Economics and Philosophy

http://journals.cambridge.org/EAP

Additional services for Economics and

Philosophy:

Email alerts: Click here

Subscriptions: Click here
Commercial reprints: Click here
Terms of use : Click here

A Neo-Kantian Critique of Von Mises's

Epistemology

Pierluigi Barrotta

Economics and Philosophy / Volume 12 / Issue 01 / April 1996, pp 51 - 66

DOI: 10.1017/S0266267100003710, Published online: 05 December 2008

Link to this article: http://journals.cambridge.org/abstract_S0266267100003710

How to cite this article:

Pierluigi Barrotta (1996). A Neo-Kantian Critique of Von Mises's Epistemology.
Economics and Philosophy, 12, pp 51-66 doi:10.1017/S0266267100003710

Request Permissions : Click here

Downloaded from http://journals.cambridge.org/EAP, IP address: 134.176.129.147 on 11 Mar 2015

Economics and Philosophy, 12 (1996), 51-66. Copyright © Cambridge University Press

A NEO-KANTIAN CRITIQUE OF
VON MISES'S EPISTEMOLOGY

PlERLUIGI BARROTTA
University of Pisa, Italy

1. INTRODUCTION
More than many other Austrians, Mises tried to found aprioristic
methodology on a well defined and developed epistemology. Although
references to Kant are scattered rather unsystematically throughout his
works, he nevertheless used an unequivocal Kantian terminology. He
explicitly defended the existence of 'a priori knowledge', 'synthetic a
priori propositions', 'the category of action', and so forth.
Consequently, both critics and followers alike interpreted him as a
Kantian or, at the very least, as a scholar strongly influenced by Kant. For
instance, Lachmann's (1982, p. 36) authoritative view is that: 'In his quest
for a reputable philosophical position that would supply him with
enough intellectual armor to withstand the onslaughts of positivism ... he
was driven to seek refuge in neo-Kantianism'. More recently S. Parsons
(1990, p. 309) has argued that 'Given the neo-Kantian heritage, Mises's
affinities with Kant are not difficult to establish. Crucially, the investiga-
tions of both Kant and Mises were oriented around the same problem: the
conditions of possibility'.
In this paper, I shall try to show that Mises seriously misrepresented
Kant's philosophy. If he, as his writings and interpreters suggest, was,
directly or indirectly, influenced by Kant, he misunderstood Kant's basic
ideas and failed to provide a sound foundation for his aprioristic
methodology. Although he might have thought he was a follower of
Kant, he actually ended up by defending an epistemological tenet very far
from Kant's.
I would like to stress that the question I am raising is not a mere
matter of scholarship. If we take Kant's teaching seriously then we can
easily find an original way to examine Mises's epistemology critically. In
51

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

52 PIERLUICI BARROTTA

fact, such a critique is very different from that proposed by neopositivists.

Their criticisms are basically founded on the idea that synthetic a priori
propositions do not exist. This analysis is, so to speak, external to Mises's
approach, whereas my thesis is that even if the existence of a priori
knowledge were accepted, it would not follow that aprioristic metho-
dology is vindicated.
Furthermore, as we shall see, a neopositivistic perspective, even
broadly understood, inevitably misunderstands Mises's use of the word
'deduction'. In fact, deductive logic is typically associated with formal
methods, whereas Mises had in mind a very peculiar kind of logic, which
we might call 'predicate attribute logic', that is, a procedure that aims at
'drawing out' the attributes inherent in economic concepts.1 The origin of
this kind of 'logic' is probably rooted in Aristotelian syllogistic, which, as
is well-known, focuses on the 'subject-predicate' relationships. However,
Mises's 'logic' must be compared with all kinds of formal logic (including
Aristotle's). Indeed, one of the aims of this paper is to clarify his very
peculiar approach to the logic of science. As we shall see, Mises used
'deduction' to describe what we would nowadays call 'meaning analysis'.
Thus, if my thesis holds, a fair critique of Mises's idea of an entirely
deductive economic science should be placed in its appropriate (certainly
non-neopositivistic) framework.
Before examining these issues in greater depth, the basic character-
istics of Mises's epistemology of economics should be outlined.
The most delicate matter in understanding Mises's views is his claim
that 'human action is necessarily always rational' (Mises, 1949, p. 18). By
this, Mises does not mean a trivial tautology, according to which
rationality is defined, through a conventional stipulation, by what Mises
understands as 'human action'. Rather, he wants to emphasize that every
human action is always a conscious and purposeful piece of behaviour,
whose aim is to remove uneasiness: 'A man perfectly content with the
state of his affairs ... would not act ... Action is the manifestation of a
mans will' (Mises, 1949, p. 13). Thus Mises (1949, p. 20) clarifies that 'The
opposite of action is not irrational behaviour, but a reactive response to
stimuli on the part of the bodily organs and instincts which cannot be
controlled by the volition of the person concerned'. Therefore action is not
used as a synonym for what is now understood as rational choice, but
more generally as a synonym for (conscious) choice.2
The aims of the acting man are given subjectively: 'Praxeology does
not deal with the external world, but with man's conduct with regard to
it. Praxeological reality is not the physical universe, but man's conscious
1
The phrase 'predicate attribute logic' was suggested to me by Philippe Mongin, who also
suggested that I emphasise this point. Mongin's terminology conveys the right sense of
Mises's approach.
2
On this issue see also Caldwell (1982, pp. 119-20).

