. By means of the insight that humans act, the study of an entire array of disciplines—logic, epistemology, arithmetic, geometry, economics, and history (when analyzed with the help of praxeology)—can be demonstrated as useful and capable of imparting certain, irrefutable, unfalsifiable knowledge. Furthermore, two principal doctrines—empiricism and historicism—which deny the possibility of irrefutable knowledge have been shown to be false, contradictory, and absurd. The logical errors in both doctrines implicitly concede the possibility and validity of a priori economic analysis and a priori knowledge in general.

Works Cited

Hoppe, Hans-Hermann. Economic Science and the Austrian Method. Auburn, Al.: Ludwig von Mises Institute, 1995. Mises.org. 19 Nov. 2005. <http://www.mises.org/esandtam.asp>.

Mises, Ludwig von. Human Action: A Treatise on Economics. Irvington: Foundation for Economic Education, 1996. Mises.org.  2000. Ludwig von Mises Institute. 19 Nov. 2005. <http://www.mises.org/humanaction.asp>

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