On Robert Nozick’s ‘On Austrian Methodology’

On Robert Nozick’s ‘On Austrian Methodology’ Walter Block Fraser Institute. Vancouver - Austrian economics the school of thought associated with Carl Menger, Frederick von Weiser, Eugen von Bohm-Bawerk, and in this century, Ludwig von Mises, Friedrich Hayek, Murray N. Rothbard, and Israel Kirzner - is based on a framework of methodological principles and assumptions much at variance with those of traditional or ‘orthodox’ economists. Robert Nozick, in his ‘On Austrian . Methodology’, focuses attention on the most fundamental features of this framework, and subjects them to a thoroughgoing and scathing analysis. Singled out for detailed and critical review are: ( 1) the praxeological concepts of methodoloBcal individualism; (2) the claim that economics is an a priori science of human action; (3) the nature of preference and its relation to choice and action: and (4) the as- sumptions of time-preference theory. Although Nozick does not consider Austrian views on business cycles, market process analysis, the coordinative and informa- tional effects of the price system, competition, and several other fundamental as- pects of praxeology, his criticism strikes at the very root of the praxeological school: This paper attempts to refute each criticism made of the praxeological school by Nozick on a point-by-point basis. It thus follows the same pattern as the original paper, and scrutinizes in detail the arguments made by its author. ‘On Austrian Methodology’’ is eloquent testimony to the functioning of the interdisciplinary approach, for its author, philosopher Robert Nozick, nonetheless tackles an economic school of thought. Its thoroughness, its insight, its sheer brilliance, are proof positive that the boundaries that have been erected between the various academic disciplines are needless and artificial. Although I shall have many critical remarks to make about the article, none of them can be fairly attributed to the fact that it was penned by a philosopher and not an economist. His article focuses on four main tenets of Austnanism, or praxeology: methodological individualism, the u priori nature of human action, and the concepts of indifference and time-preference. Along the way, Nozick touches on some dozen or so other building-blocks of the praxeological system. Let us consider each in turn. 398 Walter Block Austrian Methodology 399 I. Methodological Individualism shown that a similar difference exists between the micro- and macro- realms of economics as between the disciplines of the social and the Taking the points to be considered in the order developed hy Professor natural sciences. To my knowledge this has never been done, let alone Nozick. we may first concern ourselves with his speculations to the effect attempted. that while Austrians are reduc?ionists within economics. they are oppo- 1. We turn to an examination of Nozick’s equation of methodological nents of this procedure when it i s applied ‘from below (physics and individualism, i.e. ‘the theory of individual action’, with ‘Robinson Crusoe neurophysiology)‘. theory’. Says Nozick: ‘Economists who discuss individual human action What are the anti-reductionist arguments which Austrian methodologi- often use the example of Robinson Crusoe. so we might call the theory of cal individualists use against possible reduction of human action to state- such individual action “Robinson Crusoe theory”.’4 ments in the hard sciences? Can these be used against the praxeological There are several objections to this way of proceeding. It is aesthetically school in its own determination to defend the proposition that al! behav- displeasing; for the reader, when confronting the new term, must pause iour of groups is traceable back to individual decision-making. as Nozick and translate each time he sees it. More important, it is a phiiosophical alleges? error, if1 may make so bold as to label it thus, for in needlessly duplicating The reasonwe may object to the explanation of human action in terms of terminology, it is in violation of the law of Occam’s Razor. This is, the movement of subatomic particles or electrical impulses across neurons moreover, no mere quibble. For by dint of this terminological innovation, is because there is simply no rquivalence between the thoughts, feelings. confusion and obfuscation are brought in where none existed before. pains, purposes, and plans which make up the reality of actingindividuals. When Nozick asks, for example, if ‘the theory of the interaction of m the one hand. and the constructs of physics and neurophysiology, on Crusoe and Friday can be reduced to Crusoe theory’,5 he seems to be theother. And this is completely apan from the question of whether these dealing with something new, and puzzling. But if we translate this query sciences will ever succeed in correlating the two, or explaining human back into the more mundane ‘Can the interaction of Crusoe and Friday be decision-making in these terms. Be the lie-detector ever so perfect, the traced back to what is true of them individually?’ it becomes more amen- subjective feeling of telling the truth is, and will always be, radically able to analysis. It asks, then, if there is anything about Friday. and Cru- different in kind from the pulse and sweat rates with which they are (may soe, and their interaction, that cannot be traced back to facets of the two someday be) correlated. individuals. It might also be interpreted as asking if there is something Purposeful, future- and forward-looking behaviour is the essence of about Crusoe and Friday that is not derivable from truths about each of human action. People act because they envision a future that is preferable them. Is there, for example, a Crusoe-Friday ‘group mind’ at work when to one that does not include their present action. The explanation, then, of they interact, but which mysteriously disappears when the two separate? why people act is teleological: they act because they have purposes which When reinterpreted in this manner, the answers seem much more intui- they think can be accomplished if they act. But such a mode is completely tively obvious than in their original construction. at variance with that which prevails in the natural sciences. There. caus- But perhaps the greatest shortcoming of this definition is that it allows ality or correlation is all, and teleology is dismissed as a suspect and Nozick to define ‘Crusoe theory [a]s the theory of Crusoe’s interaction illegitimate kind of anthropomorphism. with the inanimate and nonhuman animate environment’.6 The problem Austrians reject the reduction of economics to physics on the grounds of with this is that while ‘Crusoe theory’ may well consider interaction with the incompatibility of the subject-matters of the two discipline^.^ We can- only the ‘inanimate and nonhuman animate environment’ (Nozick can not now give a definitive answer as to whether this line of reasoning can be define the term in any manner he chooses), the Austrian theory of indi- turned back upon the praxeological school in its determination to defend vidual human action most definitely includes Crusoe’s interactions with the reduction of group activity to individual behaviour until we have other human beings also. ’ :ramined this doctrine of methodological individualism. But we can say at So when Nozick asks ‘Does the theory of two-person interaction merely the outset that if this Nozickian speculation is to bear any fruit it must be specify the previous Crusoe theory and apply it in particular cir- 400 Walter Block Austrian Methodology 401 cumstances. or does it introduce something new and irreducible?‘ ( p . 354) one would go about determining exactly what t h e criteria would be for he is able to treat this as an interesting non-vacuous question. with a answering on either side. positive answer as a possibility. But it is. contrary to Nozick, a very trivial question in that (1) it has never been asked before, to the best of my knowledge, in the history of I contend. however. thai !tie only reason a positive an3wer could he economics, and ( 2 ) certainly no Austrian economist has ever concerned given is because Nolick’s original definition explicitly excludes the hu- himselfwith it. And this should occasion no surprise. It is adirect outcome man elemenl. -Of roiirsc. if we define ’Crusoe theory‘ apart from the of Nozick’s peculiar definition of ‘Crusoe theory’. and since he was the human element. then when Friday is introduced we can readily agree that first to so employ it, it is only to be expected that he should be the first to ‘something new and irreducible‘ is added: the human element. But this, to raise the question. repeat. is not because there is anything in the two-ior- more-)person What Nozick does is to put forth a somewhat interesting question (to situation that is not traceable to the thoughts. purposes. and actions of those of a physiological-psychological bent), only vaguely and indirectly individuals; it is solely because Nozick has defined Crusoe theory in this related to methodological individualism, and then criticize this Austrian peculiar way. doctrine on the ground that attention has been paid by the praxeologists to 2 . We turn now to one of the most puzzling aspects of the article: the their own concerns, and not to this new ‘interesting question’. It is as i f 1 distinction between the ‘trivial‘ and the ’non-trivial’ question. As near as I were to invent a new philosophical question (Where was the philosopher’s can make out. whai Nozick seems ro have in mind is the following stone first produced, and were there increasing returns to scale in its dichotomy: production?) vaguely related to the concerns of philosophers and then The Triviul Question - Are two-(,ormore-)person interactions reducible call my question ‘interesting’ (it is, to me, a: least in this scenario) and to truths about individuals? Can we tell all about the Crusoe-Friday theirs ‘trivial’. interaction solely from truths about these two individuals? 3. The same analysis may be applied to Nozick’s discussion of game The Non-trivial Quesrion - Are two-(or more-)person interactions re- theory.9 We can agree that human responses 10 a game-theoretic situation ducible to Crusoe theory; i.e. are the responses that an individual makes might not be reducible to ‘Crusoe theory’, but only because this iatter view to other human beings derivable from the ones he makes with regard to has been d e h e d so as to exclude the human element. This is Nozick’s inanimate and non-human animate matter? non-trivial question: Can we infer the responses of people when they treat If this interpretation is correct, the Austrian reaction to the first ques- each other as rational agents from their responses to the inanimate and tion would be to agree with Nozick’s positive answer, but then to deny its non-human animate environment? This is truly a debatable inquiry, and triviality. One might, of course, agree with Nozick that it is a trivial the answer may well turn out to be positive or negative. Austrians may question in that its answer is obvious and necessarily true; but the sympathize with Nozick’s interest in biology, and wish him well with his praxeologist would certainly not agree that it is trivial in the sense that the experiments. But they must completely reject his monopolistic claims to answer to it is unirnportan~or uninteresting.8 non-triviality. Methodological individualism, too, remains interesting, AS evidence of the fact that methodological individualism is by no important, and still controversial, despite this foray into physiology which means widely accepted. of course, we need do no more than cite (1) the is irrelevant to Austrian concerns. existence of macroeconomics and (2) the Nozick article that we are 4. Nozick is off the mark, too. in his interpretation of methodological presently criticizing. Its very controversiality, then, proves that the doc- individualism (MI) with regard to the number of people that are its basic trine is by no means triviai. building-block. In his view of MI, ‘[Tlhe laws of n +I-person interactions And what of the Non-trivial Question? It is indeed not a trivial question [are] reducible to the laws ofn-person (inter-) actions’, wheren is a ‘small’ insofar as its answer is by no means obvious. In order to answer it, one number. l o would have to engage in some very extensive physiological-psychological But it is the individual that cannot be dissolved into components who is research. And it is not even clear. at this early state of such research, how both the starting-point and the ultimate given of all endeavours (of MI) to  Austrian Methoddogy 403 deal with human action. Thus the correct interpretation of 17 is not ’small’ MI and the money regression theorem are completely independent, Either but one. could be true with the other false. A monetary medium of exchange, for When Austrians speak of methodological inbividitalisni , they mean it example, could have been precipitated not from the everyday voluntary quite iiterally. And the individual can and must always be equal toonc. and exchanges of bartering individuals, but by prior group fiat, as far as MI is not a ‘small number’. Thus Sidney Shenvood: concerned. For MI says no more than that all group actions can be traced back to, and understood in terms of, the actions of individual people. Lfa Since human choice is the large. the controlling force in social causation. we must group decision was responsible for the creation of money, the doctrine of perforce take the individual as the integral unit. for there is no choice but indrvidua! choice . I ’ MI would only insist that this group decision had its counterpart in the Economic forces. thus, in their last analysis. find their beginning in the minds of decisions of all the participating members of society; that if at the time a individuals.’’ monetary unit was adopted, none o f the individuals in the economy acted All consumption is individual. It cannot be ‘socialized‘. A painting in a public museum is not sociafly consumed. Each Individwilalone finds in it the satisfaction ofhis aesthetic in accordance with it, then it would have been impossible for money to want. have come into existence in this way. On the other hand, individual free-market activities might have ‘natur- It seems tempting to understand this divergence not as Nozick‘s failure to ally’ resulted in the creation of money, as the Austrians contend. but this be acquainted with ;? most basic postulate of MI but rather as part and would not prove, or even indicate, that MI is correct. For a methodologi- parcel of hisrrinlerpretation of MI in a way that makes it ‘non-trivial’. But cal collectivist could also believe this. After all, methodological collec- whatever the cause of the confusion. one thing is clear: for the Austrian tivism (the denial of MI) need not take the extreme position that all events economist, the building-block out of which MI operates is the single, are to be attributed to a group mind. Nor take the view that all human unique. separate individual. not a ‘small‘ group. interactions contain elements that are inexplicable in terms of ‘mere’ 5 . We turn next to Nozick‘s treatment of crowds, groups, assemblages, individuals. No. The moderate methodological collectivist can ( n o r e etc., where he sees an embarrassment for the theory of MI. But his reasonably) take the stance that only some events are to be so explained. statement of the ‘logical possibility that there be . . . emergent truth^''^ in Secondly, Nozick happens to be incorrect in his substantive (but ir- this situation, i.e. that some truths about mobs might not be found by afull relevant) allegation: although, to be sure. it is not an obvious and biatant study of the individuals that make it up, and that, rather. the true facts will self-contradiction to suppose that the institution of money arose by only ‘emerge’ from a study of the group itself. apart from the individuals acclaim or by social contract, t h s makes no economic sense whatever. concerned, is an unsupported assertion. IR point of fact, the theory of And yet, the only reason Nozick gives for his position is that ‘[ilt cannot crowds is not a weakness but a strength of MI. in that this is the only [be shown] that a social contract could not actually give rise to [the creation proper way to study the phenomena.15 of rnoney]’.l6 It is not ‘logically possible that there be such emergent truths’. On the Let us consider, as an antidote to Nozick’s agnosticism on the question contrary. it is inconceivable that any truths about crowds should ‘emerge’, of money creation, what is involved in the creation of money de novo. We apart from the truths about the individuals of which the group consists. make the assumption that the main motivation to accept money in pay- Unless there is an actual ‘group mind’ which thinks and acts in the behalf ment for goods or services is the possibility of using it, ir. turn, as a means of the group (apart from the constituent individuals) it is impossible to of payment for still other goods and services. Money, unlike consumption analyse the behaviour of an assemblage other than by utilization of MI. goods. then, has no necessary intrinsic value to the individual; its value is 6. There are problems, too. with Nozick‘s treatment of the money derived from its ability to be utilized in future transactions. regression theorem (the view that a medium of exchange could only have In the Austrian explanation of how money grew out of a barter system, arisen on the free market, entirely apart from government or ‘group’ some goods (salt, copper, gold, cows, sugar) were more marketable and agreement, or social contract) as a n example of MI. widely accepted in trade than others. People began desiring them not only First of all, this issue has nothing whatsoever to do with MI!The truth of for their intrinsic properties as producers’ or consumers’ goods, out also  Austrian Methodology 405 404 W u l f e r Blork for their ahi!itS to facilitate transactions. This gave added impetus to the Nozick seems to be far out on a limb in his claim, in effect, that for any desire t o hold some of these good\ f o r their increased ’money-ness‘. action, ifX doesn’t do it. there will always be a Y R!-. will. On a perhaps Evenigajiy. the market settied on one tor t w o ] cummidit>.usuaiiy gold superficialj simplistic, and commonsensical level. It just doesn‘t appear to (alldjor silver) as its medium of exchange. be true. Surely individual decision-making can at least sonirfirnes make a Suppose. now. that a group of public-minded citizens had attempted to daerence. What evidence can there be for the counterfactual conditional qhofl-circuir this prtxedure. at i t \ beginning. That is. before the market claim that if Kennedy hadn’t blockaded Cuba, then another president in participants had come to accept any commodity as more marketable tnan his place would have carried out this very act? Common-sense observa- an!’ other. this group had approached individuals and offered them tion will lead us to reject this claim. ‘Nozicks‘, which are green pieces of paper looking remarkably like pres- There is also a tinge of determinism in Nozick’s remarks: that since ent U.S. dollar bills. for their use as money. This would entail their institutions are more than the acts of individuals. they have an irrdepen- attempt IO purchasr the goods and services of people with these dent power to shape or direct the choices of economid actors. But surely it ‘Nozicks’. ‘ is more nearly correct to speak of institutions as affecting individual N o w , what are the odds that any of our ‘ignorant’ bartering individuals decision-making. And since institutions are merely complexes and pat- would have agreed to part with a single bit of his property for even millions terns of individual acts.20 no more, there is nothing over and above the of ‘Nczicks‘ which to him could only appear to be funny-looking pieces of actions of individual people which can serve as the raw material out of green paper? What. even. is the iikelihood that he would accept the which future such actions are influenced. ‘Nozisks‘ if they were given to him, in the honest expectation that he The institution of marriage certainly proscribes, limits, and channels the would be able to use them as a medium of exchange‘! The chances are actions of millions of people. But there is nothing here that is inconsistent pretty slim, for in order to suppose that either the gift or the purchase could with MI, since this institution consists solely of a complex pattern of be used so as to introduce ‘Nozicks‘ which had no previous objective individual actions.21There are not two kinds of things - individual actions exchange value, we would have to assume that other market participants and institutions. Rather, they are one and the same, looked at, perhaps, would accept them. and that each person approached with these green from two different perspectives. Human history is the stcry of the unfold- pieces of paper would count on their being so accepted in future trades. ing of actions which lead to other actions which lead to further ones, in a , The chances of these occurrences taking place are not just ‘slim‘:they are so far, unending chain. The fact that some commentators have called some impossible (in all but the sense of the word in which no self-contradiction, of these complex patterns of individual actions ’institutions’ should not or logicai impossibility is committed by supposing market acceptance). confuse the issue, and lead us to believe that there is anything apart from But there are further difficulties with this supposition. Even making the such separate human actions. truly heroic assumption that all market participants were somehow be- Nozick’s false dichotomy, however. leads him along this very path. It guiled into accepting the green pieces of paper as money, what rate of accounts for his ‘apparent chicken and egg situation’: which came first, exchange between the ‘Nozicks’ and the bartered goods and services institutions or individual human action? would be established? The problem is that any and all rates would be There can be no better answer to this dilemma than that provided by completely arbitrar\.. There never having beer, established an objective Ludwig von Mises: exchange value for the ‘Nozicks‘ in the barter economy, any rate of Now the controversy whether the whole or its parts are logically prior is vain. exchange, or set of prices would be as proper as any other.I8 Logically the notions of a whole and its parts are correlative. As logical concepts they are both apart from time.22 7 . Nozick next launches into adiscussion of MI and institutions, holding That there are nations. states. and churches, that there is social cooperation under the that the latter ‘are not merely sums of particular act tokens’. on the ground division of labor. becomes discernible only in the actions of certain individuals. that ‘if the person hadn’t done those particular act tokens, he would have Nobody ever perceived a nation without perceiving its members. In this sense one may say that a social collective comes into being through the actions of individuals. That does done other similar ones, or when if this person didn’t occupy an office or not mean that the individual is temporally antecedent. It merely means that defmite role, another would have who would have acted similarly’.l 9 actions of individuals constitute the c ~ l l e c t i v e . * ~ 4% b a l t r r Bloci, A us trian Methodoiogy 407 8 We next turn to hozick 5 treatment otev,dutronar\ btolog\ uhere he claim that even if MI were completely true, no consequences for the c l a m s that evolution maxi have instilled desire5 which themselves refer t o practice of social science need follow from it. The reason for this is institutions! or particular social vtuations‘ straightforward. For Nozick, if MI is true, this means that the macro- and So far there 1 5 no ct!\agreernent w i t h the Austrian5 4s M i w s himself the micro-level are equivalent: statements in the former sphere are redu- states cible to those in the latter. If so, it doesn’t matter whether we deal with the individual decision-maker or with the entire economy. Abstracting from Individuai man is the product of a long line of Loological evolution which ha5 shaped his physiological inhcntance He is born the offspring and the heir of hts ancestors. and tne the question of whether or not any macro-statement has actually been precipitate and sediment of all that hi\ forefathers experienced are his biological pat- reduced to its micro-counterpart, the equivalence implicit in reductionism rimony certifies that all true statements on either level of discourse will be matched by true statements on the other. Nor, given this equivalence, But from this undisputed set of premisses. Nozick concludes that ‘social does it matter much whether one starts with the theory of human action scientific explanations of current behavior would have to admit (innate) and ‘work[s] one’s way up’,z8or presumably, begins with the macro-level, desires or reinforcers for whichmacro-social reference would be needed to and works one’s way down to the’individual. specify either what is desired or the conditions under which the desire is This view is seemingly supported by an analogy from the physical operative‘.2sIr! other words. claims Nozick. because of the fact that man sciences. Just as macroeconomics is reducible to microeconomics, so is is not brought into this world as a ‘tabula rasa‘. but rather as dependent biology reducible, in principle, to physics and chemistry. And just as one upon the evolutionary factors which affected his predecessors. this leads would scarcely be justfied in rejecting all of biology merely because to the conclusion that the insistence of MI upon micro-social reference is theories in this sphere have not yet been reduced to physics and chemis- suspect. But why. it may be asked. just because much (some?) of man’s try, so would one not be correct in rejecting macro- in favour of micro- behaviour is biologically influenced. need we believe that there is some- economics. Nor is there any presumption that the scientist should start thmg over and above indwiditnl action? How do innate desires lead to the with either level in preference to the other. existence of a ‘group mind’? MI, as we have seen. does not insist that each All this would be correct if the analogy to the physical sciences held up. individual is an atom, completely unafTected by the behaviour (past or Unfortunately for Nozick‘s interpretation. it does not. Both bioiogy, on present) of others. We are forced to take the position, then, that there is the one hand, and chemistry and physics, on the other, are able to offer nothing in the teachings of evolutionary biology that necessarily con- causal explanations of occurrences in their respective fields. They both tradicts MI. have propositions that are true within their own realm, independent of the 9. Nozick next focuses on the question of how utility functions are others (albeit perhaps [mutually] reducible in terms of them). But the same shaped, taking the view that praxeoiogists have been remiss in not pro- does not hold true in the case of economics. For the claim of the Austrians viding at least a general theoryZhas to how this phenomenon takes place. is that although microeconomics is correct in its own terms, able to trace Our author states that ‘[tJheAustrian tradition has devoted little attention phenomena back to the causal agents (individual decisions), macro- to this question‘ (p. 360), but in truth, praxeologists have devoted no t h e economics includes only artificial constructs which, apart from the to it whatsoever. For this school of economics takes as its task the individual choices upon which they are very indirectly based, have no treatment of the logical implications of the category of human action. The causal explanatory power on their own. There are, to be sure, statistical actual content of choice is of interest only to psychology, or history. Mises correlations between various of the macroeconomic aggregates. But cut makes this claim in stark fashion: ‘Praxeology is not concerned with the off from thepurposes of human actors, the only causal agent in economics, changing content of acting, but with its pure form and its categorical they are powerless to form part of a causal genetic chain.29 structure. The study of the accidental and environmental features of Gerald P. O’DriscoIl and Sudha R. Shenoy say in this regard: human action is the task of history.’27 10. The last point which will concern us in the first section is Nozick’s We find,quite inconsistently, an aggregativeanalysis, utilizing holistic macro-constructs  408 VC’ultPr Blot I; that die treated iwrongii) as If thev interacted direct:! nith on? another This procedure enrireli Ignore5 the microeconomic picices\ u hich acruallL deternines the real 11. The A Priori 5tructure of (eLonomic redlityil ” Nozick begins this section with a series of charges which are evidence, he And. says Ludwig von Mises. alleges. of the failure of the Austnan theoreticians, Mises and Rothbard. 1. As an example, he cails for ‘a clear, precise, and consistent statement All that hzppens in (economic realit) 15 actions of m d n iduals and g r o u p of Lqdlvtaual\ of the content of the (a priori) theory within a specified vocabulary of acting in concert But macroeconomics proceeds as ddl these indrvlduai dCtlOnS were in primitive terms and with explicit definitions and axioms’ (p. 362). fact the outcome of the mutual operation of one niacroeconomtc magnitude upon another such magnitude ’ I We can answer this in several ways. On one level, the entire contents of Rothhard’s M a n . Economy und Sture and Mises‘s Human Action may be looked upon as the definition or statement of the contents, implications, Thus we cannot accept Nozick’s equation of MI with the reducibility of and ramfications of Austrian a priori praxeological theory. the macro- to the micro-level. On the contrary, as we have seen. there are More specifically. the first two dozen pages of Man, Economy, und grave differences between them. There are. therefore, important practical State (and indeed, its entire first chapter) are devoted to a clear outline of implications that follow from the acceptance (or rejection) of MI. It is not praxeological theory. Rothbard begins by defining the basic pro,miss as true that statements in the two spheres are translatable in terms of each human action, or purposeful, motivated, forward-looking behaviour other. One is bililt up out of artificial aggregations, divorced from human (p. 1). On the very next page he starts to derive logical implications of this purpose and action, and limited to statistical correlations between such axiom: methodological individualism. expectations (p. 2), the importance constnncts. The other suffers from no such drawbacks. The equivalence and the fact of the scarcity of time (p. 3), choice, the scarcity of economic hypothesis, then, must be rejected. means, valuation (p. 4),uncertainty of the future ip. 3, error (p. 6). The And what of a possible Nozickian response that even ifwe are correct in very topic headings in his Chapter 1 give further evidence of the clear and the foregoing, that microeconomics. not macroeconomics, offers the pos- precise outline of praxeological theory. sibility of causal explanations. it is still possible to maintain the position Although this is not the time or place to summarize Austrian theory, we that it does matter from which end we sta-’ the construction of our social might cite one further ‘clear, precise. and consistent statement’ of its basic theory? theoretical outline. Murray N. Rothbard states: Mises has expressed himself on a related topic as follows: Those who want to start the study bf human action from the collective units encounter an - Praxeoiogy contains one Fundamental Axlorn - the axiom of action which may be called a prion‘, and a few subsidiary postulates which are actually (‘broadly‘) empin- insurmountable obstacle in the fact that an individual at the same time can belong and - cal. , . . What are these (subsidiary) propositions‘? We may consider them in decreasing with the exception of the most primitive tribesmen -really belongs to various collective order of their generality: ( 1 ) Vurierv of resources, both natural and human. From this entities. The problems raised by the multiplicity of coexisting social units and their follows directly the division of labor, the market. etc., (21 Leisure ir u consumer good mutual antagonisms can be solved only by MI.32 . . . (3) Indirect exchanges are taking place. and least important. (4) firms dways aim at maximization of their money Mises is thus placing an irresistible road block in the way of macro- economic theory’s Yucceeding in explaining economic reality. ‘How can 2. Nozick asks that ‘such a statement should make clear whether prefer- an aggregative hypothesis triumph’, this version asks. ‘if it is conceded ence is initially over actions or outcomes’ (p. 362). One would have hoped that a necessary condition for explanation is to base occurrences on that such a matter would have been clear from the general context of individual actions. and also that most individuals belong to a myriad of human action itself, ifnot from any specific statement. Surely, on this, the groups. The tie between the individua! and the collective must inevitably human side of omnipotence, it is not within man’s province to choose be broken.’ In this construal, Mises is entirely correct. outcomes? On this earth at least, it can only be man’s lot to decide upon his own actions. If they are blessed with the outcome he was aiming at, well  Austrian Merhodohgy 41 1 and ,good. If not. the actor must ’go hack to the di-auinp board’, and plan The uncertamty of the future IS already implied XI the very notion ofactlon That man acts and that the future is uncertdin are by no means two independent matter5 Thev are anew. only two dfierent modes of establishing one thang 39 This matter can be resolved by the very second sentence of Mun. Economy and Srafe: ‘Hurnmn uction is dqfirird simply a s purposeful hp- huvior’ (p. 1). Since ‘purposeful behaviour‘ i s used by praxeoiogists as a And in Rothbard’s view: synonym for ‘human action’ it is crystal clear that preference can initially Another hndamental implication derived from the existence of human action IS the be over only actions. and not outcomes. uncerfoinfy of the f i f u r e . This must be true because the contrary would completely 3. Nozick is unsure as to which term is basic in the Austrian view negate the possibility of action. If man knew future events completely, he would never (‘preference, satisfaction, desire’) and which are subsidiary. and hence act, since no act of his could change the defined in terms of the primitive expression. It is, however, clear that action is the basic focal term in the Austrian Moreover, Israel Kirzner’s book, Cnmpetitiun and Entrepreneurship4‘ universe. Rothbard calls ‘[flhe existence of human action the Fundamen- may be said to be devoted solely to one ofthe implications ofuncertainty: tal Axicm (the nub of p r a ~ e o l o g y j ‘ . ~ ~ the fact that markets are never in equilibrium in the real world. Withcut Moreover. Mises holds that action is more basic than preference: uncertainty, Kirzner contends, there would be no scope for entrepreneur- ship, the driving force of the market process. Action IS not smplq givingpreference Man also - h o w preference in situations in which If anything, Nozick’s criticism of Austrianism on the grounds of ignor- thmgs and events are unavoidable or are believed to be so Thus a man ma\ prefer ing uncertainty would be far better levelled at its opponents, the orthodox sunshine to ram and may wish that the SUR uould dispel the clouds 3 1 economists who make a fetish out of states of equilibria. where uncer- tainty has little or no roie to play. This charge of Nozick’s is particularly True, the answer to the question, ‘Why does man act‘?’ can only be unfortunate, since it is the Austrian school that has made the study of the answered in terms of ‘an improvement of his own state of satisfaction‘,36 (disequilibrium) implications of uncertainty a matter of great contention or to gain ‘relief from a felt uneasiness’,37or some such. And one, there- with mainstream economists. fore, might be tempted to say that these terms are in some sense more 5 . Nozick chides the Austrians for failing to consistently ‘distinguish in basic than the action which is motivated by them. One might concede that the presentation of the theory what it is expected will h a p F n from what it from the psychological point of view, the three terms mentioned by is thought might happen’ (p 362). Nozick are more basic and important than human action. But from the Stated in this form, this charge is very difficult to refute. First, Nozick pruxeological point of view this is not so. Here, human action is of the gives no citations for this ’error’, so it is not easy to know where to look for essence. Thus Mises: confirmation or !ack of it. Secondly, he calls for the consistent distinction The fxld of our science is human action. not the psychologmd events which result in an between these two terms, implying perhaps that while Austrians usually action. It is precisely this which distinguishes the general theory of human action. are not guilty of any improprieties with regard to them, somewhere, praxeology. from psychology. The theme of psychology is the internal events that result someone calling himself an Austrian failed to give full credence to this vital Or Can result in a dtfmite action. The theme of praxeology is action as distinction. Thus no number of quotes showing praxeologists paying due regard can rebut his claim. 4. Nozick expresses the hope that the a priori science of praxeology What to do? It seems appropriate at this juncture merely to call for ‘would be sophisticated enough to take account of the considerations of evidence of this error on the part of those who claim it. the theory of choice under uncertainty’ (p. 362). 6. Nozick calls upon Austrians to ‘avoid Mises’s unfortunate tendency The implication that Austrians are unaware of the phenomena of un- to speak as if the outcome of an action is preferred to the current situation certainty must be rejected. On the contrary, uncertainty is an integral part (it need not be) rather than to what would obtain if the actions weren’t of praxeology . done’ (pp. 362-3). Says Mises: 412 waiter RiocX Austrian MPrhodolog; 413 Rut we can see thi5 in Mises‘q setting forth the exact sentiment that If a goal could be attained instantaneously, \o !hat it did not have to Hal: until the future for satisfaction, there would be no scarcity o f the means to effect it. Bur economics is the Nozick calls for. in almost identical words, science ofsc-urcr means. Therefore. economics can have no part to play with respect to such an 0ccurrence.~8 Action is alwals directed toward the future: i t i \ essentiallv and necessaril? alwayc a planning and acting for a better future. 11s d i m 1 5 C I ~ M(I*.’> to rrridrr.frclure < ondrrroris mori sarrsfwrori thrrri f h c l , \t,ould be n , i t h o i i r f & ~nivtfcrciicc (11r i r ‘ t ~ o i ~The uneasiness that On the other hand, we may understand ‘doing something merely to do it’ as impels a man to act I \ caused by a dissatisfaction with expected future conditions as the) the more usual ‘doing something for the hell of it’ or ‘doing something on would probably devclop if nothing were done ?I) alter them K the spur of the moment’. But in these translations, the Austrian insistence OR the future orientation of all acts holds true. Be the action ever so Also: frivolous or haphazard, there is still a purpose in the mind of the actor, Man acts because he is dissatisfied with the state ofaffairs as it prevails in the absence of means applied in a goal-directed manner. Even if the act in question is his intervention merely to drink oneself into a sodden stupor, one must still plannow (order the booze. sit down. and imbibe, etc.) for theJufurP pleasures ofoblivion. Men resort to definite means in order to preserve or to attain a definite stare of & a s s different from that which wou!d prevarl tfrhey abstamed from anv purposeful reaction 44 8. Nozick calls Mises to task for speaking ‘of acting man [as] necessanly ignoring sunk costs’ on the grounds that it is ‘irrarinncrl to consider them’ Even Professor Claudio Gutierrez. a staunch critic of Austrian theory. c m (p. 363). In other words, Nozick objects to Mises’s supposed contention be used to refute this contention of Nozick’s. For he disapprovingly cites that acting man will always act rationally. This is correct as far as it goes, the following as a widely held belief of the praxeological school: but misleading. It does not mean, for example, that Mises thinks that no human being can ever make mistakes. On the contrary, says Mises: All action aims at rendering conditions at some time in the future more satisfactory for the actor than they would have been without the intervention of the action.45 It is a fact that human reason is not infallible and that man very often errs in selecting and applying means. An action unsuited to the end sought falls short of expectation. It is contrary to purpose.49 7 , Professor Nozick next launches into an attack on how Austrians deal with the future. ‘More care . . . is needed in stating the future orientation What it does mean is that the Austrians focus on the irreducible core of of action‘, says the good professor, ‘for the point of an act may merely be rationality involved in every human action. Given that acts. however to do it, or to be continuing a previously started plan, or to be following a bizarre they appear to the outside observer, are .motivated by some pur- previous commitment’ (p. 363).4h pose or other, it is always possible to see action as ‘rational, i.e., the Nozick is incorrect. however. The fact that one is merely ‘continuing a outcome of a reasonable - although faulty - deliberation and an attempt - previously started plan or . . . following a previous commitment’ is ir- although an ineffectual attempt - to attain a definite goal’.50 relevant. These are only psychological explanations of why the individual Professor Israel M. Kirzner demonstrates the praxeological attempt to is acting a s he is. The fact that he is so acting is sufficient to prove that his ‘tease out’ the core of rationality from every human action: present act is future oriented. For ‘ifthe desired ends could all be attained instantaneously in the present. then man‘s ends would all be attained, and The man who has cast aside a budget plan of long standing in order to indulge in the there would be no reason for him to act’.47 fleeting pleasure of wine still acts under a constraint to adapt the means to the new program. Should a fit of anger impel him to forgo this program as well and to hurl the What of the claim that ‘the point of an act may merely be to do it’? If we glass of wine at the bartender’s head. there will nonetheless be operative some con- interpret this literally as a completely non-future oriented ‘act’, then we straint - let us say the control required to ensure an accurate aim - which prevents his must deny that it is an act at all. If it is instantaneously available, then no action from being altogether rudderless. It is here that praxeology has grasped the possibility of a new scientific range of explanation of social phenomena. Precisely human action with regard to i t is necessary: no choice must be made; no because man’s actions are not haphazard, but are expressions o f a necessity for bringing Purposes need be planned for. As I have stated in response to the Gutier- means into hannony with ends, there is room for explanation of the content of particular re2 criticism of this point: actions in terms of the relevant array of ends.51 4 1 4 ~ a l : e rBl0c.i Austrian Methodology 415 9. In Nosick's vieu,. i t is . x o r 7 1 p ~ i n 1 ~rational .~ ( n o t in the Miscsian sense the experience machine that would give you any experience you desired. Superduper neuropsychologists could stimulate your brain so that you would think and feel you were where all actior! has a core of rationalit). hut in the ordinar!, sense of writing a great novei. or making a mend. All the time you would he floating in a tank. pruper', .efficient'. .efficacious'. etc.) to ignore sunken costs.52 I take with electrodes attached to your brain.57 ?<ozick to be saving that the 'people in restaurants . . . whose f m d has come and turned out to be poor tasting . . . [and who] speaX as though the reason they're going ahead to eat it is that money has aiready been committed to it' ( p . 