THE PURE LOGIC OF CHOICE

WITTGENSTEIN
Wittgenstein represents, as Cacciari has argued, the utmost attempt to give formal
scientific status to the Machian/Austrian weltanschauung !ut an attempt that he records
as a "desperate failure# from the ver$ outset% Indeed, Wittgenstein&s philosophical 'or(s
)for that is 'hat the$ are inevita!l$* represent an illustration of the necessit$ of this
failure their failure is their conclusion, their outcome% The ver$ first proposition of the
Tractatus, that the 'orld is all that either is or is not the case, alread$ "!anishes# the
'orld itself from the compass of philosophical anal$sis !ecause the 'orld is not a
proposition and it is not a "case# )+all*% Tragic 'ere therefore !oth Wittgenstein&s stance
and the attempts !$ the W,reis to give it a "logical# foundation together 'ith
mathematics% W (ne' this and advised his readers to read the -reface and the
Conclusion%
The turnaround in the -I represented a further concession of defeat in that the$ no'
confine the entire tas( of philosoph$ to the formal e.ercise of descri!ing "language
games# 'ithout even the hope of internal truth/hood coherence that the Tractatus had
held out% The Tractatus still hoped for an internall$/coherent "language# 'ith
demonstra!le truth value referring to sense data that could clarif$ thought processes
prone to philosophical delusions% 0ut the -I relin1uish even this goal% All that remains is
the sheer "functionalit$/instrumentalit$# of s$m!olic frame'or(s that can onl$ !e
"games# 'ith ine.ora!le rules )+oundations, 223*% The 4de/finition& of a "language/
game# can achieve onl$ "internall$ logical# )self/referential, circuitous* consistenc$ !$
the postulation of "ar!itrar$# premises that e.clude/a!olish an$ "scientific or logical#
validit$% Indeed, Cacciari reminds us, Wittgenstein o!5ected to the ver$ idea of a "single#
language game, one 'ith "metalinguistic# or "essential# rules% 6ust as the "rules# of a
language/game# su!5ect its 4universe& and domain to an ine.ora!le logic or "destin$#
)recall Niet7sche&s and 8eidegger&s 4Schic(sal&*, so are the$ 4destined& to "scientific
failure#%
What concerns us here is the "attempt# to transform the fluid human activit$ in the sphere
of production )'hich therefore 'e do not see, pace 9o'ith or 8egel, as "the annihilation
of nature# !ut rather as its "transformation#* from a "pla$ful/creative# activit$
)represented !$ the concept of living labour* into a strait5ac(et of "game/rules# that
define and confine, limit and constrain living la!our to ensure its domination !$ dead
la!our% This attempt is thus the real practical political strategic goal of the "scientific#
game or paradigm that neoclassical theor$ has sought to set up, culminating in :o!!ins&s
"economics as science of choice#, 8a$e(&s "-ure 9ogic of Choice# and, more recentl$, in
the 'hole enterprise of "game theor$#%
To illustrate, 5ust as the rules of an$ game, such as a "competitive sport#, do more than
5ust describe the pla$ful agon of human !eings !ut actuall$ and effectivel$ serve to con-
fine, to limit and con/dition the human activit$ and its creative aspirations or aims so
neoclassical theor$ constitutes )to invo(e Wittgenstein, "ideas are li(e glasses on our
nose ever$thing 'e see is through and for them#* the "glasses# through 'hich realit$ or
human action is not onl$ "seen/interpreted# !ut also guided/channeled and
confined/conditioned )seen for the theor$*%
0ut the "conventionalit$# of sporting games )from chess to rug!$* is readil$ visi!le in
part !ecause the "rules# are fi.ed !$ convention and not, as in economic activit$,
through long historical transformations that ma(e less "visi!le# and com/prehensi!le or
per/spicuous the super/position or im/position of the rules to the conduct of human
activit$% The "activit$# !ecomes "ossified# or reified, either "fro7en in time# )and
therefore "s$nchronic#* or "evolving# in one dimension )stead$ state, cf% 9achmann* into
a "uni/verse# so that this latter !ecomes confused 'ith and mista(en for the original
activit$ 'hich, instead, is onl$ the varia!le and muta!le "historical content# of the
"rules# 'hich are themselves in/varia!le, im/muta!le and alas in/e.ora!le so that no'
the "activit$# appears to !e transformed into, 'holl$ "captured# !$ the "in/variance#,
"im/muta!ilit$# and "ine.ora!ilit$# of the rules; )<n conventionalit$ and -oincare&,
4S=8&, p>>, see Cacciari, p?@%*
The ine.ora!le instrumentalit$ of the formal logico/mathematical "rules# ensure that the
"theor$# )'hich is the mere "id/entit$# of the relations !et'een "entities# that ma(e up
the rules* has a functionalit$ that confuses "ine.ora!ilit$# 'ith "predicta!ilit$# and
therefore ma(es them "effective#% 0ut not true;
"Theories help focus political actionA / their "truth# is the effectiveness 'ith 'hich the$
achieve their "goal#, that is, a purpose or finalit$ that the$ identif$ and clarif$% Sichtbar
machen to render visi!le is the aim in Cacciari&s 4-refa7ione& to Krisis%
Sphere of E1uivalent E.change E1uili!rium "End/State#
We must remem!er, ho'ever, that all human action, and particularl$ political pra.is, has
a telos or some finalit$ in mind, some conatus or Trieb that inspires and sustains it, and
this is aided and defined !$ historical circumstances% We ma$ 'ell !e "die Zeichen# !ut
'e shall al'a$s see( to !ecome "die Subjekte#% The overcoming of capitalism is in large
part a search for the supersession of antagonism not, as Cacciari decries, a !id to some
atavistic "original# purit$/harmon$ or "millenar$# pursuit, !ut rather to a historicall$/
engendered com-prehensible construction )or 4,on/stru(tion& as opposed to 8eidegger&s
4Be/stru(tion&, echoed in Berrida&s 4deconstruction&*% The greater the clarit$ and ease
'ith 'hich 'e can focus on our aims, the stronger is our conviction that the historical
conditions are ripe for their practical achievement%
The remainder of this chapter 'ill stud$ the process 'here!$ 8a$e(&s and :o!!ins&s
conception of "the science of choice& proceeds from certain assumptions )individualism,
historical institutions seen as rigid ossified structures, scarcit$ or 4rarete&&, competition*
'hich allo' it to !e distinguished from pure engineering and $et permit the selection of a
"!o. of tools# that turn it into a "techni1ue# that purports 4to descri!e& social realit$ !ut
in fact prescribes social action and shapes it decisivel$%
It is the com!ination of "in/dividualism# )recall 8o!!es in vonClause'it7&s
perspective, if 'ar is the continuation of politics !$ other means this is onl$ !ecause
politics is incipient 'ar* and "scarcit$#, as the e.pression of the antagonism of self/
interested in/dividuals, that ma(e the theor$ particularl$ po'erful strategicall$ for
capital% 0$ adopting these assumptions, :o!!ins&s formal categori7ation of "pra.eolog$#
'hich )Napoleoni* is the encapsulation of the fundamental assumptions of neoclassical
theor$ completel$ overloo(s the fact that these notions of "individualist competition#
and of "scarcit$# are not "scientific# categories !ut in fact are themselves determined !$
"political# conditions that go from the 4Trennung& to the selection of production
technologies, consumption schedules and income distri!ution )Napoleoni points this last
element out in reference to -areto optimalit$, 'hich cannot encompass this parameter*
'hich are not "given data# )8a$e( pointed this out !$ reference to general e1uili!rium
and "competition# also covered !$ Sraffa and :o!inson later* !ecause the$ are not
"e.ogenousl$/independentl$# determined !ut are endogenous varia!les to "the science of
choice#, there!$ destro$ing their "scientificit$#%
As Napoleoni notes, :o!!ins&s aim 'as to turn "economics# into a "techni1ue# in a
fashion similar to engineering, !ut this is not possi!le !ecause of the fallac$ of misplaced
concreteness )invo(ed !$ 8a$e( against "scientism#* !ecause "individuals# and
"scarcit$# are themselves social constructs; It follo's that the "goal/neutralit$# and
"means/neutralit$# of "the science of choice# is an$thing !ut neutral !ut in fact disguises
clear ideological/political choices that reveal its strategic-political character largel$
dependent on "prices# determined through e1uili!rium anal$sis%
We can no' see )'hat remains a m$ster$ to Cacciari, pCC* 'h$ Schumpeter as 'ell as
8a$e( had to cling "desperatel$# to e1uili!rium anal$sis even though the$ 'ere a'are of
these "apories# )simultaneit$ and perfect competition in 8a$e(, endogeneit$ of
technolog$ and organi7ation as 'ell as "non/capitalist# nature of 4Stati(& anal$sis in
Schumpeter 'here 4B$nami(/,risis& !ecome the differentia specifica of capitalism*%
Without e1uili!rium anal$sis, !oth 8a$e( and Schumpeter 'ere a'are that their attempts
"to distil# the core of )scientific* "economic anal$sis# in isolation from the "Mar.ian#
factors )relegated !$ Schumpeter to "economic sociolog$#* 'ould come to naught% The
theor$ 'as evidentl$ un/historical )Napoleoni* and Schumpeter sought to improve on this
score 'ithout relin1uishing the Machian presuppositions and $et introducing Niet7schean
notions that give it far greater political realism and "honest$#/!luntness%
Thus, "pra.eolog$# !ecomes a Wittgensteinian "language/game# that limits the scope of
human action forcing it into a strait5ac(et% We see( to outline the epistemological
foundations of this construct )also discussing Niet7sche&s Frammenti Postumi* and to
highlight its ,af(aes1ue "violence# )recall Arendt and Cacciari&s references*%
Interestingl$, Cacciari uses the 'ord "ine.ora!le# to descri!e the functional
instrumentality of the (ind of "language game# erected !$ 8a$e(/:o!!ins%
As 'e noted, Wittgenstein had alread$ reached the epistemological limitations of the
pro5ect of esta!lishing the logical foundations of mathematics and then also the
development of a non/metaph$sical "language/game# aspiring to scientific status% This
'as the failure of Machism as 'ell )recall also 9enin&s intervention discussed !$
