Author Archives: Mattheus von Guttenberg

A Red Herring on Praxeology: A Reply to Lord Keynes

Before I critique the substantive portions of Lord Keynes’ article, I would like to applaud him for taking up the daunting task of attempting to make headway on the philosophy of economics. Although he rejects the method of praxeology, in my opinion erroneously, writings like his are nevertheless to be encouraged because they sharpen the mind and get to the heart of the issue.

As readers may know, I have some experience studying Kantian epistemology, and in particular, the status of the synthetic a priori. This is truly the starting point of praxeology and Austrian economics, and I am grateful for the attempt to render it more comprehensible. In the article, Lord Keynes attempts to force Misesian praxeology into either one of two boxes: the analytic a priori or the synthetic a posteriori. Like the positivists before him, Lord Keynes refuses to acknowledge the possibility of synethetic a priori.

Lord Keynes’s article begins by quoting Mises’ on praxeology and aprioristic reasoning in general. Immediately, LK makes the claim that Kant’s idea of the synthetic a priori is “untenable.” He cites the advance of non-Euclidean geometry as proof that Kant was mistaken to consider geometry synthetic a priori – and this mistake should, according to LK, cast serious doubt on the whole enterprise of the synthetic a priori in general.

Furthermore, he attempts to show by linking from another problematic article, that even if one were to grant plausibility to the category of the synthetic a priori, the “action axiom” cannot be a worthy candidate for it because it incorporates synthetic a posteriori knowledge.

But this is all beside the point. The real meat of the article is to illustrate why Mises fails to understand “Philosophy of Mathematics 101” in his inability to separate “pure geometry” and “applied (physical) geometry.” To describe the distinction, he introduces Rudolf Carnap, a logical positivist. Even further in the article, Lord Keynes correctly notes the limited nature of Euclidean geometry in describing a “universal theory of space.” Euclidean geometry, as we know from the theories of Einstein, instead reflect a special case — a subset — of the larger, more general category of non-Euclidean geometry, which can account for advances made in 20th century physics. LK asserts that because Mises misunderstands the nature of geometry, we can safely disregard his musings on philosophy of economics, and on praxeology in particular. Nowhere in the article does LK refute or directly challenge praxeology as a methodology, because he has no doubt done that elsewhere.

My contribution to this riveting discussion is merely to point out a few errors Lord Keynes makes. I will begin as he began.


In the first place, Lord Keynes begins by inappropriate question-begging. He writes, “Kant’s belief in the synthetic a priori is false, and we know this now given the empirical evidence in support of non-Euclidean geometry: this damns Kant’s claim that Euclidean geometry – the geometry of his day – was synthetic a priori (Salmon 2010: 395).

Notice immediately that Lord Keynes tries to undermine Kant’s notion of the synthetic a priori by use of empirical evidence. This will not do. The synthetic a priori, as Kant formulates it, is a category of knowledge by which we come to understand synthetic claims (claims about the real world) by means of aprioristic reasoning (logical deduction). Pointing to an empirical event as falsifying or refuting a claim about a methodology misses the mark entirely. Kant’s ideas on the synthetic a priori may well be wrong or mistaken, but one must prove so by means of showing where the logical error lies. It is simply poor philosophy to argue that an empirical event can refute epistemic claims. This is a category mistake. Epistemic claims — claims of how we understand knowledge — are of an altogether different category than claims of knowledge themselves.


In the second place, Kant’s musings on pre-Einsteinian geometry are fascinating, but hardly foundational for the synthetic a priori paradigm. As Mises says, men can make mistakes in their logical deductions. Just because Kant did not, or could not, imagine non-Euclidean geometric theorems does not invalidate his notions on the category of the synthetic a priori in general. For years, I too considered pure geometry to be analytic a priori; as an edifice of logic that does not necessarily refer to real constructs. This excerpt by Hans Hoppe is worth considering, however, given the context we are discussing:

“[T]he old rationalist claims that geometry, that is, Euclidean geometry is a priori and yet incorporates empirical knowledge about space becomes supported, too, in view of our insight into the praxeological constraints on knowledge. Since the discovery of non-Euclidean geometries and in particular since Einstein’s relativistic theory of gravitation, the prevailing position regarding geometry is once again empiricist and formalist. It conceives of geometry as either being part of empirical, aposteriori physics, or as being empirically meaningless formalisms. Yet that geometry is either mere play, or forever subject to empirical testing seems to be irreconcilable with the fact that Euclidean geometry is the foundation of engineering and construction, and that nobody there ever thinks of such propositions as only hypothetically true.”1

He continues,

“Recognizing knowledge as praxeologically constrained explains why the empiricist-formalist view [of geometry] is incorrect and why the empirical success of Euclidean geometry is no mere accident. Spatial knowledge is also included in the meaning of action. Action is the employment of a physical body in space. Without acting there could be no knowledge of spatial relations, and no measurement. Measuring is relating something to a standard. Without standards, there is no measurement; and there is no measurement, then, which could ever falsify the standard. Evidently, the ultimate standard must be provided by the norms underlying the construction of bodily movements in space and the construction of measurement instruments by means of one’s body and in accordance with the principles of spatial constructions embodied in it. Euclidean geometry, as again Paul Lorenzen in particular has explained, 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. Naturally, these norms and normative implications cannot be falsified by the result of any empirical measurement. On the contrary, their cognitive validity is substantiated by the fact that it is they which make physical measurements in space possible. Any actual measurement must already presuppose the validity of the norms leading to the construction of one’s measurement standards. It is in this sense that geometry is an a priori science; and that it must simultaneously be regarded as an empirically meaningful discipline, because it is not only the very precondition for any empirical spatial description, it is also the precondition for any active orientation in space.”2