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

A NEO-KANTIAN CRITIQUE OF VON MISES'S EPISTEMOLOGY 53

reaction to the given state of this universe. Economics is not about things
and tangible material objects; it is about men, their meaning and actions'
(Mises, 1949, p. 92). For instance, as far as profit is concerned, Mises (1949,
p. 97) writes that, 'Profit in [its] primary sense is purely subjective, it is an
increase in the acting man's happiness, it is a psychical phenomenon that
can be neither measured nor weighed'.
So broadly understood, the category of action allows a very wide
praxeological system of deductions: 'Such an all-comprehensive system
would provide a theory referring not only to human action as it is under
the conditions and circumstances given in the real world in which man
lives and acts. It would deal no less with hypothetical acting such as
would take place under the unrealisable conditions of imaginary worlds'
(Mises, 1949, p. 65). Such a system of deductions appears to be too wide
in scope, and consequently Mises accepted some restrictions based on
empirical postulates - such as the disutility of labour - which holds in the
real world.3
The introduction of a few empirical facts does not prevent praxeology
from being formal in character: '[praxeology] is purely formal and general
without reference to the material content and the particular features of the
actual case' (Mises, 1949, p. 32). In particular, praxeological theorems are
radically independent of psychological studies: 'Psychology and eco-
nomics are differentiated by their methods of viewing man' (Mises, 1981,
p. 154). For example, the law of decreasing marginal utility is not based
on any psychological fact: 'the law of marginal utility is already implied
in the category of action. It is nothing other than the reverse of the
statement that what satisfies more is preferred to what gives smaller
satisfaction' (Mises, 1949, p. 124).
It is interesting to note that Mises considers economics as being close
to geometry.4 He believed both to be deductive in kind, although he
rejects, as far as praxeology is concerned, the neopositivistic idea that the
starting point of a deductive system is given arbitrarily: "The starting
point of praxeology is a self-evident truth, the cognition of action' (Mises,
1978, p. 5). Here the synthetic a priori seems to come to the fore. In fact,
Mises (1978, p. 5) explicitly criticises the neopositivistic doctrine 'that
there are no synthetic a priori propositions'.
Once the a priori character of the category of action has been
established, the testing procedure of praxeology becomes entirely deduc-
3
Rothbard (1957, p. 316) argues that these empirical postulates are 'so broadly based as to be
hardly "empirical" in the empiricist sense of the term... They are so generally true as to be
self evident'.
4
See Mises (1978, pp. 4-5). However, Mises's references to geometry are somewhat
misleading. In fact, the emphasis on their deductive nature conceals that Mises uses the
word 'deduction' with a different meaning when economics is explicitly taken into
consideration. I shall tackle this issue in Section 3.

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

54 PIERLUICI BARROTTA

rive: 'He who wants to attack a praxeological theorem has to trace it back,
step by step, until he reaches a point in which, in the chain of reasoning
that resulted in the theorem concerned, a logical error can be unmasked.
But if this regressive process of deduction ends at the category of action
without having discovered a vicious link in the chain of reasoning, the
theorem is fully confirmed' (Mises, 1978, p. 72).
To sum up, what we have said and quoted explains why Mises's
apriorism in economics has been typically interpreted as consisting of the
following two theses: (1) it is possible to single out a self-evident
proposition, a priori valid, but not analytic in kind; and (2) pure economic
theory can be entirely deduced from such a proposition.
In the next section, we shall exploit this interpretation, since it allows
us to focus on thesis (1) without unduly investigating the sense in which
Mises uses the word 'deduction'. The latter issue will be tackled in Section
3, which involves, however, a modification of the traditional interpreta-
tion, since Mises's self-evident starting point is better understood as a
term, rather than a proposition.

2. THE ROLE OF CATEGORIES

Let us examine the first fundamental thesis of Mises's apriorism. It can be

split into two subtheses: (a) synthetic a priori propositions do exist, and
(b) they provide the 'axioms' of economic science. Typically, neopositi-
vists criticise point (a), since they strongly believe that analytic and
synthetic sentences exhaust the well-formed language of science. A good
example of this attitude can be found in Kaufmann (1937, p. 340):

After having analysed the propositions of Economics which we take for

granted, we declare that the economic behaviour of men has the properties
Pi/ P2/ • • •/ Pn- These properties are held to be necessary properties ... This
statement looks like a judgement about reality ... But that is a mistake. We
call human behaviour economic behaviour, only when it has the properties
Pi/ P2/ • • •/ Pn- K/ however, the concept of economic behaviour is defined
independently of the properties pi, p2,..., pn, and it is then maintained that
economic behaviour has the properties pi, p2, • • -, p™ then we really do have
an empirical statement which can be verified by experience.

