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The Ultimate Foundation of Economic Science: An Essay on Method
In this volume, Mises argued that economics is a science because human action is a natural order of life and that it is the actions of humans that determine markets and capital decisions. Since Mises believed these links could be proven scientifically, he concluded that economics, with its basis on that human action, is indeed a science in its own right and not an ideology or a metaphysical doctrine.
148 pages, Hardcover
First published January 1, 1962
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About the author
Ludwig von Mises
271 books1,245 followersLudwig Heinrich Edler von Mises (German pronunciation: [ˈluːtvɪç fɔn ˈmiːzəs]; September 29, 1881 – October 10, 1973) was an Austrian economist, historian, philosopher, author, and classical liberal who had a significant influence on the Austrian government's economic policies in the first third of the 20th century, the Austrian School of Economics, and the modern free-market libertarian movement.
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Displaying 1 - 14 of 14 reviews
February 26, 2023
2020 - Listened to the audio version from Mises.org, on a long car ride or two. Narrator did a good job, but this book is not the best subject for me in audio version. I think I need a written version, such as this edition, to make the ideas more concrete and understandable.
This book has a very strong critique of Marxism and other philosophies of history.
24 Oct. 2018 - I read this book but not this edition, between 1979 and 1984 and have very, very warm thoughts about it. It was a great re-statement, first published in 1962, by Mises about the most proper grounding of economics, in a priori logic, and his critique of the much more prevalent, but wrong, positivism of mainstream economics as well as the Milton Friedman Chicagoan school.
Friedman's book "Essays in Positive Economics" came out in 1953. I don't know if that had any influence on Mises to write this book, which was a restatement, clarification and passionate defense of his ideas developed in his book "Epistemological Problems of Economics" (published in 1933 only in German, and not translated till 1960), then later used extensively in his magnum opus "Human Action"(published 1949) and "Theory and History" (published 1957), but perhaps. On the other hand, Friedman was not even mentioned in this book (or at least is missing from the Index). But Friedman was famously known for not engaging in debate on this subject and never returned to it, even though Mises and others had strong critiques of his ideas. Perhaps these closing words from the book may have kept him from even broaching the subject:
"As far as the empiricist principle of logical positivism refers to the experimental methods of the natural sciences, it merely asserts what is not questioned by anybody. As far as it rejects the epistemological principles of the sciences of human action, it is not only entirely wrong. It is also knowingly and intentionally undermining the intellectual foundations of Western civilization."
This book has a very strong critique of Marxism and other philosophies of history.
24 Oct. 2018 - I read this book but not this edition, between 1979 and 1984 and have very, very warm thoughts about it. It was a great re-statement, first published in 1962, by Mises about the most proper grounding of economics, in a priori logic, and his critique of the much more prevalent, but wrong, positivism of mainstream economics as well as the Milton Friedman Chicagoan school.
Friedman's book "Essays in Positive Economics" came out in 1953. I don't know if that had any influence on Mises to write this book, which was a restatement, clarification and passionate defense of his ideas developed in his book "Epistemological Problems of Economics" (published in 1933 only in German, and not translated till 1960), then later used extensively in his magnum opus "Human Action"(published 1949) and "Theory and History" (published 1957), but perhaps. On the other hand, Friedman was not even mentioned in this book (or at least is missing from the Index). But Friedman was famously known for not engaging in debate on this subject and never returned to it, even though Mises and others had strong critiques of his ideas. Perhaps these closing words from the book may have kept him from even broaching the subject:
"As far as the empiricist principle of logical positivism refers to the experimental methods of the natural sciences, it merely asserts what is not questioned by anybody. As far as it rejects the epistemological principles of the sciences of human action, it is not only entirely wrong. It is also knowingly and intentionally undermining the intellectual foundations of Western civilization."
May 23, 2023
ENGLISH
“The Ultimate Foundation of Economic Science” is the last book written by Ludwig von Mises, it is said. In it, Mises summarizes his more philosophical thought about economics, although he mentions that the book is not a contribution to philosophy.
Mises exposes his thoughts by essentially refuting arguments raised by opponents of Liberalism, notably positivists and Marxists.