I will conclude before the conversation becomes unwieldy. To my understanding, LK makes two errors: one minor and one monumental. The minor error he makes is to give us a red herring; that is, he attempts to use Mises’ misunderstandings (or not – depending on if Hoppe is correct) on the epistemic status of mathematics and geometry to entirely discount his contributions to philosophy of economics, and praxeology in particular. His larger and more alarming error is in not recognizing the validity of the category of the synthetic a priori. In so doing, Lord Keynes forces his mind into considering knowledge in only two ways: either analytic a priori (empty formalisms, logic games of which no relation to reality can be made) or synthetic a posteriori (real-world empirical claims, of which continuous testing is done to falsify or confirm a hypothesis). He does not recognize that action necessarily renders us knowledgeable of its logical implications, and because human action is a real world phenomenon, does indeed give us knowledge of the real world through the use of the rationalist, deductive process. Hoppe writes elsewhere that action — the substitution of one state of affairs for another — necessarily implies that the actor understands and comprehends a teleological, means-ends framework, and the existence of “time-invariantly operating causes” (the category of causality). No actor could make a decision about whether to interfere or not without understanding that events are connected in a casual framework. Even making empirical observations requires that the observer understand a causal framework, simply in order to make sense of his observations. The understanding of causality is thus inherent and irrefutable within every action. This renders causality to the status of the synthetic a priori and — that every event is interconnected with other events and causes — is both true logically, because every action demonstrates the actor must know this, and it also gives us usable and important information about the real world.


1. Hans-Hermann Hoppe, Economic Science and the Austrian Method, pg. 30.

2. Hoppe, ibid, 31.

My Experience at PorcFest X

Guest post: by Mattheus von Guttenbergporcfest logo

Not too long ago, I got back from a week long camping trip in New Hampshire at the Porcupine Freedom Festival (PorcFest), hosted by the Free State Project. The Free State Project, for those unaware, is an organization made of thousands of freedom-lovers of all types to encourage libertarianism in the state of New Hampshire. They espouse the philosophy that the “maximum role of civil government is the protection of life, liberty, and property” and they encourage people to move to New Hampshire to participate in grassroots activism as well as change through the New Hampshire political channels. PorcFest is the Free State Project’s annual camping event in Lancaster, New Hampshire. By the end of Porcfest, there were over 1,700 people gathered in tents, RVs, and for some fortunate ones, nearby hotels.

Prior to this trip, I had no direct knowledge of what lay in store for me. I was not a Free Stater nor was I current with their news and events. Having attended the week-long Mises University twice, and a few days back in February with the Students for Liberty folks at their international conference in D.C., I would have told anyone who asked that I had experienced a wide range of libertarians, and for this very reason I didn’t think PorcFest would bring anything new to me. My knowledge of “active” libertarian types was limited to (1) bowtie-wearing Austrian bibliophiles, and (2) College age or young-adult libertarians engaging in political and social activism around their respective schools.

The general feeling of attending other libertarian venues (week-long or not) is that one comes away with better arguments or positions with how to convince or persuade others. I’ve studied Austrian economics and praxeology for years in the hopes that I can convince fellow economists and philosophers of their Keynesian or anti-libertarian errors – and in so doing slowly bring them around to a more civil position on society, ethics, etc. For the same reason, I’ve studied the social and economic effects of various types of state intervention and I appeal to people’s decency and rationality when I explain the terrible effects of money printing or occupational licensing laws, or what-have-you. I’ve studied these things in the hopes that I can talk and bring around regular people in my life to a more peaceful, libertarian resolution to their perceived social ills. I enjoyed attending both, and I think both types of work are necessary. But they are certainly not sufficient. If the Mises University is represented as intellectually advancing libertarianism, and groups like Young Americans for Liberty and SFL are represented as politically or socially advancing libertarianism – then PorcFest is about advancing libertarianism through direct action.

Attending PorcFest is nothing but an exercise in direct action. The “theme” of PorcFest, if one could refer to anything, would be a general desire to practice agorism. Agorism is the philosophy of living as much as possible outside the state; to encourage non-compliance, civil resistance, and “opting out” of state-run services. Instead of explaining freedom and trying to make it sound beautiful, we should create freedom, and people will come later. As they said, people will become attracted to freedom when they see it. Thus, the whole atmosphere at PorcFest was an atmosphere without a trace of police or state involvement. People were happy to do business with merchants they knew were unlicensed, to buy silver from a loud tattooed man with a rifle on his shoulder, to listen to Ernie Hancock on “Declare Your ndependence” in the morning preaching the many and various injustices committed on regular, peaceful people in the name of “law.”

These people were committed to establishing the “new channels” of commerce and exchange – without the purview of the state regulatory boards or food inspection thugs or Bernanke’s whim. Of course, a not-small contingent of these “agorists” were left-libertarians; “hackers” some might say for advancing the use of encryption and anonymity software, “socialists” some might say for desiring more localized production instead of huge corporate monoliths dominating the economic scene in Randian fashion.

Some people practiced home-schooling or, the more radical variant, “unschooling.” While homeschooling seeks to “bring the public school to the home” in terms of workload, curriculum, etc., unschooling represents a more laissez-faire approach to education where the emphasis is on growth and development of interests instead of efficiency at standardized tests. Unschooling, unfortunately, flies in the face of a thicket of local, state, and federal laws regarding public education, homeschooling, compliance with teaching laws, etc. Practicing unschooling – taking your children out of government schools and seeing to their development yourself – is another way to advance libertarianism by example.

Many more people were united against the injustices being committed to our foods and medicines. The fluoridation of water, the food cartel strengthened by Monsanto and the USDA, the over-medication of pharmaceutical drugs especially to children, the outlawry and subsequent raids on owners raw milk and cannabis, the ubiquitous presence of genetically modified organisms that a majority of Americans consume – these are all legitimate and often-heard complaints against the state-sponsored monopolization of agribusiness and pharmaceuticals.

