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Austrian Philosophy and Austrian Economics: Barry Smith
Austrian Philosophy and Austrian Economics: Barry Smith
l
Economics
Barry Smith
11IStilut~fr PhilO$ophi4
Ulljv~rsily olGral
decisions of individual subjects in such a way as to embrace the thesis favorable to that sort of dirigisrne with which Keynes had allowed
that all social phenomena are the result of individual activity, all value himself to be associated.
the result of individual preference. An economy is not, from this subjec- Austrian economics since then has had a chequered career. Certainly,
tivist point of view, an autonomous formation with unintelligible proper- a number of the subjectivist insights of Menger and his followers have
ties of its own. Rather, as Menger sees it, one can understand the established themselves as orthodoxy within the mainstream of
workings of an economy. One can see, for example, how the value of economics, though they have in the process normally lost their' Austrian'
goods at earlier stages in the process of production is derived from the label and flavor. Certainly, too, a number of latter-day Austrians have
value to actual consumers of the products of the later stages. come to enjoy some influence in political and more recently even in
Menger's theoretical pronouncements were directed above all against government circles in England, America and elsewhere. Austrian
German historicist economists who were, to different degrees, both economic theory. however, has enjoyed a less fortunate fate, and the
anti-tbeoretical and anti-subjectivist. The phrase 'Austrian school' was principal living genius of the Austrian school, Friedrich Hayek, has
in fact initially employed by Menger's historicist opponents as a term of devoted his efforts since the war not to economic theory as such but to
denigration. For the kingdoms and lands of the Empire of the Habsburgs the working out of certain implications of the ideas of Menger and others
were still, in 1871, distinguished from their more developed neighbors for our understanding of social and political formations in general.
to the west in that they could look back on almost no important theoretical Contemporary Austrian economic theory is represented above all by
or scientific achievements of their own. As we shall see however, things Ludwig Lachmann. Israel Kirmer and Murray Rothbard, all of them past
were soon to change, and in the decades following the appearance of students and associates of Mises in New York. Lacbmann has perhaps
Menger's work Austria was to experience a veritable renaissance not done more than any other thinker within the Austrian tradition to push
merely in the scientific sphere but across the entire range of artistic and back the limits of subjectivism, particularly in relation to the role that is
intellectual achievement. played by individual expectations in economic theory. Kinner, on the
The first generation members of the Austrian school, Eugen von other hand, has developed and refined the ideas of Mises and Hayek on
Bhm-Bawerk and Friedrich von Wieser, were both, like Menger, profes- the role of knowledge, ignorance and error in economic action and has
sors of economics in Vienna. Their successors included Joseph Schum- shown how it is possible to utilize Misesian ideas on entrepreneurship in
peter, Ludwig von Mises, Hans Mayer, Leo Schnfeld-my and Paul a way which has consequences for our understanding of such economic
Rosenstein-Redan, and Austro-Marxists such as Rudolf Hilferding and categories as profit, competition and the market, as also of the role of
Otto Bauer were also influenced by Menger's thinking. It was however time in economic theory. Rothbard, finally, is perhaps the most con-
the circle of thinkers around von Mises who did most to establish the spicuous of modern-day American Nee-Austrians, his notoriety deriv-
characteristic methods and insights of the Austrian school and to spread ing above all from the fact that he has welded Misesian economics and
Austrian ideas beyond the borders of Austria itself. Mises' Vienna circle the Misesian critique of the state to a libertarian or even anarcho-
included not only economists such as Friedrich von Hayek, Gottfried von capitalist ethics and political theory.