In this paper I set out to suggest a different approach and I shall focus
my attention on point (b). Against apriorism, the question I would like to
raise is: if we believe (rightly or not) that synthetic a priori propositions
exist, is it reasonable to take it for granted that they provide the axioms
from which we can derive all valid theorems of economic science?
If we analyse Kant's view on this issue, we soon realise that Kant did
not maintain that it is the role of categories to provide the premises that

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

A NEO-KANTIAN CRITIQUE OF VON MISES'S EPISTEMOLOCY 55

allow the deduction of scientific laws. For instance, in his Critique of Pure
Reason he writes:

Special laws, as concerning those appearances which are empirically

determined, cannot in their specific character be derived from categories,
although they are one and all subject to them. To obtain any knowledge
whatsoever of these special laws, we must resort to experience. (Kant, 1787,
B165)

Thus, for Kant the basic function of categories is not to supply the
axioms of science, but rather to organise the 'empirical manifold', that is,
they make it possible to constitute the experience to which empirical
theories can then be addressed. This is why, in the passage quoted above,
Kant emphasises that scientific laws must be subject to categories, though
they cannot be deduced from them.
When we examine Kant's 'analytic of principles', where he explains
his theory of scientific knowledge, we realize once more that Kant does
not set out to deduce scientific theories. Let us take the first analogy of
experience, in which Kant provided a transcendental justification of what
we can call, using modern terminology, the principle of conservation of
matter or mass. From this principle we cannot deduce, for example, the
oxygen theory. On the other hand, Kant proved to be exceedingly
penetrating in highlighting the importance of that principle, since it made
the rise of chemistry as a science possible.
Modern students should consider that Kant was much more inter-
ested in a priori principles and categories than in the methodology of
scientific research, that is, how scientific hypotheses are introduced and
accepted. Consequently, it is not surprising that his remarks on scientific
methodology are less systematic than his studies on the role of a priori in
science (namely, on the conditions that make science possible). From this
point of view, his approach is very different from ours, and this explains
why some of his interpreters and critics conflate Kantian a priori concepts
and scientific theories into a single philosophical agenda. However, in
the many - although unsystematic - passages in which Kant deals with
the methodology of science, he makes it clear that scientific theories
should be considered as being introduced a posteriori. For instance, he
admits that scientific theories are introduced through arguments by
analogy: 'Conjectures (by means of induction and analogy) can be
suffered in an empirical science of nature only' (Kant, 1783, p. 369;
English trans, p. 118). He also clearly accepts the asymmetry thesis of
falsificationism. As he writes: 'it is obvious that a hypothesis can never ...
be transformed into demonstrated truth ... For if even a single false
5
For instance, Popper (1963, Chapter 2, Section X) clearly makes such a mistake. However, it
must be admitted that Kant is not always consistent in his view.

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

56 PIERLUICI BARROTTA

consequence can be drawn from a proposition, the proposition is itself

false' (Kant, 1787, B 819). Even more evidence is given by his reflective
judgements which state that scientific laws can be derived from the
particulars which are given.6 Finally, he clearly contrasts the hypothetical-
deductive employment of reason, which concerns scientific theories, with
its constitutive employment, which concerns categories; a distinction
which is unfortunately absent from Mises.7
My aim is not to clarify such important aspects of Kantian
philosophy, but rather to show their relevance for understanding the
limits of apriorism. Reference to Kant has often been seen as a
'philosophical embellishment', without any serious consequence for
apriorism. For instance, to L. Robbins (1938, p. 348):

Whether we think that the main assumptions of the pure theory of choice
rest upon observation or upon a priori knowledge, we all agree about the
main conclusions. If they rest upon a priori knowledge then, to that extent
they are certain. If not, even so it would still be agreed that the facts of
experience corresponding to these particular assumptions are so general
that they may be treated as if they were certain.

If the reference to Kant had been taken more seriously the possibility
of a different critique of apriorism, devoid of any compromise with
neopositivism, would not have been neglected. In fact, it has been argued
that even if point (a) (i.e., synthetic a priori propositions do exist) is
6
As he writes: 'If the universal (the rule, principle or law) is given, then the judgement which
subsumes the particular under it is determinant... If however, only the particular is given
and the universal has to be found for it, the judgement is simply reflective' (Kant, 1790,179,
pp. 7-15).
7
As Kant (1787, B 675) writes "The hypothetical employment of reason, based upon ideas
viewed as problematic concepts, is not, properly speaking, constitutive, that is, it is not of
such a character that, judging in all strictness, we can regard it as proving the truth of the
universal rule which we have adopted as hypothesis'. Namely, according to Kant, scientific
theories can never have the universal necessity which characterises categories. Further-
more, in the following passage Kant (1787, B 674) clearly accepts the hypothetical-
deductive procedure of explanation and testing: 'Several particular instances, which are
one and all certain, are scrutinised in view of the rule [i.e., hypothesis, theory] to see
whether they follow from it. If it then appears that all particular instances which can be
cited follow from the rule, we argue for its universality, and from this again for all
particular instances, even for those which are not themselves given'.
Using modern terminology, we can characterize the difference between the constitutive
and the hypothetical employment of reason in the following way: categorical principles
(i.e., the constitutive employment of reason) determine the reference of concepts and their
meaning, namely the ontology underlying the language through which we organize our
perceptions; scientific theories (i.e., the hypothetical use of reason) are based on, but cannot
be deduced from, the ontology. Mises's unfortunate lack of distinction on this crucial point
is reflected in the fact that he confused meaning-analysis with explanatory deductions. We
shall tackle the latter issue in Section 3.