A small body of us came as Bitcoin enthusiasts, hoping to spread the use of Bitcoin and the familiarity with digital currency in general. Despite Bitcoin’s large rise in price and its large popularity in libertarian circles, some vendors were either totally ignorant of Bitcoin, and others were slanted against it for one reason or another. The Bitcoin panels were excellent at answering common questions regarding its stability, strength, future use, and other technical characteristics of Bitcoin. At Revolution Coffee, one could even use a Bitcoin ATM to exchange with dollars.

Without law enforcement, PorcFest became a peaceful anarchy. Alcohol and cannabis were consumed openly without pretense or permission needed. Social favor was distributed by reputation and conduct – for this reason, one has an incentive in traveling around and meeting new people to impress. Likewise for the merchants, their business is entirely dependent on word of mouth. The bearded guy that sold Texas chili, the Thai family who sold egg rolls and fried rice, the man and woman who operated the Juice Caboose, even Mandrik the pavilion gyro cook were all dependent on the happiness of their customers. Stations were poised all around the campground with coffee, fruit punch, and lemonade. Other stations included firewood and electrified coolers with bags of ice. All of these operated on an honor system ($1 for refill, $6 for firewood, etc.). There were large printed QR codes in case you wanted to buy with Bitcoin. Such was the level of trust at PorcFest that vendors felt safe leaving their “tip” jars with silver and large bills outside for the whole day.

Of course, for those looking to do more than sit at a smoldering campsite drinking beer or smoking, presentations and events were offered all day. Everything from hula-hooping, to a beginner’s shooting class, to Bob Murphy’s Variety Show were available. There were panels on homeschooling, on natural food production, on libertarian fiction writing, on alternative legal systems, on Remembering Rothbard, on mesh networking, on Bitcoin. There was even an event dedicated to exploring new areas in which savvy agorist entrepreneurs can develop markets and products that don’t exist in today’s state-dominated world.

Even though the overwhelming population of PorcFest were radical libertarian anarchists, by the final few days, even libertarian celebrities and non-anarchists came to show. Peter Schiff came giving an introduction to Gary Johnson, the 2012 Libertarian Party presidential candidate. Only at PorcFest, however, could Gary Johnson get heckled for being a statist. In his plan to slash federal income taxes of all types, people cheered. When he followed with “and I would replace them with a single tax…” it turned into outright booing. Gary lamented that the United States engaged in such atrocious foreign policy and members of the audience shouted at him for using the collective words “we” when describing the actions of the US government. “I didn’t murder anybody!” shouted one man from the audience.

More radical anarchism was to follow the next day with the Soapbox Idol contest, where contestants would compete for the best rant they could deliver. Antonio Buehler was the first ranter to earn a perfect score for his powerful and emotional tirade against the “cowardly” nature of police officers and law enforcement. His rant underscored what a lot of libertarians see day in and day out – the terrible abuse of police officers against peaceful citizens, whether in the form of “no-knock raids” where police accidentally kill the wrong person suspected of having drugs, or when they exercise intimidation to stop people filming or recording their actions. Another woman delivered a devastating poem she wrote about the horrors of drone warfare.

The experience of being at PorcFest, above all, was inspiring. John Bush and others on the peaceful parenting panel were jaw-dropping. One woman told an anecdote describing how she traveled to the local New Hampshire school board and told them that she will not be complying with their edicts and regulations, and she left. At first glance, that seems frightening. What if they come to your house? Take your kids? Frightening, until you realize that the locals in New Hampshire have a large community of non-compliant parents, and the city simply doesn’t have the resources to prosecute them all. Joining a community of non-compliant members is certainly much easier than beginning one yourself, and that applies to parents looking to skirt state law as much as any other agorist enterprise. You want to market and sell natural healing products without licenses and paying taxes? It certainly helps to have customers and like minded business partners that don’t care about licenses or tax evasion.

PorcFest was inspiring because I’ve been talking and thinking about what a free society looks like (or might look like) for years, but I don’t take much action to create it. Living off the grid, learning to produce a portion of your food, earning an undocumented income, keeping healthy – these are all ways to secure yourself from the state and its centralized power structures in society (food, banking, medicine, etc.). PorcFest is a community dedicated to those principles. The Free State Project, and PorcFest too, gets larger each and every year as more and more people are realizing the benefits of creating the “alternative institutions” to replace the state. Libertarians can offer all the intellectual and social arguments for laissez-faire, but when the state comes crashing down (as La Boetie describes) – what will there be to replace it? PorcFest and the Free State Project are excellent reminders to live and act now and to spend energy and time creating the society we all know can exist.

Another Attempted Rescue of Praxeology

Although I feel Jonathan did an admirable job defending the Misesian methodology, he has asked me to buttress his own writings with some philosophical thoughts of my own to which I of course will oblige. Jonathan links us to a critique of the practice of praxeology by Eric Perkerson at The Social Rationalist. After some interesting thoughts on the value of knowledge for its own sake and knowledge for the sake of its application, we find Eric’s thesis put bluntly:

The process of pure deduction, as a methodology, should not be valued in this regard. As we will show, it cannot be applied because it cannot yield appropriate knowledge-as-means.

This thesis is demonstrably untrue. First, I will deal with the body of his work – which deals with this specific thesis – and I will then comment on a few other erroneous, auxiliary points Eric tries to make against praxeology. Eric begins the meat of his post with an unqualified and wrong assertion:

Pure deduction can only yield conditional knowledge. Only with foundational assumptions, or with things that are “given,” can logical deduction yield any results at all. Logic in a vacuum yields nothing. Nothing in, nothing out.