Haberler, Fritz Machlup and Otto Morgenstern, but also philosophers
such as Felix Kaufmann and Alfred Schutz. The impact of these thinkers 2. Austrian Economics and the Neoclassical Mainstream
is seen, for example. in the work of Lionel Robbins and - more radically
- in that of G.L. Shackle in London, and indeed the peak of the influence Competition, in the Austrian view, is never 'perfect'. The plans and
of the Austrian school was achieved in the L.S.E. in the 1930s, where expectations ofdistinct market participants are never even approximately
Austrians and their fellow-travellers enjoyed a virtual dominance of high in harmony with one another. Yet there would appear to be certain
theory in the economic field - only to be shot down by a burgeoning manifest benefits of market competition, benefits of a sort which, as the
Keynesianism. or more precisely by historical events conceived as being early Austrians did much to demonstrate, are incapable of being simu-
lated by, for example, a centrally planned economy. How, then, are such
Austrian Philosophy and Economics 249
2.41 Prulololl- and tile Philosophy of Economics
benefits to be understood? Neoclassical economic theory has tackled this 3. Austria vs. Germany
problem almost exclusively by examining the (formal, or mathematical)
properties of the equilibrium state, a state which would involve perfect A:us~a and Germ~y, I want to claim, have different modes or styles
harmony of all participants' plans. It has paid much less attention to the of thinking and speaking, different attitudes to learning and to tradition
problem of how the benefits of competition and of the market can be ~ to ~ German language itself. 2 The differences of styles of thought,
understood under the actually prevailing circumstaneeS of endemic im- In ~cular, run so deep, that the Germans and Austrians themselves
perfection and of constantly changing external conditions. Austrian have In most cases been unaware of them, to the extent that they have
economists, in contrast, think not in terms of an ideal state of achieved felt the ~ to protest against those intellectual historians who have
equilibrium, but rather in terms of a faltering process of always partial drawn attentton to the differences in question. Austria is marked, above
movement towards the elimination of disequilibria Taken in and ofitself, all, b~ an absen~ of any entrenched philosophy of the Kantian or
this idea is intriguing, and seems to bear great promise. Yet it must be ~eg~lian sort. This partly a matter of psychology: the Austrians - similar
admitted that, at least from the perspective of those working within the In this respect to the English - have tended to react with suspicion in the
mainstream of economic science, this promise cannot be said to have face of metaphysical systems of the German sort. But it is partly also a
been fulfilled. consequence of the already-mentioned intellectual backwardness of the
Right, of course, is not always on the side of might, and certainly a Habsburg Empire in the 19th century in relation to its neighbors to the
very different story would have to be told about the merits and demerits ~est. ~ works of both Kant and Hegel were indeed for a time prohibited
of Austrian economics in a world in which Austrian ideals prevailed in In Austrta, whe~ philosophical education was dominated instead by
our determinations of what economic science is designed to achieve and textbooks, prescnbed by the state authorities in Vienna, whose content
as to the criteria which are to be used to separate good theory from bad. was drawn from Catholic school-philosophy and from a Leibnizian-
Thus for example the Austrians are sceptical as to the possibility of Wolffian 'Popularphilosophie' of the sort that had been current also in
obtaining meaningful measures in relations to many of the phenomena Germ~y un?! ~ time of Kant. This gave way. in the period leading up
represented parametrically in the models of equilibrium theorists. They to the liberalization of the Austrian university system in the second half
have accordingly tended to favor qualitative investigations of economic of the 19th century, to a rather superficial mixture of doctrines incor-
phenomena, of action, intentionality, knowledge, error, perception, porating in particular ideas taken over from the German Herbart. Things
choice, etc. were made worse by the fact that Austrians were for a long time not
My aim what follows, however, is not to expound the details of !egally permitted to study outside the confines of the Empire. This was
Austrian economic doctrine. Rather, I wish to show that Austrian 10 pan because university education was considered more or less ex-
economics is not an isolated phenomena. but rather part and parcel of a clusively as a training for the home civil service. But it reflected also a
wider tradition in Austrian (or Austro--Hungarian, or even Austro-Hun- fear on the part of the Imperial authorities that enlightenment ideas and
garian-Polish) philosophy, a tradition which. as we sh~ see, even in other f~rms of sedition might be imported from the west.
spite of its own fundamentally anti-positivistic orientation. helped to . Irorucally. however, there were certain advantages in this compara-
make possible also the logical positivism of the Vienna circle. Only in ~ve ba~k~ar~ss (as there were advantages to Germany of her late
the light of this wider tradition, I shall argue, will it be possible for us to l~UStriallzatiOn as compared to England). For it meant that, when the
understand what, precisely, is involved in the claims of Austrian ~e came ~or the ~tablishment of a modem and scientifically oriented
economics. And only then shall we be able adequately to gauge the philosophy In Austrta. there was little of substance against which the new
relation of Austrian economiCS to its neoclassical counterpart. philosophical developments had to compete. Modem philosophy was
thereby able to gain a hold in Catholic Austria. where its development in
2SO PruioJogIes and the Philosophy 01 Economics Austrian Philosophy and Economics 251
Gennany has been repeatedly thwarted by the influence of Kantian and subject for investigation, the German philosopher's world (the world of
Hegelian idealism and other tendencies of a metaphysical sort. 3 the Philosophical Text) is in effect split apart from the world of what
TIle strength of idealist metaphysics in Germany derives in no small happens and is the case, and this, too, has consequences for the style of
part from the fact that it is closely associated even in the popular mind the philosophy which results.