363) are ignoring sunk costs and are n o t thereby He points out, quite brilliantly, with the aid of this example, that we would necessarily acting in an uneconomic manner. not choose to be so immersed: that on the contrary, we want more than the Nozick then states that 'it is nor impnssihle that letting something he's experience machine: 'We want to do certain things, and not just have the paid for go uneaten has disutility for that person' (p. 363). This is. of experience of doing them.'s8 course, true. Conceivably. a person could single out a!l instances where One is sorely tempted to agree with this last statement. Who wants to be sunken costs might be taken into account. and so order his preferencess3 pickled in brine, after all, even while enjoying the most deiightful fan- that he benefits more by taking them into account than b l ignoring them. tasies? But if asked why we want to do certain things, isn't the answer. Nozick is actually over-modest in his claim. Not only is it not 'not 'Because it feels good, or satisfies me. or removes felt uneasiness' ines- impossible' for a person to adopt this atypical set of utility orderings, we Granted that we want more than the satisfaction that usually can go so far as to say that there is nothing in all of praxeological theory accompanies doing things, that we want the thing itself, it cannot be (which takes ends as ultimate givens)54that could even cast aspersions on denied, also, that we do things because of the subjective feelings which this particular preference, or ciaim for it a lesser status than that enjoyed ensue. The truth seems to be that we want the experience of actually doing by any other. the thing, no! merely the (very similar, identical?) experience we could get The Austrian objection to this response, therefore, has nothing to do while immersed in liquid, without doing anything but feeling good, nor yet, with a denial of the phenomena of psychic income. Indeed, praxeologists if it were possible, to do the thing itself without any feelings of success. have been vociferous in trumpeting its i m p o r t a n ~ eThe . ~ ~ problem with accomplishment, or satisfaction. Nozick's objection is that it ignores the implicit ce;eris paribus qualifica- So it is possible, in spite ofNozick's objections, to agree with Mises that tion. There is no basic economic law (downward sloping demand, the 'strictly speaking, the end. goal, or aim of any action is always the relief dynamic stability of equilibrium, the law of marginal utility as well as the from a felt uneasiness'.6o However, one should note that this claim. irrelevance of historical costs to action) that could not be turned on its ear concerned as it is with the motivations, not the implications of action, with a little judicious use of an awkward psychic income assumption belongs to the domain of psychology, and not that of praxeology, proper. (consumers may like to buy moreat higher prices, in order to confound the 11. Nozick next ventures into the question of whether 'behavior which law of demand). There is a l w y s an (implicit?) assumption of 'other things falls under the principles of operant conditioning [is] action?' (p. 364). being equal'.56 Since operant conditioning uses 'rewards and punishments, positive and 10. Nozick suggests that Austrian theory negative reinforcements [to] . . . raise and lower the probability of various behaviors', Nozick's question is equivalent to asking if human behaviour be formulated so that even though prefemng is a subjective psychological state. the subject to reinforcement is to be considered human action. ultimate t h m g s which are preferred one to another need not themselves be subjective But surely the obvious response is that (virtually) all human behaviour psychological states (such as felt satisfactions or dissatisfactions, or removals of such thinps). (p. 363) is 'conditioned' in this sense.61 In fact, 'operant conditioning' seems to be no more than a synonym for 'being convinced, or persuaded'. One shud- His reasons are spelled out in his National Book Award-winning Anarchy, ders to equate a view of Nozick's with any of Galbraith's, but if the State and Utopia, where he poses Galbraithian shoe fits the Nozickian foot . . . one cannot disregard it. Nozick's attempt to deny the status of human action to 'operant be-  4 16 \vciifsr ~ i o c k Austrian Methodology 411 haviour’ resembies nothing if n o t Galbraith.5 diatribes against adverli5- not shown either that the basic premisses or the deductions therefrom are ing.62 mistaken, he cannot deny the certainty with which it is possible to hold 12. Does animal bekaviour constitute ’action‘ for Austrian<%” wonders the conclusions. In contrast, the conclusions which flow from the Skin- Nozick. There are severai discussions in the Austriarr literatme. In nerian system, if they are correct, must be accepted tentatively, since it is Rothbard‘s view. ‘animajbehavior. from the lower organisms t o the higher always possible that further inductive evidence may come along to dispdr- primates. . . . might be considered as on a borderline between purely age present conclusions. reflexive and motivated behavior^ .@ R u l he also states that An analogy comes to mind. The claim that Skinner’s a posteriori theory the fact that men act hv virtue of their being human is indisputable snd mcontroventble. may be ‘better’ in some sense than a priori praxeology is just iike saying To assume the contrary wriuld be an absurdit! The contran -the abseiice of motivated that (a priori) geometry may be surpassed by (a posteriori) engineering behakior - wauid appl) o n l y topiunrr o r i t i rnoryariii r r i o f l p r hd measurements. Now surely engineering is ‘preferable’ to geometry in some respects (it’s more practical, for one thing); but it must be conceded He is thus careful n o i to deny the possibilit) of motivated behaviour for that. at least in terms of conceptual exactitude, the geometrical line which animals. Mises seems open to the possibility that the animals are capable ofpur- has no width is preferable to the one the engine& must perforce work with. posive action.65 Me 15 nonetheless clear in limiting the concerns of The second problem with saying that Skinnerian theory may be ‘better’ praxeology to strictly human affairs.66 than ’human action theory’ is that this is like comparing ‘apples and Even though animals do not, strictly speaking. fall within the province oranges’. The purposes of the two are in no ways comparable; one cannot of praxeology. our understanding of their behaviour can be enhanced by be ‘better’ than the other. Skinner, as a p s y c h o l ~ g i s tis, ~trying ~ to explain thsdiscipline. Says Mises: human behaviour: how people change their aims under certain (operant) conditions; Austrians, on the other hand, as economists, attempt to unveil As far as animal behaviorpoeq beyond mere phvsiological processes like breathing and the logical irnpiication.~~~ o f human action. We cannot accept, then, metabolism. it can only he investigated with the aid of the meaning-concepts developed Nozick‘s contention that ‘Skinnerian theory [is] incompatible with human hy praxeology *- Without praxeologrcal catepones we would be at a loss to conceive and to understand action theory’ (p. 365). the behavior both .mimais md of mfants hR 14. We can also question Nszick’s view that ability to predict is a valid criterion of the success of a hypothesis in economics (p. 365). And Rothbard: This view, which sees the social sciences as akin to the natural sciences. where prediction is a legitimate criterion of success, has elicited wide- Men can undersfand (as distinguished from merely observe) such behavior only insofar spread agreement. Nevertheless, the Austrians have put forth compelling as they can impute to the arurnais motives that they can understand 69 reasons for reconsideration. One reason is that natural science, but not the science of human action. We must conclude then. albeit tentatively, that (operant) behaviour of is able to take advantage of controlled experiments. By varying one animals is purposive action. at least sometimes, and partially, although it element at a time in an experiment, the natural scientist is able to make a i s action that falls outside the main interest of Austrians. clear determination as to the effects of any one of them. Then, when the 13. Nozick next regales us with a speculation to the effect that even cause appears in nature, he is able to predict that the effect will result. though Austrian theory is a priori. and Skinnerian theory is a posteriori. In economics, however, events are the results of the interactions some- the latter may be ‘better. more predictive. wider ranging‘ (p. 3651. times of the conflicting plans, purposes, and intentions of hundreds, if not There are two criticisms that can be made of this view. First, if the thousands or millions of people. It is impossible to isolate any one strand premisses with which an u priori system begins are true. and the logical and to hold it unambiguously as the causal agent for any event. Mises says derivations of the intermediate steps are free of error. then the conclusions in this regard: are absoiutely and apudiciicall! true. Since Nozick (or anyone else) has  Austrian Mrthodoiogv 3 19 The experience with which the sciences of human x t m r have to deal is alwab5 an [tlhe LI prrort character of the theory of human action would be of n o h d p In decldlng experience of cornpiex phenomefid h o !ahoraton experiment5 can he performed \4lth whether ~twa5 (rue of a kxhaviord situation. and economlcs Would be c a m e d o n in as regard to human action We are Revel :n d positron to obsewt- the change I n one element ernpmcd a manner as any other sclence’ ‘p 366, ongnal e m p h a m ) on!& aU other ~ o n d i t i o n sof thc e\enr reniaimng unchanged - 2 Nozick asks whether there is a ‘great enough guif be?ween human action Another difference between the physical sciences and those of human and other human behaviors’ so as to make easy distinction possible (p. action is that the material studied by the former. for example the reactions 366). Since the relevant defining characteristic of human action is ‘pur- of copper to other elements. can be relied upon to be unchanging. This poseful’, ‘other human behaviors’, whatever else this may mean, would cannot be taken for granted concerning the reactions of human beings. In have to be non-purposeful. It is, to be sure, not possible to distinguish the words of Mises: between purposeful and non-purposeful behaviour on an a priori basis: it can only be done empirically. What distinguishes the sciences of human action is the fact that there is no such foreknowledge (as there is with regard 10 copper. for exampie) of the individuals‘ value But the ‘problem’, if it is such, is very much iess vexing than Nozick judgments, of the ends they will aim at under the impact of these \ d u e judgments. of the would have us believe. We must remember that for him, the vital distinc- means they will resort to in crder to attain the ends sought and of the effects of their tion i s between behaviour subject to operant conditioning, on the one actions insofai a s these are n i t entirely determined by factors the knowledge of which is conveyed by the natural sciences. (Material in brackets suppiied by present author.)’3 hand. and purposeful, motivated human action on the other. Here, we agree. it would be difficult if not impossible to draw any boundary line. But A thrd circumstance militating against the possibility of predi~tion’~ is a that is exactly our point: since we have interpreted operant conditioning as phenomenon we have touched upon above: psychic income. A5 we have merely persuading, or convincing, and see no difference, in principle, icen. it is possible, if not likely. for an individual to act in such a way as between behaviour so conditioned and purp~seful,motivated human ac- zeemingly to violate basic economic postulates, if we assume he derives a tion, the distinction for us between human action and other human be- :<‘eat enough psychic benefit from acting against his own (otherwise) haviours is one between purposeful and non-purposeful activity, not be- economic interest. tween action which results from persuasion, and that which is purposeful. Suppose. then, that we predict thatA causesB, see anA, and. therefore, In our view, for example, we need only distinguish between purposeful predict a B . And suppose that B does not ensue. Are we to reject our activities such as buying, selling, producing, etc., and such non-purpose- theory according to whichA causesB3 Not unless we can definitively rule ful behaviour as sleepwalking, the knee-jerk reflex, Freudian slips of the out the possibility that agroup of people knowing of our expectation thatB tongue, etc. And this sort of distinction certainly presents no problem for would follow A , and determined to wreck our prediction, acted in such a modern economics, nor is it even relevant to our concerns. way as to prevent B from appearing on the heels ofA. But we are never in a There is, however. a sense In which the point Nozick raises has rele- position to make any such determination! vance and importance for the explication of praxeology. And that is to Compare this with the situation which prevails in the natural sciences. show the part played by empirical work in the Austrian world-view. Has anyone ever accused a copper molecule, or a group of them acting in Clearly, for the Austrians, economic theory is completeiy devoid of any collusion, of purposefully acting in such a way as would disprove any empirical role, while it is necessary, although not sufficient. for an under- chemical laws based o n the reactions of copper? Merely to pose such a standing of economic h i s m u . Experience is also vitally important in cluestion shows how ludicrous is the suggestion. determining the appficabilitv of apodictically certain economic theory. 15. We next confront Nozick’s claim that it is ‘importan[t] for the With regard to the latter, Rothbard explains: Austrian view that there be nothing else close to (human) action’ (original All these elaborated laws are absolutely true. [But] they are only applicable in concrete emphasis) and his supposition that there is. Then, he argues, ‘detailed cases . . . where the particular limiting conditions apply. There is nothing, of course. ,rrpirical investigation’ (p. 365) would be called for, and remarkable abaut this; w e can enunciate as a law that an apple, when unsupported, will drop to the ground. But the law is applicable only in those cases where an apple is actually dropped. 420 Uaitr7 BlmX Austrian Methodology 42 1 m e praxeologiogt alwais has in mind rhe provrro that where this suhsidiarv postulati 17. Nozick repeatedly asserts that Verstcheti cannot eliminate al! ves- doesno! appli jaz i n the case of the Re er d o - w e i ! CKpheu] hrz deduced theone? w ~ l no‘ l be appiicahle ’‘ tiges of empirical examination. observation, etc.; that the Austrian con- cept of understanding is not valid using ( I priori reasoning alone ( p p . 367-9). There is of course nothing wrong with this contention: nor have [he And Mises savs: praxeologists ever denied it. What seems amiss, however, is that Nozick Only theorems based on the aswnption that laboi I \ a source of uneasines\ are apparently believes that Austrians hold the opposite view. upplrcabie for the comprehension of what is going on in this &orid (emphasrsadded)70 But the record is clear. Mises says in Human Action: Experience. then. and only experience. can tell us whether or not an app!e rhe apnon sciences - logic. mathematics, and praxeology - a m at a knowledge uncon- ditionally valid for all beings endowed with the logical structure of the human mind is unsupported, whether there is a ne‘er-do-well nephew in the picture Histoncal understandlng can never produce results which must be accepted by ail whose welfare is relevant to the psychic income of the owner. whether men.81 ’4mur is distasteful. Only when we know these things does our a priori .deductive system come into play. Thus does pure economics retain its LI And in The Uitimate Foundation of Economic Science: priori character, while room is found, in the Acstrian system. for empirical work in economic history, in economic explanations of the real world. There are two branches of the sciences of human action. praxeology on the one hand. history on the other hand. But note how different here is the employment of the term ‘empirical‘ Praxeology is apriori . . . from its ordinary use in economics. The Austrians use it to denote the The other branch of the sciences of human action is history. It comprehends the applicability of a prioristic economic law to reality (and, in the case totality of what is experienced about human action.82 Understandkg does not deal with the praxeological side of human action. It refers to Nozick raises, to distinguish purposeful and non-purposeful behaviour); value judgments and the choice of ends and of means on the part of our fellow man. It (311 the part of establishment economists, empirical work is done in order to refers not to the field of praweology and economics, but to the field of history.83 icst’ the truth of economic hypotheses. 16. We now consider Nozick’s examination of the phenomenon of 18. The last issue to be covered in this section is Nozick’s consideration Verstehen. He begins by citing Ernest Nagel” as one of the ‘[c]ritics of of the individual’s understanding of his own motivations and behaviour. .erstehen [who] have claimed that if is at best a route to thinking up hypotheses. and not a way of corning to know which hypotheses are true‘ (Mlost people do not think they always act to reduce their own felt uneasiness. etc. (p. 366). Hence, if Mises is right. these people’s empathetic understanding 3f theirown behavior is sometimes faulty. @. 