by Mises
[Title Page and Publication Information]: Title page and publication history for the third edition of Ludwig von Mises's 'Epistemological Problems of Economics'. Includes information on the original German publication (1933), the first English translation by George Reisman (1960), and subsequent reprints and editions including the 2003 Mises Institute edition. [Table of Contents]: Detailed table of contents covering the introductory materials and the first chapter regarding the task and scope of the science of human action. It outlines sections on the nature of social sciences, the logical character of economics, a priori theorems, and the relationship between science and value judgments. [Table of Contents (Continued)]: Continuation of the table of contents for the book, listing chapters and sections covering utilitarianism, sociology, history, the subjective theory of value, and the psychological basis of opposition to economic theory. [Introduction to the Third Edition: From Value Theory to Praxeology]: An introduction to the third edition providing a biographical sketch of Ludwig von Mises and an overview of the book's two central theses: that the Austrian theory of value is the core of a general theory of human behavior (praxeology), and that social science is an a priori, deductive discipline distinct from the natural sciences. [Economics—Sociology—Praxeology]: Traces the evolution of economics from classical political economy to a general science of human action. It highlights the marginal utility revolution as the catalyst for subjectivism and explains how Mises transitioned from using the term 'sociology' to 'praxeology' to describe the universal science of choice, distinguishing his approach from the anti-economic sociology of the early 20th century. [Economic Calculation and Praxeology]: Explains Mises's unique position on economic calculation as the dividing line between his praxeology and other schools. Mises argues that while value theory applies to all action (homo agens), economic calculation is only possible within a market system of private property. This contrasts with thinkers like Wieser and Pareto who believed in a universal 'utility calculus' applicable to socialism. [Toward a General Theory of Economic Calculation: The Contingency of Economic Calculation]: Discusses Mises's 1920 argument on the impossibility of economic calculation under socialism. It refutes the Millian dogma that production and distribution are separate spheres, showing that without market prices for factors of production, rational resource allocation is impossible, thus making the existence of economic calculation historically contingent on private property. [Toward a General Theory of Economic Calculation: The Preference Theory of Value]: Details Mises's development of a trilateral preference theory of value, where value is an ordinal relationship expressed through choice rather than a measurable quantity. This section traces the refinement of this theory from 'The Theory of Money and Credit' (1912) through his critiques of Menger and Böhm-Bawerk, establishing the foundation for his rejection of any non-monetary economic calculus. [The Meaning of Apriorism]: Clarifies Mises's claim that economics is an a priori science. It explains that while economics deals with facts, these facts (like choice and intention) are not perceptible via the senses but are known through self-reflection. Mises's apriorism is presented as a reaction to radical empiricism, asserting that the structural features of human action are necessary truths independent of sensory observation. [Theory and History]: Distinguishes between praxeology (the study of constant, time-invariant features of action) and history (the study of contingent, unique features). Using the example of central bank inflation, it shows how history explains 'why' an event happened based on specific facts, while economics explains the 'objective consequences' based on universal laws. [Misesian Rationalism]: Argues that Mises's epistemology is better understood as Aristotelian realism rather than Kantian idealism. While Mises used Kantian terminology like 'a priori', his work focuses on the 'nature' of things (money, socialism, interventionism) derived from the essence of human action and the physical reality of the division of labor, rather than pure mental impositions. [Conclusion to the Introduction by Jörg Guido Hülsmann]: Hülsmann concludes his introduction by emphasizing that Mises's work remains a vital milestone in the development of praxeology. He argues that the book is not obsolete because it contains unique critical discussions of Menger, Böhm-Bawerk, and Weber not found elsewhere in Mises's corpus, and asserts that progress in social sciences requires the absorption of Misesian ideas. [Foreword to the 1978 Edition by Ludwig M. Lachmann]: Lachmann provides historical context for the 1978 edition, situating Mises's essays as preliminary studies for 'Human Action'. He discusses Mises's defense of 'exact laws' against the German Historical School and logical positivism, his refinement of subjective value theory, and his critique of Max Weber's methodology regarding 'ideal types' and rational action. Lachmann also highlights the implications of Mises's work for capital theory and the logic of choice. [Preface to the English-Language Edition (1960)]: Mises distinguishes the methods of the natural sciences from the sciences of human action, rejecting the application of Newtonian physics to social phenomena. He argues that while natural sciences find regularity in stimuli-response, human action is guided by non-uniform ideas and choices. He critiques various 'negativistic' doctrines like Marxism and positivism, clarifies his terminology (introducing 'praxeology'), and addresses specific criticisms of Gunnar Myrdal and Alfred Vierkandt. [Preface to the German Edition (1933)]: Mises critiques the Historical School and the influence of empiricism on economic thought. He argues that economics must be a universally valid, aprioristic theory rather than a collection of historical 'styles' or 'laws' derived from the past. He specifically challenges Max Weber's use of 'ideal types' as a substitute for theoretical investigation and asserts that political bias often motivates the rejection of economic science. [Chapter 1: The Task and Scope of the Science of Human Action - Part I]: Mises explores the origins and logical character of the social sciences, contrasting the historical method with the aprioristic nature of economics. He argues that all historical interpretation presupposes universally valid knowledge. He critiques historicism and empiricism for denying the possibility of time-independent laws, asserting that human action (praxeology) is an a priori category similar to causality. The section concludes with a review of how classical and early subjective economists (Senior, Mill, Cairnes, Wieser) approached the deductive method. [The Basic Concept of Action and its Categorical Conditions]: Mises defines human action as conscious behavior and derives fundamental economic categories like value, scarcity, and cost directly from this concept. He argues that while certain conditions of action (like the passage of time or the use of money) are established empirically, the theorems derived from these conditions remain strictly a priori and universally valid. He critiques the Historical School's claim that economic laws are geographically or temporally limited, asserting that the logical structure of human action is constant across history. [A Priori Theory and Empirical Confirmation]: This section explores the relationship between a priori theorems and experience, arguing that theory is logically prior to the observation of facts. Mises contends that historical experience is too complex to refute a priori propositions; instead, apparent contradictions between theory and experience suggest either an error in observation or a missing prerequisite condition. He uses examples like the 'iron law of wages' and Knapp's state theory of money to show how erroneous theories persist despite empirical evidence, emphasizing that only logical re-examination can truly validate or invalidate a theory. [Theory, Experience, and the Rationality of Action]: Mises discusses the demarcation between theoretical science and historical