Pure deduction, as a matter of fact, can yield quite a bit of certain knowledge. The understanding of mathematics and geometry are based on pure deduction from an incontestable axiom: the law of identity. A=A is not an empirical hypothesis, nor is it an abstract illustration of philosophical confusion (see: Hegel’s “self-differentiating unity” for an example). It is an incontestable truth that we cannot conceive of as erroneous. That A=A is correct does not require continual testing or experimentation; it can and must be understood a priori. Likewise, the law of non-contradiction – that something cannot both be A and not-A at the same time – is an example of pure deduction. Contrary to Eric’s assertions, these laws do not represent condition knowledge, but the opposite: unconditional knowledge. We can know with absolute objective certainty that a thing is equal to itself, and we know this by the very definition of what we are proposing. A=A is a tautology, just as all deduction is. Whether Eric thinks logical tautology can give us usable or meaningful knowledge is another thing, but certain knowledge it definitely can. For a more obvious example of the results of pure deduction to give us a bedrock of certain knowledge, see Descartes’ cogito.Furthermore, contrary to Eric’s ex cathedra pronouncement, the law of identity is not an assumption. It is a requisite for all deduction. There is no conceivable world where A=A cannot be true, and this elevates it to the status of an incontestable axiom – a product of deduction.

For conditional knowledge to be elevated to the status of proper knowledge, we have to somehow verify that the conditions or assumptions on which the conditional knowledge is contingent actually hold true in some respect out in the external world. The conditional knowledge of the pythagorean theorem is based on the condition that one has a right triangle. Actual knowledge based on the pythagorean theorem has to come from knowledge that one is dealing with something which satisfies the definition of a right triangle. Conditional knowledge becomes proper knowledge when the conditions it is based on are known to be satisfied. How this knowledge comes to be known is a problem that is outside of the realm of pure deduction: it is necessarily empirical. This is the interesting epistemological problem.

This paragraph is untrue in all of its parts. Not only does Eric not give us a definition of “proper” knowledge (versus improper knowledge?), but he is wrong when he asserts the need to empirically demonstrate the necessary conditions for the Pythagorean Theorem. The theorem, as we all should know, says that the two sides of a right triangle, when squared and added, will equal the hypotenuse when squared. It must be remembered, that in order for this to be true, we do not need to posit the existence of any right triangles. In order for it to be true that the circumference of a circle is equal to its diameter multipled by Pi, we do not need a circle. These polygons illustrate the logical theorems, but are themselves not exactly necessary. The Pythageoream theorem and the mathematical properties of a circle are not dependent on witnessing or “having” such shapes. They are true by virtue of their tautological status. The relationship of Pi to a circle is such that the concept of “circle” – a round plane figure whose boundary (the circumference) consists of points equidistant from a fixed center – already implies the necessary mathematical unit of Pi. What empirical testing and experimentation can do is to verify whether certain theorems fit into a specific case, not whether certain theorems are true or false. Eric seems to adopt a certain mathematico-positivism, whereby the truth value of all logical claims are held conditional to some external reality. How and why Eric believes the observable world can guarantee him something other than “conditional” knowledge, I do not know. The observable world is far more unreliable than logical tautologies as far as delivering the verdict on the truth value of scientific claims, and for this reason we should be skeptical of trying to prove logic using reality. The really interesting epistemological problem, again contrary to Eric’s argument, is not a boring empirical argument, but a much deeper issue in metaphysics and philosophy of mind. How our knowledge squares with reality is not satisfied by a  “go and see for yourself” attitude. It is satisfied by a rigorous metaphysical formulation that explains the essence of reality and ties in true epistemic claims about that reality. Whether reality is composed of many substances or just one, whether reality is deterministic or indeterministic, whether reality is simply “our universe” or if it consists of multiple universes; these are metaphysical and epistemological arguments that are the heart of philosophy and will not be solved by a microscope. Left unmentioned is exactly why Eric believes “reality” and the a posteriori can grant us unconditional knowledge when it is a priori knowledge that is based on necessary and universal truisms, not happenstance observations.

Conditional knowledge, without knowledge about whether or not the foundational assumptions hold, cannot be knowledge-as-means because there is then no way of connecting the real world with the abstract world in which the assumptions we have based our conditional knowledge on hold. We have shown that the process of deduction by itself, as a methodology, is useless in attaining knowledge-as-means, because it gives no way of solving this problem.

I have already illustrated that these foundational “assumptions” are not assumptions at all but necessary truisms. The laws of identity and non-contradiction are a priori true because they cannot coherently be denied. The question of how our logical knowledge connects with reality is an old philosophical question, and one that Kant has helped us understand a great deal. The Kantian framework of synthetic and analytic propositions, along with the a priori and a posteriori methods, have given us a great deal of headway into answering this question. I relate Kant to Mises here.

But while we have good reasons for believing this [action axiom] to be true, it is by no means true on the basis of pure deduction alone. Fundamentally, this is an empirical claim. We can certainly conceive of a world where humans are nothing more than mere animals, reacting on the basis of instinct alone. We also know that there are human beings in our world who do not act, who have fallen into persistent vegetative states. But if one tries to solve this problem by appealing to definition, by claiming that human beings aredefined by their ability to act, then one is at once at a loss to explain how they can know that the beings around them who look similar and with whom they seem to communicate are in fact human beings in the sense that they act.

Eric is clearly confused. In the first place, it is true that Mises writes “Man acts,” and we are tempted to run out into the world and see if this is true. But it would be more accurate for Mises to have written “Agents act.” Despite some sloppy terminology from the early 20th century, we can still recover much of Mises’ formulation. For instance, it is an incontestable truth that agents act – this is in fact a prerequisite for all other definitions of agency (argumentation, reflective thinking, the pursuit of virtue, etc.). Action is necessary to the concept of agency and cannot be done without. Secondly, to tie in to my earlier point, we do not need to posit the existence of any agents to arrive at a theoretically true economic science. All we need to say is that if agents exist, then they must act. If they act, they must choose. If they choose, they must exhibit preferences. And also, if they choose, they must forgo any competing alternatives. This illustrates the theoretical principle of opportunity cost – that the cost of any action is the value of one’s next most favorable alternative. This logic is sound irrespective of if there are any agents in which it could be manifest. Praxeology does not give us knowledge about what humans or non-humans will or can do, but about categories of action that manifest themselves in the economic sphere of agents. If there are creatures who act, the whole body of praxeology applies to them in all its parts.