Cacciari*% :elativit$ and 1uantum theor$ 'ill put paid to these velleities, 'hilst 8usserl
and 8eidegger 'ill perform similar tas(s in philosoph$/phenomenolog$ )cf% ogische
!ntersuchungen and "The -ro!lems of -henomenolog$#, respectivel$*%
The 8a$e(/:o!!ins pro/5ect does not see( to go !e$ond Machism !ecause its "self/
understanding# is in realit$/effectivel$ to develop "tools# that can serve as the
foundations of a "Science of Choice#% What Wittgenstein )and Niet7sche !efore him*
sho' is that this is im/possi!le% Thus 8a$e( remains a prisoner of the Wiener/,reis
position, see(ing if not a Neo/,antian correspondence of logic 'ith realit$, at least a
Machian phenomenological correspondence 'ith truth, an "e.plorative# procedure a& la
Tars(i or Carnap, allo'ing a gro'ing appro.imation or refinement of logical anal$sis to
reach scientific truth% -opper&s definition of "scientificit$# of course is "empiricall$#
antithetical to this, preferring the e.perimental road to science )8a$e( in to'*%
0ut Mises remained the "fundamentalist#% The misguidedness here as in 8a$e( to a lesser
e.tent is in failing to understand that the "rules# to !e "distilled# from the realit$ of
capitalist social relations of production do not and cannot correspond to realit$ !ecause
the realit$ is in a different dimension, a multi/verse 'orlds removed from the one
encompassed !$ the "rules#% This is so not onl$ in an epistemological sense, as Godel
)!ut also :ussell and Cantor 'ith their 4parado.es&* sho'ed, !ecause the "rules# cannot
"e.plain# their "truth#, the "causalit$# of the events the$ "measure# and "relate#D !ut also
!ecause, as Wittgenstein sho'ed, there is no ),antian* truth%
And this is 'h$ it is possi!le to attri!ute ,antian foundations to Mises )",ant is
metaph$sics;# 'e can hear Neurath cr$ out* in the "introspective/individual# rationalit$
of "human action# representing the :atio of the transcendental su!5ect% The "freedom# of
this Su!5ect remains "e.ogenous# to the economic s$stemA it simultaneousl$ "re/
e1uili!rates# the s$stem of e.change descri!ed !$ marginal utilit$, pushing it to'ard an
"e1uili!rium# than(s to the "logic# of its rationalit$% 0ut then it ma(es the attainment of
this "e1uili!rium# impossi!le !ecause the "choice# of the transcendental su!5ect cannot
!e su!ordinated to the "phenomenal# lin( of causalit$, of empiricism%
8ere the -lanlosig(eit of "choice#, the ,antian "freedom# of the Su!5ect, is 'hat rescues
"homo agens# from the "non/action# of the "end/state#, of e1uili!rium% The mar(et
mechanism, therefore, 'hilst it is anal$7a!le "scientificall$# through "logic#, must retain
the freedom of "choice# that restitutes the Su!5ect to the centre of the s$stem of
e.change% The e.change cannot !e one of "e1uivalents#, therefore%
The "socialist# attempts to transform "the logic of choice# into a "-lan# 'ould remove
this su!5ective element, as 'ould the 8a$e(ian emphasis on "co/ordination#% These are
Neo/,antian moralistic elements that 8a$e(/:o!!ins see( to supplant 'ith Machian
o!servational/empiricist ones evocative of the logical positivism of the Wiener ,reis,
)tending to'ard e1uili!rium !ut generating the "utili7ation of (no'ledge# or "learning#
that 'ould evolve the s$stem* notions Mises despised !ecause the$ 'ould lead to a
"scientistic determinism# incompati!le 'ith "action# and "choice#% Schumpeter 'ill
retain the ,antian moment 'ith the notion of "Innovation#, e.ogenous to the s$stem, and
supplement it 'ith Mar.ist antagonistic "evolutionar$# notions%
Mises instead al'a$s turns "calculation# into "appraisement# !$ supplementing the
"e.change# 'ith "competition#% )+or ,ant&s influence on Mises, see 9ong&s, and also
0oett(e&s recent piece, "Witt%, Austrian School and 9ogic of Action#% 0ut 9ong a!l$ re/
esta!lishes the Mises/8a$e( lin( to Witt% See also +estre&D and the "8usserl vs% Schlic(#
article% Note also ,aufer&s article on 8eidegger and 9ogic, re +rege/8usserl/Carnap%*
Cf and discuss "The +alse -rison# 'hich rightl$ teases out the "Schopenhauerian# origins
of the Tractatus )ch 2 "Wide/Angle Eie'#%* 'hilst 5ustl$ circumscri!ing the ,antian
rapport%
Indeed, Wittgenstein moved further a'a$ from Machism and 'ell to'ard Niet7sche after
the failure of the Tractatus in that "later# he came to see the hopelessness of "founding#
logic and mathematics "outside# )even phenomenologicall$ see 8usserl&s concepts of
"apodictic transcendence#* of their "self/referential# consistenc$, effectiveness or
instrumentalit$ 'hich is the "ine.ora!ilit$# of the rules of language games% As Cacciari
!rilliantl$ e.pounds, the "rules# are "effective# !ecause once the$ appl$ to a "realit$#
the$ encapsulate it or "circumscri!e# it the$ possess or permeate it inelucta!l$ and
totall$A "the la' always catches )raggiunge sempre* the guilt$#F%!ecause the la' has no
meaning 'ithout the guilt$ or guilt ),af(a*% And this "al'a$s# is not 5ust a statement of
infalli!ilit$A it is a statement of im/possi!ilit$ )non c&e& possi!ilita& di gra"ia Cacciari*%
)Wittgenstein if $ou thin( outside of the rules of chess, $ou are not pla$ing the game%
Therefore, pace Carroll, I cannot choose to ma(e a rule mean 'hatever I choose% There is
no choice in a game% To thin( outside the rules is im/possi!le%*
What Mises and 8a$e( )Schumpeter as 'ell 'ith his insistence on the
Machian/Walrasian schema* do not understand is that the "efficac$# of "the logic of
action# lies entirel$ in its first having "appropriated# realit$% 9ogic does not descri!e or
contain or refer to "realit$#D logic has no "truth#, no "meaning#, it tells us nothing ne'
!ut it renders visi!leA it is only inelucta!le, it is onl$ "ine.ora!le#% <nce 'e define mone$
or rent and "utilit$# in a certain 'a$ once the "rules# of the game are set the
conclusions are inescapa!le and the conse1uences ine.ora!le% 0ut this is not !ecause
"realit$# conforms to the "theor$#A there is no theor$ there is a "language game#; The
h$pothesis is not "falsifia!le# hence 8a$e( had to disagree 'ith -opper a!out this as a
condition of "scientificit$#% There is onl$ a "game# 'hose ine.ora!ilit$ is hidden onl$ !$
the fact that it does not "initiall$# encompass all realit$ as "given data# )8a$e(*F%!ut it
does so se1uentiall$ !$ appro.imation or "perfection# )Tars(i*%
Indeed, 8a$e( 'as the first to perceive )no, actuall$ Walras and -areto did too* that
general e1uili!rium 'as fla'ed in the sense that it encompassed "simultaneousl$# the
"totalit$# of eventsA it 'as, in 9oas!$&s 'ords, a "closed s$stem# that 'as completel$ and
utterl$ "totalitarian# ,af(aes1ue% 0ut 8a$e( failed to see that this 'as the "destin$# of
his "-ure 9ogic of Action#% <nce the "realit$# of its field of operation 'as "given#
metaph$sicall$ )!$ positing scarcit$/dependent 4utilit$&, for instance, or 4rarete&&*, then
the conclusions 'ould follo' "ine.ora!l$#% 8a$e( does not perceive this "ine.ora!ilit$#
)his cousin Wittgenstein did* e.cept perhaps in the case of "the impossi!ilit$ of a socialist
econom$#, 'here 8a$e( could intuit the "e.tremit$# of Mises&s arguments% Get he
!elieved that it 'as possi!le to proceed "!$ appro.imations# )li(e Tars(i, !ut 'ithout the
latter&s a'areness of the impossi!ilit$ of esta!lishing the truth of logical propositions, !ut
onl$ the effectiveness of the rules in a given game*%
Similarl$ 'ith the concept of "competition#A 8a$e( sho'ed ho' hopelessl$ aporetic this
'as% 9oas!$ )4Econ=Ev&, pp@2/@* approves of Bemset7&s recasting of the concept as
"perfect decentrali7ation# and relates ho' 8ahn regards general e1uili!rium as leading to
intellectual death, as does Be!reu no improvements in (no'ledge are possi!le% 8e then
proceeds unpertur!ed 'ith "evolutionar$/institutional# approaches that, as 'e 'ill soon
see )4Bemset7& !elo'*, are doomed !$ their limits; And Metcalfe refers to 8a$e(&s
criti1ue of "competition# in "e1uili!rium# theor$ as "most devastating# )4Ev Econ and Cr
Bestr&, p%2H*% 0ut he still e.amines the implications of 8ic(sian gro'ing returns to scale
as if these did not provide a perfect illustration of the "closed s$stem# approach, though
one that at least "formall$# contradicts the assumptions of e1uili!rium anal$sis in favour
of an "open/ended# Schumpeterian approach in the sense of 9anglois )4Anal$tical
:evie'&*;
)M$ argument here is, see ne.t section, that the "open/endedness# is onl$ "formalistic# or
"contemplative#Icf 9u(acsJ and therefore either aporetic or re/enclosa!le in the "closed
s$stem# model, at its "theoretical# !est, or lapsing into a vulgar "practical empiricism# at
'orst% Indeed, it is this last "strategic use# Ior ideological, !ut 'e prefer the other term to
stress the "political usefulness# of ideolog$ as against the "idealistic/impractical#
connotations of the latterJ that gives these "theories# an$ "relevance# at all; -areto and
Schump ICS=BJ have something to sa$ a!out these notions of "ideolog$#, too cf
0o!!io in our 4Scientism&%*
Excursus on Mises:
#oettke and eeson $%&as 'ises (ight)*+ fall into the most deplorable misconceptions in
their e,position of 'ises*s apriorism- starting with tracing its provenance to Kant when it
is actually Schopenhauer and 'ach . of whom they make no mention/ The illustrious
authors- keen 0to illuminate the real world1 with the embarrassment of 'isesian drivel-
fail to understand that 0pra,eology1 can have applicability to 0reality1 only as a
0language-game1 and not . as they sheepishly overe,tend themselves . as 0analytical
narrative1- a 0somewhere between1 formalism and empiricism2 For this alone one has to
side with the honesty of a 3ayek who tried to give empirical form to his theories rather
than with the foolishness and bombast of 'ises2 See our %3ayek and Scientism*2
Mises eschewed the traditional analytic/synthetic dichotomy, successfully both
revealing the illegitimacy of the positivist approach and defending the empirical
relevance of mere tautologies in economic science. (p24!