Criticisms of Marxists are frequent in Mises' work (see, for example, https://www.goodreads.com/review/show...). In Mises' view, Marx envisages a superhuman system (the forces of production) that will lead to the triumph of the working class over the productive bourgeoisie. But this superhuman system is nothing more than an argumentative ploy, for there is no such common abstract entity at the social level. The “progressive” detractors of capitalism are just myopic people who do not see the economic benefits that the capitalist system has provided for the average population, while they enjoy these benefits too.
In addition, the capitalist system was implemented gradually and peacefully (a phrase that draws some attention due to its possible naivety). There is also a strange imprecision when Mises claims that Marx, in his main work, “The Capital”, foresees the overthrow of the bourgeoisie. Having recently read the 3 books of The Capital (Book 1 https://www.goodreads.com/review/show..., Book 2 https://www.goodreads.com/review/show..., Book 3 https://www.goodreads.com/review/show...), I can say that Marx does not make such a “prediction” in that work. Marx dedicates the book essentially to portraying the functioning of the capitalist system and explaining why the working class will always be exploited in the productive system. Mises would have been more accurate if he had linked such prediction to the Communist Manifesto (https://www.goodreads.com/review/show...) or other works by Marx. It’s a minor inaccuracy, though, which does not compromise Mises’ arguments. Disappointing, though, is Mises’ use of Marx’s origin as a non proletarian to disqualify him in a passage — and worst: Mises states it’s enough to invoke Marx’s origin to rebut him.
As for the positivists, Mises criticizes that Auguste Comte and his disciples praise the so-called natural sciences without understanding that their methods do not apply to the sciences of human action, as these deal with factors such as ideas and final causes, factors that are unstable and variable. That is why there is also no point in the indiscriminate use of mathematics, statistics and game theory to understand economics. The overuse of these disciplines in economics is child's play as per Mises’ view. The same critique he makes regarding the model of strictly rational agent, which economists ended up developing. Even behavioral psychology is not able to portray human action correctly, as it seeks to separate intention and purpose of actions from human behavior. Mises points out that behavioral psychology calls the old psychology of the mind “literary psychology”; but for him, such literary psychology should be called “tymology”.
Mises argues that, in fact, the science of human action (which he calls “praxeology”) is the correct branch of knowledge for understanding human behavior. For Mises, “praxeology” essentially encompasses Economics and History.
History deals with past facts and cannot say anything about people's behavior in the future, as it analyzes circumstances specific to the historical moment, which will not necessarily be repeated.
Economics, once understood from the prism of praxeology, is able to analyze past and future human behavior correctly. Mises talks predominantly "adjectively" about so-called praxeology in this book. He dedicates passages to praise it as a correct and accurate way of analyzing behavior, but he never defines precisely what it is in this book. It claims, at most, that it is the a priori method of analyzing human behavior, giving the impression of being a possibly tautological method of examining behavior — that is, behavior as it is externalized answers any question of how it would have been. But this explanation I leave to specialists in Mises' thought.
Like Mises' other works, this book is written with great clarity and incisiveness — another fierce defense of individual liberty. While recognizing, as in “Liberalism” (https://www.goodreads.com/review/show...), that human society is the result of cooperation and division of labor, and that the State and government are necessary to guarantee the order and curb violence, Mises states that only individual freedom is capable of resulting in economic prosperity and full citizenship for the majority of the population.
PORTUGUÊS
“O Fundamento Último da Ciência Econômica”, segundo dizem, é o último livro escrito por Ludwig von Mises. Nele, Mises sintetiza seu pensamento de caráter mais filosófico sobre a ciência econômica, embora mencione que o livro não é uma contribuição à Filosofia.
A exposição do pensamento de Mises ocorre essencialmente pelo rebatimento de argumentos suscitados pelos adversários do pensamento liberal, notadamente positivistas e marxistas.