 Far from being the end of the matter, the action axiom is but the first of many assumptions needed to fuel the engine of deduction that produces the claims embodying Austrian economics.

The action axiom is not an assumption, but an incontestable truth. Nobody can deny that man (or agents) act because a denial is itself an action and the opponent would be caught in a performative contradiction. The action axiom is thus immediately and obviously true. Mises makes a few auxiliary empirical claims (such that labor constitutes a disutility and that we live in a world of scarcity, among others), but these are not exactly necessary to erect the body of praxeological truth. There are no assumptions in Austrian economics. There are premises and there are deductions.

Very little, and possibly nothing which could be classified as “useful” economic knowledge-as-means can be derived from simply the action axiom alone.

An obvious counterexample is the principle of diminishing marginal utility, which is proved on praxeological grounds. Hoppe writes:

[T]he law of marginal utility follows from our indisputable knowledge of the fact that every actor always prefers what satisfies him more over what satisfies him less, plus the assumption that he is faced with an increase in the supply of a good (a scarce mean) whose units he regards as of equal serviceability by one additional unit. From this it follows with logical necessity that this additional unit can only be employed as a means for the removal of an uneasiness that is deemed less urgent than the least valuable goal previously satisfied by a unit of such a good. Provided there is no flaw in the process of deduction, the conclusions which economic theorizing yields must be valid a priori. — Hans-Hermann Hoppe, The Economics and Ethics of Private Property (Auburn: Ludwig von Mises Institute, 2006), p. 278

To put it in terms for non-economists, Hoppe says that every actor prefers that which satisfies him more over that which satisfies him less. When you add an additional unit of a good to an already existing stock of the same good, this additional good must be put to a use less valuable than the previous units of the stock. Thus, the first sack of grain to a pioneer farmer will be put to a more productive use in satisfying his desires than his second sack of grain, which will still be more productively utilized than his third sack of grain, etc. This all follows from the praxeological fact that we prefer things which satisfy our desires over things that satisfy them less. This proof does not require empirical testing, experimentation, or falsification – but logic.

“Useful” knowledge, for people acting in the real world, must be knowledge about the real world.

This is the great value in Kant’s synthetic a priori. It is synthetic – in that the concrete matter of inquiry is a real world phenomenon – and yet it is learned a priori – by logic. We can learn “useful” knowledge about the real world without acquiescing to microscopes and hypotheses. Economics is a subject dealing with real-life content: value, choice, cost, profit, and loss. These are the categories of action that we can understand, as I illustrated above, using a purely deductive methodology.

The remainder of the critique is focused on the difference between methodologies. Our author makes us aware that the methodology of physics is different than the methodology of history. Surprisingly, he draws no conclusions from this on the question of what methodology can give us knowledge in economics and proceeds to throw up his arms on the debate, flatly declaring that:

“In the final analysis, the methodology of Austrian-economics-as-practiced, as opposed to the stated methodology of Austrian economics, is a synthesis of casual empiricism, in that the assumptions necessary for the reasoning are simply taken for granted, and logical deduction.”


Clearly Ludwig von Mises’ thousand-page treatise on economic theory and methodology skipped right over our author’s head when considering source material to verify that the “Austrian-economics-is-empiricism” story is true. The ideas that differentiate the Austrian school from others – from a time-preference theory of interest, to the catallactic function of profit and loss, to the Mises-Hayek business cycle theory, to name a few – are not products of casual empiricism, but rigorous deduction. While not all Austrians are Misesian purists, the Austrian school by and large holds and practices a substantially different mode of science. We are not empiricists with some mathematics pasted for a backbone. This critique would hold fine for the Neoclassicals – who do not attempt to justify their assumptions on cardinality, indifference, continuous functions, among other aberrations – but it looks absolutely ridiculous when charged against the Austrians who make economic methodology a prime concern of their study.

Sunk Costs on Economic Thought

I spent about an hour or so this morning typing out a long-ish response to Daniel for his view on the legitimacy of the state only to realize after the halfway mark that he refined his ideas with two more blog posts here and here. Having shifted ground on his point and thus rendered many of my questions irrelevant, there’s not much use in continuing and posting my response to an old topic. Instead, I’ll rewrite the draft and make a proper blog article on the idea absorbing all these thoughts. For the kids out there, this is the perfect example of why you should ignore sunk costs and why the state should let private owners reconfigure and reuse idle resources naturally.

For your amusement until that post comes:

What’s the Alternative?

I realize that most of my blog posts for a long time have have usually been a reaction to, or a response to, something written by Daniel over at Facts and Other Stubborn Things. Today – and a for a little longer in the future – that will still be the case.

In a comment thread regarding how everyone and their mothers’ are going to suddenly become constitutional scholars over the ruling on Obamacare, Joseph Fetz writes:

I don’t understand why the thought even exists that one cannot or should not express their opinion. If one wants to make the claim that the constitution represents a “social contract”, then that means that even the lowest dullard should weigh in.

Daniel weighs in with: “But social contract theory is silly.”

Chalk it up to my ignorance, but I’d always assumed that social contract theory was held by most or all non-libertarians as the justification for a state. Some type of Hobbesian “understanding” was reached and everyone agreed it was proper for some men to have power over others. Something like that. But silly? How can Daniel reject it without simultaneously granting the argument that the state is illegitimate? Without a contract (social or not) between state and citizen, there is no “self-governance.” It is impossible to “give consent” to the state. The myth of government as an agent on behalf of the people (who ushered in its existence) must be thrown away if social contract theory is wrong.