research, noting that theory must focus on problems relevant to actual conditions. He provides a rigorous defense of the rationality of action, arguing that 'irrationality' is a misnomer for actions based on different values or incomplete information. From the perspective of the acting individual, all action is a rational attempt to remove dissatisfaction. He concludes that the laws of catallactics apply regardless of whether motives are egoistic, altruistic, or driven by impulse. [Science and Value: Neutrality and Liberalism]: Mises explains the principle of value-neutrality (Wertfreiheit) in economics, asserting that while the science itself does not make value judgments, its findings are indispensable for achieving human ends. He argues that social cooperation through the division of labor and private property is the most effective means for preserving life and prosperity. Consequently, liberalism is presented not as a metaphysical world view, but as the practical application of scientific insights to the universal human desire for well-being. [Methodological Individualism vs. Universalism]: Mises critiques universalist and collectivist social philosophies, specifically the work of Othmar Spann. He argues that 'society' has no existence apart from the actions of individuals and that collectivist doctrines inevitably lead to conflict by asserting one group's ideal as supreme. He distinguishes between scientific cognition (which is discursive and causal) and the mystical experience of 'the whole,' which belongs to art and personal intuition rather than science. He concludes by rejecting the idea of 'objective meaning' in history as a metaphysical intrusion that cannot refute the a priori deductions of economics. [Utilitarianism, Rationalism, and the Theory of Action: Vierkandt’s Instinct Sociology]: Mises defends the formal conception of pleasure and utility against charges of being 'empty' or 'immoral.' He critiques Alfred Vierkandt’s instinct sociology, arguing that attempting to explain social cooperation through an arbitrary list of innate instincts (like the 'instinct of subordination') is unscientific and logically inconsistent. Mises asserts that such psychological approaches fail to explain why certain instincts prevail over others, whereas the science of action (praxeology) remains neutral and formal by focusing on the subjective choice between incompatible desires. [Myrdal’s Theory of Attitudes and the Economic Interest]: Mises critiques Gunnar Myrdal’s attempt to replace 'economic interests' with 'attitudes' in social analysis. Myrdal argues that the labor movement is driven by strivings for power and self-esteem rather than just higher wages. Mises counters that while men have diverse goals, the economic science of action is formal and encompasses all subjective valuations. He argues that Myrdal’s distinction between interests and attitudes is based on a misunderstanding of modern subjectivist economics, which does not limit 'utility' to material or monetary gain. [The Critique of Rationalism by Ethnology and Prehistory]: Mises addresses the claim by ethnologists like Eduard Hahn and Leo Frobenius that primitive man was guided by 'ideals' or 'magic' rather than utility. He argues that while primitive technological notions (like ritual plowing) differ from modern scientific ones, the underlying category of action remains the same: the conscious use of means to attain ends. He concludes that all human behavior that is not merely reactive is necessarily rational in the praxeological sense, seeking to enhance well-being according to subjective standards. [Sociology and History: The Methodological and Logical Problem]: Mises introduces the relationship between sociology (the theoretical science of human action) and history. He traces the development of the 'Methodenstreit' in Germany, where the Historical School rejected the possibility of universal economic laws to protect political programs of interventionism. Mises distinguishes between methodology (the technique of thought) and logic (the character of scientific propositions), arguing that the logical character of a science is best studied in its most developed branch: economics. [The Logical Character of History and the Ideal Type]: Mises examines the work of Windelband, Rickert, and especially Max Weber regarding the logic of history. While praising their rejection of 'historical laws' and the application of natural science methods to history, Mises critiques Weber for failing to recognize sociology as a nomothetic science of human action. Weber viewed sociology merely as a generalized history using 'ideal types.' Mises argues that economic concepts are not ideal types (arbitrary intensifications of reality) but are derived from the essential nature of action itself. [The Universality of the Economic Principle and the Critique of Weber's Typology]: Mises provides a rigorous defense of the universal validity of the economic principle against Max Weber's typology of action (purposive-rational, valuational, affective, and traditional). Mises argues that all conscious action is inherently rational because it involves choosing between possibilities to attain a more desired state. He critiques Weber's treatment of Gresham's Law as a mere 'typical chance' or 'ideal type,' asserting instead that it is a necessary law of catallactics that holds whenever its specific conditions are met. He concludes that sociological laws are not 'tendencies' or 'average types' but necessary expressions of the nature of human action. [The Basis of the Misconceptions Concerning the Logical Character of Economics]: Mises defends the rationalistic nature of economic theory against antirationalist critiques. He argues that while ultimate ends are irrational value judgments, the means chosen to achieve them must be subject to rational scientific examination. He critiques those who smuggle irrational arguments into social science to serve political agendas, such as national autarky, by falsely claiming these policies impose no material sacrifice. [Modern Subjectivist Economics vs. Classical Objectivism]: Mises distinguishes modern subjectivist economics (marginal utility theory) from the older classical school. While classical economics focused on the 'businessman' and objective use value, modern economics starts from the consumer and treats all actions as data for explaining market prices, regardless of their morality or 'correctness.' He refutes the idea that economic theory assumes a society driven only by 'economic factors' or free competition, noting that it equally explains monopoly and government intervention. [The Universality of Economic Law Across History]: Mises argues that economic laws, such as marginal utility, are as universal as the laws of physics; even if medieval men did not understand them, they still acted according to them. He rejects the Historical School's claim that theory cannot explain modern 'regulated' economies or imperialism, asserting that theory is the only tool capable of accurately judging the effects of interventionist policies. [History Without Sociology]: Mises critiques Max Weber's view that general laws are 'empty of content' for historical understanding. Using the example of German reparations and currency stability, Mises demonstrates that history cannot be understood without the application of universally valid economic theories. He argues that all historical explanation implicitly relies on sociological theorems, and the choice is between using critically examined scientific theories or uncritical popular dogmas. [The Immutability of Human Reason and the Failure of Historicism]: Mises refutes the historicist claim that the logical structure of human reason changes over time. He examines ethnological evidence regarding 'primitive' minds, arguing that while the content of thought and interests may differ, the underlying logical categories remain the same. He concludes that economic history failed as a discipline because it attempted to reject universal theory in favor of 'theory-free' data collection, which in practice meant relying on obsolete or contradictory popular misconceptions. [Universal History and Sociology]: Mises clarifies the distinction between sociology (as a science of universal laws) and what Max Weber called sociology, which Mises reclassifies as 'universal history' or the