#ut 0pra,eology1 has absolutely nothing to do with Kant*s idealism2 The latter has to do
with human 0apperception1 of %spatio-temporal* dimensions- not of %psychological or
deontological* motivations $or a,iology+2 4t is true that Kant develops the a priori
synthetic category of thought to account for 0mathematical reasoning12 5nd 6# are
right that 0the pure logic of choice1 has the same status as mathematical reasoning as
far as its %logical* properties are concerned2 This makes both mathematics and logic
0language games1 in &ittgenstein*s definition that we discussed earlier $%3ayek-
(obbins*+2 So they are right to insist that even 0id-entities1 logico-mathematical
identities $not 0tautologies1- which involve either a petitio principii or an e, post facto
rationali"ation+ can have empirical functions and practical uses2
&here they are wrong- however- is in failing to see that logico-mathematical identities
applied to physical events that are 0e,periment-able1 ad infinitum have categorically
different status from when they are applied to social institutions $including economic
ones+ that are 0conventional1 in the sense that they are not 0immutable1 but are
0political1 and therefore subject to historical transformation2 7nly if we 0reify1 social
political and economic institutions can we hope to apply logical identities to them2 #ut in
that case we would be performing an impermissible task . assuming that they are
0immutable natural entities1 when in fact they are pro-ducts or 0facts1 prone to social
transformation- and then applying the logical identities to them as if they were
0immutable natural objects1/ &e would be creating- to use a &ittgensteinian metaphor-
0a false prison1/ 89f2 discussion in %:;6Soc(lty*- ;uote from 5rendt2 'yrdal makes
similar point2<
4t is to no avail to invoke the =ichian %verum ipsum factum*- a notion that goes back to
5;uinas through to 'achiavelli and 3obbes to =ico2 The 0fact1 that human beings make
their own history and are therefore capable of 0reflecting1 upon it $'ises*s
0introspection1+ does not at all mean that human history has the same ontological and
epistemological status as 0physical events1 . for the e,act reason that human beings can
0change1- 0transform1 or otherwise 0revolutionise1 their social relations2
The fatal flaw in 'ises*s 0pra,eology1 is that he seeks to turn 0human historical
institutions1 $goods- money- demand- supply- competition- individuals+ into 0reified1
eternal or immutable natural entities subject to controlled e,perimentation . whilst at the
same time protecting his fantastic theory from scientific e,amination by saying that it is
not subject to e,perimentation because it arises 0apodictically a priori from mental
introspection1/ #ut 'ises cannot have it both ways/ :ither human institutions $including
economic ones+ are 0reified1 and capable of 0logico-mathematical analysis1 $the pure
logic of choice+- in which case we are brutally and violently imposing the present
economic institutions as an ineluctable 0destiny1 of humanity> or else we admit that
these are 0historical institutions1 that are not subject to logico-mathematical analysis
e,cept in the most brutal and repressive sense of 0preserving the established order of
capitalist domination1/
4ndeed- 'ises*s ;uite pathetic- callous and e;ually ridiculous attempt to attribute the
0reification1 of human institutions to some absurd 0evolutionary process1 $see below+ is
the conclusive proof of the colossal stupidity of his entire undertaking/
$See 9acciari- p??2 See also ivingston*s 03usserl and Schlick1 for the %post-Kantian*
nature of this problematic and its divergence into phenomenology and logical positivism
8end of sec2@< . particularly the concern to do away with any 0metaphysical1 references
both in the 3usserlian %mathesis universalis* and in the &iener Kreis*s search for logical
truth of propositions2 5lso- discussion in ong- 0&itt26ogic of 5ction18pAB-C-esp2 pAD
on evolutionary %polylogism*< where post-Kantian Frege-3usserl and &itt2*s divergence
from log pos are highlighted2 Part ? is dedicated to these matters- correctly stating that
&itt2 overcomes the analyticEsynthetic- impositionistEreflectionist dichotomy2 PFC e,hibits
ong*s peculiar refractoriness . he just does not get the difference between 0language
games1 and propositional logic itself/+
"ecogni#ing the $antian bac%ground to Misess defense of the nature of economic
thought is our primary focus. $ant developed his argument concerning human action
by reference to &oc%es discussion of how belief gives rise to action. &oc%e argued
that our understanding of human action arises only through our e'perience with
nature. (hile $ant admits that empirical study may enable us to understand the
occasional cause by which the pure categories and forms of intuition are brought into
application, he argues for their strict a priori nature. )t is this focus on the a priori
categories of human action that would occupy Misess philosophical attention.(p2*+!
This is completely wrong and only the lamest e,cuse for applying the tired
0methodologically aprioristic yet radically empirical1 claptrap2
There is then the =ichian foundation- verum ipsum factumG
,he social scientist, on the other hand, is in a relatively better position, for
-ua man, he is himself the very sub.ect of his study. This fortunate position
allows him to get inside the mind of his subject. Thus, in the social
sciences,
the scientist begins with knowledge of the ultimate causes driving his
subjects behavior. And it is in this sense that the social scientist is in a
better
position for the study of his feld than the physical scientist in terms of
understanding causation. ,his fundamental di/erence between the relationship
of the physical scientist to his sub.ect of in-uiry and social scientist to his
sub.ect of study suggests a fundamental di/erence in the epistemological
status of their insights and implies a methodological dualism in the realm of
science.(p2*4!
This much is argued by 3ayek $9(S+ as 6# acknowledge in fnAH2 #ut 3ayek draws the
e,act opposite conclusion- namely- that we must refrain from attributing to human actors
motives arising from mere observation . the case of 0behaviourism1 and 0scientism1
generally2 #ecause 0concepts1 already involve 0finality1 $an implicit goal+- 3ayek
cautions against drawing conclusions about the real motives or knowledge behind human
use of the 0objects1 behind them- which can be illegitimately manipulated by 0the
observer1 $the social scientist+ who is also using 0concepts1 in the analysis2
- &hich is what 'ises does- and 3ayek wished to avoid by the time he wrote 9(S and
what led him to develop the concept of 0spontaneous order1- precisely to be able 0to
observe1 economic behaviour 0from the point of view of individuals- whose motives for
decisions is %inscrutable*1 rather than manipulate it as in the 0omniscience of
e;uilibrium analysis2 This is the entire basis of 3ayek*s 0subjectivism1/ The authors
have clearly missed it . but not Salerno who is scathing about it- as is (othbard in his
vituperation against 3ayek2 3ayek is more in line with &ittgenstein- who was far too
subtle to believe that there is any 0rationalElogical1 connection between what humans
say and think and what they do2 4ndeed we may regress to Schopenhauer and the
Scholastic questiones occultaeor 0ultimate causes1 or aims- which he e,cluded from
scientific inference both a priori and a posteriori2
3ere- in a nutshell- we have the difference between 3ayek*s 0homo ;uaerens1 $where
e;uilibrium is an appro,imate real state- the result of empirical price discovery- and
only a %heuristic* device for %empirical observation* until attained+> and 'ises*s 0homo
agens1 where e;uilibrium is a logical language game schema indispensable for the
0caeteris paribus Iedenkene,perimenten1 of logical analysis but unattainable in fact2 4t
may be said that 3ayek adopts 'achian methodology and 'ises adopts Jeo-Kantian
aetiology2
0ra'eological reality is not the physical universe, Mises argued,
but mans conscious reaction to the given state of this universe. 1conomics
is not about things and tangible material ob.ects2 it is about men, their
meanings and actions. 3oods, commodities, and wealth and all the other
notions of conduct are not elements of nature2 they are elements of human
meaning and conduct (+44 2!.