What’s the alternative? The way I see it, it’s either that you see the state as an organization beholden to the people’s wishes as enumerated in various constitutions and documents – ie, as a contracted partner to solve certain problems; or you see the state as an invasive criminal gang without justification or merit. What am I missing?

Edit: Daniel’s response is here.

Two Problems with Consequentialist Libertarianism

I have spoken at length here on Economic Thought and elsewhere on the untenability of subscribing to a consequentialist moral background as the impetus for one’s libertarianism. As with most other things, I consider this a work in progress.

Most libertarians are not libertarians because of stirring speeches on freedom or complex chains of reasoning behind the non-aggression principle. If anything, most libertarians might admit the non-aggression principle to be a good or ideal moral code – that no one violates the physical integrity of another’s person or property without their permission – but supererogatory and secondary. If a strong enough need arises to violate this principle, so much for the principle. The fact that all politically active adults are not anarchists is testament to the widespread acceptance of “ends justify the means” logic. Most libertarians are libertarians, by contrast, by a slow immersion into economics. They realize the state is not often successful in achieving its goal and state action often comes at a high price (taxation, inflation, unemployment, etc.). From this ground, most libertarians come to see the state as ineffective, counter-productive, or in some cases completely unnecessary. But they are quick to deny that it is anathema, unjust, or evil. Most libertarians, whether they realize it or not, are completely in line with Mises on this point:

If I am of the opinion that it is inexpedient to assign to the government the task of operating railroads, hotels, or mines, I am not an “enemy of the state” any more than I can be called an enemy of sulfuric acid because I am of the opinion that, useful though it may be for many purposes, it is not suitable either for drinking, or for washing one’s hands.

-Ludwig von Mises, Liberalism 

They are thus some type of utilitarian or consequentialist libertarian. In other words, they are libertarian because they believe the advancement of the libertarian agenda will have profoundly positive consequences for society (I should say here that all libertarians believe that libertarianism is in the best interest of everyone; none believe adopting libertarianism will result in a worse condition. I discuss the “moral” and “utilitarian” strains here.)

I believe there are significant problems with holding this (what I will call the utilitarian/Misesian) perspective on libertarianism; 1) The subordination of morality and justice in the name of efficiency and consequences; and 2) The complete impossibility to accurately weigh the consequences.

In the first place, holding this philosophical position does not anchor you to any constant policy proposals. As a utilitarian, every government action must be weighed anew to see if it actually is in the maximum interests of the population. There is no firm, principled bedrock to stand on if the morality of all government action requires a “wait and see” attitude. Not surprisingly, most libertarians who are of this stripe are not anarchists. The espousal of a stateless society requires  imagination and/or adherence to the non-aggression principle. Minarchists fill neither of these criteria. This often leads libertarians to make absurd arguments like “taxation is theft, but government is necessary.”

Contrary to Casey Given at StudentsForLiberty, I don’t believe it is fruitful for libertarians to defend their libertarianism on utilitarian grounds. I don’t believe it is proper, strategic, or logically consistent to defend the libertarian agenda based on what you expect the consequences to be. Or at least, not only on those grounds. There is nothing wrong, after all, by showing that peace has good consequences. It just must be remembered that peace is the goal, not utility. We should advocate for liberty and non-aggression – not because they coincide with good consequences – but because they are sufficient moral ends in themselves. So long as libertarians recognize this, there’s no problem. We can all have a conversation with each other about the negative effects of price controls, import quotas, or what-have-you. But let’s just remember the effects of these policies is secondary; what should be paramount is justice. The problem arises when utilitarians deny that libertarianism has anything to do with what is right or just and they market it instead as simply the most efficacious way to promote prosperity, a free society, liberty, etc.

I found a good example of the second problem with utilitarianism when I went to study for this year’s Mises U and found this choice quote by Guido Hulsmann in an article responding to Bryan Caplan’s famous “Why I am Not An Austrian Economist” article.

[Caplan] thinks that welfare economics can build on the criterion of Pareto-superiority; that is, from the idea that reallocations are efficient as long as they are potentially Pareto superior. Says Caplan:

While justice and efficiency are not the same, this criterion . . . has many advantages over Rothbard’s approach. In particular, it allows one to make efficiency judgments about the real world—to judge, for example, that Communism was inefficient, or rent control is inefficient, or piracy was inefficient. (Caplan 1999, pp. 834f.)

 However, Caplan does not explain how and why efficiency judgments are possible. In particular, Caplan fails to address Rothbard’s (1979) argument that the crucial question is for whom Communism, rent control, or piracy are efficient and inefficient. A communist leadership might consider Communism a very efficient way to legitimize all-around government planning. Certain politicians might see rent-control laws as an efficient way to promote their careers, and rent control might also be efficient from the point of view of current tenants. The term “efficiency” refers to the relationship between means and ends. One cannot tell whether a means is efficient without considering the end to be reached. But ends are always the ends of individuals, and in political questions (Communism, rent controls, etc.) these individual ends are always conflicting. Therefore, one cannot say whether a disputed policy is efficient. All one can state is that it is efficient for some persons and inefficient for others.”

This argument – for whom are certain policy prescriptions efficient or not – is one of the central drawbacks to maintaining a utilitarian philosophy in general. Who can judge the consequences of certain actions, with motives and desires hidden as they are? The tendency to highlight government errors or waste is used by some as the only road to libertarianism. Concession to the economic calculation problem is the only obstacle to a just/efficient society. Some libertarians concede that the state might be a useful or beneficial institution if it weren’t riddled with calculation problems, public choice problems, and/or myopia and self-interestedness. If only we could get the politicians to be honest, the regulators to have perfect knowledge, and the politically motivated entrepreneurs to abstain from lobbying – then government would be perfect. But, as these libertarians are forced to contend with things as they exist in reality, they find themselves coming down on the offensive against the state. Ideally, the state would be a perfectly representative, consensual institution that acted on the maximum interests of the whole. If it were proven that certain state intervention could lead to higher overall utility, some libertarians would heartily endorse these policies (I remember Steve Horwitz saying something like this recently). I believe we must defend libertarianism on stronger grounds than expected consequences. We must think of the dissolution of state power as a powerful end in itself, rather than a link to some other hypergood, like utility or welfare.