with the development both of German nationalist feeling and of the But why should this be so? Some preliminary clues can be gathered
German nation itself. Kant, Fichte, Hegel have come to occupy an if we look at those isolated German thinkers of importance - one thinks
entrenched position in German thought and feeling that is comparable to in particular of Helmholtz, Frege and Hilbert - whose philosophical
the position of Catholicism in modem Poland. Every German school- writings are not marked by Kantian-Hegelian stylistic excesses. What
teacher has his shelf of works by Kant and Hegel and Marx. Every such thinkers have in common is clear: they have each come to
German town has its Kant- and Hegelstrasse,just as it has its Beethoven- philosophy from some extra-philosophical discipline where normal
, Goethe- and Bismarckstrasse. At no time was philosophy rooted in this standards of clarity prevail. TIle literary style imposed upon the
way in the structure of the Austrian state and in the national conscious- generality of German philosophers, in contrast, became entrenched
ness of the Austrian people. precisely during a period when philosophical thinking was carried out in
Strangely, the rootedness of philosophy in the German popular mind virtual dissociation from modem science. This style was shaped, rather,
goes hand in hand with a quite peculiarly abstruse style of German by religion and politics, by romanticism, Sturm und Drang, and by
philosophical writings. a style which has proved inimical to the develop- German nationalist ideology. Contrast the case of England, whose native
ment of a native German tradition of exact or scientific philosophy in the philosophical style had been established 100 years before Kant during
modem sense. German philosophers have tended to strive for ter- the heyday of the British scientific enlightenment And contrast also the
minological depth at the expense of philosophical clarity, which they case of Austria, which found its feet philosophically only at the tum of
have associated with shallowness of thinking. 4 our present century, and whose stylistic forms are accordingly deter-
It is worth pointing out, though, that there were isolated thinkers in mined by models derived from logic, physics and experimental psychol-
Germany - one thinks in particular of Humboldt or Herder - who were ogy.
conscious of the stylistic inadequacies of their compatriots. and who were
sensitive also to the role oflanguage in philosophy. Moreover, there were 4. The Marks of Austrian Philosophy
cases of Austrian philosophers who occasionally took on some of the
stylistic habits of the Germans. On all of this see Mulligan (forthcoming), Philosophy, we have said, plays no central role in the national con-
especially his treatment of the philosophical style of the later Husserl. sciousness of the Austrians. Yet. as philosophers and historians of ideas
Even Kant can be charged with some of the responsibility of the stylistic have come gradually to recognize, there is a peculiarly Austrian way (or
excesses and consequent unclarities of his successors, and Neokantians family of ways) of doing philosophy, sharply to be distinguished from
such as Rickert and Windelband. who attempted to develop a scientifi- that of Kant. Hegel. Fichte. Schlegel. Schelling. Schopenhauer, Schleier-
cally oriented philosophy in the spirit of Kant, never achieved in their macher and their modern-day successors. 5
writings that sort of clarity which we associate with Bolzano or Brentano. TIle characteristic marks of this Austrian philosophy are difficult to
TIle philosophical insights of the Germans- and it is certainly not to defme precisely. If, however, we consider the thinking of Bolzano,
be ruled out that there are philosophical insights scattered through the Brentano,6 TwardOWSki, Meinong, Ehrenfels, Husserl, Mach,
writings of, say, Hegel or Heidegger - must therefore as it were struggle Boltzmann. Wittgenstein, Wertheimer, Iogarden, Gdel, Popper, and the
to make themselves heard from behind textual barriers constructed out members of the Vienna circle, then we can reach the very tentative
of a terminology that has become an end in itself. Moreover, because the conclusion that this thinking is at least to some degree marked by:
relation of philosophy to empirical matters of fact is not, normally, a i) the attempt to do philosophy in a way that is inspired by or closely
connected to empirical science. It is indeed remarkable to consider the
252 PraxJoIo(pes aDd the Philosophy 01 Ecooomks
Austrian Philosophy and Eeooomlcs 253
extent to which modern philosophy of science has been a charac- and the world as it is in itself are one and the same (which does not, of
teristically Ausman phenomenon. or at least a phenomenon marKedly course, imply that it is in any sense a trivial matter to set out what this
influenced by Ausman thought and culture in the period around the turn world is like in philosophical terms).