The colossal stupidity of this statement is just too much: Assez! For what Mises
does is efectively to reduce!traduce" these elements of human meanin# and
conduct" such as #oods$ commodities$ and wealth" to precisely what he says
they are not$ that is$ thin#s and tan#i%le material o%jects" or elements of
nature"! &antian a priori synthetic jud#ements do not concern human action"
for this sphere %elon#s to practical reason" or re#ulative concepts$ not to the
phenomenal" world of possi%le perception$ which involves the
necessary!conditioned concepts of causality made possi%le a priori %y pure
reason"'
5dditionally, in contrast to the natural sciences, Mises argued that there
were no constant relationships in human action. 5s such no universally valid
-uantitative laws were possible in the realm of human a/airs. 6tanding
between the claims of methodological monism on the one side and
historicism on the other side, Mises sought to carve out a niche for the
science of human action7one that agreed with the cultural critics of
methodological monism that the human sciences were uni-ue, yet resisted the
implication of these critics that there were no nomological laws possible
in the human realm. Misess position was that while the science of human
action (pra'eology! was di/erent from the natural sciences for the reasons
enumerated above, it generated nomological laws that had the same
ontological claim on our attention as that of the natural sciences.(p2*4!
!nbelievable leap from 0language games1 $with their tautological 0ine,orable laws1+ to
physical reality . how can 0purposeful action1 $an open-ended multi-verse+ have the
same 0ontological status1 let alone 0claim1 $/+ as physical observation $of the inanimate
world+) 5s a minimum- one would e,pect Schopenhauer*s categorical distinction
between %Sinne*- 0(ei"* and %'otiv* als Faktoren der Kausalitat $Tchauscheff- pHB+2
5ccording to Mises our nature as actors7beings who purposefully act7is
%nown through introspection. "e8ection on what it means to be human
reveals that purposeful behavior is our primary and distinguishing feature.
,his %nowledge is aprioristic. (e do not become aware of our uni-uely
human characteristic through e'perience because we cannot, in fact,
e'perience without purpose. ,hus, man does not have the creative
power to imagine categories at variance with the category of action
(Mises +44 9*!. )n ta%ing action as the starting point for all of economic
+9 Economic laws are deduced from the aiom of action aprioristically with the aid of the ceteris paribus
assumption that enables a sort of controlled mental eperiment. 5nd theoretical progress in the human
sciences, according to Mises, occurs by way of these mental e'periments. Mises goes as far as to say that
the method of pra'eology is the method of imaginary constructions (Mises +44 29: ; 29<!.
(56 M)616 ")3=,>
2**
theory, Mises roots the logic of choice in the broader logic of action he calls
pra'eology.(p2*?!
The 0mental e,periment1 comes from 'ach $thought e,periments+2
)t is true, economic theory could begin with another a'iom, and the laws
thus deduced would be valid if no errors were made in the process of
deduction and the assumptions posited corresponded to the circumstances at
hand. @ut because for Mises economics is both aprioristic and interested in
illuminating the real world, its starting a'iom must be both %nown without
reference to e'perience and fundamentally connected to the world of man.
,he action a'iom Ats both of these descriptions. )n contrast, the competitive
e-uilibrium world of 5rrowB=ahnBCebreu is derived aprioristically but
eschewed by Mises because unli%e theory deduced from the a'iom of action,
it remains largely unconnected to the real world.+4(p2*?!
!tter rubbish/ 4n fact- both theories are 0a,iomatic1 and amount to 0language games1/
#ut at least I: lately accepts this fact/ $9f2 3ahn in awson2+
)n e'amining the a priori nature of these logical categories, Mises (+4,
+:<! o/ers a speculative history as to how they evolved as part of the
human mind. 5ccording to Mises the a priori categories evolved along
with humans in a Carwinian fashion. (e have the categories of the mind
that we do today precisely because they were best able to impart accurate
information about the real world to us necessary for our survival.
,he categories are sub.ect to future evolution as improved variations
enable us to better understand the world or the underlying reality of the
world itself changes. ,his hypothesi#ed evolutionary process helps
e'plain the necessary connection of the starting point of action, and the
categories that it implies, to the real world. )f they were not connected in
this way to the world, humans possessing them could not have evolved
as they have. ,here is a mutually interactive process between our minds
and the world, forming a feedbac% loop between the evolution of our
a priori mental categories that determine the world we e'perience, and the
reality of the world that conditions our way of thin%ing and understanding
reality.(p2*:!
Dn the other hand, his evolutionary e'planation of the emergence of these
categories, which conditions them on the reality of the world, suggests a
re8ectionist view since a priori %nowledge evolves over time with the
evolution of individuals mental categories. )n this sense, there is a 6mithBli%e
fallibilistic element to Misess conception of a priori %nowledge, which,
though true for acting man at the present may ultimately be revealed to be
mista%en (i.e., inconsistent with ob.ective reality! with further developments
in the evolution of mans mind.(p2*<!
Surely this is the most fanciful stuff in the history of philosophical reflection! Misess
mind needed to evolve rapidly for such science fiction!(Cf Long on polylogism.)
Erom these categories implied in the a'iom of action, Mises contends we
can deduce the pure logic of choice. ,he theories thus arrived at, because
they represent the elucidation and teasing out of the implications of the
fact that man acts are, li%e those of logic and mathematics, a priori
(Mises +44 92!. )f no logical error has been made in the process of
deduction from the a'iom of action, the theories arrived at are aprioristically
true and apodictically certain. ,heir aprioristic -uality, however, does not
render them irrelevant to the real world. ,he theorems attained by correct
pra'eological reasoning are not only perfectly certain and incontestable, li%e
the correct mathematical theorems. ,hey refer, moreover with the full
rigidity of their apodictic certainty and incontestability to the reality of
action as it appears in life and history. 0ra'eology conveys e'act and precise
%nowledge of real things (Mises +44 9!.(p2*<!
9omplete garbage/ That is precisely what 'ises does not and cannot haveG - 0knowledge
of real things1/ #ecause a 0language game1 is only as good as the 0game1 it regulatesG
the %truth* of its propositions is non-e,istent2 4n fact- 'ises would not apply pra,eology to
0real things1 $objects like physics+- but rather to 0human action1 which is knowable
through introspection and 0thought-e,periments12 #ut applying logico-mathematical
identities to 0human action1 can only yield 0language games1 because- as 'ises himself
rightly pointed out- human beings do not behave like objects . the 0circumstances1 of
their actions cannot be 0reduced1 to logico-mathematical identities2 To the e,tent that
they can- 0human action1 has been 0reified1- reduced to a 0thing1 . and 0the world1
reduced to 0the limit of language1 $see ong below+2
$!p to a point- Kant and Schopenhauer were aware of the %technical*-only validity of
logic and mathematics- and of the vital distinction between %logical form* and %real
content* . whence the primacy of perception in the drawing up of scientific hypotheses2
7f course- this is what the logical positivists were arguing . but methinks they presumed
too much- that is- 0proof1/+
[Note that ,ant himself 'as a'are of Wittgenstein&s insight% In decr$ing +ichte&s
Wissenschaftslehre as impossi!le, he commentsA
"+or the pure science of (no'ledge is nothing more nor less than mere logic, and the
principles of logic cannot lead to an$ material (no'ledge% Since logic, that is to sa$, pure
logic, a!stracts from the content of (no'ledge the attempt to cull a real o!5ect out of
logic is a vain effort and therefore a thing that no/one has ever done,# )in +orster, 4, and
his influence&, p2HK*% The pro!lem ho'ever is that !$ classing logico/mathematical
statements as s$nthetic a priori he e1uated them epistemologicall$ 'ith ph$sical
e1uations descri!ing causal chains of events 'hich do "lead to material (no'ledge#%J
Longs ttempt!