As críticas aos marxistas são frequentes na obra de Mises (ver, por exemplo, https://www.goodreads.com/review/show...). Na visão de Mises, Marx vislumbra um sistema sobre-humano (as forças de produção) que levará ao triunfo da classe trabalhadora sobre a burguesia produtiva. Mas esse sistema sobre-humano não passa de um estratagema argumentativo, pois não existe tal entidade abstrata comum no nível social. Os “progressistas” detratores do capitalismo não passam de pessoas míopes que não enxergam os benefícios econômicos que o sistema capitalista proporcionou para a média da população enquanto desfrutam desses benefícios.
Além disso, o sistema capitalista foi implementado de modo gradual e pacífico (frase esta que chama atenção por sua possível ingenuidade). Também se verifica uma imprecisão estranha quando Mises afirma que Marx, em sua obra principal, O Capital, prevê a derrubada da burguesia. Tendo eu lido recentemente os 3 livros d’O Capital (Livro 1 https://www.goodreads.com/review/show..., Livro 2 https://www.goodreads.com/review/show..., Livro 3 https://www.goodreads.com/review/show...) posso afirmar que Marx não dedica essa obra a tal “previsão”. Marx dedica o livro essencialmente a retratar o funcionamento do sistema capitalista e explicar porque a classe trabalhadora será sempre explorada no sistema produtivo. Mises teria sido mais preciso se tivesse relacionado tal previsão ao Manifesto Comunista (https://www.goodreads.com/review/show...) ou outras obras de Marx. Trata-se de uma imprecisão menor, porém, que não compromete os pontos defendidos por Mises. Decepcionante, no entanto, é o uso de Mises da origem de Marx de não proletário para desqualifica-lo em uma passagem — e pior: Mises diz que é suficiente invocar tal origem para rebate-lo.
Quanto aos positivistas, Mises crítica que Augusto Comte e seus discípulos louvam as ciências ditas naturais sem entenderem que os métodos delas não se aplicam às ciências da ação humana, pois estas lidam com fatores como ideias e causas finais, fatores esses instáveis e variáveis. Daí porque também não há cabimento no uso indiscriminado de matemática, estatística e teoria dos jogos para entender Economia. O uso excessivo dessas disciplinas no âmbito econômico não passa de uma brincadeira de criança para Mises. A mesma crítica ele faz à figura do agente econômico estritamente racional que economistas acabaram usando. Mesmo a psicologia comportamental não é capaz de retratar a ação humana corretamente, pois procura apartar do comportamento humano exatamente a intenção e a finalidade das ações. Mises aponta que a psicologia comportamental chama a antiga psicologia da mente de psicologia literária; para ele, tal psicologia literária pode ser chamada de “timologia”.
Mises defende que, na verdade, a ciência da ação humana (que ele chama de “praxeologia”) é o ramo do conhecimento correto para entender o comportamento humano. Para Mises, “praxeologia” abarca essencialmente Economia e História.
A História lida com fatos passados e nada pode dizer sobre o comportamento das pessoas no futuro, pois analisa circunstâncias próprias do momento histórico específico, que não necessariamente se repetirão.
Já a Economia, uma vez entendida sob o prisma da praxeologia, tem condições de analisar o comportamento humano passado e futuro de modo correto. Mises discorre de forma predominantemente “adjetiva” sobre a dita praxeologia neste livro: dedica passagens para elogiá-la como modo correto e preciso de análise do comportamento, mas jamais define o que ela é com precisão neste livro. Afirma, quando muito, que é o método a priori de análise do comportamento humano, dando a impressão de ser um método possivelmente tautológico de exame dos comportamentos (isto é, o comportamento como ele se exterioriza responde a qualquer indagação de como ele teria sido). Mas isso deixo para explicação aos especialistas no pensamento de Mises.
Como outras obras de Mises, trata-se de um livro escrito com bastante clareza e incisividade — uma defesa aguerrida da liberdade individual. Embora reconheça, como em “Liberalismo” (https://www.goodreads.com/review/show...), que a sociedade humana é fruto de cooperação e divisão do trabalho, e que Estado e governo são necessários para se garantir a ordem e coibir a violência, afirma que apenas a liberdade individual é capaz de resultar em prosperidade econômica e plena cidadania para a maioria da população.