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

A NEO-KANTIAN CRITIQUE OF VON MISES'S EPISTEMOLOCY 57

accepted, point (b) does not follow, since it is possible to argue against
apriorism that those propositions do not determine the axioms of a deductive
science, but rather that they constitute the experience or phenomena to which
scientific theories - a posteriori introduced - refer.8 Thus, according to this
interpretation, even if we accept the synthetic a priori, economic theories
cannot be deductively vindicated, since they are a posteriori introduced
to provide explanations concerning the phenomena determined by
categories.
The first weak point in Mises's apriorism is that he hadn't foreseen
this possible criticism, since he confined himself to a defence of the
existence of synthetic a priori propositions, in the belief that this were
sufficient to guarantee a purely deductive economic science.
This argument against Mises should be distinguished from another -
more traditional - criticism. It could be rightly argued, contrary to Mises's
ideas, that the concept of human action is not sufficient to deduce even
the most elementary economic theories (such as the law of demand).9 I
agree with this criticism, as will be discussed later. However, here I
would like to follow a different line of reasoning, which in my view
provides further insight into the very same topic. What I set out to argue
is that the lack of deductive power is somehow related to the fact that the
concept of human action appears to be a prerequisite of any economic
model, even those which are mutually incompatible. The existence of
mutually incompatible economic models that are grounded on the
Misesian concept of action suggests that this concept cannot provide the
only premise of those models. Confronted with this difficulty we can only
conclude that (a) Mises's 'human' action does not provide the only
premise of economic models, or (b) it does not provide a premise at all.
Point (b) represents the most radical departure from Mises's episte-
mology. Nonetheless, and interestingly enough, it does follow from
Kant's philosophy, namely from the very same philosophical framework
accepted by Mises.
Let us now analyse this second perspective, which is Kantian in
nature, in order to examine Mises's view critically.
The ubiquitous character of the category of action is easily
documented. Even classical economics implicitly refers to it. This should
be clear if we remember that the Ricardian assumption, that is, in the
8
It is important to understand that Kantian experience is not a sort of neopositivistic Erlebnis,
as it is already conceptualised by categories. As Kant (1787, A 2) writes: 'Now we find,
what is especially noteworthy, that even into our experiences there enter modes of
knowledge which must have their origin a priori'.
9
See, for instance, Mongin (1984). Although from a different perspective, Mongin (1984,
p. 11) draws a similar conclusion to mine when he writes: 'it is necessary to distinguish the
principle of rationality in itself, understood as a generic model, from the many specific
models, which can refer to it, but do not exhaust its content' (The English translation is
mine).

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

58 PIERLUICI BARROTTA

long term there is a uniform rate of profit in all industries, is intuitively

justified by the idea that entrepreneurs always seek the best employment
for their capital.10 The same could be said if we think of the most
common problems of economics. For instance - to give a random sample
- how do individuals choose under uncertainty? How do they choose in
an oligopolistic competition, where the actions of competitors are to be
taken into consideration? Every economic theory refers, explicitly or
implicitly, to the concept of action or choice. For instance, do large
companies maximize their profits or their revenue given an acceptable
level of profit? Do investors' choices depend on interest rates? And so
forth.
To all those questions, economists give different, and sometimes
incompatible, answers, that is, they put forward different explanatory
theories, which are introduced a posteriori in order to explain the specific
phenomena they are interested in.
However, the problems to which theories refer are really incompre-
hensible, as Mises emphasizes, if we do not adopt the concept of action as
a fundamental category of economics. As Caldwell (1982, p. 132) writes,
there must be something right in Mises's position, since 'any analysis
would be empty (and worse, impossible) if human action, as praxeology
defines it, was not operative'. Caldwell does not specify the nature of the
'correct part' of Mises's epistemology, but I maintain that it is related to
what is upheld in this paper. Mises (1949, p. 34) is completely right when
he stresses that '[categories] are the indispensable prerequisite of percep-
tion, aperception, and experience'. However, precisely because they
constitute our experience, they determine the phenomena of science, not
its axioms.
My view is that the debate on apriorism has been misled by the
absence of the crucial distinction between 'categories' and 'explanatory
theories'. Traditional economists and philosophers of economics focus on
explanatory theories and consequently they neglect the role of categories
in science; on the contrary, Mises, who was fascinated by the discovery
that categories play a fundamental role in science, misinterpreted their
function, and tried to found an entirely deductive science on them.
This should also help us to understand why Mises apparently had
some difficulty in deducing all significant economic 'theorems' from the

10
See Ricardo (1821, pp. 88-9). It could be argued that the fundamental category of classical
economics is not the category of action (although it is admittedly part of its categorical
system). I agree on this point. As we shall see, we can easily imagine different and
competing systems of categories. Neoclassical vs. Classical or Srafh'an economics are good
examples of theories which are grounded on competing categorical systems (on this issue
see Barrotta (1993)). The question arises from the unclosed nature of categorical systems
underlying any science. To use Kant's terminology, there is no way to provide a
'metaphysical deduction' of categories. I shall deal with this issue later.