Since 1935 when Lionel Robbins wrote on the problem of interpersonal utility comparisons, we libertarians (Austrians more explicitly) have come to consider this a main weapon of our intellectual repertoire. In all political matters, choices are made which hurt some and benefit others. I can think of no clear case where state intervention has made some better off and none worse. Therefore, any judgment on state intervention must invoke some interpersonal utility comparison. In order for any Misesian-libertarian to make any judgment about credit expansion, war, or taxes, he has to assume that the weight of some people’s subjective feelings is greater than another. He has to assume that credit expansion leading to a business cycle is worse for everyone on net. But how can we know this? How can we possibly tally everyone’s utils together to come to an aggregate number on how much harm the business cycle inflicted on them, versus all the “good” it has done for politicians and others seeking power? As Hulsmann writes, communist leaders certainly found Communism as an extraordinary benefit to them. What is the common denominator that allows simple comparison between the increased happiness of the communist leaders and the suffering of the petrified masses?

SMBC highlights this problem in its usual hilarious fashion.

Suffice it to say that there is no common denominator and that Robbins was completely right. We cannot judge the merits of government action on its consequences. If we are completely at a loss with regards to arbitrating between different consequences – that is, if we cannot truly even make the comparison – then the Misesian is left with no reason to endorse libertarian policies over and above a hunch that A is better than B. Without being able to calculate utility, the utilitarian is completely unable to demonstrate the superiority of one outcome versus another. This is why I think libertarianism is best grounded on justice, not efficiency. Following Rothbard, we may be agnostic on the beneficial or negative nature of state intervention, we cannot be and are not agnostic on the moral nature of aggression and taxation.

Hoppe on Marginal Utility

[T]he law of marginal utility follows from our indisputable knowledge of the fact that every actor always prefers what satisfies him more over what satisfies him less, plus the assumption that he is faced with an increase in the supply of a good (a scarce mean) whose units he regards as of equal serviceability by one additional unit. From this it follows with logical necessity that this additional unit can only be employed as a means for the removal of an uneasiness that is deemed less urgent than the least valuable goal previously satisfied by a unit of such a good. Provided there is no flaw in the process of deduction, the conclusions which economic theorizing yields must be valid a priori.

— Hans-Hermann Hoppe, The Economics and Ethics of Private Property (Auburn: Ludwig von Mises Institute, 2006), p. 278

The Synthetic A Priori and What It Means for Economics

Note: This article was published on the previous domain and it no longer exists. On a chance, I happened to find it preserved perfectly as a saved file on my computer, so I am here reprinting it as I originally wrote it.

A good reply by Daniel Kuehn is here.


Immanuel Kant, one of the Enlightenment’s great philosophers, created perhaps a larger paradigm in the course of philosophy than he himself realized. While famous for his Categorical Imperative, Kant’s true claim to fame was his discovery into the nature of knowledge and reality. Kant divided claims about the universe into 2 categories – analytic and synthetic claims. And he divided ways of knowing them into 2 categories – a priori and a posteriori knowledge.

Analytic claims are those claims that are true by definition, but do not necessarily have relation to the real world. These claims are tautologies, in that the truth of the claim is evident in its subject predicate. Analytic claims might be:

  • All triangles on a plane surface have 180 degrees;
  • Bachelors are unmarried men.

Synthetic claims are claims that deal specifically with the real world. Synthetic claims might be:

  • Blood type “O” is the universal donor;
  • Muscles burn carbohydrates before burning calories.

A priori knowledge is knowledge that comes from understanding, or deductive logic, without reference to experience. A priori knowledge consists of:

  • 2 + 2 = 4;
  • A =/= B.

A posteriori knowledge is knowledge that comes from either empirical studies done by scientists, or common sense observation. A posteriori knowledge consists of:

  • Trees grow from seeds;
  • Water is composed of H2O.

Thus, there are 4 possible ways to know about the universe.


Take A for example. Analytic a posteriori claims are claims that are tautologically true, but can only be understood through empiricism. Walter Block has an excellent example of such a truth.

Although there is some question about this in philosophical circles, one way to characterize the elements in this set is in terms of the ways in which we come to learn language. For example, “We shall use language in such a way that ‘rouge’ in French will translate to ‘red’ in English.” We learn this through experience, but to say “Rouge equals red” is an analytic statement. For A, the analytic a posteriori, we can learn each of the words in this sentence through experience (in an a posteriori manner), and yet the meaning of it is tautological.[1]

Next is B. Analytic a priori claims are those that are apodictically true, and we can learn by logic alone. Mathematics and geometry are made exclusively by analytic a priori claims. They concern abstract logical rules such as the operations of calculus and trigonometry.

Likewise, C easy to understand. The synthetic a posteriori statements are those that appeal to physical reality, but can only be understood by observation. The fact that I am an author of Economic Thought is a synthetic a posteriori claim, much like the truth that more people live in the United States than in Bhutan. The only way to come across this knowledge of the universe is to judge empirically whether it is true; no resort to deductive logic could answer who lives where.

Finally, we come to D – the most important claim of truth for this discussion. The synthetic a priori statements are those that deal specifically with the real world, but can only be understood through reason alone. The synthetic a priori is fundamental for epistemology (ie, what can we logically know about reality?). It is thus fundamental for our understanding of economics. Synthetic a priori statements are also known as “self-evident” truths; they are referred to as such because any denial of their truth would entail a self-contradiction. These statements cannot be refuted by resort to experience.