of the century. One thinks in this connection not only of Bolzano and v) realism is associated further with a commitment - in the end
Mach. Popper and Polanyi. Wittgenstein and Hayek, 1 but also of Ludwig derived from Aristotle and the scholastics- to descriptive or ontological
Boltzmann. Ludwik Fleck.' Otto Neurath, Friedrich Waismann, Herbert ade~uacy. This is marKed especially by a concern with how the parts of
Feigl, Leon Chwistek, Gustav Bergmann, Paul Feyerabend and reality fit together to form different kinds of structured wholes. In some
Wolfgang Stegmller- all of them Ausmans (or Austro-Hungarians) who cases it involves the recognition of differences of ontological level
have done much to determine the shape of the philosophy of science as amo?g the entities revealed to us by the various science and a consequent
we know it today.' The logical positivism of the Vienna circle (itself a readiness to accept a certain stratification of reality.
multifaceted phenomenon that is all too often treated over-simply in the vi) a special relation to the a priori, or more generally a concern with
standard texts) is in this respect merely one partial moment of a much what is prior to observation and experiment. This is revealed first of all
richer tradition of scientifically-oriented philosophy, a tradition whose in that tradition of Austrian philosophy of science which insists that
implications for the practice of science have not, as yet, been harvested observation in the Baconian sense is not unproblematic, that observation
in full. is, in some sense, 'theory laden'. It is revealed also however in the
ii) a sympathy towards and in many cases a rootedness in British willingness of a number of Austrian philosophers to accept one or other
empiricist philosophy, which goes hand in hand with a concern to fonn of Platonism (in logic, ontology, value theory, and elsewhere), 10 or
develop a philosophy 'from below', on the basis of detailed examination to accept disciplines such as phenomenology and Gestalt theory which
of particular examples, rather than 'from above' in the fashion of most are (as Wittgenstein expressed it) 'intennediary between science and
German philosophers (with manifest consequences, again, for the literary logi~:. Finally, it is revealed, in the work of Austrian philosophers in the
style of the philosophy which results). tradmon of Brentano who argued - following Aristotle - that the world
iii) a concern with the language of philosophy. This sometimes as it is in itself is at least to some degree meaningful or intelligible, so
amounts to a conception of the critique of language as a tool or method that we are able, even without appeal to experiment or induction, to read
of philosophy, sometimes to a conception of language itself as a proper off certain structures or relations directly from experience.
object of philosophical investigation; sometimes it leads to attempts at vii) an overriding interest in the relation of macrophenornena (for
the construction of a logical ideal language; in many cases it manifests example in ethics, or in ontology) to the microphenomena (especially
itself in the deliberate employment of a clear and concise language for mental experiences) which underlie or are associated with them. This
the purposes of philosophical expression and in the cultivation of a does not of necessity imply any reduction of complex wholes to their
philosophical style that is not cut free from the empirical world of what constituent parts or moments: certainly a reductionism of this sort is
happens and is the case. present, again, in Mach and in some of the Vienna positivists. But it is
iv) a special relation to realism. understood both in an ontological explicitly rejected by almost all the other Austrian thinkers to be dis-
sense (the world exists, more or less as we fmd it) and in an epistemologi- cussed below.