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

 A NEO-KANTIAN CRITIQUE OF VON MISES'S EPISTEMOLOGY 59

category of action. This naturally follows from the fact that the category
of action, understood as 'conscious choice', does not supply the explanans
of economic phenomena, but the very subject matter of economic
explanations (and indeed of most human sciences).
A few well-known examples clearly illustrate Mises's difficulties. Not
only did Mises have to introduce explicitly some postulates, such as the
disutility of labour, whose nature is empirical and not a priori, as he
honestly admits,11 but an important Austrian economic theory, such as
the theory of opportunity costs, is not consistent with Mises's claim that
we cannot conceive a preference ordering independently of individuals'
actions.12 Finally, it is worth noticing that Mises's theory of an evenly
rotating economy, in order to have any explanatory validity, must
presuppose that there exists a tendency towards equilibrium in the real
world. However, such a tendency is only presupposed, that is, it is not
proved through the rigorously deductive procedure required by Mises.13
From a philosophical viewpoint, these difficulties should show that Kant
was right in emphasizing that scientific theories cannot be deduced from
categories.
Furthermore, there is a second problem related to the role played by
the category of action.
Let us assume - for the sake of argument - that the category of choice
supplies the self-evident 'axiomatic' starting point of a deductive system,
through which we can derive all Mises's economic theories. This does not
provide, as yet, the foundation of an entirely deductive procedure of
testing. In fact, our assumption alone does not rule out the possibility of a
different categorical system from which we might deduce a different
theoretical system. In this case, the procedure of validation could not be
only deductive in kind, since we first need to argue in favour of one of the
two categorical systems. In other words, even if we accepted the
misleading idea that the concept of action provides the fundamental
axiom of Mises's economics we could not conclude that it provides the
fundamental axiom of economics as such. To use Kantian terminology,
Mises did not care to offer a 'metaphysical deduction' of the category of
action, namely a proof that it gives us the whole and complete categorical
system of economics. He simply assumed that the category of action could
play such a role.

11
See Mises (1949, p. 65-6).
12
On this issue see Nozick (1977).
13
On this issue see Cowen and Fink (1985). It could be objected that Mises seems to suggest
that his theory is useful as a counterfactual device (see, for instance, Mises, 1949, p. 248)
and consequently no tendency to an ERE equilibrium is asserted. However, this is not
Mises's view, since he writes that '[although] the final state of rest will never be attained ...
what makes it necessary to take recourse to this imaginary construction is that the market
at every instant is moving toward a final state of rest' (Mises, 1949, p. 246).

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

60 PlERLUICI BARROTTA

This implicit assumption is clearly incorrect. For instance, to M. Hollis

and E. Nell the category of action has a limited scope in economics; since
they maintain that the concept of 'production' or 'reproduction of
economies' is the most fundamental category of economics.14 With this
they try to provide an aprioristic foundation to Sraffian or neo-Ricardian
economics. However, Hollis and Nell also face the same problem as
Mises: to provide a metaphysical deduction of categories, namely, the
philosophical proof that the categories proposed constitute a complete
and closed system.15 Of course, as every student of Kant knows,
providing a metaphysical deduction of categories is not easy, and even
Kant's own attempt is unanimously considered to be unsatisfactory.
Without such a proof, however, apriorism is in serious difficulties.
It could be argued that Mises tried to provide a justification for the
category of action by means of introspection.16 Although he maintained,
as we have seen in the previous section, a formalistic approach to
economic 'theorems' he referred to introspection in order to justify the
relevance of the category of action in the real world.17 As L. H. White
(1984, p. 17) notices: 'to anchor the chains of praxeology deduction in the
real world ... Mises returns (in a somewhat different fashion) to the
foundation claimed by Wieser, namely introspection'.
However, this use of introspection misses the point discussed here. In
fact, not only could it be questioned that introspection provides the sort of
indubitable knowledge required by Mises,18 but, what is more important,
even if introspection did provide indubitable a priori knowledge it could
not rule out the use of a different system of categories (such as those
suggested by Hollis and Nell). In other words, there is no reason to
believe that introspection can prove, together with the relevance of the
category of action in the real world, the uniqueness of such a category as
well.
14
As they write: 'Choice depends upon choosers, exchange upon traders, labour upon
workers ... The reproduction of the system, in short, is primary' (Hollis and Nell, 1975,
p. 243). Hollis and Nell seem to refer more to Aristotle's than Kant's philosophy. In fact,
they writes that 'there are "real" definitions, which capture the essence of the thing
defined' (Hollis and Nell, 1975, p. 178). However, following a different perspective and
line of reasoning, I maintain that a similar criticism could be put forward against their
Aristotelian version of apriorism. Unfortunately I cannot deal with this issue here.
15
Hollis and Nell seem to be aware of this problem. As they write: 'there can be only a set of
fundamental economic definitions and axioms. There can be only one economic science'.
(Hollis and Nell, 1975, p. 242).
15
As he writes: 'For the comprehension of action there is but one scheme of interpretation
and analysis available, namely, that provided by the cognition and analysis of our
purposeful behaviour' (Mises, 1949, p. 26).
17
For instance he writes: 'The starring point of praxeology is self-evident truth, the cognition
of action, that is, the cognition of the fact that there is such a thing as consciously aiming at
ends' (Mises, 1949, pp. 5-6).
18
For a devastating critique of introspection see, for instance, Lyons (1986).