389, Note 27) Without commenting on the competence of the criticism that Nagel levels against the version5 of Verstehen he deals with, we may note that his Nozick is of course right. People say all sorts of things and there is no treatment is unfortunately irrelevant to the Austrian view of Verstehen. reason to doubt that some of them have denied that they always act so as to Yot only does Nagel not cite Mises on ‘understanding’ in economics and reduce their own felt uneasiness. But Mises’s views of Verstehen by no liistory, his comprehension of the phenomenon is radically different. For means commit him to be bound by what the average person says or thinks. example, Nagel seems to see Verstehrn in terms of empathy and sym- nor by the (faulty) praxeological analysis that a person may make of his ’ ~ Mises is on record as distinguishing empathy and sympathy ~ a t h y , but own acts. Only by what forms his human action takes. Mises says: :‘wm Verstehen, or ~nderstanding.’~ Further evidence that Nagel and Vises do not mean the same thing by ‘Verstehen’: although Nagel does What a mandoes is always aimed at an improvement of his own state of satisfaction. In this sense -and in no other- we are free to use the term selfishness and to emphasize that illention ‘acomplex set of social conditions’ (p. 4821, he does not denote by action is necessarily aiways this phrase what Mises means by ‘complex phenomena’; the Austrians, ‘:Lawever, see understanding or Versrehen as intimately tied up with com- Another difficulty with Nozick’s treatment is that he is really making a ; k x phenomena.80 psychological not a praxeological p0int.8~But even on a psychological  422 Wuitrr Biock Choosing an RC: may well be asufiicient conditron forweakly prefemng doing i t to doing level the individual need not be the best judge of his oN,n motivations. The one of its alternatives. But it is not ii necessary condition for that and. hence. it is not a phenomenon of the apoplectic person yefling at the top of his voice. ‘I’m sufficient condition for strong preference. ( p . ?70) not angry, goddammit!‘ is too widely known for this to occasion any surprise. If choosing A over B is not a necessary condition for weak preference, then, according to Nozick. one could express weak preference without choosing A over B . But even granting the contention that one somehow 111. Indifference could express weak preference without choosing, [his does not establish, as Nozick seems to feel, as shown by the use of ‘hence’ in the above 1. Nozick begins by analysing the following ‘Austrian’ statement: statement, that choosingA instead ofB cannot be a sufficient condition for If a person does an action A . then that person preferred doing A to doing any other act strong preference. In other words, it may be true that choosing is not a which (he believed) was available to him at the time. ip. 370) necessary condition for weak preferencz, urtd that choosing is not a sufficient condition for strong preferenceB6 but the second by no means He sees this as incorrect: ’doingA doesnor show he was unwilling to doB.‘ logicallyfollows from the first. It is possible to affirmthe first and deny the Nozick continues: ‘He might have been willing to doll also. Thus, doingA second without self-contradiction. does not show the person preferred doing it to doing B‘ (p. 370). 2. We turn now to Nozick’s defence of the concept of indifference. He It is of course true that doingA does not show unnillingrzess to do B . The begins by pointing to ‘indications of indifference’: person might have been wiIling to do B too (under other circumstances. presumably). But the fact that he picked A when B was available certainly [FJor example, the person flips a coin between doing A and doing B and acts on the shows that he preferred A to B , at least at that point In time. The fact that outcome of the flip; or, the person uses a random device to choose between doing A , {he person might have been willing to do B also (under other conditions) doingB, andflippingacoin to decide between doingA and doingb. and so forth. (p. 370) cannot be converted into a denial of the fact that, at least at the time that he made the choice, he preferred A to B. If picking A instead of B when both The ‘argument from coin flipping’ unfortunately f d s to establish indiffer- were available is not enough to establish that A was preferred to B, what. ence. If a man flips a coin and on this basis chooses A over B , we must may we ask. would establish this? perforce conclude that he prefers AIB. If he didn’t really prefer AIB, he Nozick defines weak preference as: was free to reverse the ’decision’ of the coin flip and to pick BIA. One , [TJheperson prefers doingA to doingB. or the person is indifferent between doingA and cannot assume that people are in thraldom to coin flips. They own and doing B . In terms of this relation of weak preference. a person is indiflerent between control the coin, not the other way around. Whenever someone does not doingA and doingB ifand only if he weakly prefersA to B . and he weakly prefers B to A. like the choice a random device has ‘made’ for him, he is free to reverse A person srrongli. prefers A to B if and only if he weakly prefers A to B and he does not it.R7 weakly prefer B to A. (p. 370) 3. I consider Nozick’s next attempt to show the necessity of indifference [.:sing this language. we can see that the dispute between Nozick and the as one of the most brilliant and creative criticisms that has ever been Austrians concerns horh ‘levels’ of preference: For Nozick, choosing A levelled against any aspect of Austrian theory. Nozick argues that the over B establishes weak, not strong preference; for the praxeologists, it praxeological views on indifference and marginal utility are incompatible. :tan only establish strong preference‘. To the latter, weak preference is Suppose that, for example, a person has a stock of some commodity. considered illegitimate. because the concept of indifference, upon which it This means. of course, that he considers each unit equally useful, desir- is based, is itself without foundation. able, serviceable. (Ifhe did not, then the units, as Nozick says, ‘arenof [ofl What reasons does Nozick give in support of his view? He says: the same commodity’ [p. 3701.) Let us presume that he has 100 lbs. of butter and now for some reason desires to give up one of these units of  434 WaJtrr Blork Austrian Mefhodoloys (125 butter. And let us saj . further. !hat he arbitrarii! picks one such unit. saj as deny it (when c h o i ~ etakes place). Thus, 10 the extent that homoge- the 72nd one. neotis units of a commodity are required for the operation and application Nozick would say that ‘the person does not prefer giving up rhk OlZP to of this law. there is no giving up another one’ (p. 390. Note 30). But this interpretation is dearly Moreover. there is a discrepancy between the Nozickian and the Aus- unsatisfactory. For if the person didn’t really prefer to give up rlrU (72nd) trian view of the concept of diminishing marginal utility. In the one, nlh?, did he picX i t bc given praxeological view, t b s is an absolutely certain law. It follows from the So we are forced to conclude that the butter units were not really fact that the actor will always give up the least beneficial use that follows interchangeablefrc,nl t h c point of view o f i h e acior involved in the selec- from the lossof one unit of a commodity.92 In the psychological view with tion process. Thus we seem to be forced to deny that there is ever any such which Nozick seems to agree, marginal utility need not always diminish thing as a commodity. surely a iudicrous position. with command over increased units of the commodity. There can actually 1 think that this problem can be reconciled as follows. Beforr the be a realm of increasing marginal utility with extra units, perhaps because question of giving up one of the pounds of butter arose. they were all the additional units allow the actor to do things that were not possible with interchangeable units of one commodity. butter. They were all equally f e ~ e r , or ~ 3because it takes a few units before he can really begin to enjoy iiseful and valuable to the actor. the commodity. (‘The second sip of beer tastes better than the first.’) The But then he decided to give up one pound. N o longer did he hold, or can problem with this, of course, is that it would imply that when forced to give he be considered to have held, a homogeneous cornmodit). consisting of up one unit of a commodity, the actor would choose to give LIPthat unit butter pound units. NOH. there are really rwo commodities. Butter a ’ , on which affords him more satisfaction than those that remain; a manifest the one hand, consisting of 99 one-pound units. each (of the 99) equally impossibility. valued, each interchangeab!e from the point of view of the actor with any 4. Nozick zeroes in on the special status accorded ‘action‘ compared to of the other in the %-pound set: on the other hand, butterb. consisting of ‘talk’and ‘preferences’ over and above ‘beliefs’, by the Austrian theorists. one pound of butler (the 72nd unit out of the original 100 butter units, the He seeks to right the balance in favour of the latter members of each pair. one, as it happens. that he chose to give LIPwhen he desired to sell off one Thus he asserts that ’beliefs sometimes issue in action, and preferences in of his pounds of butter). In this case butter, would he preferable to talk’ and asks: ‘[Alren’t talk and action each the product of beliefs and hutterh,*’as shown by the fact that when push came to shove, butterh was preferences both?’ (p. 371). jettisoned. and butter,, retained. But thls will not do. For the praxeological school has special and Alternatively, we may say that the person was ‘indifferent’ between all important reasons for the ‘uneyenness’. There is truth, for one thing, in the I00 units of butter before and apart from any question of choice coming old saw that ‘talk is cheap!’ This bit of ‘folk wisdom’ is the distillate of into the picture. But ‘indifference’, in this interpretation. existing only in years of practical experience which shows that people are capable of lying the absence of human action, would not be a praxeological, or economic in speech, but not in their (properly interpreted) actions, ‘which speak category, but a vague. psychological one. louder than words’. A farmer. six months away from market day, may vaguely think that he Action, on the other hand, as we have seen, always exemplifies prefer- has a stock of 100 cows. each of which is a homogeneous unit in a ence. As Mises states: commodity called ‘cows‘. But when he wants to sell one, the veneer of indifference vanishes and he picks a specific, one (the weakest? the fat- Neither is value in words and doctnnes. It is reflected in human conduct. It is not what a test?). showing that when action (as opposed to contemplation) is taken. man or groups of men S Q about ~ d u e that counts, but how they u c f . The oratory of moralists and the pompousness of party programs are signdcmnt as such. But they there is no room for i n d f i e r e n ~ e . ~ ” influence the course of human events only as far as they really determine the actions of We can see. then, that with this interpretation. there will be no difficulty men.* with regard to the law of diminishing marginal utility. For one thing, this is because we can have our homogeneity (apart from human action) as well The relationship between action and belief is altogether different. If a  426 Waiter Riock Austrian ,Viethodology 427 person engages ER the actlon of choosing ,.ill?. we are t r o i entitled to make 6. We turn next to Nozick’s inspired attempt to criticize .the notion definitive statements about his beliefs. N O Mit~may be true. and i i prohablj, [that] preference does not make sense apart from an uctrral acfinn which is; in most cases, that such a persor: would h!:evc t b : ’4 ‘s properties arc exhibits it‘ ip. 372). Nozick‘s argumer,! i s no less than ingenious: The cost better than B ‘ s . Rut i r is also conceivable that A / B was chosen solely as a of an act,A, for the Austrians. is B. the next best alternative (to A ) that is result of a coin flip. or is an attempt to foil economic analysts. and that the forgone whenA is chosen. But this would involve the praxeological school person has no such beliefs about the relative efficacy of A and B.9s in picking B over the other forgone aiternatives C . D , E , F , . . without , 5 . Thus far we have implicitly assumed the unambiguity of saying that A benefit o j u n actual action whereby B n a chosen ~ urrd C, D,E, F, . . . set was preferred to H . We have assumed that the actor, as well as outside aside. observers. could know at least what the A referred to. Nozick now calls Nozick is undoubtedly correct to the extent of saying that we need not this into question. His reason for this remarkable claim is that ‘the be- be able to pick out any specific B and say that it is the next best alternative havior performed can be described differently. e . g , “traveUing to the fist to A (the one actually chosen). And this is certainly. as Nozick states, floor”. “stepping in this particular place“. “exerting a certain pressure” ‘ because it; B , has never been actually picked by any human actor who was (p. 3711. He goes so far as to suspect that the human actor himself need not faced with the array A , B , C , D ,E , F , . . . ‘ know what he preferred ( p . 372). Me is driven to doubt that ‘preference But when Austrizns say that the cost of the choice made is the next best [can] apply to things directly’, and thinks. instead; that it can ‘appl[y]only opportunity forgone, they have never stated or even implied that this via descriprions. via something linguistic-like’ (p. 371). opportunity cost was necessarily known. On the contrary, the usual man- Now the case one has in mind as illustrative of preferring A to B is a ner in which praxeologists have viewed opportunity cost has been one of person buying a newspaper for 25 cents. A would be the newspaper. andB lack of knowledge, of uncertainty, of vagueness. G . F. Thirlby, for exam- the quarter. This is. seemingly. reasonably unambiguous. but with a little pie, sees alternative cost as Nozickian irnagination it, too, can be converted Into something fraught with ambiguity. Is the person buying or renting the paper? Is it a counter- the loss, prospective or realized, to the person making the decision, of the oppor- tunity of using those things in the alternative course of action. A fortiori, this cosr feit coin? Perhaps the buyer thinks that the newspaper is really an cannot be discovered by mother person who evenrually watches und records rhe elephant? and the seller thinks the coin is a piece of cheese? Maybe he‘s flow of rhose rhings along rhose channels. Cost is not something which is objec- not really ‘buying’ it. but rather holding, fondling, taking. spindling, and tively discoverable in this manner: it is something which existed in the mind of the decision-maker before the flow began, and something which may quite likely have been mutilating i t ? Maybe it’s not buying and selling but mutual gift-giving. the but vague/? apprehended.97 vendor ‘gives‘ the person a newspaper. and the reader ‘gives’ the vendor 25 cents. Nozick quite rightly shows that if the Austrians contend that a specific The scepticism that Nozick levels against the pedestrian ‘preferringA to alternative cost, say, B. need be known, either by the actor himself. or by B’is a heady thing. But an equal measure applied toany realm of discourse outside observers, then they cannot also hold that preference can only be or knowledge would have as grave effects. His is a pyrrhic victory. One indicated by actual choice. For while A , the first choice, was actually would have difficulty not only describing preference, but what clothes a chosen over all other