study of ideal types. He emphasizes that while the domains are conceptually distinct, the historian and sociologist must be mutually acquainted with each other's work. He identifies the rejection of theory as the primary error of the Historical School during the Methodenstreit. [Sociological Laws and Historical Laws]: Mises discusses the use of the 'static method' in sociology as an indispensable fiction for studying change. He critiques the formulation of 'historical laws' and 'laws of stages' (like those of Karl Bücher), arguing they are merely sequences of ideal types rather than universal laws. He uses the law of the division of labor to show that while theory explains the higher productivity of cooperation, it cannot predict a necessary, inevitable progression toward higher stages of civilization, as such outcomes depend on human volition and ideology. [Qualitative and Quantitative Analysis in Economics]: Mises argues that economics is a qualitative science and cannot be made quantitative. Unlike physics, economics lacks constant relationships (e.g., a doubling of money does not exactly halve its purchasing power). He critiques the use of mathematics in economics as often misleading, noting that mathematical models cannot expose errors in their initial non-mathematical assumptions. While economists can predict the qualitative direction of effects (like the results of price controls), they cannot predict the exact magnitude because human valuations are ultimate data. [The Universal Validity of Sociological Knowledge]: Mises examines the logical status of sociology as a science of universal laws. He critiques Marxism and the Historical School for attempting to limit the validity of economic laws to specific historical 'periods' or 'systems' (like capitalism). He argues that any 'theory' valid only for a specific period is actually an ideal-typical construction, not a law. He concludes that the science of human action is valid wherever its defined conditions are met, based on the conceptual nature of action itself. [Conclusion: The Necessity of Theory for History]: In the conclusion to this section, Mises reiterates that history cannot function without the intellectual tools provided by the theory of human action. He argues that the historian must use the best available scientific theory rather than popular misconceptions. Quoting Walter Bagehot, he emphasizes that the historical method and the abstract method are not rivals but complementary, with theory serving as the necessary foundation for historical explanation. [Conception and Understanding: Cognition From Within]: Mises introduces the distinction between the natural sciences (cognition from without) and the sciences of human action (cognition from within). He critiques behaviorism for attempting to study human conduct without reference to 'meaning,' arguing that such an approach fails to distinguish between fundamentally different actions (e.g., a surgical cut vs. a mutilation). He asserts that all conscious conduct is meaningful and can only be understood by entering into the actor's intent. [The Methodological Distinction Between Conception and Understanding]: Mises refines the terminology of the 'moral sciences' by distinguishing between 'conception' and 'understanding.' Conception is the use of discursive reasoning to grasp the universal, rational aspects of action. Understanding is the empathic intuition used to grasp the unique, irrational, and qualitative aspects of historical events. He argues that while understanding is subjectively conditioned and cannot be strictly proved, conception relies on the immutable logical structure of reason shared by all humans. [The Irrational as an Object of Cognition]: Mises explores the limits of scientific explanation, identifying the 'irrational' as the ultimate given that reasoning cannot exhaust. In the science of human action, the final valuations and goals of individuals constitute this irrational given. He distinguishes between 'conception,' which deals with rational means and universal laws (sociology), and 'understanding,' which attempts to grasp the unique, irrational facts of history and art (Kunstwissenschaft) through empathy and subjective vistas. [Sombart’s Critique of Economics]: Mises provides a detailed rebuttal of Werner Sombart’s critique of economic theory. Sombart argued that economic concepts like 'exchange' and 'price' are historically contingent and lack universal meaning. Mises counters that if these terms were merely homonyms for different historical occurrences, scientific discourse would be impossible. He defends the 'rational schema' of marginal utility as a necessary tool for comprehending any act of exchange, regardless of the historical epoch, and attributes Sombart's hostility to political motives and a misunderstanding of the logical nature of theory. [Logic and the Social Sciences]: Mises asserts the universality and immutability of logic in the social sciences. He rejects the notion of 'living concepts' with changeable content, viewing such ideas as tools for political parties unable to justify their programs logically. He defends the necessity of abstract concepts against critics like Sismondi, arguing that there is only one logic applicable to all scientific inquiry. [On the Development of the Subjective Theory of Value: The Delimitation of the Economic]: Mises discusses the historical development and delimitation of 'economic' action. He argues that the transition from classical to subjective value theory rendered the old distinctions between economic and non-economic action obsolete. Since all conscious, meaningful action involves the rational allocation of means to attain ends, the 'economic principle' is the fundamental principle of all human conduct, encompassing both material and immaterial goals. [Preferring, Eudaemonism, and the Relationship with Psychology]: This section defines human conduct as an act of preferring and choice. Mises defends the eudaemonistic and utilitarian roots of economic theory, clarifying that 'pleasure' and 'pain' are formal concepts referring to the attainment of ends, regardless of their content. He distinguishes economics from psychology, arguing that economic laws (like the law of marginal utility or Gossen's law of satiation) are deduced from the logic of action rather than psychological observation. [Economics, Technology, and Monetary Calculation]: Mises explains that economic theory is independent of technology, using the law of returns as an example. He then emphasizes the critical role of monetary calculation as a mental tool for long-range production in a society based on the division of labor. He reiterates his famous argument that without private property and market prices for the means of production, economic calculation is impossible, rendering socialism impracticable. [Limits of Calculation, Data Changes, and the Role of Time]: Mises discusses the limitations of monetary calculation, noting it is an ordering of rank rather than a measurement of value. He argues against applying calculation to non-market entities like human life or 'social profit.' He also addresses the role of time in the economy, noting that changes in data require time to reach a new equilibrium, and critiques the use of 'time lags' as a justification for interventionist policies. [Competition, Costs, and the Continuity of Economic Thought]: Mises defends economic theory against the charge that it only applies to 'perfect competition,' explaining that it can easily account for 'fettered' economies. He redefines 'cost' subjectively as the importance of the next most urgent want that must be foregone. Finally, he argues for the continuity of economic science, asserting that modern subjectivist economics is built upon the foundations of the classical system rather than being a radical break from it. [Remarks on the Fundamental Problem of the Subjective Theory of Value]: Mises begins a critical examination of the subjective theory of value, noting that even its founders, Menger and Böhm-Bawerk, occasionally used language or concepts from the older objective theory. He clarifies that catallactics traces market exchange ratios back to individual subjective valuations, regardless of the underlying psychological or ethical motives. The core achievement of the theory was resolving the paradox of value by