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

A NEO-KANTIAN CRITIQUE OF VON MISES'S EPISTEMOLOCY 61

The uniqueness of a categorical system is fundamental to Mises's

apriorism, but it is not essential for the recognition that categories have
the function to determine the experience to which explanatory theories
refer. In fact, the latter issue belongs to what Kant called the 'transcen-
dental deduction' of categories, that is, the study of the conditions that
make (in our case, economic) science possible. Contrary to the metaphy-
sical deduction, transcendental deduction cannot aim at establishing the
nature and number of categories once and for all. We can see why this is
the case through a well-established line of reasoning:19 categories
determine the conditions of experience (indeed, this is exactly what
transcendental deduction shows),20 but nothing guarantees that such
conditions (and consequently our experience too) will not change over
time; for instance, via historical evolution or conceptual revolutions. Kant,
being a strong rationalist, wanted to rule out this possibility by relating
categories to (Aristotelian) logic, which in his view was a closed and
definitive system.21 In short, this is the rationale of Kant's metaphysical
deduction. Of course, it does not work, since, as we have witnessed, we
can have changes in logic as well.
Once metaphysical deduction is dropped, the legitimacy and possibi-
lity of categorical changes are still compatible with some forms of
Kantianism, but not with Mises's deductivism. In fact, as I have already
suggested, without a proper metaphysical deduction even if we accepted
the misleading idea that categories provide the axioms of science, we
would still have to examine the conceptual adequacy of our categorical
system before starting the deductive procedure of testing.
So far I have proposed two criticisms against Mises's epistemology:
the distinction between categories and explanatory theories, and the
possibility of different categorical systems. I maintain that either criticism
is sufficient to reject Mises's deductivism. However, my main critique of
Mises's apriorism is based on a combination of both of them, as they are
mutually related. In fact, together they show that competing categorical
systems may structure economic science differently, through the use of
other meaning analyses of economic concepts or terms.

3. DEDUCTION AND MEANING ANALYSIS

We have seen that to Mises the only procedure for the validation of
economic theories is their rigorous deduction. Strangely enough, Mises did
19
In my view, one of the most thorough explanations of this argument can be found in
Barone (1964).
20
As Kant (1787, B 104) writes: 'What transcendental logic ... teaches is how w e bring to
concepts ... the pure synthesis of representations'.
21
As he writes: 'Our table of concepts [must] be complete, covering the whole field of the
pure understanding' (Kant, 1787, B 89).

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

62 PlERLUIGI BARROTTA

not take care to clarify in which sense his readers were to understand the
word 'deduction'.
An obvious candidate for the elucidation of such a concept would be
mathematical deduction. However, Mises's hostility towards the use of
mathematics in economics is well known. The reasons for his rejection of
mathematics must not be confused with a generic anti-scientific metaphy-
sics. On the contrary, Mises's arguments against the use of mathematics
in economics are based on a reasonable, although not necessarily
acceptable, analysis of the nature of a market economy. Mises, like all
Austrian economists, is much more interested in market process than in
studies of equilibrium conditions - that is, the determination of the values
of economic variables that would be consistent with market equilibrium.
As he claims, 'In dealing with [the relation of prices and costs]
mathematical economists disregard the operation of the market process'
(Mises, 1949, p. 349).
I am not setting out to discuss the advantages and disadvantages of
the use of mathematics in economics. Rather my question is: if deduction
is not mathematical in kind, what is its nature? Clearly enough, if both
empirical and mathematical testing is ruled out, one may wonder
whether testing is possible at all.22
As in any logical system, Mises (1949, p. 38) emphasizes the
tautological character of the sentences (or theorems) derived: 'Aprioristic
reasoning is purely conceptual and deductive. It cannot produce anything
else but tautologies and analytic judgements. All its implications are
logically derived from the premises and were already contained in them'.
At the same time Mises (1949, p. 38) denies that praxeology 'cannot add
anything to our knowledge'. If we confine our attention to the standard
systems of formal logics, the only way out is to claim that praxeology
provides knowledge because it starts from at least one non-tautological
premise. This is why, it could be argued, Mises insists on the existence of
synthetic a priori sentences.
However, this reconstruction of Mises's view misses the point. Mises
does not start from sentences in order to derive economic theorems, but
from one single term (or concept), namely, action. In a frequently quoted
passage, for instance, he states that 'In the concept of money all the
theorems of monetary theory are already implied' (Mises, 1949, p. 38).
With this in mind, it is understandable why Mises's 'deductive' logic is
very far from standard formal logics. Mises's 'verbal logic' consists in
introducing at each step new terms, such that each new term represents an
elucidation of at least one of the previous ones. Eventually, as Mises
(1978, p. 71) writes, 'this regressive process of deduction ends at the
category of action'.