known alternatives, B most certainly was not the person was wearing. the colour and locatiorr of a house,indeed, ‘travelling subject of actual choice. to the first floor‘. an occupation one would have thought was as clear as But Austrians have definitely not insisted that any specific B was the anything in our kaleidoscopic world. cost of doing A . Rather, the contention has been that there is some Nor is it helpful to multiply entities needlessly. To think that we cannot alternative, call it B , for purposes of identification, which was the best directly prefer things, but can only prefer descriptions of things. or ‘lin- afterA, and that this value, whatever it is, is the true cost of doing A . In SO guistic-like’ entities. harks back to nothing but the discredited doctrine of doing, the praxeological school has not violated the maxim that (specific!) sense data.96Of course we can prefer things themselves, and not merely preferences can only be exhibited through actual action. descriptions thereof. In the foregoing paragraphs we have been implicitly assuming an in-  Austrian Methodoli)g!: 429 terpretation of ‘actual choice‘ according to which i t only makes sense 10 The main difficulty with the interpretation of preferring as a subjunctive apply this term when w c h behaviour could be observed by ohservers is the ‘brute fact’ that man can change his preferences. And since the other than :be human x i o r involved. We have stated that NoziLk was Austrian emphasis is on the market process. where change is the rule. and correct in maintaining that H . for example. has never been actually picked not on static equilibrium. favoured by the orthodox economists, where by any actor. solely because no one could have been ohsPwed to have change is more of an exception. the subjunctive mode is completely alien chosen B over c’. D. L . etc.. because the choice of A was the only to praxeology. It helps little in our understanding of human action to phenomenon available to outside observation. suppose that a person ‘really’ favours B over A (because he has a We may n e w relax that asstimptIon and consider the alternative notion psychological predilection towards B?) when he in f x t choosesil instead that action does not have to be observable. If we do, we can entertain the of B . following : Moreover, Nozick’s analogy from the concept of solubility in the physi- Earlier in the day J had a choice offhinking about either part I . II. I11 or IV of Professor cal sciences cannot be accepted. The disanalogy is that while people can Nozick’s paper on Austrian methodology. My choice was to think about part I . N o one and do change their preferences, substances do not change their solubili- else observed this. N o one else could be in a position io know anything about this choice ty!y9But suppose a world in which substances did change their solubility, of mine. (I assume away the possibility of not-yet-invented electronic mind-reading devices, ’super-duper‘ neurologists, etc. J with no less ‘compunction’ than now exercised by people in changing their If one concedes that this was an of choice. then there i s n o problem of inconsis- preferences. Could Nozick then deny that ‘it makes no sense to say tency between the Austrian doctnne of alternative costs and i i , ciaim that preferences something is soluble unless it already has actually dissolved’? Hardly. For cannot exis! apart from actual choices made. For what happens when you choose betweenA. B . C , D is a two-stage process. First of in this kind of world, people could not be sure that a substance was soluble all. you narrow down your range of choice. You say that of 11. I11 and IV. 11 is the best; unless and until they had actually seen it dissolve. No more than one can ?.nd that of I . 111. and I V , I is the best. Therefore. I and I1 are the best two of the lot. You now be sure that a person prefers A to B unless he actually chooses it. choose the two best by scanning all. (or many) alternatives. Secondly, you choose between 1 and 11. As I have said. I chose I . This would make I1 8. Nozick begins his discussion of transitivity and rationality by citing a the second best. or. in Austrian terminology. the COSI of thinking about I. So you do passage from Mises’s Human Action (Nozick, pp. 375-6; Mises, p. 103) compare 11. the alternative cost, with the others. 1x1 and IV.9R which denies that the former (if AiB, and BIC, then AIC) is a conditior , ) f Not only. then. has a preference of I over I1 actually been made. and the latter. This is because there must necessarily be a lapse of time shown by human action. but a preference of I1 over I11 or IV has also been between the first, second, and third choices which make up the transitive made, and isa1.m pan and parcel of an actual act of choice. Although, to be relationship; and if the person changes his scale of values after placingA sure, this preference. unlike the first, is unobservable to people other than above B , and B above C, there is then no rational reason why he must favour A over C. the human actor involved. We must therefore reject Nozick‘s claim that it is inconsistent to say both that (a) the notion of preference makes no sense So much is presumably agreed to by our critic. But Nozick does not seem to like this state of affairs. He yearns for a system under which it will apart from a n actual choice made and that (b) the cost of any act is the best one of the rejected alternatives. For the best one of the rejected alterna- be possible to declare intransitive preferences ‘irrational’. ‘The acts can- tives has been chosen to the same degree that A . the best of them rill. has not be synchronous’. he admits, ‘but the subjunctives can hold true at the been picked. Only the choice of B . the most favoured of the rejects is not same time. So we can make sense of nontransitive preferences at a time’ publicly observable. while the choice of A is apparent to all observers. (p. 376). And with this much we must agree: subjunctives are a way of making sense of the interpretation of transitivity as rationality. The difi- 7. Nozick, of course, is not convinced by the above argument. He sees a need to ‘make sense of preference’ in the absence of choice. And his culty, however, is not with this usage; it concerns the concept of the answer? The subjunctive: ‘to say a person prefersA to B at a time is to say subjunctive itself, and the criticisms of it, levelled above. These have not been answered, and indeed, cannot be. he ~ * o u /c d. h o o s c ~A over B if he 1 1 ~ given ’ ~ a choice between (only)A and 9. We now arrive at the only section of the paper which would better B at that time’ (p. 373). have been left unwritten: intimations that Mises’s political philosophy  Austrian .blethodolo,qy 43 I may he responsible for his praxeological views. Nozick asks. scales, it is utterly impossible to base an interpretation of a preference of Whv c!ees Mises think it SO importan: 10 a r g x :ha: the S i x i i i i i r e ofpreference> cannot be BIA on an actual act of selecting the very opposite. We cannot reason that irrational? Perhaps because he doesn’t want anyone interfering with choices on the because a person has always selected BiA in thi, piist he. therefore. 1r.ould grounds that they arise from irrationally structured preferences. (p. ;76) prefer B/A in the f u t u r e . especially not in those cases where the subject now picks AIB. This gratuitous. uncalled-for motive-mongering is especially unfortunate We must ofcourse agree with Nozick that ‘[flrom a person’s doingB, we in view of the many attacks which have been launched against Mises. or! cannot know he believed A was available to him’ (p. 377). We cannot, grounds of violating the canons of value freedom in eeonomics.lO(J then, deduce from the fact that a person chose B that he preferred B t o any coupled. paradoxically. with Mises’s long-standing championing of the specific A . But we most certainly can know, contrary to Nozick, that if he self-same doctrine of [’er[frrihfjir. It is. morecver. entirelv irrelevant to chose B, he preferred this to some other alternative, call it A . For if there the truth or falsity of Mises‘s views on transitivity/rationality. As Mises were no alternative,A , rejected in B’ s favour, then the person collld not be himself explains. perhaps in anticipation of these very remarks of said to have made a choice at all. If B was the only opportunity strictly Nozick’s: available, then the person did not act: at most, all we can say is that B ‘occurred’, but not that 5 was chosen. All that counts is whether a doctnne I S 5ound or unsound This IS to be established by discursive reasoning The motives that guided the thinker are immaterial to ap- 11. The last point we will concern ourselves with in this section is preciating h s achievement In; Nozick’s claim that ‘[rlationality conditions are conditions which it is possible to violate’ (p. 377). In other words, if there is to be rationality, it must be possible to have some irrationality with which to contrast it. This !O. We turn now to Nozick‘s explanation of how it is possible to seems plausible, but not when we understand the sense in which the ‘conclude he does preferA toB. despite the fact that he has chosenB when A was available‘ (p. 377). One account is that ‘the person might have . . . Austrians put forth the claim that ‘all action is rational’. This can best be interpreted as a research manifesto, whose aim is to explain the core of lost sight of A [or perhaps] he just gets confused and acts’ ip. 377). rationality in all of human action.Io3 In this view, allowing that an action The question we must pose is how does Nozick, the outside observer, can partake of the irrational would be to admit, for the Austrians. that it know that the person really preferred AIB. even though he picked BIA? cannot be explained or understood. And this, in the realm of economics, How can Nozick tell that he ’got confused‘ or ‘lost sight of A ’ ? the Austrians are unwilling to do. And would we h l i r v e a person who chose BIA but yet maintained that he ‘really’ preferred A!B, but just ‘got confused’ or ‘lost sight of A’? As psychologists we might perhaps believe him (although our credulity would be strained to the breaking point after very few repetitions of this IV . Time-preference sort of behaviour. We would soon begin to believe that ‘actions speak 1. Nozick begins this section by criticizing Rothbard’s view of time- louder than words’). A trained therapist. intimately familiar with a pa- preference, where he denies the latter’s contention that this phenomenon tient’s reactions. might. however. put some stock into the subjunctive can be ‘demonstrate[d] . . . on the basis of the scarcity of time’ (p. 378). mode and reason that since the long-standing pattern has been to choose Nozick is of course correct when he asserts that ‘time-preference is not AIB. a very few counterexamples cannot extinguish it. the same thing as economizing time’. Rothbard, however. would not and But as praxeo1ogis:s this ratiocination could only be considered as the did not maintain this. Rather, he held that time-preference ‘results from‘, subjunctive mode run amok. For the economist. as outside observer, has or is deducible from, the economization of time. before him only the act of choosingAlB. Nothing else. This Is the bedrock But Nozick’s reason for denying the equivalence between time-prefer- w o n which all anaiysis must be based. Anything else must be considered ence and time-economizing is incorrect. In his own words: sheer speculation. Given that man can and does change his preference Suppose there arc two actsA and E . which each take five minutes to do, and yield the  Austriun .W~!hodology 433 goal Dut one delivers i t ? po.J e3riier t h m the other Suppose 4 delrbers z e r e q tion that a person may ‘act now‘ not because of time-preference, but minutes atrer i t s done and B delners one ten! after i i s done Houever each tdklng .because the option of getting the satisfaction is a fleeting one which will five minutes to d o e c ~ n o m i z e ctime equal11 t ime-preference. therefore iannot be not be available later’. In other words, a person might really wan? an item denved from economizing time ( p p 37%-91 ’later’. but realizes that if he is to have it at all, i t will have to be ‘now’. The difficulty with this is that for the Austrian it matters not one whit how since it will soon disappear, forever. Nozick concludes: ’Thus, a person long a productive act takes to d o : what is r-~lcvanrfor human action, and can have a reason. other than time-preference. to act now; to prefer the on/>, thing relevant for human action. is rhe manufacturing plus the satisfactior, sooner rather than later is not necessary in order to act now’ delivery time. or total time until consumption can take place. A and B in (p. 379). Nozick’s example may each take five minutes to d o , but since A takes This is all true enough, but it is irrelevant to the Austrian argument in another seven minutes to d ~ l i v e r .while , B takes a whole y u r , they cannot behalf of time-preference. For on this view, there is supposed to be a at all be considered to -economize time equally‘. as Nozick would have it. choice between two different goods. both of which would be equally Rather. A takes a total of 5+7=1? minutes. while B takes 5 minutes -t 1 serviceable,’OBbut which are available at different times. Then, according year = I year and 3 minutes! to the praxeological conception, the oRe which can be delivered earlier One would have thought that so much would have been understood will be the one chosen. But Nozick’s criticism. in contrast, speaks instead from reading the section ofM<iiJ.Ec.cinom>’rind SiatP from which Nozick of only one good, which will be available right now, arid not thereafter. cites Rothbard‘s views. For it is clearly stated that what is important 1s ‘the Even this choice, however, while not. perhaps, a good illustration of period from the beginning of the action to the time when the consumer‘s preference, is certainly consistent with that doctrine. For by the fact that a good is availahlc’.’” man acts (in whatever choice situation he finds himself) he shows himself 2. Nozick goes on to consider and criticize Mises’s views on time-pref- as preferring present action to no action at all. Just because, as in Nozick’s erence, according to which it is a ‘categorial requisite of human action’, in example, the good will not be available later, is not a sufficient explanation that if a person ‘were not to prefer satisfaction in a nearer period of :he of why it was chosen now. There was still another alternative: spending future to that in a remoter period, he wou!d never consume and so satisfy the money for somethmg else which will be available in the future. The wants. . . . He would not consume today. but he would not consume reason that this was rejected in favour of present consumption, any tomorrow either. as the morrow would confront him with the same alter- present consumption, can only be understood in terms of time-prefer- aiative’. ence. lo9 Nozick first characterizes Mises‘s views as ‘different and more strik- Nozick goes on to make a forceful case indeed for the view that the law ing’ than those of Rothbard. Now I am not aesthetician enough to com- of time-preference need not always be in operation; that periods of time- ment on which of the two gives a ‘more striking’ presentation. but as for preference can alternate with periods of non-time-preference. Labelling the implicit allegation that they are inconsistent, this is mistaken. It is this ‘weak time-preference’ he terms this ‘considerably weaker’ than the true that Mises explicitly links time-preference and the categorial nature