This is the limit of ong*s attempt to reconcile 'ises and &itt2 $at pHD et ff+2 3ere is
ongG
"In solving +rege&s pro!lem, Wittgenstein has solved Mises& pro!lem as 'ell% There can
!e a priori economic la's, !ecause the terms that occur in those la's 'ill !e applica!le
onl$ to phenomena that in fact o!e$ those la's% As 'e shall see, this Wittgensteinian
solution, as 'ell as man$ of the ideas associated 'ith it, 'ere anticipated, to some degree
!$ Mises and to a ver$ great e.tent !$ 8a$e(,# )p@K*%
This is entirely wrong because it presumes that we can define what are 0economic laws1
and what are not/ 4n fact- all we can do is define the rules of the 0language game1 that
we call 0economics1 and these rules are valid only until such time as the behaviour of
the participants is consistent with the rules/
4ndeed- ong ;uotes 'ises and 3ayek $p@A+ regarding "the specific e.ample of coins,
'hich count as mone$ onl$ if the$ are actuall$ used to facilitate indirect e.change% That
use is constitutive of mone$%# &rong- wrong- wrong/ 4t is only one of the uses of money-
and indeed physical money $even tokens+ is not needed at all . it can be just a cipher or
unit of account2 5nd in any case- money is only one means of describing methods of
e,change- however 0indirect1- that do not involve 0money1/ This serves to show that
there are no 0given1 economic la's and that 0pra,eology1 is an e,ercise in reification
and baseless prejudice/
ong proceeds to a conclusion $p@@+G
"No' 'e can !egin to see 'h$ it is a mista(e to assimilate 'hat the pra.eologist does to
'hat a Cartesian rationalist does 'hen he spins out the la's of ph$sical motion a priori2
The conclusions of pra.eolog$ are not in themselves empirical statements% The$ do not
predict 'hat people 'ill do% +or e.ample, the$ do not predict ho' people 'ill !ehave
'ith regard to metal dis(s and piles of 'ood% What the$ do predict is ho' people 'ill
!ehave so long as they are buying and selling% If that gives pra.eolog$ empirical content,
then geometr$ has empirical content in 5ust the same 'a$% Geometr$ cannot predict ho'
man$ edges $our ne.t slice of pi77a 'ill haveD !ut it can predict ho' man$ edges it 'ill
have so long as it is triangular12
&rong again/ The problem is that 0economics1 is not a set of activities that can be
encapsulated entirely within the 0language game12 9onse;uently- it is not possible for
0the rules of the language game1 to describe and encapsulate the meaning of the totality
of the 0game1- including its unintended conse;uences or underlying 0meanings1 and
0realities1/ &e are still nowhere near the 0economic science1 that 'ises and 3ayek
were seeking to establish/
"8ence empirical 1uestions do !ecome relevant in economics not at the level of
economic theor$, ho'ever, !ut onl$ in the application of that theor$ to the real 'orld%
-ra.eolog$ is an a!stract structure, li(e mathematics, and 'e must turn to e.perience to
learn 'hich things, if an$, actuall$ instantiate that structure in an$ particular case,# )pLH*%
Kes2 5nd 4 can tell you that very little factual e,perience 0actually instantiates that
structure 8pra,eology<1$p@C+2 Pages @F and @D- where ong seeks to illustrate the
application of 0pra,eology1- only serve to illustrate his gross stupidity because it is there
that he seeks 0to fit the facts into the theory1- in other words to e,clude the facts that do
not fit the theory/ This has to be read to be believedG
"In other 'ordsA mathematical concepts are applied in such a 'a$ that nothing counts as
a falsification of mathematical la'% We ma$ illustrate mathematical claims !$ means of
empirical e.periments, !ut if the e.periment goes 'rong 'e revise not the mathematical
claim, !ut rather the choice of illustration,# )pLK*%
3owever much he changes 0choice of illustration1- however- ong will find that the
0language game1 called 0pra,eology1 simply does not describe correctly the observed
behaviour of 0the players1- so that the 0language game1 rather than the behaviour of
the players needs changing/ #ut ong is just too stupid to see this2 So- having correctly
identified the &ittgensteinian notion of propositional logic- ong forgets that
0pra,eology1 can at best be a 0language game1 and that- if reality does not correspond
to it- it is because reality is not ade;uately described by the language game and not the
other way round/ ong ;uite simply confuses 0language games1 with a theory of social
reality itself/ 3ow is this for supreme bestiality)
"It lies, I thin(, in the fact that 'e cannot opt out of logic or mathematics or
pra.eolog$ the 'a$ 'e can opt out of a 9a(atosian research program% )In this respect
chess is a misleading !ecause incomplete analog$%* If one research program ceases to
!e fruitful, 'e can s'itch to another% )Not painlessl$ paradigm shifts are al'a$s 5arring
!ut the transition can !e made%* 0ut if our a!ilit$ to appl$ logic or mathematics or
pra.eolog$ !rea(s do'n, it is not a particular style of thought, !ut thought itself, that
!ecomes disa!led !ecause "it is 5ust this that is called 4thin(ing&, 4spea(ing&, 4inferring&,
4arguing&%# )(F' I% 2H>%*
8ence, although the rules of logical grammar are "ar!itrar$# in the sense of not !eing
designed to promote some independentl$ specifia!le goal, the$ are not "ar!itrar$# in the
sense of !eing dispensable-1 $pDD+2
ong simply does not get the supreme difference between 0chess1 and 0pra,eology1-
which are particular 0language games1- and the rules of logic and mathematics that
make them possible as 0language games1/ Luoting 3ayek- ong goes around in endless
circles until he crashes into the black hole of 0evolutionism1G
"I+rom 8a$e(AJ The mind does not so much ma(e rules as consist of rules of action, a
comple. of rules F% The$ 'ill manifest themselves in a regularit$ of
action 'hich can !e e.plicitl$ descri!ed, !ut this regularit$ of action is not
the result of the acting persons !eing capa!le of thus stating them% F
Although such rules come to !e generall$ accepted !ecause their
o!servation produces certain conse1uences, the$ are not o!served 'ith the
intention of producing those conse1uences conse1uences 'hich the
acting person need not (no'% ) I% 2D cf% 9%*
The groundlessness of logic and pra.eolog$ is lin(ed to Wittgenstein&s re5ection of the
impositionist/reflectionist dichotom$% It is a sign of confusion to sa$ either that the
logicalit$ of the 'orld has its source in the structure of thought or that the logicalit$ of
thought has its source in the structure of the 'orld as though the logicalit$ of thought
:oderic( T% 9ong &ittgenstein- 5ustrian :conomics- and the ogic of 5ction, p% 2M2
and the logicalit$ of the 'orld 'ere t'o different facts that need to !e hoo(ed together,
rather than !eing t'o sides of the same fact%2M> "he limits of my language mean the
limits of my #orld$ $ppAMM-A+2
See below for discussion of this dreadful misreading of &itt2 5ll replete with
3eideggerian tones of 0at-handedness12 ong fails to detect the significant difference
between 'ises who insists on %a-prioricity*- independently of bio-evolutionary causes
$though he allows for 0methodological dualism1+ and 3ayek who attributes these
0rules1 to the 0spontaneous order12 'ises posits 0individual action1 whereas 3ayek is
addressing 0social institutions1 . the 0psychologism1 dreaded by Frege and 3usserl2
$Jote reference to avoie*s 0(ivalry1- pAAA+2 Iood discussion of 0realism vs2
phenomenology vs2 postmodernists12+ The final sections D and AM are probably the best
e,amples of how contorted and confused 0pra,eology1 becomes when it deals with half-
real problems2
!Ff. Arst section in Eestre on epistemological di/erences between
Mises and =aye%. )nterestingly, Eestre correctly draws the distinction
between the two ; Mises concentrates on a priori homo agens
pra'eology, whereas =aye% is concerned with Gthe coBordination of
many individual plansH. 5nd this goes bac% to our initial conundrum of
GselfBinterested individualsH4 how can it be said that their GselfB
interested and individual plans or activitiesH actually conver#e toward
GcoBordinationH rather than diver#e into GdisBintegrationH>
=ere is =aye%4
+rom 8a$e(&s "Ind=Econ<rd#A 4The -ure 9ogic of Choice&A As I have suggested else'here in this
volume,@ the tautological etho! "hich is a##ro#riate an! in!is#ensa$le %or the anal&sis o%
in!i'i!ual action sees in this instance to ha'e $een illegitiatel& exten!e! to #ro$les in "hich "e
ha'e to !eal "ith a social #rocess in "hich the !ecisions o% an& in!i'i!uals in%luence one another
an! necessaril& succee! one another in tie% The economic calculus )or the -ure 9ogic of Choice* 'hich
deals 'ith the first (ind of pro!lem consist of an apparatus of classification of possi!le human attitudes and
provides us 'ith a techni1ue for descri!ing the interrelations of the different parts of a single plan% Its
conclusions are implicit in its assumptionsA the desires and the (no'ledge of the facts, 'hich are assumed
to !e simultaneousl$ present to a single mind, determine a uni1ue solution% The relations discussed in this
t$pe of anal$sis are logical relations, concerned solel$ 'ith the conclusions 'hich follo' for the mind of
the planning individual from the given premises% When 'e deal, ho'ever, 'ith a situation in 'hich a
num!er of persons are attempting to 'or( out their separate plans, 'e can no longer assume that the data
are the same for all the planning minds% )KL!
5nd Faldwell (Dn =odgson!4
(hat Mises and &ong and @oett%e do when invo%ing Gpra'eologyH is
spea% about homo agens, and not about homines agentes ; because
then the Gintersub.ectivityH of these atomised inBdividuals has to be
confronted and e'plained4 how do the Geconomic institutionsH over
which Gthe pure logic of choiceH is to be e'ercised, come into %ein# in
the Arst place>
Eor there is no logic without a GworldH to which it applies ; and Gthe
worldH does not stop at GlanguageH, unli%e what &ong says .ust above.
(ittgenstein most certainly does not say this! ,he entire world lies
beyond lan#ua#e, which is only Gthe ladderH that we must leave
behind. =ence (itts invitation to read only the 0reface and Fonclusion
of the ,ractatus ; Gthat of which we cannot spea%HI
This is not to !u$ into the "impositionist/reflectivist dichotom$# generated !$ 0arr$ Isee
9ongJ !ecause 'e are not sa$ing that "realit$ shapes logic/pra.eolog$# !ut rather that
pra.eolog$ ta(es the conduct of language/game participants as "given/natural# even in an
"evolutionar$# sense 'ithout noticing that its 4a priori& is simpl$ an application of
formal logico/mathematical rules to a "realit$# alread$ "'arped# and "tailored# to !e
fitted into them li(e a -rocrustean !ed;"
#ack to #oettke
Eor e'ample, we could
imagine a world in which instead of labor bringing about disutility, it
brought about .oy. ,he labor theory deduced from this assumption would be
correct but hold only in a world in which labor brings about .oy. =owever,
since our purpose is to understand the world in which we actually live, we
observe the conditions of our world (in our e'ample the disutility of labor!
and use this empirical subsidiary postulate to circumscribe the bounds of our
"1J)1( DE 6DF)5& 1FDKDML
2*<
theori#ing.+* 5s Mises put it, the end of MeconomicN science is to %now
reality. )t is not mental gymnastics or a logical pastime. ,herefore
pra'eology restricts its in-uiries to the study of acting under those
conditions . . . which are given in reality (+44 ?*!.(p2*!
#ut 0the disutility of labor1 is precisely the kind of ridiculous a,iom that 0pra,eology1
consists of/ 4f we imagine that 0labour1 stands for 0alienated labour1- as it most
certainly does in a capitalist economy- then it follows in this 0language game1 that
0labour has no %utility* but rather a %disutility*1- as 'ises and thickheads like him would
have us believe2 #ut this is a 0fact1 peculiar to capitalism/ For we can well imagine a
society in which labour as 0living labour1- as the fulfillment of the creative powers of
human beings- does indeed 0bring about joy1 . which 0fact1 immediately subverts the
contemptible 0a,iom of actions1 dreamed up by 'ises/
Misess apriorism implied an important insight regarding the possibility of
value freedom. ,he deductive logic entailed in e'amining economic chains of
events must always ta%e ends as given. ,he role of the economist is to employ
a priori theory in evaluating the eOcacy of the means chosen in light of the
stated ends. ,he economist then has nothing to say about the ends
themselves but is instead in the position of commenting upon the coherence
of various means towards the achievement of those ends. 5s Mises put it4
,he ultimate .udgments of value and the ultimate ends of human action are
given for any %ind of scientiAc in-uiry2 they are not open to any further
analysis. 0ra'eology deals with the way and means chosen for the
attainment of such ultimate ends. )ts ob.ect is means, not ends (+44 2+!.