22
This criticism against apriorism has been raised, for instance, by Hutchison (1981, p. 181).

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

 A NEO-KANTIAN CRITIQUE OF VON MISES'S EPISTEMOLOGY 63

Thus, since each new term is defined through the previous ones, Mises
maintains that all economic theorems are analytic judgements. Of course,
this view must not be confused with the one proposed by neopositivists.
In fact, to neopositivists, definitions are a matter of stipulations (often
characterised in a formal or artificial language), whereas in Mises they
uncover the underlying meaning of economic concepts. By the same
token, Mises's 'logic' is very different from that envisaged by neopositi-
vists. Clearly enough, if Mises is read through the spectacles of
contemporary (mathematical) logic his position becomes incoherent: he
cannot simultaneously accept deductivism and reject the use of mathema-
tical methods. Once more, to understand the limits of Mises's episte-
mology we need to be freed from the neopositivistic heritage.
Unlike neopositivism, it is important to realize the following crucial
point: the tenet that all a priori sentences of economics are to be
considered as analytic is not inconsistent with the idea that they have an
ontological import. I disagree with Barry Smith on this issue, although his
views are far from neopositivism. Smith (1990, p. 281) criticizes Mises
because he supposedly neglected the de re (ontological) necessitations,
since 'Mises runs together what is priori with what is analytic'. In actual
fact, together with Mises's position, Smith misrepresents Kant's view
when he writes that Mises upholds a '(Kant- and Wittgenstein-inspired)
positivist conception of analyticity' (Smith, 1990, p. 280).
Let us consider a simple proposition such as 'All swans are birds'. A
neopositivist would say that such a proposition is simply analytical. This
is perhaps true (if we believe we have a sound analytic/synthetic
criterion), but it is philosophically superficial. Kant upheld a different
view. To Kant 'All swans are birds' is analytical only if we take for granted
our ontology (or, to use a more Kantian term, our experience).23 However,
Kant also tells us another story: how this ontology has been constituted.
Claiming that 'all As are Bs' clearly entails analysing the meaning of
concept A, but this presupposes that different properties, such as B, have
already been carried under the meaning of concept A; and this activity is
clearly synthetic in kind. In modern terminology, Kantian Bs are set-
predicates which determine the extension of terms (and thus our
ontology).24
However, there is an obvious difficulty in Mises's reading of Kant's
philosophy. If the 'category' of action allows only analytical judgements,
we need to know which category or principle allows the constitution of
economic phenomena. To use Kant's terminology, the concept of action
23
See also footnotes 7 and 8.
24
As Kant (1787, B 105) writes: "The same understanding, through the same operations by
which in concepts, by means of analytic unity, it produced the logical form of a judgement,
also introduces a transcendental element into its representation, by means of the synthetic
unity of the manifold in intuition in general'.

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

64 PlERLUIGI BARROTTA

can no longer be considered as a category (or pure concept), but only as an

empirical concept. In fact, as we have just seen, any empirical concept
(such as 'swan') requires a synthetic activity through the use of some
(unspecified in Mises) categories.
Thus, although Mises was fascinated by Kant and used his termi-
nology, he ended up defending a position that was very far from Kant's
epistemology. Basically, his idea was that economic theory is made up of
analytic judgements, and he referred to introspection - as we noticed in
the previous section - in order to connect pure economic theory to the
real world. Economic synthetic a priori judgements are, in his opinion, no
more than the analytic judgements given by the pure theory of economics
plus the synthetic 'cognition of the fact that there is such a thing as
consciously aiming at ends' (Mises, 1978, p. 6).
We can also appreciate the differences between Mises and Kant from
a slightly different angle: in his work Mises conflated some characteristics
of the hypothetical-deductive employment of reason with those of the
Kantian transcendental or, to be more precise, constitutive employment of
reason, which concerns how experience is determined by the use of
categories.25 To be more precise, Kant's tenet is that (a) there is a unique
system of categories (as his metaphysical deduction 'proves') and (b)
categories determine the experience to which scientific theories refer.
Thus, without forcing Kant's terminology too far, to Kant the 'categorical
laws of thought' determine the subject matter of science; a tenet that
makes deductivism compatible with hypotheticism. Mises accepts (a)
without any serious argument, and replaces (b) with the following thesis:
(c) categories constitute the axioms that allow an entirely deductive
science. Points (a) and (c) together determine what we might call the
categorical laws of a deductive science, which transform the hypothetical-
deductive employment of reason into a hybrid 'categorical-deductive
employment of reason'.
If we distinguish the two 'uses of reason' we soon realise the
weakness of Mises's tenet about the validation of economic theories. To
Mises, deducing means 'drawing out' the attributes inherent in the
concept of action (which in Mises's treatment, contrary to his intention,
has nothing to do with Kantian categories). Such an analytical activity is
legitimate in any kind of science, but it does not allow the universal and
impersonal procedure required by Mises's apriorism. In fact, not only
does 'verbal logic' not have deductive rules of inference, but - what is
more important - given that: (1) Mises did not provide any argument
25
The two Kantian terms 'transcendental' and 'constitutive' are strictly connected. Their
relationship is straightforward: categories constitute the experience (this is the constitutive
use of reason), 'transcendental' is the philosophical work that allows one to proceed
backwards: from the experience to the discovery of the underlying categories. They are
two faces of the same coin.

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

 A NEO-KANTIAN CRITIQUE OF VON MISES'S EPISTEMOLOGY 65

supporting the uniqueness of the category of action (i.e. the metaphysical

deduction of categories) and (2) categories determine the experience of
science (not its axioms), it follows that we cannot rule out that other
categorical systems may structure our experience differently through the
use of economic concepts with a different meaning. Points (1) and (2)
together destroy Mises's deductivist procedure of testing.
Mises's criticism of classical economics should illustrate this question.
Take Mises's analysis of the concept of cost:

At the bottom of many efforts to determine nonmarket prices is the

confused and contradictory notion of real costs ... Costs are a phenomenon
of valuation. Costs are the value attached to the most valuable want-
satisfaction which remains unsatisfied because the means required for its
satisfaction are employed for want-satisfaction for the cost of which we are
dealing with. (Mises, 1949, p. 393)

This meaning analysis has proved to be fruitful for economics, and it

might be called a 'deduction' if this did not cause any misunderstanding.
In fact, the point is not terminological, since it concerns the procedure of
validation envisaged by Mises. Modern economists who refer to classical
economics, for example Sraffians, could be persuaded by his analysis, but
Mises could not prove a mistake in the chain of their deductive reasoning,
since they have a different meaning of cost and profit.