focusing on concrete quantities of goods rather than abstract classes. [Menger's Prerequisites for Goods and the Subjective Nature of Wants]: Mises examines Carl Menger's four prerequisites for a thing to become a 'good,' focusing on the subjective nature of human wants. He criticizes Menger's later distinction between 'real' and 'imaginary' wants as a departure from pure subjectivism, arguing that economic theory must treat all human desires as the basis for valuation regardless of their objective validity. [The Distinction Between Economic and Noneconomic Action]: Mises critiques Böhm-Bawerk's attempt to divide price theory into 'pure' economic motives and 'modifying' noneconomic motives. He argues that from the perspective of the subjective theory of value, all consumer choices—whether based on price, convenience, or ideology—are equally 'economic' and that the classical distinction between the businessman and the consumer led to a misunderstanding of human action. [The Myth of Homo Economicus and the Objectivity of Subjectivism]: Mises deconstructs the concept of 'homo economicus,' explaining that it was a personification of the businessman's principles rather than a complete model of human action. He asserts that modern subjectivist economics is truly objective because it explains market phenomena based on actual human actions and choices, rather than passing judgment on the 'rationality' or 'morality' of those choices. [The Psychological Basis of Opposition to Economic Theory]: Mises introduces the psychological and political reasons behind the widespread rejection of economic theory. He specifically addresses the Marxist critique that the subjective theory of value is merely 'bourgeois ideology' and notes how the control of academic positions by etatist governments has marginalized praxeological thought. [The Problem of New Ideas and the Hostility to Science]: Mises discusses the general resistance to new scientific ideas, which often stems from the dogmatism of older generations and the prestige of established institutions. He argues that the opposition to economics is unique because it is a hostility to science itself, often replacing logical theory with mere empiricism or historical data. [A Critique of the Sociology of Knowledge and Class Interest]: Mises provides an immanent critique of the Marxist 'sociology of knowledge,' which claims that thought is determined by class interest. He compares this to nationalist and racialist theories, arguing that all such doctrines rely on the unproven axioms that group interests are irreconcilable and immediately evident. He concludes that even if class interest determined thought, the 'bourgeoisie' would now require a correct, objective theory rather than a distorting ideology to survive. [The Role of Resentment in Anti-Economic Sentiment]: Mises traces the ethical condemnation of money-making back to ancient standards (Cicero) and the resentment of the 'educated classes'—priests, bureaucrats, and professors—who live on fixed salaries. He argues that these groups feel an inferiority complex toward successful entrepreneurs, leading them to reject economic theories that explain market phenomena neutrally and justify the indispensable function of capitalists. [Freedom, Necessity, and the Romantic Revolt Against Logic]: Mises explores the psychological tension between the recognition of inexorable laws (both natural and praxeological) and the human desire for 'miracles' or total freedom. He characterizes the modern rejection of economics as a romantic revolt against the 'dismal science' because it reveals the limits of political power and the impossibility of socialist utopias. He warns that the abdication of the intellect in favor of instinct and mass desire threatens Western civilization. [The Controversy Over the Theory of Value: Epistemological Foundations]: In a speech delivered in 1932, Mises establishes the necessary ground rules for scientific discussion: the immutability of logic and the rejection of the idea that thought is determined by race or class. He argues that if one truly believes logic is class-conditioned, then cross-class scientific debate is impossible. He emphasizes that the goal of economics is cognition (what is), not value judgments (what ought to be). [Catallactics and the General Theory of Choice]: Mises defines the task of catallactics as tracing market phenomena back to the individual act of choice. He defends the use of imaginary constructions (like the isolated economy) to find general laws of action. He distinguishes economics from psychology by noting that economics focuses on the action itself rather than the underlying motives. [Critique of Cassel and Universalist Objections to Value Theory]: Mises responds to the criticisms of Gustav Cassel and Othmar Spann regarding the subjective theory of value. He refutes the claim that value theory is ambiguous or requires 'measurement,' clarifying that it is based on 'grading' (ordinal preference). He critiques Spann's universalism for starting with arbitrary 'totalities' rather than the confirmable fact of individual choice. [The Unity of Modern Economics and the Resolution of the Paradox of Value]: Mises concludes by asserting the unity of modern economics, which was made possible by resolving the paradox of value. He explains how the subjective theory of value integrated the theory of money and the trade cycle into a single system, moving beyond the fragmented classical approach. He notes that the persistent attacks on the Marginal Utility School are proof of its enduring scientific authority. [Inconvertible Capital: The Influence of the Past on Production]: Mises explores how the existing stock of inconvertible capital goods, inherited from the past, dictates current production decisions. He argues that it is often economically rational to continue using technologically 'obsolete' machinery or disadvantageous locations if the cost of replacement exceeds the marginal gain. He critiques the 'technological view' of socialists and interventionists who view such situations as signs of capitalist waste, noting that even a socialist manager would face the same constraints regarding capital scarcity and the influence of past investments. [Capital Scarcity and the Critique of Socialist Planning]: A critique of socialist utopian visions, specifically targeting Atlanticus-Ballod's proposals for German agriculture and industry. Mises argues that these plans ignore the fundamental scarcity of capital and the necessity of economic calculation. He asserts that any rational economic system must account for the limited nature of resources and the costs associated with abandoning still-utilizable capital goods inherited from the past. [Trade Policy and the Malinvestment of Capital]: Mises analyzes how protective tariffs and interventionist trade policies lead to the malinvestment of capital by encouraging the establishment of industries in suboptimal locations. He explains that even after such policies are removed, the effects linger because the capital is already 'fixed' in these locations, and moving production only occurs if the new investment is more profitable than continuing with the old. [The Causes and Consequences of Capital Malinvestment]: This section categorizes the various ways capital malinvestment occurs, ranging from technological shifts to incorrect speculation fueled by credit expansion. Mises critiques the idea that inflation-induced 'forced saving' necessarily leads to progress, arguing instead that the resulting falsification of economic calculation leads to significant capital losses that often elude statistical reporting. [The Adaptability of Workers and Entrepreneurial Accounting]: Mises discusses the human element in production, noting that workers often resist innovation and lack the adaptability of entrepreneurs. He also clarifies the businessman's perspective on malinvestment, explaining that 'writing off' an investment is an accounting procedure that does not change the fundamental decision of whether to continue operations based on current marginal proceeds versus operating costs. [Index]: A comprehensive index of terms, concepts, and thinkers discussed throughout the work, prepared by David Gordon. Key entries include Human Action, Austrian School, Capital, Catallactics, and various prominent economists and philosophers.