,hus, in contrast to the procedural value freedom of positivist methodology,
aprioristic methodology is analytically value free.+? MeansBends analysis in
light of aprioristically deduced economic law both avoids the fatal positivist
failure to recogni#e that all facts are theoryBladen and avoids the importation
of value .udgments into economic elucidation.
Mises points out that the aprioristic character of the pure logic of
choice implies that economic theory can never be empirically validated or
invalidated. ,he laws of economics are not sub.ect to veriAcation or
falsiAcation on the ground of e'perience and facts (Mises +44 92!.
5ttempts to empirically test economic theory are not only fruitless, but
indicate the wrongBheadedness of the scientists who attempt to do so. 6uch
scientists are in the same position as those who believe that they can validate
or invalidate the 0ythagorean theorem by measuring right triangles in the real
world. @oth fail to grasp the aprioristic nature of the theory they try in vein to
test. &i%e the laws of mathematics, the laws of economics are both logically
and temporally antecedent to any comprehension of historical facts
(Mises +44 92!. ,his fact in con.unction with the impossibility of controlled
e'periments in the real world ma%es it impossible to empirically test economic
theory as positivist philosophers of economics claim one should.+:
,he function of aprioristic theory in these analyses is to put parameters
on peoples utopias. 6o while an e'amination of the emergence of
money is necessarily an empirical in-uiry into the institutional features
that enable or disenable its emergence, the demand for money always
slopes downward. )n this fashion a priori theory bounds our behavioral
possibilities while ma%ing it possible for us to e'amine real features of
the empirical world. ,heory and the comprehension of living and
changing reality are not in opposition to one another but rather en.oy
a symbiotic relationship (Mises +44 9<!. Jiewed this way, rather than
hyperBtheoretical, Misess apriorism is actually radically empirical.+< ,he
pure logic of choice is a necessary component of economic e'planation, but
not suOcient.
Misess critics were also fond of pointing out that if he is correct, the pure
logic of choice is mere tautology.(p2:P!
5ccording to Mises it is true that li%e the laws of geometry, the pure logic
of choice is entirely tautological. Kevertheless these mere tautologies have
incredible empirical signiAcance. (ho would deny, for instance, that the
aprioristic propositions of geometry are applicable to the real world> 5ll
architectural structures from bridges to buildings rely on these tautological
propositions to be e/ectively constructed. 6imilarly, in economics we
rely upon the law of demand for instance7which is tautological at its
foundation7to analy#e the coherence of various means for the attainment of
various ends. Qust because observation cannot falsify this law does not mean
that the law is empirically irrelevant. &i%e all aprioristic propositions derived
from the a'iom of action, it is e'tremely empirically relevant. )ndeed,
without it we would be entirely unable to understand the functioning of the
economy. ,he application of the aprioristic laws of economics to the real
world yields empirical, institutionallyBcontingent propositions about
economic reality. ,hus, Mises points out, tautologies deduced from an
a'iom ine'tricably lin%ed to the real world are no vice. Dn the contrary, they
are the indispensable mental constructs that ma%e it possible for us to
understand the real world.(p2:+!
Konetheless, it is worth noting that for many years a more or less
methodological apriorism as described by Mises was common among
economists. )n fact a deductive common sense approach was the dominant
way of doing economics for -uite some time. 5s Mises put it, (e do not
maintain that the theoretical science of human action should be
aprioristic, but that it is and always has been so (+44 4P!. Kassau 6enior,
Cestutt ,racey, Q.@. 6ay, Qohn Fairnes, Farl Menger, &ionel "obbins,
Eran% $night, and many others were all apriorists of some sort or another.
1conomic theorems, these writers contended, were derived from selfevident
a'ioms.(p2?2!
Outrageous isconce#tion o% (language gaes) that #re*+u!ge the "orl! an! then
a##l& #er%ect (logical categories) to it an! #e!!le the as atheatical certainties,
-hat gar$age,
)See our discussion of 9ong&s "fallac$ of misplaced concreteness# 'here!$ he confuses
the content of "language games# Isuch as the regular !ehaviour of mar(et e.changeJ 'ith
the a!stract logico/mathematical rules of the game% In see(ing to reconcile "the -ure
9ogic of Choice# 'ith its real referential content, Mises and 9ong forget the
"ine.ora!ilit$# of the rules I;J* 'hich o!literates the "choice# that is the essence of the
"action a.iom#; Mises "reads !ac(# e. post into !ehaviour consistent 'ith the action
a.iom, the validit$ of his a priori theor$%
:oth!ard provides a good illustration 'hen tal(ing a!out the "disruptive/destructive# role
of fiat/&counterfeit& mone$ issued !$ governmentsA
"The champions of free competition in counterfeiting retort that this is simply the market
at work- that the market registers a 0demand1 for more e,panded credit- and that the
private bankers- these Kir"nerian entrepreneurs- are simply 0alert1 to such market
demands2 &ell- of course- there is always a 0demand1 for fraud- and embe""lement- on
the 0market-1 and there will always be plenty of 0alert1 swindlers who are eager and
willing to furnish a supply of these items2 #ut if we define the 0market1 not simply as a
supply of desired goods and services- but as a supply of such goods #ithin a frame#or%
of inviolate property rights- then we see a very different picture,# )pLH*%
No' :oth!ard is sa$ing that the "la's# of suppl$ and demand 'hich are perhaps the
most fundamental for "pra.eolog$# depend for their "validit$# on ever$ participant to
"the mar(et e.change game# playing by the rules of that game- 0within a framework of
inviolate property rights1; <f course, such "inviolate propert$ rights# need to !e defined
and 'e have ever$ confidence that :oth!ard 'ill !e a!le to define them consistentl$
'ith the "pra.eological language game#;
So he is in fact admitting that "pra.eolog$# e.tends to and is onl$ valid for such
!ehaviour as comes 'ithin its rules as a "language game# "the mar(et econom$
e.change game#% 0ut this is no different to sa$ing that the Soviet econom$ did not 'or(
and collapsed !ecause :ussians )or Americans for that matter* did not pla$ !$ the rules of
the "socialist econom$ game#; )The same applies to 9ong&s "th$molog$#, of course, as
'e sa' a!ove%* :ealit$ indeed, in Witt%&s frame'or(, "the 'orld#; / must !e !attered
and crushed until it fits the !lac( !o. of pra.eolog$;
The degree of a!surdit$ of these notions (no's no !ounds or !ottom% It is 'orth'hile to
1uote in full a couple of e.amples, from :oth!ard and from Salerno, to displa$ the full
horror of this line of unreasonA :oth!ard first /
"A genuine free mar(et in mone$, then, 'ould allo' the mar(et to select 'hatever metals
it 'ishes as media of e.change and units of account, 'ithout government attempts to fi.
the e.change rates !et'een them%>K
.ut one "oul! ex#ect that the "orl! %ree ar/et0 the ight& net"or/ o% 'oluntar&
exchange that Mises calle! an oecumene0 "oul!0 i% unrestricte! an! gi'en its hea!0 o'e
e'entuall& to"ar! one onetar& etal1?M And, 'hether it !e one or t'o metals, the
currenc$ units 'ould eventuall$ transcend the independent or 1uasi/independent names
given !$ states, to form a 'orld/'ide unit$ of simple units of 'eight% The entire 'orld,
'e might e.pect, as state interference into the mar(et oecumene disappears 'ill spea(
and rec(on no longer in "dollars,# or "francs,# or "mar(s,# !ut onl$ in gold ounces or
gold grams% That sort of 'orld 'as, indeed, the attaina!le dream of man$ of the
economists and statesmen of the nineteenth centur$, the classic centur$ of the gold
standard% In a series of international monetar$ conferences, 'hich contrasted to
t'entieth/centur$ ones !$ not see(ing more glo!al government monetar$ control !ut
greater e.pression of a unified free mar(et, there 'ere attempts to reach this goal% The
idea 'as first to ad5ust e.isting e.change rates slightl$ to ma(e them multiples of one
another, facilitating a phasing out of names and a gro'ing use of e.plicit units of gold
'eight in ever$ countr$% !nfortunately- the ve,ed silver problem obstructed any $@F+
NF agreement- until of course &orld &ar 4 swept away any search for a genuine
international metallic money2?2# )ppL3/K*%
And SalernoA
?M <n Mises and the oecumene- 6oseph T% Salerno, "9ud'ig von Mises as Social :ationalist,# pp%@>NHC,
esp% @?NL>% Salerno 'rites of the Misesian oecumene- "As the final and full fruition of social evolution
driven !$ the cosmic ontological principle of division of la!or, the 4oecumene& em!races all of humanit$
cooperating in h$perspeciali7ed production processes% At an$ point in histor$, the evolving oecumene is the
4rational and intended& outcome of an intersu!5ective process, 'hose purpose is the amelioration of
scarcit$% It e.ists not as a thing unto itself, !ut as a comple. of social relations 'hich emerges from a
common orientation of individual human actions, that is, to use the social division of la!or as the means to
attain individual goals% 0ecause such relations thus emanate from the 'ill, the$ must !e dail$ affirmed and
recreated in human thought and action%# I!id%, p% L2% )footnote to :oth!ard, pL3*%
This is the stuff of insanit$% 8o' can :oth!ard endorse Salerno&s 4oecumene& "as the
final and full fruition of social evolution driven !$ the cosmic ontological principle of
division of la!or# 'hen he has 5ust 1uite properl$ refuted 8a$e(&s notion of "evolution#
applied to "spontaneous order#O
EN2 OF 3E4CUR5U5 ON MI5E56
The Science of Choice and The Society of Capital: Reflections on
the Apories of Bourgeois Economics Between "Hypothesis
and Convention" and "System and reedom"
In his The Methodology of Positive Economics, Milton Friedman sets off on a
quest to define bourgeois economics as a "positive science":
In his admirable book on The Scope and Method of Political Economy, John
Neville Keynes distingishes among !a positive science " " "a body of
systemati#ed kno$ledge concerning $hat is% a normative or reglative science """
a body of systemati#ed kno$ledge discssing criteria of $hat oght to be " " " %
an art """a system of rles for the attainment of a given end!% comments that
!confsion bet$een them is common and has been the sorce of many
mischievos errors!% and rges the importance of !recogni#ing a distinct positive
science of political economy"!