cal sense (knowledge of the world is possible and we are already in
possession of substantial portions of such knowledge). The Kantian s. Austria vs. Germany Revisited
revolution was not accepted by the Ausmans, and neither were the
various sorts of relativism and historicism which came in its wake. This Even cursory reflection will tell us that not all of the given features
means that there is no divorce of a 'phenomenal' and 'noumenal' world ~ ~d in common by all the thinkers mentioned. Some philosophers
within Austrian philosophy. The world that is experienced and known m Austna are marked precisely by the ways in which they modified or
reacted against what was characteristic of Austrian philosophy in
254 Praxiologies and the Philosophy 01 Economics
Austrian Philosophy and Economics 2SS
tract on logical positivism. And ideas accepted by the Vienna circle did From the Kantian perspective the world as it is in itself is (from the
have some influence on the thinking of Ludwig Mises. though the major ~int of view of the cognising subject) a sheer unintelligible chaos. There
influence of Viennese positivism on contemporary economics has, ames an a priori dimension in our thinking only as a result of the fact
familiarly, been in helping to determine the methodological ideas of the that we ourselves ('transcendentally') impose a spurious order on this
neoclassical mainstream, most conspicuously through the work: ofMilton chaos. an order which reflects the structures of the human mind. (Recall
Friedman and the Chicago school. All of which might be summarized in Hume's doctrine of the causal relation as something that is superadded
the form of a diagram as follows:
My thesis. however. is not so much that there are strong historical
links between the two traditions of Austrian economics and Austrian ~,..ntaM Schoof . .nger_
philosophy - the latter to be conceived henceforth in its broadly Bren- Franz Brenl8no
Alexiua \I0I'l MeInog
CartUenger
Friedrich von Wieser
tanian form. Rather. I want to argue that these historical links reflect a Chr!alian \I0I'l Ehrenfela Eugen \I0I'l B6hm-Bawerk
deep-seated affmity between the respective methods and doctrines of the OecarKr_
and SO on. The given structures are at least tacitly familiar to everyone It seems indisputable, now, that it is the non-Kantian notion of the a
who has dealings with the objects concerned (i.e. to every speaker of a priori which underlies Menger's work in economics. Consider for ex-
language). Yet this does not by any means imply that it is a simple matter ample Menger's letter to Walras of 1884, in which Menger insists that
to discover what such structures are and to formulate workable theories economists 'do not simply study quantitative relations, but also the nature
about them.11 Nor, either, does it imply that the issue as to which sorts of (das Wesen) of economic phenomena.' They study the qualitative na-
linguistic structures are universal is a matter of the 'conceptual tures of and the relations between such structures as, for example, value,
spectacles' of the language-using subject. And nor does it imply that this rent, profit, the division of labor, money. etc. It could be said in this light
issue is merely a matter for arbitrary legislation by the linguistic theorist. that Menger seeks to develop a categorial ontology of economic reality,
Universals of language are not created by the linguist. They are dis- to establish how the various different sorts of building blocks of
economic reality can be combined together in structured wholes, and to
covered through painstaking theoretical efforts.
Similarly in the case of, for example, Husserlian phenomenology. establish - through the application of what he himself called a genetico-
Here, also, (or so at least Husserl claims), we are dealing with universal compositive method - how such wholes may originate and how they may
structures of experience (of perception and judgment, feeling and im- develop and become transformed over time into other kinds of wholes.
agination) which are at least tacitly familiar to every individual. Yet this Of course an ontological apriorism of this sort does not mean (any
does not imply that it is a simple matter to discover what such structures more than in the case of linguistic universals) that economic theory is
are and to formulate workable theories about them. And nor, either, does free of any empirical components. As we shall see, it is a difficult matter
it imply that the issue as to which structures of experience are universal to sort out what. precisely, the appropriate role for empirical investiga-
is a matter for arbitrary legislation by the phenomenologist, or that it is tions in economics (and in related disciplines) might be. What is certain,
a matter of the 'conceptual spectacles' brought to bear on his experience however, is that quantitative investigations in economics can be coherent
by the experiencing subject. Universals of experience are not created. and can have implicatiOns for the world outside the theory only to the
either by the phenomenologist or by the experiencing subject. They are extent that they are carried out on the basis of a prior understanding of
discovered through painstaking theoretical efforts. the natures of at least some of the entities to be measured and compared.
Austrian economics, now, holds that in the sphere of economic For otherwise the economist is not merely measuring in the dark, he is
phenomena. too, we have to deal with structures which are universal in also without any means to tie down the results of his theorizing to
. the sense that - because they are indispensable to every economic action economic reality itself. Every empirical science must in this sense be
as such, or to every instance of exchange, barter. rent. profit. etc. - they accompanied by some a priori proto-discipline. whether or not this fact
are manifested (in principle) in every economy. The given structures are is consciously realized by the scientist himself.