of general time-preference theory he takes the Austrians to champion (pp. human action. while Rothbard expresses the concept in terms of time- 379-80). economization in the passages cited by Nozick. But Rothbard, no less But Nozick himself quotes Mises as saying: ‘Time preference is a than Mises, sees time-preference as absolutely true, of apodictic cer- categorial requisite ofhuman action .’I10It is perfectly consistent with this tainty, and as a direct implication of the axiom of human action. As proof, that if there is no human action, there is no, and can be no, time-prefer- we have only to consider Rothbard’s reference to ‘the universal fact of ence! Of course, it is true that ‘when a person acts . . . he has time-prefer- time Preference’i06and note that his treatment of the concept is explicitly ence [hen for the particular good he then acts to get’. Of course there will titled a Fundamental lmplicatio~lof Human Action.IC7 be ‘an alternation of periods of time-preference for good G . and period of Disregarding Nozick’s next argument on the grounds of indifference no time-preference for good G’ (p. 379) depending upon whether or not (since we have already dealt with this at length), we arrive at his conten- human action is taking place. The Austrian may adopt as an obverse of 434 Walter Block ‘4u.5 frian Mrthodology 435 time-preference theory the view that when or where tbere is no human ence of greater current consumption and less future consumption over action there can be no time-preference. :‘he .4ustrian will accept. uniform consumption (summmg to the same as the previous alternative) moreover, the prerniss that human action need not a h i ~ ~ ytake s place. If throughout time’ (pp. 38 1-2). The Austrian view of time-preference. then, the entire world’s population were to fall asleep at the same one minute of according to Nozick, would invoive people in choosing a pattern of son- time. there could be no human action caking place during that interval. wmption which declined as time wore on. This, of course, is patently lime-preference. then. would not be in operation for that duration either. contradicted by experience, for we know that many consumers prefer a But this supposition would not create any untoward problems with uniform expenditure pattern, or one that Increases with age (‘saving for a regard to ‘what the theory of interest would look like‘ (p. 379). Interest- “rainy day” ’ or for retirement in old age). rate theory would simply not apply to such an era of no human action. no But this is a completely unacceptable interpretation of time-preference time-preference. It is not that interest theory would be bent out of shape or theory. True, if somehow we could assume a zero interest rate, and a would be incorrect. The interest rate, and the time-preference rate upon uniform-through-time-income-schedule, which we cannot, then which it is based. are concepts inextricably bound up in human action. everyone’s desired spending pattern might be a declining one through When human action is assumed out of existence, it should occasion no time. At any positive rate of interest (again, assuming income uniformity), surprise that these other theoretical edifices disappear along with i t . there will be people with high time-preference whose relatively great Nor can we accept Nozick‘s claim that time-preference remains ’mys- impatience will induce them into what Nozick regards as the pattern terious’ or unexplained (p. 380). Rothbard has explained it in terms of the Austrians are committed to: falling through time. But there will also be low specific axiom ofhuman action that time is a scarce commodity; Mises has time-preference people, willing to lend money out at present interest rates, accounted for it on the basis of the insight that human action in generd is so that they can enjoy increased income, These people will impossible without it. To Nozick‘s question, ‘Action shows time-prefer- experience increased consumption through time. ence; but why is there time-preference?’ we can only answer, ‘Because In this line of thought, Nozick is then moved to make the following there is human action‘. utterances, as if the Austrians would or could deny them: 3. Nozick‘s remarks in the next few pages are material introductory to his theory of ‘double discounting‘ with which he ends his paper. Before Given two desires which can be satisfied now or later. the greater need not be satisfied viewing his treatment of that theory. we must first note several misun- fust: the opportunity costs of satisfying it fust might be larger than those of satisfying it second. (p. 382) derstandings and misinterpretations of Austrian economics in this pre- paratory material. I take this to mean that if a person prefers an equally priced chicken to a He begins by noting that ‘Austrian writers need not deny that work hamburger dinner, he will nevertheless prefer the latter, if it could be had may itself have intrinsic satisfying quality’ (Nozick gives the example of for $ 5 . 0 0 , given that the former would cost $45.00. Let us just say that someone who does not desire privacy and who is paid by a psychologist to there is nothing controversial about this view, nor anything in it that could be observed doing whatever he wants to do {pp. 380-11). bring embarrassment to the Austrian view of time-preference. But although no Austrians to my knowledge have come up with such an What are we to make of Nozick’s opinion that ‘time-preference . . . has inventive example to illustrate the point, they have hardly ‘denied’ this been discovered in animal experiments’? (p. 382, emphasis added). What possibility. Indeed, says Rothbard: Nozick means by this phrase is that it has been discovered that the It is possible that included in this ‘return’ of satisfaction yielded by labor may be ’effectiveness of a reward declines with its distance forward in time‘. Now satisfaction in the labor itself. in the voluntary expenditure of energy on a productive this might well be true - but it has nothing to do with the Austrian notion of task. . . . Where labor does provide intrinsic satisfactions. the utility of the product time-preference, which is apodictically certain, and applicable to all pur- yielded wiU include the utility provided by the effort itself.”’ poseful beings. One must of course determine whether or not an animal is capable of Nozick then goes on to interpret time-preference a5 ‘involvjing] a prefer- motivated, purposeful behaviour, but this is a matter of Verstehen, and not 436 W ‘ r l l t P T Block A u.i rrlnn Merhodology 437 experimental testing. Once it is determined that the animal is able to act. complete accord: that man’s faculties (time-preference tendencies in then it logically follows that time-preference will describe its actions. And Nozick’s case)116are the result of an evolutionary process. although this is true whether or not an earlier reward will he more effective i n Nozick does not seem to be aware of this as an area of agreement. But changing its behaviour! 11 might be discovered. for- example. that a par- Mises does refer to ‘the genetic problem of how man acquired his charac- ticular animal is more likely to change its behaviour ?he further away in teristically human mental ability’ and states: time (within certain limits) the reward is given. But this would not neces- Man is descended from nonhuman ancestors who lacked this ability. These anceston sarily violate the canons of time-preference. for what the aniinai might be were endowed with some potentiality which in the ccurse of ages ofevolution converted obtaining in the future is the reward plus ?he oppctnunity to savour its them into reasonable beings. This transformation was achieved by the influence of a prospective coming: and i t can value this cwrnbination113more than the changing cosmic environment operating upon succeeding genecitions. * 1 7 The human mind is not a tabula rasa on which the external events write their own reward itself and still act in accord with the ’dictates’ of time-preference. history. it is equipped with a set of tools for grasping reality. Man acquired these tools, Nozick is in error. however, in saying that ‘[tjhe height of acurve at each i.e., the logical structure ofhis mind, in the course of his evolution from an amoeba to his point in time represents hon. valuable the later reward is to the organism at present that point in time’ (p. 382). By this I interpret Nozick as meaning that. for example, if it is now and the animal is to receive a reward at r s . then the 4. We are now ready to consider Nozick’s last and perhaps most height of the point at t o will show how valuable the reward is to the controversiai point: the claim that human beings are brought by evolution organism at 1,. into a state of ‘doubie discounting’. The difficulty with this is that no actor, animal, or even human, can T’his ‘puzzle’ arises because ‘the evolutionary process builds time-pref- k:now how it. or he will value something in the future. People can know erence into organisms who do not calculate’. But if, Nozick continues, how they presen:ly value something receivable in the future (the ‘present discounted value‘) but not how valuable afuture good will be in the future. organisms who do calculate, and whocan in their deliberations take into account various future contingencies . . .also feed into these calculations magnitudes of (future) desires They might change their minds about the item. and no longer value it in the which have been discounted to take such calculative considerations into account at- same way when the time for its arrival is upon them. ready, then isn’t there double-counring, or rather, double-discounting ? Time-prefer- Nozick then utilizes these response curves to illuminate the making and ence fust discounts, and our later calculations explicitly take into account factors and lead, in effect, to explicit discounting. (pp. 383-4) Sreaking of resolutions. and the concept of self-control. An example of resolution-making (or self-control: resolution-keeping) would presumably be the forgoing of an earlier smaller reward (eating a chocolate cake) in If I can put this complex claim into my own words, Nozick seems to be tavour of a later. larger reward (losing weight. maintaining health). Resolu- saying that if evolution breeds time-preference into lower animals, then tion-breaking would appear to be making the opposite choice. what about human beings who also explicitly calculate time-preference: But how can we praxeologicaliy distinguish these choices? Suppose won’t they be guilty of double discounting -on one level from nature, and that the actor either changed his mind. or originally decided that present once from purposeful calculation? In other words, man’s implicit dis- cake and later possible illness was preferable to present deprivation and counting (derived from evolution) p f u s his explicit calculational discount- later health?’14 Now the psychologisr could say that the person’s ‘better ing adds up to double discounting. self made the non-cake-eating resolution, and later succumbed in the face If this is indeed his view, then there is the difficulty that it commits an nf temptation, and was. therefore. irrational. But the praxeologist must be equivocation with regard to ‘time-preference’. This phrase is used both to silent about the content of man’s ends.115He cannot, therefore. distin- denote the general concept of time-preference, as well as aspecific rare of guish between resolution-making and -breaking, calling the former ‘better’ time-preference, or discount, without sufficient care being taken to distin- than the latter. Nozick‘s analysis then. while perhaps valid from a guish between the two. * sychological viewpoint. is irrelevant to Austrian economics. The discounting that is built into us by evolution is, and can only be, a There is one point, however, upon which Nozick and Mises are in general predisposition towards purposeful human action, out of which  Austrian Methodology 439 flow5 the curacept of time-preference. The discounting at this level of Let me \ay in conciusion that although the A~~stfianedifice still stands analysis. then. is not 3 specific discount rate: it is only a phenomenon if unbowed after Nozick’s valiant assaults UPOR it, the praxeologicat school discounting - an ability, as it w w e . to he rational: to act. to prefer present has gained immeasurably from his effort. There is nothing that energizes a to future goods. etc. Then of course there is a specific rate of time-prefer- philosophy so much as well-conceived. basic, and inventive criticism. In ence or discount that each individuai reckons in terms of- consciously or the spirit ofJohn Stuart if a Robert Nozick didn’t exist, Austrians Rot. This is the more usual understanding of the term. would do well to try to create one. Perhaps a numerical example will make clear the difYerences between Nor can we avoid the possibility that at least some of Nozick’s criti- Nozick a.nd the Austrians on this matter. One gathers from Nozick that cisms will necessitate changes, even basic changes, in the theoretical Path level of discounting imparts to the individual a specific rate. We may structure of praxeology. When one crosses swords with a scholar of suppose. for instance. that evolution has given a person a seven per cent Nozick’s intellect, one must hold one’s views with trepidation, ready, rate of discount, and that his conscious internal rate of return i s six per always, to be shown one’s error. There are two reasons for writing this cent. Thus. Nozick would reason. he is ’really‘ discounting future income defence of Austrian methodology despite these dangers: one, although by seven per cent and six per cent or by thirteen per cent. the double there are undoubtedly errors in it, I am presently unaware of their exact discount. In o u r view. by contrast. what evolution can breed into a person location; and two, there is the hope that Nozick’s possible reply will is not a specific rate of discount. such as the seven per cent we are further push out the frontiers of economic knowledge.120 supposing Nozick to be assuming for the purposes of this example. but rather an ability to have time-preference at all. Thus. foi us. there is no N.OTES seven per cent in the above case. There is only the six per cent. derived I Robert Nozick. ‘On Austrian Methodology’,Synthese, Vol. 36 (1977), pp. 353-92. from the calculative ‘level‘.There is only single discounting. not double 2 Ibid., p. 354. discounting. 3 See Ludwig von Mises, The Ultimate Foundation of Economic Science, Sheed, An- Nozick‘s argument follows the pattern of this mistaken ‘evolutionary’ drews & McMeel, Kansas City 1978, pp. 6-7. 4 Nozick, op. cit., p. 354. (All future mention of Nozick’s work, unless otherwise indi- analysis: Let us hold constant, in our minds, man’s ability to see all the cated by the context or specified. will refer to this one article. Emphases are originai colours o f the spectrum: and let us concentrate on the indubitable fact that unless otherwise stated.) evolution has brought man an ability to see one of them, the colour red. 5 Ibid., p. 354. 6 b i d . , p. 354. Had he stuck to the more mundane ‘theory of individual human action’, it is Now, analogous to double discounting, we mav charge that man really doubtful that so astute a commentator would have been led to exclude human interac- sees everything through ‘rose-coloured glasses‘. When man sees the col- tion. our yellow. it is really a combination of true yellow, plus the red colour 7 Says Murray N . Rothbard: ‘To say that only individuals ast is not to deny that they are influenced in their desires and actions by the acts of other individuals. who might be which the evolutionary process has built into him. And when modern-day fellow members of various societies or groups. We do not at all assume, as some critics man beholds something that is really red, like the inside of the ripe of economics have charged, that individuais are “atoms” isolated from one another.’ watermelon. this is really ’double red’. once from the evolutionary factor, Man. Economy and State, D . Van Nostrand C o . , New York 1962, p. 435, f.a. 6. 8 See The Uftimare Foundation. op. cit.. p. 80 and p. 82. and once from hi5 ‘calculative’ or optical sense. 9 Nozick, op. cit., p. 355. I submit that this fanciful and colourful example makes no more sense 10 bid., pp. 356-7. than Nozick’s concept of double discounting. The difficulties are the I 1 Sidney Shewood, ’ThePhilosophical Basis of Economics’,in the Annals ofihe Ameri- . can Academy of Political and Social Science (Oct. 1897),p. 65 (213). emphasis added. ::ame. For what evolution brings man, if it brings him anything of the sort, 12 bid.. p. 67 (215). emphasis added. is not a vision of everything in one specific, particular colour, but rather a 13 Ibid., p. 69 (217). general ability to perceive colours. In just the same manner evolution can 14 Nozick, op. cit., p. 357. 15 Rothbard, op. cit., p. 2; Ludwig von Mises, Human Acfion. Henry Regnery Co., bring man the ability to act, and to have time-preference, but not at any Chicago I%, p. 42 and p. 43: and Sherwood, op. cit.. p. 68 (216). See also Ludwigvon particular level, which can then be superimposed on that which man would Mises, Theory and History, Arlington House, New York 1%9. pp. 183-90. otherwise choose (or see). 16 Nozick, p. 387. Note 1 1 . I ? .4lternativel>, ihe cliizens group (government, could otfer ?I: ,qil'f people these preen 42 \fires, Hurinm 4 ~ t i ( ; n ,p. 100. emphasis acided. pieces of paper' f o r the purp)se of transacting busines3 43 fLlises, C'irimute F c u d c r i o n o p . cir.. pp. 2-3. It? For a full treatment ofthis claim see Illises. Hurnan .Acricin. op. cit . pp 4 0 5 4 . see also 34 Ibid.. p. 48. Car! Menger Piincipi<.; oj";^Econort;ic~, The F:ee h e s s . Glencoe. Ili. I W ! , pp 2?61. 45 (..lauciio Guiierrez. 'The E.xt rdinwy Claim of Raxeology'. 7 / 1 6 31.c20. '41.1. i (1971). p . 329. See aiso Walter Block. '4Comment o n ' T h c Extraordinary Claim 19 Nozick. op. cit.. p. 358. of Praxeology'~by Professor Gutierrez'. 7 h t 2 0 ncind Ikcisicin. Vol. 3 (1973). p. 382. 20 Nozick appears to admit this when he term\ institutions 'the stable pattern\ of others' wherein is found the fcllowing statement: 'Prof. Gutierrez himself. in his "play. anistic actions' ( p . 360). or religious contemplation" also conforms to this principle. I d a r e say. He does alter his '1 And individuals. although they follow institutional patterns most of the time. in break ( own Future compared to n,hrrt it would have been in the u h s e w e ofsurh conrrmplarion oui when they have a mind to. There is no doubt. ceminly with regard 10 the institution when he engages in such actions.' (Emphasis added.) of marriage in the modern day. that people can flaunt it when they decide it I \ in their best 46 In this he was anticipated by Professor CIaudio Gutierrez, w h o held that people can interest to do so 'sometimes zct not for altering the future but merely for enjoying the present. i.e.. the 22 Mises. Huniari .4c::on. op. ci!.. pp 4 1 4 2 . action itseif: e.g., in play and artistic o r religious contemplation'. See 'The Extraordi- 23 Ibid., p. 43 nary Claim of Przxeology'. op. a t . . p. 327. 24 Ibid.. p. 46 47 Rothbard, ,Man. Ecaoomy und Srate. op. cit., p. 3. 25 Nozick. op. cii.. p 360 (emphasis added). 48 Block. op. cit., p. 381. 26 While discussing one specific theory concerning the shaping of utility functions. operant 49 Mises, Humun Action. op. cit., p. 20. conditioning Nozlck seems to confuse Austnanism with libertarianism (p. 360).As this 50 Ibid.. p. 20, conflation isacon5tantoccurrence. we might d o wet1 to try to distinguish between them. 5 1 Israel M.Kirzner, The Economic Point ofVie;r,,D.Van Nosirand Co.. New York 1W. On one level. the confusion is understandable. Libertananism is an individualistic pp. 171-2. philosophy. in that ii places supreme emphasis of the rights of each person. and 52 .See Rothbard, .Man. Economv czndStare. op. cit.. pp. 54-58. and Mises, Human Action. Austrianism. as we know. has MI as a basic plank of its procedures. It is. however. op. cit., pp. 505-8. important to see the differences, for the former is an ethical system. and the latter IS a 53 His motive for this hehaviour might well be to confound lhose economists who have philosophy of (social) science: the problems created through mixing up normative and established the maxim 'ignore sunken costs' as a meam of maximizing utility. positive economics are too well known t o be elaborated u p n here. According tG liber- 54 Mises, Human Action. op. cit.. p. 95. tarianism. a theory of right and wrong, evii consists of violating individual rights to 55 Says Murray N. Rothbard: 'When an entrepreneur deliberately accepts lower money person and propertv by tne initiation offorce o r fraud: while according to Austrianism or profits in order t o give a good j o b to a ne'erdo-well nephew, the praxeologist is not praxeology ,a theory of truth and falsity, the best way to discern these elusive qualities is confounded. The entrepreneur simply has chosen to take a cerrain cut in monetary through the operation of MI. profit in order to satisfy his consumption-satisfaction of seeing his nephew well pro- 27 Mises, Human Action. op. cit.. p . 47. vided.' 'In Defense of "Extreme Apriorism" '. op. cit.. p. 316. See aiso Walter Block. 28 Nozick. op. cir.. p. 361. ' C o a x and Demsetz on Piavate Property Rights', Journal o~'Liherrarian Studies. Voi. I . 29 This is not, of course, to deny the relevance, indeed importance. of the macro-level, for No. 2, pp. 11 1-15, which is devoted to one implication of this phenomenon. some problems. For example. if we wish to determine whether o r not the floor is strong 56 Rothbard says in a related context: '[Iln the money economy, other rhings being equal. enough to hold the burden placed upon it, we need do no more than add up the weights of men will attempt to attain the highest possible money income'. Man. Economy dnd all the people who will stand upon it. Their individual purposes, plans. aims. are forthis State, op. cit., p. 183. problem entirely irrelevant. This is not an economic. but an engineering problem. (I owe 57 Robert Nozick. Anarchy, State and Utopia, Basic Books. New York 1974, p. 42. this exampie to Israel K h e r . ) 58 b i d . , p. 43. 30 In their 'Inflation. Recession, and Stagnation', in Edwin G. DoIan (Ed.).Foundatrons c!f 59 See above, point 3, Notes 36 and 37. Modern Austrian Economics. Sheed L% Ward, Kansas City 1976, p. 191. 60 Mises, Human Action, op. cit.. p. 92. 31 Mises. Ultimate Foundorion. op. cit., p. 83. 61 See Note 7. We may note, too. that profits are positive reinforcements to human action 32 Mises, Human Action. op. cit., p. 43. while losses are negative conditioning. 33 Murray N . Rothbard. 'In Defense of "Extreme Apriorism" '. Sourhern Economic 62 John Kenneth Galbraith. The Af-uenr Sociev, Houghton-Mifflin Co., Boston 1958. For Journal. J a n . 1957. pp. 31.F-16. criticism of these doctrines, see Mises, Human Action, op. cit.. pp. 320-3: Rothbard, 34 b i d . . p. 317. Man. Economv and State. op. cit.. pp. 839-50; Walter Block, Defending the Unde- 35 Mises, Human Artion. o p cit., p. 12. fendable, Fleet Press, New York 1976, pp. 68-79: Kirzner. Comperirron and Entre- 36 Ibid., p. 242. preneurship, op. sit., pp. 135-86; F. A. Hayek. 'The Non-Sequitur of the "Dependence 37 b i d . . p. 92. Effec:" ', Southern Economic Journul. Vol. 27 (April 196i). pp. 346-8. 38 b i d . . p p , 11-12. 63 Rothbard, Man. Eronomy and State, op. cit., p. 435. 39 Ibid., p . 10s. 64 bid.. pp. 1-2, emphasis added. 40 Rothbard, Man. Economy and State. op. cit., p. 5. 65 Mises, Human Action, op. cit., p. 34. On page 28 he refers to 'the fact that animais and 41 lsrael K i m e r . Competition and Entrepreneurship. University of Chicago Press. even plants react in a quasi-purposeful way'. Chicago 1973. see esp. pp. 84-87. 66 Mises, Human Acrion, op. cit., p, 36. 442 Walter BIock Austrian .;Methodo!:igy 443 67 Ibid.. p . 27. should be no paradox that if the evaluation changes. then so cap w e mcve from 68 Ibid.. p. 28. homogeneity to heterogeneity 69 Rothbard. M a n . Econorni and Srarc-. op cit., p 435. 92 See Kothhard. .Man L Lorr{;rnv nnd Sr,zrc.. op. ci!.. p . 21; also 7iin.ardu Reconsinrc-rioq, 70 See Note 38 above. op. cit.. pp. 9-1?,. 7: See Rothbard, Man, Economv onci S:ale. op. cit., p. 1. 93 Norick gives an exemplary Austrian Crtiicism of this on page 369, under the heading 72 . Mises,HumanAction. op. cit p. 31. See also hts Uitirnatc.foundation. op. cit.. pp. 74. ‘expanding universe‘, in terms of maldefinition of the lcnit of the commodity. 66,67. 94 Mises, Humt7rl ,4ctiom p 96. emphasis added. 73 Mises. T h e 0 3 and H i s t o e . op. cit.. pp. 306. 7 . See also ibid.. p. 5 . 95 The relationship between talk and belief is even more distant. In addition to the above 74 The arguments indicating the difficulties and impossibilities of prediction are very possibilities, it is always possible that the talker is lying o r fooling us. similar to those wtuch show that economic theories cannot he resred. but rather can only $6 See Brand Blanshard, Reoson and Anulvsis. Open Court Publishing Co.. La Salle. Ill. be used to iilusrrurr. historical occurrences. 1973, pp. 335-6. 75 Rothbard. ‘In Defense‘. op. cit., p. 316. material in brackets inserted by the present 97 G. F, Thirlby, ‘The Subjective Theory of Value and Accounting “Cost” ’, Economics. author. Feb. 1946, p. 33, emphasis added. See also Mises, Haman Action, op. cit.. p. 97; James 76 Mises. Human Action. op. Cit.. p. 65. M. Buchanan, Cost and Choice. Markham. Chicago 1%9, pp. 21-34; Friedrich A. 77 Ernest Nagel, The Structure o/ Science, Routledge & Kegan Paul. London I%]. pp. Hayek (Ed.), Coilectivist Economic Planning. Augustus M. Keiley, CIifton 1975, pp. -5. 226-7 (‘The Present State of the Debate’). See also Rothbard, !Man. Economy and 78 b i d . On page 483 he criticizes the view tha! ‘a social scientist cannot account f3r men’s Stare. op. cit., pp. 542-4, where specific implicit costs are given, but these are used actions unless he has experienced in his own person the psychic states he imputes to only as examples. them or unless he can successfully recreate such states in imagination’. On page 484 he 98 These quoted paragraphs are loosely based on remarks forcefully and eloquently made states: ’Insum,the fact that the social scientist, unlike the student ofinanimate nature, is by Professor Israel M. Kirzner on the occasion of the presentation of an earlier version able to project himself b y sympathetic imagination into the phenomena he is attempting of Professor Nokick’s ‘On Austrian Methodology‘ to the Austrian Economic Seminar at to understand, is pertinent to questions concerning the orip.in.7 of his explanatory New York University. hypotheses but not to questions concerning their validity.‘ (Emphasis added by the 99 For a general Austrian criticism of analogies between the sciences of human action and present author in the first case in the last sentence, not in the second.) Nozick, toc, the physical sciences, see Mises, Ultimate Foundarion, op. cit., pp. 40. 56.57. and 62; speaks of ‘empathetical!\. understand[ing] behavior’ (p. 367). (Emphasis added.; Human Action. op. cit.. p. 352; Theory and History, op. cit.. pp. 9-1 I , and Rothbard, 79 Says Mises: ‘Empathy and understanding are two radically different attitudes’, Human Man, Economy and State, op. cit.. pp. 739, 754, 755. Action, op. cit., p. 50. 100 Cf. Annals of the American Academy of Politics and Social Science, March 1950; 80 See Mises, Theory and H i s t o p . op. cit., pp. 310-1!. Also his Ulrimare Foundation. op. American Economic Review, June 1950; and Political Science Quarrerly. Dec. 1950. cit., p. 74. 101 See Mises, Human Action. op. cit.. pp. 29.95; Theow and History. op. cit., pp. 26.271. 81 Ibid., p. 57. Another paradox: Mises and Nozick are associated with the same political philosophy - 82 Ibid.. pp. 41. 43, emphasis added. See also the remainder of p. 41. libertarianism. 83 b i d . , p. 50. 102 Ibid., p. 27. One must resist the great temptation to speculate as toNozick’s motives ( I ) 84 Mises, Human Action, p. 242, emphasis added. for criticizing the Austrian school in general and (2) for ascribing political motivations to 85 See point 13 above. Mises in this particular instance. 86 Austrians would reject the frst in that weak preference makes use of ‘indifference’ and 103 See Note 51. the second since they believe that choice, or human action. is necessary and suficient to 104 Rothbard, Man. Economv and State. op. cit., p. 1 1 , emphasis added. establish strong preference. 105 Mises, Human Acrion. op. cit.. p. 484. Cited by Nozick. op. cit., p. 379. 87 Indeed this can be used as a technique to help uncertain people make up their minds. The 106 Rothbard, Man.Economy and Slate. op. cit., p. 13. Cited in Nozick, op. cit., p. 378. trick is, after frst flipping the coin, to closely monitorone’s feelings with regard to the 107 See table of contents, Rothbard. ,Man. Economy and Srare. op. cit. Mises, too. speaks result. If happy. one can choose to be guided by the random device. If not. then one can in terms of time economization. See his Human Aclion. op. cit., p. 48. do the opposite of what the coin ‘dictates’. 108 See Rothbard, Man. Economy and State, op. cit., pp. M I . See also Mises, Human 88 Reliance on the coin flip as an answer. as we have seen. is no real solution. It just pushes Action. op. cit., p. 489:Walter Block, ‘The Negative Interest Rate: TowardaTaxonomic back the question. which now becomes: Why did he go along with the random choice if Critique’, Journal u/Liberrarinn Studies. Vol. 2 (1978). No. 2, p. 121. he didn’t prefer to? 109 See Mises, Human Action. op, cit.. p. 486. 89 More exactly, certain specific units of buttern. would be shown as preferable to the 110 See Note 105, emphasis added. one unit composed of the commodity. butterb. See Rothbard. Man, Economy and Stare. 1 I 1 Rothbard, ,Wan. Economv and Stat?. op. cit.. p. 38. op. cit., pp. 17-18. I12 See Roger Garrison, ‘In Defense of the Misesian Theory ofInterest’,.Journal ofliber- See Toward a Reconstruction ofUrili0 and Wevare Economics. Center for Libertarian rarian Studies. Vol. 3 (1979), No. 2. Studies, New York 1978, pp. 13-20: and Rothbard, Man, Eci>nomvand Sfale, Op. cit., 113 See Block. ‘The Negative Interest Rate‘, op. cit., p. 123. pp. 265-8. 114 He might have been guided by the maxim, ‘Every calorie says “Yea!” to life’. 91 For the Austrian, what is signifcant in terms of homopeneity ‘is not the physical 115 See Rothbard, Man. Economy and Stare. op. cit.. p. 63. ProPerty of a good, but the evaluation of the good by the actoi‘. Ibid., pp. 19. 60,61. It 116 1 fear my previous criticism of Nozick on this point is in error. See Block, ‘The Negative .144 #alter Block 'interest Rate'. OF. crt.. p . 124. fn 3 117 Mises. Humorr ,4rrinn. op cit.. p . 33. 118 h i d . . p 35. I19 Cf. On Libcrf? And in the spht of Oscar Lange. when the Austnan schooi establishes a central meeting hali. it would be only proper and fitting that :4 great statue in Nozick's likeness be erected. and placed in the central comdor. 120 The author wishes to express a debt of pratirude to htlmkick Arnientano. David Gordon. Israel Krrzner. Murray N. Rothbard. and Brian Summer\ . n o t aii of whose comments he has had the grace or wisdom to follow,