This paper is concerned primarily $ith certain methodological problems that arise
in constrcting the !distinct positive science! Keynes called for & in particlar, the
problem ho$ to decide $hether a sggested hypothesis or theory shold be
tentatively accepted as part of the !body of systemati#ed kno$ledge concerning
$hat is"!
(You can find this paper here: http://wwwscribdcom/doc/!!"#$#"%/Milton&
Friedman&'he&Methodolog(&of&)ositive&*conomics+
You will recall that in our discussion on ,obbes-s political theor( we saw that
ever( time the word "h(pothesis" is applied to human beings and institutions that
,obbes postulated to be "conventional" (established b( a "social contract"+, this
use reflects the degree of "manipulabilit(" of the living realit( of human beings
and institutions either on the part of those who carr( out the "h(pothesis" or else
on the part of some e.isting distribution of "power" between those human beings
and their institutions so that the( acquire a degree of "predictabilit( and
regularit(" /ather than reflect on the reasons wh( certain "positivel(
measurable" behaviours ta0e place in a given societ(, Friedman prefers to
concentrate and therefore arbitralril( "narrow" the focus of his ")ositive
*conomics" to "a bod( of s(stematised 0nowledge concerning what is"
It ma( be well to recall at this point the time when the 1a2i dictatorship filmed the
behaviour of unfortunate 3ewish people whom the( had forced into the 4arsaw
5hetto & living in the most appalling circumstances that at the mere thought
renew the nightmare of the e.perience and its unspea0able sorrow &6 the 1a2i
dictatorship filmed these unfortunate human beings and the horrendous
conditions and behaviour to which the( had been horrificall( and violentl( forced
b( the 1a2i 77 and 8rm( so as to be able to "prove" to the 5erman people bac0
home "wh( 3ews are rats" 'he idea was obviousl( that if people behave li0e rats,
the( must be rats & without an( questions as0ed about "how and wh(" the( came
to behave in that manner9
7o this is e.actl( what Friedman is as0ing us to do with his "positive economics"
:ut if this is the aim, it follows then that an( "h(pothesis" that Friedman and his
"economic science" ma( advance will be vitiated ab initio & from the ver( start &
b( the historical and political circumstances that have led to "what is" In that
case, his "s(stematised bod( of 0nowledge" would tell us absolutel( nothing (9+
about the true content and substance of "what is" and it would tell us much more
instead about the "s(stem" & about the "stable, regular and predictable" social
relations that have been imposed on a societ( so that the( are not sub;ect to
great and significant change "'he s(stem" here ma( well be inconsistent with
"freedom" or "choice", the more this "s(stem" is sub;ect to "mathesis", to its
mathematical modelling 8nd this is e.actl( what we have deprecated and
e.posed on this site with the various economic and econo&metric "models"
espoused b( bourgeois economists from Mish0in to :ernan0e to <rugman
)erhaps the greatest attempt at devising and defining a "science of economics"
was that of =ionel /obbins at the =ondon 7chool of *conomics (where he was
;oined b( Friedrich ,a(e0 in the $">#s+ in terms of "the 7cience of ?hoice"
8ccording to /obbins economics is the science of allocating "scarce resources"
to "alternative uses" In other words, /obbins sa(s that economics is "the dismal
science" because it deals with "resources that are scarce" (whose suppl( is
limited+ to determine the "choices" available for their allocation to a (limited+
number of alternative uses
'he apor( (the practical contra&diction+ in this definition between the rigorous
inevitabilit( of the "science" with the apparent "freedom" of the "choice" is
immediatel( evident If, indeed, economics can tell us "scientificall(" what our
"choices" are in terms of the allocation of e'isting resorces, then we simpl( do
not have an( "choice" in the matter9 7impl( put, the bourgeois dream of a
"scientific economics of capital" and of a "free societ(" is simpl( impossible9 @ne
of two things: either economics (the "dismal" science+ is so rigorous that it
effectivel( allows no real "choice" or else it does, in which case it is neither
"rigorous" nor "scientific"9
'he apor( or contradiction & in fact, it is a "vicious circle" & that /obbins did not
see in his bourgeois apologetic haste, lies hidden in our surreptitious substitution
above of "e.isting resources" for /obbins-s "scarce resources" In fact, /obbins &
in his complete imbecillit( & never once as0ed himself "how" he 0nows that
certain "resources" are "scarce" to begin with9
(nd the ans$er is that e.isting social resorces become !scarce! becase a
given society has already made a !choice! )dependent on its e'isting system and
distribtion of political po$er* as to $hat $ill be the !resorces! that it seeks to
tili#e+++
7o, in other words, it is impossible to determine what are "scarce" resources and
the degree of their "scarcit(" without reference to the social relations (harmonious
or antagonistic, conflictual or co&operative+ of a given societ( & unless we assume
that there is " no conflict" alread( in our societ( about "how and to what e.tent"
e'isting (99+ resources are to be utilised9 /obbins simpl( "assumes" that there is
no "conflict" between social individuals and classes in a capitalist societ(9 ,e is
assuming that what is a "scarce" resource in a capitalist society will also be a
"scarce resource" in any and all societies99 :ut if that were so, "economics" would
no longer be "economic science": it would be a mere branch of engineering or
mathematics99
Indeed as (ou can see, in their absurd attempt to remove all "conflict" from
"economic science", bourgeois economists end up with onl( "mathematical
equations" & that is to sa(, "empt( formal relationships between mere numbers"999
'his happens to /obbins, it happens to Friedman (in the article quoted above+,
and it happens to <rugman in the article we ;ust reviewed9 In fact, it happens to
all "bourgeois economists" because, on one hand, the( wish to preserve the
(consumeristic, individualistic+ "freedom of choice" in "societ(" & (et at the same
time the( must present "the societ( of capital" as one that operates according to
"scientific" principles & as a (free+ societ( that is rid of the "conflict and
antagonism" of "capital"9
'hat is wh( in our title we have wor0ed with the "geometric opposites" of
"science" and "choice", of "capital" and "societ(", of "convention" and
"h(pothesis", of "s(stem" and "freedom" 4e will loo0 more closel( at these in the
near future
The Science of Choice and the !eil of "oney
It is clear that AeconomicsB as the Ascience of choiceB that /obbins was see0ing is as
impossible as a Asquare circleB C it is a contradiction in terms because if economics is to
be a AscienceB of AchoiceB then it must tell us what our AchoiceB must be (9+ given Ascarce
resourcesB to be allocated to AgivenB alternative uses 8n( AeconomicsB that treats
Ascarce resourcesB and Aalternative usesB C the real elements of AchoiceB C as
Ae.ogenous inputsB is pure and formal mathematics, not AeconomicsB In other words, it
loses all substance and content as a stud( of human needs and organi2ation C and
becomes a set of sterile quantitative equations or a barren Aanal(tical filing s(stemB (see
further discussion b( Friedman at page with footnote "+ Friedman admits as much in
what follows:
The ltimate goal of a positive science is the development of a
!theory! or, !hypothesis! that yields valid and meaningfl )i"e", not
tristic* predictions abot phenomena not yet observed" Sch a theory
is, in general, a comple' intermi'tre of t$o elements" In part, it is a
!langage! designed to promote !systematic and organi#ed methods
of reasoning"!, In part, it is a body of sbstantive hypotheses
designed to abstract essential featres of comple' reality"
-ie$ed as a langage, theory has no sbstantive content% it is a set
of tatologies" Its fnction is to serve as a filing system for
organi#ing empirical material and facilitating or nderstanding of it%
and the criteria by $hich it is to be .dged are those appropriate to a
filing system/""
?onversel(, an( AeconomicsB that see0s to identif( a AmechanismB, such as the Amar0et
mechanismB of Asuppl( and demandB, that can identif( Ascientificall(B the wa( in which a
societ( ma0es its AchoicesB to allocate Ascarce resources to alternative usesB C an( such
AeconomicsB will have to admit that the AchoicesB involved are purel( AtechnicalB and
therefore are not AchoicesB at all9
If instead AeconomicsB is supposed to tell us what Aalternative usesB are possible given
certain AchoicesB of Ascarce resourcesB, then this economics has to tell us Awh(B the
Ae.isting resourcesB are AscarceB and what ma0es them AscarceB9 /obbins and ,a(e0
would sa( that it is the Amar0et mechanismB through its ApricesB that tells us what is
AscarceB and what is not, and that it is the identification of Athe mar0et mechanismB that is
the real success and content of Aeconomic scienceB 'his is wh( ,a(e0 preferred to
spea0 of a Apure logic of choiceB and not of a Ascience of choiceB
:ut (et again (as we showed in our pieces on ,a(e0 D(ou can search this site using the
facilit( providedE+, there is no wa( at all for us to tell Awh(B mar0et prices are an accurate
measure of social AchoicesB about the Ascarcit( and allocation of resources to alternative
usesB C e.cept to sa( that the mar0et mechanism is correctFbecause it is a Afree
mar0etB mechanism9 In other words, to 0now whether prices are an accurate measure of
Ascarcit(B, we need to 0now that ApricesB indicate Ascarcit(B as decided freel( b( mar0et
agents :ut we cannot 0now whether a ApriceB correctl( indicates Ascarcit(B as decided