Title page and publication history for the third edition of Ludwig von Mises's 'Epistemological Problems of Economics'. Includes information on the original German publication (1933), the first English translation by George Reisman (1960), and subsequent reprints and editions including the 2003 Mises Institute edition.
Read full textDetailed table of contents covering the introductory materials and the first chapter regarding the task and scope of the science of human action. It outlines sections on the nature of social sciences, the logical character of economics, a priori theorems, and the relationship between science and value judgments.
Read full textContinuation of the table of contents for the book, listing chapters and sections covering utilitarianism, sociology, history, the subjective theory of value, and the psychological basis of opposition to economic theory.
Read full textAn introduction to the third edition providing a biographical sketch of Ludwig von Mises and an overview of the book's two central theses: that the Austrian theory of value is the core of a general theory of human behavior (praxeology), and that social science is an a priori, deductive discipline distinct from the natural sciences.
Read full textTraces the evolution of economics from classical political economy to a general science of human action. It highlights the marginal utility revolution as the catalyst for subjectivism and explains how Mises transitioned from using the term 'sociology' to 'praxeology' to describe the universal science of choice, distinguishing his approach from the anti-economic sociology of the early 20th century.
Read full textExplains Mises's unique position on economic calculation as the dividing line between his praxeology and other schools. Mises argues that while value theory applies to all action (homo agens), economic calculation is only possible within a market system of private property. This contrasts with thinkers like Wieser and Pareto who believed in a universal 'utility calculus' applicable to socialism.
Read full textDiscusses Mises's 1920 argument on the impossibility of economic calculation under socialism. It refutes the Millian dogma that production and distribution are separate spheres, showing that without market prices for factors of production, rational resource allocation is impossible, thus making the existence of economic calculation historically contingent on private property.
Read full textDetails Mises's development of a trilateral preference theory of value, where value is an ordinal relationship expressed through choice rather than a measurable quantity. This section traces the refinement of this theory from 'The Theory of Money and Credit' (1912) through his critiques of Menger and Böhm-Bawerk, establishing the foundation for his rejection of any non-monetary economic calculus.
Read full textClarifies Mises's claim that economics is an a priori science. It explains that while economics deals with facts, these facts (like choice and intention) are not perceptible via the senses but are known through self-reflection. Mises's apriorism is presented as a reaction to radical empiricism, asserting that the structural features of human action are necessary truths independent of sensory observation.
Read full textDistinguishes between praxeology (the study of constant, time-invariant features of action) and history (the study of contingent, unique features). Using the example of central bank inflation, it shows how history explains 'why' an event happened based on specific facts, while economics explains the 'objective consequences' based on universal laws.
Read full textArgues that Mises's epistemology is better understood as Aristotelian realism rather than Kantian idealism. While Mises used Kantian terminology like 'a priori', his work focuses on the 'nature' of things (money, socialism, interventionism) derived from the essence of human action and the physical reality of the division of labor, rather than pure mental impositions.
Read full textHülsmann concludes his introduction by emphasizing that Mises's work remains a vital milestone in the development of praxeology. He argues that the book is not obsolete because it contains unique critical discussions of Menger, Böhm-Bawerk, and Weber not found elsewhere in Mises's corpus, and asserts that progress in social sciences requires the absorption of Misesian ideas.
Read full textLachmann provides historical context for the 1978 edition, situating Mises's essays as preliminary studies for 'Human Action'. He discusses Mises's defense of 'exact laws' against the German Historical School and logical positivism, his refinement of subjective value theory, and his critique of Max Weber's methodology regarding 'ideal types' and rational action. Lachmann also highlights the implications of Mises's work for capital theory and the logic of choice.
Read full textMises distinguishes the methods of the natural sciences from the sciences of human action, rejecting the application of Newtonian physics to social phenomena. He argues that while natural sciences find regularity in stimuli-response, human action is guided by non-uniform ideas and choices. He critiques various 'negativistic' doctrines like Marxism and positivism, clarifies his terminology (introducing 'praxeology'), and addresses specific criticisms of Gunnar Myrdal and Alfred Vierkandt.
Read full textMises critiques the Historical School and the influence of empiricism on economic thought. He argues that economics must be a universally valid, aprioristic theory rather than a collection of historical 'styles' or 'laws' derived from the past. He specifically challenges Max Weber's use of 'ideal types' as a substitute for theoretical investigation and asserts that political bias often motivates the rejection of economic science.
Read full textMises explores the origins and logical character of the social sciences, contrasting the historical method with the aprioristic nature of economics. He argues that all historical interpretation presupposes universally valid knowledge. He critiques historicism and empiricism for denying the possibility of time-independent laws, asserting that human action (praxeology) is an a priori category similar to causality. The section concludes with a review of how classical and early subjective economists (Senior, Mill, Cairnes, Wieser) approached the deductive method.