also at least tacitly familiar to everyone who has dealings with the objects
10. A Priori Laws can have Exceptions
concerned (i.e. to every economic agent, to every observer of the be-
haviorofmarkets). Yet this does not by any means imply that it is a simple Further light on the above can be thrown by considering the a priori
matter to discover what such structures are and to formulate workable theory oflaw developed by Husserl's disciple AdolfReinach. In his "A
theories about them. And nor, either, does it imply that the issue as to Priori Foundations of Civil Law" of 1913 Reinach seeks to develop a
which sorts of economic structures are universal is a matter for arbitrary categorial ontology of the legal sphere almost exactly parallel to the
legislation by the economic theorist or of the 'conceptual spectacles' of categorial ontology of economic phenomena outlined above. Reinach's
the economic agent. Universals of economic reality are not arbitrary theory of the relations between such basic legal phenomena as contract,
creations of the economist. They are not created in any sense. They are obligation. promise, etc. is especially interesting for us here because he
discovered through painstaking theoretical efforts. deals explicitly with the ways in which the corresponding a priori
structures may become modified in their instantiation in given context.
2M Praxiologies aad the Philosophy of Economics Austrian Philosophy and Economics l6S
for example through the acts of legislators and ju~ges. '~a cl~m is that the results of the exact orientation of theoretical research appear insufficient and
unempirical in the fteld of ecxmomy as in all other realms of the world of phenomena,
extinguished by being fulfilled is,' Reinach argues, surely Just as eVIdent when measures by the standard of realism. This is, however, self-evident, since the
as any logical or mathematical axiom'. Yet: results of exact research. and indeed in all realms of the world of phenomena, are true
only with certain presupposition&, with presuppositions which in reality do not always
apply.
if it should prove useful. why should not the positive law enact that ctain claims are
extinguished only when their fulfillment is officially notarized at the nearest court-
house? (Reinach 1913. p. 802, Eng. p. 1(4) All the laws of a priori economics, that is to say, 'hold only in rare
cases';
As Reinach himself recognizes, this possibility constitutes what is
probably the most problematic aspect of the very idea ~f an a T?~iori as a rule real prices deviate more or less from economic ones (those corresponding
to the economic situation). In the practice of economy people in fact endeavor only
theory of law: 'how can one want to put fo~ard a priOri p~opos~uons rarely to protect their economic interests completely. Many sorts of considerations,
which claim absolute validity, when any poSluve law can set Itself tn the above all. indifference to economic interests of lesser signiftcance. good will toward
most flagrant contradiction thereto?' (loc. cit.) No contradiction arises, others, dC., cause them in their economic activity not to protect their economic
according to Reinach however, because the issuing of a leg~ ~rm by interests at all in some cases. in some cases incompletely. They are, furthermore,
vague and in error concerning the economic means to attain their economic goals;
an institution of the positive law is a speech act of a very Special kind, ~ indeed they are often vague and in error concerning these goals themselves. Also the
distinct from an act of judgment as is a question or command. Hence It economic situation, on the basis of which they develop their economic activity, is
can stand in logical contradiction with a judgment just as little as can a often insuffICiently or inrompletely known to them. Finally their economic effort is
not infrequently impaired by various kinds of relationships. A defmite economic
question or command. It is a proposition of the ~ priori theory of .law, situation brings to light precisely economic prices of goods only in the rarest cases.
for example, that my claim on you cannot be asSigned br .me at Will to Real prices are, rather more or less different from economic. (Menger 1963, p. 69)
some third party. But suppose in some system of poSluve law such
assignment is allowed. Then, Reinach argues, it would not follow that This passage has been seen as a defense of model building,19
the claim changes its bearer through the act of tranSferring. Rather, the Menger's'economic prices' being the prices predicted by a model, which
}X>sitive law' enacts that whereversuch an act of transferring takes place, then deviate here and there from reality. Looking at the matter against
the given effect should come about.' (p. 803, Eng. p. 1(4) Hence th~re the background of Reinach's work, however, suggests another, quite
are legal enactments which bring about deviations from the essential different interpretation which sees Menger's economic theory as an a
legal relations which are given a priori. But this does not. Reinach argues, priori proto-discipUne relating to the basic categories from out of which
economic phenomena are built up. The laws of a priori economics relate
in any way affect the apriori relations themselves; rather their validity ~ presupposed to these categorial structures as it were in their purest and simplest forms,
by these very enactments. For it is the very function of the enaclment either to ~stroy before they have been affected by the various sorts of interreference and
legal formations which ari~ according to a prio~i l~ws, or to generate out of Its own
power legal formations which are excluded apru:m. (p. 812, Eng. p. 111)
modification which are involved in specific empirical instantiations.