b( mar0et agentsFe.cept b( means of the ApriceB9 7impl( put, Athe mar0et price
mechanismB C suppl( and demand C is Aauto&referentialB and therefore it is a simple
tautolog(, as Friedman freel( admits above
'he onl( wa( out of this logical and theoretical impasse is to sa( that ApricesB as
determined b( Athe mar0et price mechanismB correctl( predict the AchoicesB of societ( as
to the allocation of given resources In other words, we can no longer spea0 of Ascarcit(B
or of AchoicesB but rather of simple Aregularities and predictabilitiesB in social behaviour C
which is what Friedman means b( A)ositive *conomicsB as a science ,ere is Friedman
again:
The ans$ers to these 0estions depend partly on logical, partly on
factal, considerations" The canons of formal logic alone can sho$
$hether a particlar langage is complete and consistent, that is,
$hether propositions in the langage are !right! or !$rong"! 1actal
evidence alone can sho$ $hether the categories of the !analytical
filing system! have a meaningfl empirical conterpart, that is,
$hether they are sefl in analy#ing a particlar class of concrete
problems"2 The simple e'ample of !spply! and !demand! illstrates/ this point/"
D1@'* that Friedman adopts the Machian concept of Asimplicit(B as the rule of selection for different
h(potheses, given equal AfruitfulnessB C for a discussion of 1iet2scheGs critique of *rnst MachGs and
7cholastic notions of Asimple. sigillum veriB ;ust search this site ,ere is Friedman on this point:
The choice among alternative hypotheses e0ally consistent $ith the available evidence
mst to some e'tent be arbitrary, thogh there is general agreement that relevant
considerations are sggested by the criteria !simplicity! and !fritflness,! themselves
notions that defy completely ob.ective specification" ( theory is !simpler! the less the
initial kno$ledge needed to make a prediction $ithin a given field of phenomena% it is
more !fritfl! the more precise the reslting prediction, the $ider the area $ithin $hich
the theory yields predictions, and the more additional lines for frther research it
sggests"E
:ut once again, as we saw in our previous )ost, this means that Aeconomic scienceB lives or dies b( its
abilit( to predict reliabl( the future course of Athe econom(B (b( its AfruitfulnessB+ C and we 0now ver( well
how disastrous Aeconomic scienceB has been in that regard9 @f course, the reason wh( Aeconomic scienceB
cannot reliabl( predict the future is that capitalism is founded on social antagonism, on the wage relation C
which means that Aeconomic outcomesB are the result of political struggles between living labour (wor0ers+
and dead ob;ectified labour (capitalists who own the means of production and social resources+ and not of
trul( AdemocraticB decision&ma0ing about the allocation of social resources C chief among them Aliving
labourB itself, that is to sa(, our own living activit( which is decided for us b( ass&holes li0e 7teve 3obs9 (@<,
e.aggerating a little C but nowhere near as much as these 1obel )ri2e winner AgeniusesB9+
:ourgeois economics sees social antagonism not as such, but rather as Ae.ogenous shoc0sB or
AdisturbancesB, our needs as Ae.ternalitiesB and its design of domination and destruction of our world as
As(stemic ris0sB 8nd the wa( capital see0s to chr(stallise, to ob;ectif( its abilit( to command and control
living labour is through the monetar( medium
:ecause mone( (capital e.pressed as value in liquid form+ is the instrument that lies at the interface of the
antagonism between living labour and capital C as the wage relation C it is obvious that bourgeois
economics has no AtheoreticalB role left for Amone(B, & because otherwise it would have to come to grips with
the phenomenon of AvalueB, that is to sa(, not ;ust ApriceB (which is the institutional Ae.pressionB of
antagonism+ but as Acommand over living labour Friedman himself, in a candid moment, admits as much
(see his A?onclusionB, at pHI on m( cop(+:
The $eakest and least satisfactory part of crrent economic theory seems to
me to be in the field of monetary dynamics, $hich is concerned $ith the
process of adaptation of the economy as a $hole to changes in conditions
and so $ith short&period flctations in aggregate activity" In this
field $e do not even have a theory that can appropriately be called !the!
e'isting theory of monetary dynamics"
:etween the Idea and the /ealit( falls the 7hadow (to paraphrase ' 7 *liot+: between capitalists and
wor0ers lies Amone(B C Athe Jeil of Mone(B 4e shall tr( Ato unveilB this relationship soon
rom Science of Choice to Evolution # Escaping the !icious Circle
of "Economic Science"
=et us summarise what we have argued in the two preceding posts on "'he 7cience of ?hoice" 8ccording
to /obbins and ,a(e0, economics is a "science" because it identifies for us the most "efficient allocation" of
"scarce resources" to "alternative uses" so that we ma( be able to ma0e a "scientific choice" @f course, if
our "choice" is to be guided b( "science", then it is no "choice" at all & e.cept if we "choose" to bind our
"choice" to what "science" alone suggests :ut even if we allow this, then economics would amount to
"social engineering" in the sense that we are "free to choose" whether to accept "the laws of ph(sics or
chemistr(" in the pursuit of a specified "use", but if we ignore them, the consequences will be self&defeating
so that, in fact, we have no real choice in the matter
:ut /obbins and ,a(e0 can retreat to a safer position and argue that "the science of choice" can at least
"tell us" which "choices" are the most "efficient allocations of scarce resources to alternative uses" so that at
least we ma( ma0e an "informed choice" :ut the problem with this "retreat position" is that if we choose to
ignore what economic "science" tells us is the most "efficient allocation of scarce resources to alternative
uses", or very choice of ignoring the !scientific reslts! as to the efficiency of alternative allocations $ill
affect the calclation of the !scarcity! of the resorces that 3obbins and 4ayek take as a !given!++ In other
words, economics as a "science of choice" is no "science" at all because our "choices" themselves change
the calculation of both the "scarce resources" (which "resources" are "scarce" and how "scarce" the( are+
and the "alternative uses", because these change with the "scarcit(" of the "scarce resources" and with the
ver( definition of "what" is a "resource" and what is not9
'his is wh( Friedman was forced to retreat still further in the definition of "economic science" so as to avoid
the pitfalls of tautolog( (self&referentialit(+ ,e did so b( re&defining economics as a "positive science" & in
other words as one that does not "tell" us what to do e.cept to the e.tent that its "h(potheses" can be tested
empiricall( and so can help us "avoid the wrong choices" purel( in terms of "predictabilit(" In effect, this is a
fresh version of the /obbins&,a(e0 position, as we saw, because Friedman assumes that "social realit( as it
is", even if it could be predicted with an( degree of precision b( economic "science", is reall( "what we want
it to be"9 In other words, Friedman is suggesting that the economic behaviour of "societ(" is the result of
"spontaneous choices" that can be "predicted" and "measured" scientificall(
'his position is almost entirel( identical with ,a(e0-s notion of "spontaneous order" which he developed in
his later (ears, after he abandoned the notion of a "science of choice" or "pure logic of choice" :ut as the
phrase itself suggests, this is a contradiction in terms, or an o.(moron, because if "societ(" has an "order",
then this cannot be "spontaneous" & and if this "order" is indeed "spontaneous", then it simpl( cannot be an
"order"9 ,a(e0 seemed to have a "biologistic" or "organicist" notion of social institutions that came strangel(
close to 7chumpeter-s own concept of "economic evolution" 'hese "evolutionar(" distractions on the part of
economic theoreticians, ;ust li0e the "institutional" ones of the 1ew Institutional *conomics, are alwa(s the
clearest sign that bourgeois economists are completel( at a loss to define the "scientificit(" of their discipline9
'he other, more common, sign is the retreat into the obfuscator( world of comple. mathematical equations
that & b( definition9 & are onl( "formal" identities that cannot ever describe or e.plain realit( in a substantive
sense & in terms of human "purpose"
7o it is to this "purpose" that we turn ne.t In focusing on the "fruitfulness" of economics as a "positive
science", Friedman was aware that this was the best wa( to preserve the "neutralit(" (hence the "positive"
character+ of economics as a "science" & and not as a "normative" doctrine advocating "values" and "goals" &
and to escape the "circularit(" (tautologies+ of the /obbins&,a(e0 concept of "7cience of ?hoice" for
economics 3oseph 7chumpeter was perfectl( aware of these combined difficulties & which is wh( he tried
(li0e ,a(e0 with his later "evolutionar(" concept of "spontaneous order"+ to overcome them b( drawing a
conceptual distinction between the "circular flow" of the econom( and its "historical evolution or
development" (*ntwic0lung+ & its "growth" or trans&crescence :( ma0ing this e.tremel( clever distinction,
7chumpeter meant to isolate ("to ring&fence", as it were+ the "circular and circuitous" part of economics & the
part that Friedman described as an "anal(tical filing s(stem"+ & from the "causal" or "scientific" part & the one
that deals with the "causal factors", with the "direction and purpose" of the econom( in terms of "growth" and
"development" or "evolution", all terms that do not necessaril( suggest a "goal" of economic activit(, but at
least leave conceptual "room" for these more "historical" aspects of human needs and aspirations 4e will
loo0 at these soon