Read full textMises defines human action as conscious behavior and derives fundamental economic categories like value, scarcity, and cost directly from this concept. He argues that while certain conditions of action (like the passage of time or the use of money) are established empirically, the theorems derived from these conditions remain strictly a priori and universally valid. He critiques the Historical School's claim that economic laws are geographically or temporally limited, asserting that the logical structure of human action is constant across history.
Read full textThis section explores the relationship between a priori theorems and experience, arguing that theory is logically prior to the observation of facts. Mises contends that historical experience is too complex to refute a priori propositions; instead, apparent contradictions between theory and experience suggest either an error in observation or a missing prerequisite condition. He uses examples like the 'iron law of wages' and Knapp's state theory of money to show how erroneous theories persist despite empirical evidence, emphasizing that only logical re-examination can truly validate or invalidate a theory.
Read full textMises discusses the demarcation between theoretical science and historical research, noting that theory must focus on problems relevant to actual conditions. He provides a rigorous defense of the rationality of action, arguing that 'irrationality' is a misnomer for actions based on different values or incomplete information. From the perspective of the acting individual, all action is a rational attempt to remove dissatisfaction. He concludes that the laws of catallactics apply regardless of whether motives are egoistic, altruistic, or driven by impulse.
Read full textMises explains the principle of value-neutrality (Wertfreiheit) in economics, asserting that while the science itself does not make value judgments, its findings are indispensable for achieving human ends. He argues that social cooperation through the division of labor and private property is the most effective means for preserving life and prosperity. Consequently, liberalism is presented not as a metaphysical world view, but as the practical application of scientific insights to the universal human desire for well-being.
Read full textMises critiques universalist and collectivist social philosophies, specifically the work of Othmar Spann. He argues that 'society' has no existence apart from the actions of individuals and that collectivist doctrines inevitably lead to conflict by asserting one group's ideal as supreme. He distinguishes between scientific cognition (which is discursive and causal) and the mystical experience of 'the whole,' which belongs to art and personal intuition rather than science. He concludes by rejecting the idea of 'objective meaning' in history as a metaphysical intrusion that cannot refute the a priori deductions of economics.
Read full textMises defends the formal conception of pleasure and utility against charges of being 'empty' or 'immoral.' He critiques Alfred Vierkandt’s instinct sociology, arguing that attempting to explain social cooperation through an arbitrary list of innate instincts (like the 'instinct of subordination') is unscientific and logically inconsistent. Mises asserts that such psychological approaches fail to explain why certain instincts prevail over others, whereas the science of action (praxeology) remains neutral and formal by focusing on the subjective choice between incompatible desires.
Read full textMises critiques Gunnar Myrdal’s attempt to replace 'economic interests' with 'attitudes' in social analysis. Myrdal argues that the labor movement is driven by strivings for power and self-esteem rather than just higher wages. Mises counters that while men have diverse goals, the economic science of action is formal and encompasses all subjective valuations. He argues that Myrdal’s distinction between interests and attitudes is based on a misunderstanding of modern subjectivist economics, which does not limit 'utility' to material or monetary gain.
Read full textMises addresses the claim by ethnologists like Eduard Hahn and Leo Frobenius that primitive man was guided by 'ideals' or 'magic' rather than utility. He argues that while primitive technological notions (like ritual plowing) differ from modern scientific ones, the underlying category of action remains the same: the conscious use of means to attain ends. He concludes that all human behavior that is not merely reactive is necessarily rational in the praxeological sense, seeking to enhance well-being according to subjective standards.
Read full textMises introduces the relationship between sociology (the theoretical science of human action) and history. He traces the development of the 'Methodenstreit' in Germany, where the Historical School rejected the possibility of universal economic laws to protect political programs of interventionism. Mises distinguishes between methodology (the technique of thought) and logic (the character of scientific propositions), arguing that the logical character of a science is best studied in its most developed branch: economics.
Read full textMises examines the work of Windelband, Rickert, and especially Max Weber regarding the logic of history. While praising their rejection of 'historical laws' and the application of natural science methods to history, Mises critiques Weber for failing to recognize sociology as a nomothetic science of human action. Weber viewed sociology merely as a generalized history using 'ideal types.' Mises argues that economic concepts are not ideal types (arbitrary intensifications of reality) but are derived from the essential nature of action itself.
Read full textMises provides a rigorous defense of the universal validity of the economic principle against Max Weber's typology of action (purposive-rational, valuational, affective, and traditional). Mises argues that all conscious action is inherently rational because it involves choosing between possibilities to attain a more desired state. He critiques Weber's treatment of Gresham's Law as a mere 'typical chance' or 'ideal type,' asserting instead that it is a necessary law of catallactics that holds whenever its specific conditions are met. He concludes that sociological laws are not 'tendencies' or 'average types' but necessary expressions of the nature of human action.
Read full textMises defends the rationalistic nature of economic theory against antirationalist critiques. He argues that while ultimate ends are irrational value judgments, the means chosen to achieve them must be subject to rational scientific examination. He critiques those who smuggle irrational arguments into social science to serve political agendas, such as national autarky, by falsely claiming these policies impose no material sacrifice.
Read full textMises distinguishes modern subjectivist economics (marginal utility theory) from the older classical school. While classical economics focused on the 'businessman' and objective use value, modern economics starts from the consumer and treats all actions as data for explaining market prices, regardless of their morality or 'correctness.' He refutes the idea that economic theory assumes a society driven only by 'economic factors' or free competition, noting that it equally explains monopoly and government intervention.
Read full textMises argues that economic laws, such as marginal utility, are as universal as the laws of physics; even if medieval men did not understand them, they still acted according to them. He rejects the Historical School's claim that theory cannot explain modern 'regulated' economies or imperialism, asserting that theory is the only tool capable of accurately judging the effects of interventionist policies.