Wieser, too, in his methodology of economics defends a conception of
Even the formations of the positive law, that is to say, are what they economic theory as beginning with the deSCription which is then supple-
are only in virtue of certain a priori laws and categories which provide mented and to some extent corrected by empirical investigations into the
as it were the building blocks from out of which they can be constructed. various ways in which these simple structures may come to be affected
And even positive legal formations are correctly characterized as le~al contingently in different context.
only in virtue of the underlying a priori categories from out of which
they are built up. But now Menger, similarly, is ready to admit
Austrian PbUosopby and Economics 267
l66 Praxiologies and the PbUosopby of Economics
for that activity of measuring and calculating and correlating which (as
of what can be read off from certain sorts of structures in reality may
we normally suppose) forms the heart of empirical science.
even serve to make understandable the fact that such different intuitions
Euclidean geometry. we might say. (or something like it). constitutes
exist. Certainly it tells us that the acquiSition of a priori knowledge may
one such a priori proto-discipline of the science of physics. And now
we see that. as the case of geometry makes clear, empirical research,
7
be no asy malter, where a priori knowledge on the Kantian conception
ought In some way to be both incorrigible and immediately accessible to
measuring and calculating, may in certain circumstances come to exert all.
an ex post control on the relevant proto--<iiscipline, so that we may come
to regard the propositions of the latter in a new light; the results of Notes
empirical research may even lead us to reject as false propositions
hitherto accepted a priori true. 1. My thanks go to Axel BhIer, Rudolf Haller, Don Lavoie, Allan Megill, J. C. Nyiri,
This does not mean that the opposition between what is empirical and Werner Sauer, Karl Schuhmann and Jeremy Shearmur for conunents on early
versions of this paper.
what is a priori is itself undermined. No single a priori proposition of a 2. See Grassl and Smith 1986 and the references there given.
proto--discipline may be falsified by empirical means: even the pos- 3. Of course nothing is as simple as one might wish. As the case of Herbart, for
sibility of direct logical contradiction is here ruled out. The control ~xample, makes clear: there were on both sides exceptions to and discountinuities
exerted by empirical research is, rather. at most indirect, as further m the g~ ~~cs referred to in the text, and the most important of these will
be menlloned m passmg below. For a more rounded picture see Sauer 1982. To talk
reflection on the case of geometry will make clear. It is such indirect of. 'Austrian ' and 'German' philosophy at all is, admittedly, an oversimplification.
control which is at work when physicists come to employ non-Euclidean It 15 ~ eve'.' greater overs~plifi~ation, however, When Austrian philosophy and
geometries in their descriptions of -reality. That such control is possible Austnan philosophers. are sunply Ignored, as has all too often happened in the past.
One recent example IS the stark confounding of the quite different intellectual
at all, however. shows that we have only partially trustworthy access to traditions of Austria and Germany in McCloskey 1985, p. 39.
the a priori structures in the world, so that it is not to be ruled ~ut that 4. Consider WID?elband's famous description of Locke's philosophy as 'shallow'
Austrian economists. too might one day have to countenance the Idea of (selcht). Consider, too, the enormous difference in style as between Mach on the
one hand and such German or German-inspired philosophers as Schuppe or
something like a non-Euclidean Austrian economics in their dealings Avenarius on the other.
with economic reality.n In any event, the very possibility of such empiri- 5. On Austrian philosophy in general see Haller 1979, 1981, 1986, and Nyiri (ed.)
cal control signals the fact that in another respect, too, the Austrian a 19~1 and 1986. On its stylistic moments and on those of classical German
philosophy see, again, Mulligan (forthcoming).
priori must be divorced from epistemological concerns of a Kantian sort. 6. Brentano.was in fact a native of Germany, though. as we shall see, he was the founder
For if a priori structures exist independently of the mind (or inde- of what IS from our present perspective the most important stream of modem
pendently of what the mind reads into reality), then we have no good Austrian philosophy.
cause to expect that our knowledge of such structures will in every case 7. See especially the latter's TM COIUIIer-Revollllion ofScience.