Hoppe writes: “According to Kant, mathematics and geometry provide examples of true a priori synthetic propositions. Yet he also thinks that a proposition such as the general principle of causality (i.e., the statement that there are time-invariantly operating causes, and every event is embedded into a network of such causes) is a true synthetic a priori proposition.”

Valid synthetic a priori claims are objectively true, for any denial would entail logical contradiction. For instance, the statement “Man acts” is another synthetic a priori truth, because if anyone were to deny that man acts, he would be acting in order to deny my statement thus proving its truth.

The most comprehensive treatment of economic phenomena on the basis of synthetic a priori truth is Human Action by Ludwig von Mises. Using only minor auxiliary empirical assumptions (such as we live in a world of scarcity, and labor involves disutility), Mises takes human action as the only axiom by which he builds his structure. Using the “action axiom,” Mises makes corollary truths by means of logical deduction. He deduces that when man chooses, he is making a preference. A choice of A over B is in fact a preference of A over B. It also necessarily implies that A is chosen, and B is left aside. Choice implies preference and leaving aside. Soon, Mises builds the concept of opportunity cost from these previous axiomatic deductions. His other synthetic a priori deductions included “Man prefers happiness to suffering” and “Man prefers sooner rather than later.” These basic deductions into human nature allowed Mises to construct his model of human society from primitive, autarkic man to a collective society built on an extensive division of labor. All his conclusions arrive from logical deductive processes, and are therefore logically sound. Empirical evidence is useless to challenge these views, they must be argued via reason if one finds them faulty.[2]

The theoretical contributions of Human Action derive from the initial axiom. Mises’ understanding on monetary policy, competition, capital theory, and theories on interest all initially derive from synthetic a priori truths about man. While it is possible that Mises made an incorrect deductive jump, the rebuttal of such must be by aid of reason alone.[3] Using such self-evident truths, Mises continued the application into the study of man, a logical science called praxeology. Praxeology follows the same chain of logical deductions as mathematics and geometry, and therefore any contention with praxeology must be by resort to logic. Friedman is mistaken when he criticizes praxeologists for being difficult to reconcile.

If you and I are both praxeologists, and we disagree about whether some proposition or statement is correct, how do we resolve that disagreement? We can yell, we can argue, we can try to find a logical flaw in one another’s thing, but in the end we have no way to resolve it except by fighting, by saying you’re wrong and I’m right.[4]

This mindset is typical of many economists used to modeling abstractions based on real-world experience – on a posteriori grounds. Roderick Long, in a piece titled Realism and Abstraction in Economics: Aristotle and Mises versus Friedman, corrects this faulty analysis of those who study economics from observation. He assuages their concern for logic thusly:

Let’s take a less controversial case of an a priori discipline: mathematics. If two mathematicians disagree about the results of a calculation, they don’t come to blows; nor do they consult a private source of revelation. Instead they “try to find a logical flaw in one another’s thing,” and presumably one of them will succeed – because logical relations are at least as “public” as empirical ones.[5]

Conclusions derived from the synthetic a priori are as contestable as conclusions derived from the analytic a priori – if there is a discrepancy between scientists, the proper course of action is to trace the logical deductions to the root and attempt to clarify the logic underneath the challenged conclusion.

The synthetic a priori direction is extremely useful. Other models and hypotheses based on physical observation lack in accuracy, clarity, and/or reason. Because the changing dynamic economy has so many variables, the process of isolating variables (as in a laboratory) is impossible. The application of the scientific method – of creating hypotheses, testing them, and reworking hypotheses – is ultimately pointless. With the infinite complexity of variables all acting in unison, any attempt to work a model of reality by observing economic actors is to  <i>over-simplify</i> and make <i>purposefully unrealistic</i>[6] claims about the world.

Only by proceeding step-by-step from axioms that are objectively true can we arrive at any meaningful understanding of the world. Only by using synthetic a priori knowledge can we make models that are complex enough to satisfy being realistic, and yet do not suffer from the shortcomings of empirical observation. Von Mises’ work on praxeology must remain the building block on which further understandings of complex economic phenomena rest. Any attempt to model economic behavior without the initial axiom – and instead fall into conclusions characterized by “instinctual” or “behavioral” explanations – will be faulty. Economics must rest on an edifice of logic.

[1] Block, Walter. Realism: Austrian Vs. Neoclassical Economics, Reply to Caplan. (The Quarterly Journal of Austrian Economics. Fall 2003.)

[2] Von Mises, Ludwig.  Human Action. (Yale University Press. 1949)

[3] Kuehn, Daniel. “You mention nothing in your post about the possibility that… Mises took an invalid deductive step.”

[4] Friedman, Milton. Friedrich Hayek: A Biography (New York: Palgrave, 2001), p.273.

[5] Long, Roderick. Realism and Abstraction in Economics: Aristotle and Mises versus Friedman (The Ludwig von Mises Institute. 2004)

[6] Long, Roderick.

Cognitive Dissonance and Libertarians

I saw this picture on facebook and it puzzled me. After all, if Williams really believes government finance ultimately amounts to theft – why doesn’t he come right out and assert its illegitimacy? Either Williams is using hyperbole and doesn’t really think taxation is theft because government is “necessary” as a minarchist – or he is a moral particularist when it comes to who can and who cannot commit theft.

This is a common criticism I see of libertarians, where they use inflammatory language (the State is a criminal gang, taxation is slavery, regulation is aggression, etc.) but are for some reason mostly complicit in these acts. We don’t see Walter Williams on street corners protesting taxation or being on the news for refusing to submit his income tax papers. So which is it? Does he really believe government financing is theft (in the way every person defines this word) or is it just acknowledging that it is theft, but he’s okay with it? You would think that once you realize a certain action amounts to murder, theft, enslavement, etc. you would emotionally and psychologically rebel against that institution, but as far as I know Williams is a common garden libertarian.