Read full textMises critiques Max Weber's view that general laws are 'empty of content' for historical understanding. Using the example of German reparations and currency stability, Mises demonstrates that history cannot be understood without the application of universally valid economic theories. He argues that all historical explanation implicitly relies on sociological theorems, and the choice is between using critically examined scientific theories or uncritical popular dogmas.
Read full textMises refutes the historicist claim that the logical structure of human reason changes over time. He examines ethnological evidence regarding 'primitive' minds, arguing that while the content of thought and interests may differ, the underlying logical categories remain the same. He concludes that economic history failed as a discipline because it attempted to reject universal theory in favor of 'theory-free' data collection, which in practice meant relying on obsolete or contradictory popular misconceptions.
Read full textMises clarifies the distinction between sociology (as a science of universal laws) and what Max Weber called sociology, which Mises reclassifies as 'universal history' or the study of ideal types. He emphasizes that while the domains are conceptually distinct, the historian and sociologist must be mutually acquainted with each other's work. He identifies the rejection of theory as the primary error of the Historical School during the Methodenstreit.
Read full textMises discusses the use of the 'static method' in sociology as an indispensable fiction for studying change. He critiques the formulation of 'historical laws' and 'laws of stages' (like those of Karl Bücher), arguing they are merely sequences of ideal types rather than universal laws. He uses the law of the division of labor to show that while theory explains the higher productivity of cooperation, it cannot predict a necessary, inevitable progression toward higher stages of civilization, as such outcomes depend on human volition and ideology.
Read full textMises argues that economics is a qualitative science and cannot be made quantitative. Unlike physics, economics lacks constant relationships (e.g., a doubling of money does not exactly halve its purchasing power). He critiques the use of mathematics in economics as often misleading, noting that mathematical models cannot expose errors in their initial non-mathematical assumptions. While economists can predict the qualitative direction of effects (like the results of price controls), they cannot predict the exact magnitude because human valuations are ultimate data.
Read full textMises examines the logical status of sociology as a science of universal laws. He critiques Marxism and the Historical School for attempting to limit the validity of economic laws to specific historical 'periods' or 'systems' (like capitalism). He argues that any 'theory' valid only for a specific period is actually an ideal-typical construction, not a law. He concludes that the science of human action is valid wherever its defined conditions are met, based on the conceptual nature of action itself.
Read full textIn the conclusion to this section, Mises reiterates that history cannot function without the intellectual tools provided by the theory of human action. He argues that the historian must use the best available scientific theory rather than popular misconceptions. Quoting Walter Bagehot, he emphasizes that the historical method and the abstract method are not rivals but complementary, with theory serving as the necessary foundation for historical explanation.
Read full textMises introduces the distinction between the natural sciences (cognition from without) and the sciences of human action (cognition from within). He critiques behaviorism for attempting to study human conduct without reference to 'meaning,' arguing that such an approach fails to distinguish between fundamentally different actions (e.g., a surgical cut vs. a mutilation). He asserts that all conscious conduct is meaningful and can only be understood by entering into the actor's intent.
Read full textMises refines the terminology of the 'moral sciences' by distinguishing between 'conception' and 'understanding.' Conception is the use of discursive reasoning to grasp the universal, rational aspects of action. Understanding is the empathic intuition used to grasp the unique, irrational, and qualitative aspects of historical events. He argues that while understanding is subjectively conditioned and cannot be strictly proved, conception relies on the immutable logical structure of reason shared by all humans.
Read full textMises explores the limits of scientific explanation, identifying the 'irrational' as the ultimate given that reasoning cannot exhaust. In the science of human action, the final valuations and goals of individuals constitute this irrational given. He distinguishes between 'conception,' which deals with rational means and universal laws (sociology), and 'understanding,' which attempts to grasp the unique, irrational facts of history and art (Kunstwissenschaft) through empathy and subjective vistas.
Read full textMises provides a detailed rebuttal of Werner Sombart’s critique of economic theory. Sombart argued that economic concepts like 'exchange' and 'price' are historically contingent and lack universal meaning. Mises counters that if these terms were merely homonyms for different historical occurrences, scientific discourse would be impossible. He defends the 'rational schema' of marginal utility as a necessary tool for comprehending any act of exchange, regardless of the historical epoch, and attributes Sombart's hostility to political motives and a misunderstanding of the logical nature of theory.
Read full textMises asserts the universality and immutability of logic in the social sciences. He rejects the notion of 'living concepts' with changeable content, viewing such ideas as tools for political parties unable to justify their programs logically. He defends the necessity of abstract concepts against critics like Sismondi, arguing that there is only one logic applicable to all scientific inquiry.
Read full textMises discusses the historical development and delimitation of 'economic' action. He argues that the transition from classical to subjective value theory rendered the old distinctions between economic and non-economic action obsolete. Since all conscious, meaningful action involves the rational allocation of means to attain ends, the 'economic principle' is the fundamental principle of all human conduct, encompassing both material and immaterial goals.
Read full textThis section defines human conduct as an act of preferring and choice. Mises defends the eudaemonistic and utilitarian roots of economic theory, clarifying that 'pleasure' and 'pain' are formal concepts referring to the attainment of ends, regardless of their content. He distinguishes economics from psychology, arguing that economic laws (like the law of marginal utility or Gossen's law of satiation) are deduced from the logic of action rather than psychological observation.
Read full textMises explains that economic theory is independent of technology, using the law of returns as an example. He then emphasizes the critical role of monetary calculation as a mental tool for long-range production in a society based on the division of labor. He reiterates his famous argument that without private property and market prices for the means of production, economic calculation is impossible, rendering socialism impracticable.
Read full textMises discusses the limitations of monetary calculation, noting it is an ordering of rank rather than a measurement of value. He argues against applying calculation to non-market entities like human life or 'social profit.' He also addresses the role of time in the economy, noting that changes in data require time to reach a new equilibrium, and critiques the use of 'time lags' as a justification for interventionist policies.
Read full textMises defends economic theory against the charge that it only applies to 'perfect competition,' explaining that it can easily account for 'fettered' economies. He redefines 'cost' subjectively as the importance of the next most urgent want that must be foregone. Finally, he argues for the continuity of economic science, asserting that modern subjectivist economics is built upon the foundations of the classical system rather than being a radical break from it.