8. FIec~ was bom in 1896 in Lemberg, capital of Galicia on the Eastern fringes of the
have that evidential character with which the Kantian a priori is normally Emp1l"e. He was the author of some 200 scientific papers in the areas of medicine
associated. It thereby becomes possible to conceive a doctrine of what and ~cro.biology. B~t he was also the author of a longer, philosophical work,
we might call fallibilistic apriorism. parallel (perhaps) to doctrines of ~bllShed m 1935, enlltled Genesis and Development ofa Scientifu: Fact. Introduc-
I~ to 1M DoctriN: ofCogniJive Style and oftM Tlwught-Colleclive. This work is
fallibilistic intuitionism in ethics. 23 of m~st~.' 1eas~ ~ause, as a contribution to the nascent discipline of'sociology
When the above considerations are taken into account, then many of ?f sc~ .' It antiCIpates and perhaps even served to inspire some of the now so
the unfortunate connotations of the term a priori' will be seen to fall int1uen~alldeas of Thomas Kuhn. (Kuhn in fact contributed a Jreface to the English
translatlon of the work.)
away. Thus one common objection to the notion of the a priori turns on
9. C~. Nrm 19~. It is noteworthy also that later German philosophers who favored
the fact that different individuals may have different intuitions as to what SCIentific philosophy over metaphysical speculation were, at least in the 20s and
counts as a priori. The possibility of indirect empirical control does much 30s, to ~me extend able to fmd a receptive audience in Vienna and Prague.
to render this objection harmless. TIle thesis that the a priori is a matter 10. One thinks here first of all of Bolzano and his followers, but also of Meinong
especially his later writings in the theory of value. '
11. This section sununarizes a thesis defended in more detail in Smith 1987.
110 PraxloJoaies aDd the Philosophy 01 Economics Austrian Philosophy and Economics 211
12. For furthec details see Fabi.an and Simons 1986 and Grassl 1983. Hayek. FA. 1966 "Diskussionsbemerkungen her Ernst Mach und das sozialwis-
13. Cf. Kraus 1905,1937. senscha.ftliche Denken in Wien", in Symposium aus Anlass Us 50. Todestages von
14. See Lavoie (forthcoming).. Ernst MacA, Freiburg i. Br.: Emst-Mach-Institut, 41-44.
15. See e.g. Burkhardt 1980, 134ff. H~ ~'-l!' 1964 Nic~iri.sche ErkeNllnis. AnaJytiache IINl synthetiache Urteile a
16. See Reinach 1911 and the discussions in Smith 1982 and 1986. pnor, bel Kant WId be. HflWerl, Meisenheim am Glan: Anton Hain
11. See, on this, especially Hoche 1964, Delius 1963. The extent to which the Vienna Holenstein, E. 1986 SpracltJiche Universalien. EiM UntersuchlVll/' zur Natur des
positivists were influenced (sometimes positively, more often negatively) by the menschlichm Geistu, Bochum: Brockmeyer.
early pumomenologists is nowadays too often overlooked. Cf. Smith 1987. Husserl. E. 1900/01 ~giache UnUrsllCitungen, critical edition. Dordrecht: Nijhoff, 1975,
18. For a more detailed account of these matters see Holenstein 1986. 1984(A= tirsteditlon); Eng. trans. of2nded. by IN. Findlay,Logical investigations,
19. Diamond 1979. London: Routledge and Kegan Paul. 1970.
20. See Holenstein 1986. Kaufmann, F. 1937 "Do synthetic propositions a priori exist in economics?"
21. For a more detailed version of this argument. see Smith 1986, pp. 17f. EconomU:a", N.S. 4, 337-42. '
22. It is difficult to foresee how far such revision might go. COUld further research in Kinner, I. 1979 ~erci!ftion, 0Pfort~ty and Profit. Studies in the Theory of
economics lead us to conclude, for example that methodological individualism is Entrepreneurship, Chicago: Uruverstty of Chicago Press.
false? Kraus, O. 1905 "Die aristotelische Werttheorie in wen Beziehungen zu den modemen
23. See Shearmur 1988. Psychologensc::hule", Zeitschrift fur die gesamte StaatswissenscMft, 61, 573-92.
Kraus, 0.1937 Die Werttheori.en. Geschichle WId Kritik., Brunn/Wienna/Leipzig: Roh-
rer.
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272 Praxiologies and the Philosophy ~ Ecooomics
Don Lavoie
Celller for tlu Study ofMarut Procuses
George Masoll Ulliversity.
Fairvax. VA
Relativism
273