4. BY WAY OF CONCLUSION
Mises's idea of economics as a 'praxeological science' is intriguing, but
appears to be founded upon a weak philosophical basis. In fact, there is
no need to resort to the neopositivistic analytic/synthetic distinction to
reject Mises's methodological approach. Nowadays such a distinction is
strongly criticized and in any case a critique based on it would be
convincing only if the neopositivistic tenet had already been accepted.
In this paper I have suggested a different critique, founded on Kant's
work. I maintain that we may legitimately appreciate Mises's insistence
on the importance of the category of action for economic science. As we
have noticed, economic phenomena could not even be conceived without
such a concept. However, when categories are carefully distinguished
from explanatory theories the methodology of apriorism can no longer be
held. Furthermore, I have argued that apriorism requires that the
categorical systems of economics must be unique, and unfortunately
Mises completely neglected this crucial issue. Finally, I hope I have been
able to show that Mises uses the term 'deduction' inappropriately. I can
only conclude, therefore, that Mises's apriorism cannot be vindicated
through Kant's epistemology.

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147

66 PIERLUICI BARROTTA

REFERENCES
Barone, Francesco. 1964. Logica formale e logica trascendentale. 2nd edn. Edizioni di Filosofia
Barrotta, Pierluigi. 1993. 'A special case? An epistemological analysis of Hahn's critique of
Sraffian economies'. History of Economic Ideas, 1:141-70
Caldwell, Bruce. 1982. Beyond Positivism. Economic Methodology in the Twentieth Century. Allen
& Unwin
Cowen, Tyler and Richard Fink. 1985. 'Inconsistent equilibrium constructs: the evenly
rotating economy of Mises and Rothbard'. American Economic Review, 75:866-9
Hollis, Martin and Edward Nell. 1975. Rational Economic Man. Cambridge University Press
Hutchison, Terence W. 1981. The Politics and Philosophy of Economics. Marxians, Keynesians and
Austrians. Basil Blackwell
Kant, Immanuel. 1950 [1783]. Prolegomena to Any Future Metaphysics. Trans. L. W. Beck. The
Bobbs-Merril Company, Inc.
Kant, Immanuel. 1958 [1787]. Critique of Pure Reason. 2nd edn. Trans. N. Kemp Smith.
Macmillan
Kant, Immanuel. 1952 [1790]. Critique of Judgement. Trans. James Creed Meredith. Clarendon
Press
Kaufmann, Felix. 1937. 'Do synthetic propositions a priori exist in economics?' Economica,
4:337-52
Lackmann, Ludwig. 1982. 'Ludwig von Mises and the extension of subjectivism'. In Method,
Process, and Austrian Economics. Essays in Honor of Ludwig von Mises. I. Kirzner (ed.).
Lexington Books
Lyons, William. 1986. The Disappearance of Introspection. MIT Press
Mises, Ludwig von. 1949. Human Action. Yale University Press
Mises, Ludwig von. 1978. The Ultimate Foundation of Economic Science. 2nd edn. Sheed
Andrews and McMeel
Mises, Ludwig von 1981. Epistemological Problems of Economics. Trans. G. Reisman. New York
University Press
Mongin, Philippe. 1984. 'Modele rationnel ou modele economique de la rationalite?' Revue
Economique, 35:9-64
Nozick, Robert. 1977. 'On Austrian methodology'. Synthese, 36:353-92
Parsons, S. 1990. "The philosophical roots of modem Austrian economics: past problems and
future prospects'. History of Political Economy, 22:295-319
Popper, Karl. 1963. Conjectures and Refutations. Routledge and Kegal Paul
Ricardo, David. 1821. On the Principles of Political Economy and Taxation. Reprinted in The
Works and Correspondence of David Ricardo, Vol. I. P. Sraffa (ed.). Cambridge University
Press
Robbins Lionel. 1938. 'Live and dead issues in the methodology of economies'. Economica,
5:342-52
Rothbard, Murray N. 1957. 'In defence of "Extreme Apriorism"'. Southern Economic Journal.
Reprinted in Austrian Economics, Vol. I. S. Littlechild (ed.). Edward Elgar Publishing
Smith, Barry. 1990. 'Aristotle, Menger, Mises: an essay in the metaphysics of economies'. In
Carl Menger and his Legacy in Economics. B. Caldwell (ed.). Duke University Press
White Lawrence H. 1984. "The methodology of the Austrian School economists'. The Ludwig
von Mises Institute of Aubun University. Reprinted in Austrian Economics, Vol. I. S.
Littlechild (ed.). Edward Elgar Publishing

http://journals.cambridge.org Downloaded: 11 Mar 2015 IP address: 134.176.129.147