Read full textMises begins a critical examination of the subjective theory of value, noting that even its founders, Menger and Böhm-Bawerk, occasionally used language or concepts from the older objective theory. He clarifies that catallactics traces market exchange ratios back to individual subjective valuations, regardless of the underlying psychological or ethical motives. The core achievement of the theory was resolving the paradox of value by focusing on concrete quantities of goods rather than abstract classes.
Read full textMises examines Carl Menger's four prerequisites for a thing to become a 'good,' focusing on the subjective nature of human wants. He criticizes Menger's later distinction between 'real' and 'imaginary' wants as a departure from pure subjectivism, arguing that economic theory must treat all human desires as the basis for valuation regardless of their objective validity.
Read full textMises critiques Böhm-Bawerk's attempt to divide price theory into 'pure' economic motives and 'modifying' noneconomic motives. He argues that from the perspective of the subjective theory of value, all consumer choices—whether based on price, convenience, or ideology—are equally 'economic' and that the classical distinction between the businessman and the consumer led to a misunderstanding of human action.
Read full textMises deconstructs the concept of 'homo economicus,' explaining that it was a personification of the businessman's principles rather than a complete model of human action. He asserts that modern subjectivist economics is truly objective because it explains market phenomena based on actual human actions and choices, rather than passing judgment on the 'rationality' or 'morality' of those choices.
Read full textMises introduces the psychological and political reasons behind the widespread rejection of economic theory. He specifically addresses the Marxist critique that the subjective theory of value is merely 'bourgeois ideology' and notes how the control of academic positions by etatist governments has marginalized praxeological thought.
Read full textMises discusses the general resistance to new scientific ideas, which often stems from the dogmatism of older generations and the prestige of established institutions. He argues that the opposition to economics is unique because it is a hostility to science itself, often replacing logical theory with mere empiricism or historical data.
Read full textMises provides an immanent critique of the Marxist 'sociology of knowledge,' which claims that thought is determined by class interest. He compares this to nationalist and racialist theories, arguing that all such doctrines rely on the unproven axioms that group interests are irreconcilable and immediately evident. He concludes that even if class interest determined thought, the 'bourgeoisie' would now require a correct, objective theory rather than a distorting ideology to survive.
Read full textMises traces the ethical condemnation of money-making back to ancient standards (Cicero) and the resentment of the 'educated classes'—priests, bureaucrats, and professors—who live on fixed salaries. He argues that these groups feel an inferiority complex toward successful entrepreneurs, leading them to reject economic theories that explain market phenomena neutrally and justify the indispensable function of capitalists.
Read full textMises explores the psychological tension between the recognition of inexorable laws (both natural and praxeological) and the human desire for 'miracles' or total freedom. He characterizes the modern rejection of economics as a romantic revolt against the 'dismal science' because it reveals the limits of political power and the impossibility of socialist utopias. He warns that the abdication of the intellect in favor of instinct and mass desire threatens Western civilization.
Read full textIn a speech delivered in 1932, Mises establishes the necessary ground rules for scientific discussion: the immutability of logic and the rejection of the idea that thought is determined by race or class. He argues that if one truly believes logic is class-conditioned, then cross-class scientific debate is impossible. He emphasizes that the goal of economics is cognition (what is), not value judgments (what ought to be).
Read full textMises defines the task of catallactics as tracing market phenomena back to the individual act of choice. He defends the use of imaginary constructions (like the isolated economy) to find general laws of action. He distinguishes economics from psychology by noting that economics focuses on the action itself rather than the underlying motives.
Read full textMises responds to the criticisms of Gustav Cassel and Othmar Spann regarding the subjective theory of value. He refutes the claim that value theory is ambiguous or requires 'measurement,' clarifying that it is based on 'grading' (ordinal preference). He critiques Spann's universalism for starting with arbitrary 'totalities' rather than the confirmable fact of individual choice.
Read full textMises concludes by asserting the unity of modern economics, which was made possible by resolving the paradox of value. He explains how the subjective theory of value integrated the theory of money and the trade cycle into a single system, moving beyond the fragmented classical approach. He notes that the persistent attacks on the Marginal Utility School are proof of its enduring scientific authority.
Read full textMises explores how the existing stock of inconvertible capital goods, inherited from the past, dictates current production decisions. He argues that it is often economically rational to continue using technologically 'obsolete' machinery or disadvantageous locations if the cost of replacement exceeds the marginal gain. He critiques the 'technological view' of socialists and interventionists who view such situations as signs of capitalist waste, noting that even a socialist manager would face the same constraints regarding capital scarcity and the influence of past investments.
Read full textA critique of socialist utopian visions, specifically targeting Atlanticus-Ballod's proposals for German agriculture and industry. Mises argues that these plans ignore the fundamental scarcity of capital and the necessity of economic calculation. He asserts that any rational economic system must account for the limited nature of resources and the costs associated with abandoning still-utilizable capital goods inherited from the past.
Read full textMises analyzes how protective tariffs and interventionist trade policies lead to the malinvestment of capital by encouraging the establishment of industries in suboptimal locations. He explains that even after such policies are removed, the effects linger because the capital is already 'fixed' in these locations, and moving production only occurs if the new investment is more profitable than continuing with the old.
Read full textThis section categorizes the various ways capital malinvestment occurs, ranging from technological shifts to incorrect speculation fueled by credit expansion. Mises critiques the idea that inflation-induced 'forced saving' necessarily leads to progress, arguing instead that the resulting falsification of economic calculation leads to significant capital losses that often elude statistical reporting.
Read full textMises discusses the human element in production, noting that workers often resist innovation and lack the adaptability of entrepreneurs. He also clarifies the businessman's perspective on malinvestment, explaining that 'writing off' an investment is an accounting procedure that does not change the fundamental decision of whether to continue operations based on current marginal proceeds versus operating costs.
Read full textA comprehensive index of terms, concepts, and thinkers discussed throughout the work, prepared by David Gordon. Key entries include Human Action, Austrian School, Capital, Catallactics, and various prominent economists and philosophers.
Read full text