“The Ultimate Foundation of Economic Science” is the last book written by Ludwig von Mises, it is said. In it, Mises summarizes his more philosophical thought about economics, although he mentions that the book is not a contribution to philosophy.
Mises exposes his thoughts by essentially refuting arguments raised by opponents of Liberalism, notably positivists and Marxists.
Criticisms of Marxists are frequent in Mises' work (see, for example, https://www.goodreads.com/review/show...). In Mises' view, Marx envisages a superhuman system (the forces of production) that will lead to the triumph of the working class over the productive bourgeoisie. But this superhuman system is nothing more than an argumentative ploy, for there is no such common abstract entity at the social level. The “progressive” detractors of capitalism are just myopic people who do not see the economic benefits that the capitalist system has provided for the average population, while they enjoy these benefits too.
In addition, the capitalist system was implemented gradually and peacefully (a phrase that draws some attention due to its possible naivety). There is also a strange imprecision when Mises claims that Marx, in his main work, “The Capital”, foresees the overthrow of the bourgeoisie. Having recently read the 3 books of The Capital (Book 1 https://www.goodreads.com/review/show..., Book 2 https://www.goodreads.com/review/show..., Book 3 https://www.goodreads.com/review/show...), I can say that Marx does not make such a “prediction” in that work. Marx dedicates the book essentially to portraying the functioning of the capitalist system and explaining why the working class will always be exploited in the productive system. Mises would have been more accurate if he had linked such prediction to the Communist Manifesto (https://www.goodreads.com/review/show...) or other works by Marx. It’s a minor inaccuracy, though, which does not compromise Mises’ arguments. Disappointing, though, is Mises’ use of Marx’s origin as a non proletarian to disqualify him in a passage — and worst: Mises states it’s enough to invoke Marx’s origin to rebut him.
As for the positivists, Mises criticizes that Auguste Comte and his disciples praise the so-called natural sciences without understanding that their methods do not apply to the sciences of human action, as these deal with factors such as ideas and final causes, factors that are unstable and variable. That is why there is also no point in the indiscriminate use of mathematics, statistics and game theory to understand economics. The overuse of these disciplines in economics is child's play as per Mises’ view. The same critique he makes regarding the model of strictly rational agent, which economists ended up developing. Even behavioral psychology is not able to portray human action correctly, as it seeks to separate intention and purpose of actions from human behavior. Mises points out that behavioral psychology calls the old psychology of the mind “literary psychology”; but for him, such literary psychology should be called “tymology”.
Mises argues that, in fact, the science of human action (which he calls “praxeology”) is the correct branch of knowledge for understanding human behavior. For Mises, “praxeology” essentially encompasses Economics and History.
History deals with past facts and cannot say anything about people's behavior in the future, as it analyzes circumstances specific to the historical moment, which will not necessarily be repeated.
Economics, once understood from the prism of praxeology, is able to analyze past and future human behavior correctly. Mises talks predominantly "adjectively" about so-called praxeology in this book. He dedicates passages to praise it as a correct and accurate way of analyzing behavior, but he never defines precisely what it is in this book. It claims, at most, that it is the a priori method of analyzing human behavior, giving the impression of being a possibly tautological method of examining behavior — that is, behavior as it is externalized answers any question of how it would have been. But this explanation I leave to specialists in Mises' thought.
Like Mises' other works, this book is written with great clarity and incisiveness — another fierce defense of individual liberty. While recognizing, as in “Liberalism” (https://www.goodreads.com/review/show...), that human society is the result of cooperation and division of labor, and that the State and government are necessary to guarantee the order and curb violence, Mises states that only individual freedom is capable of resulting in economic prosperity and full citizenship for the majority of the population.
PORTUGUÊS
“O Fundamento Último da Ciência Econômica”, segundo dizem, é o último livro escrito por Ludwig von Mises. Nele, Mises sintetiza seu pensamento de caráter mais filosófico sobre a ciência econômica, embora mencione que o livro não é uma contribuição à Filosofia.
A exposição do pensamento de Mises ocorre essencialmente pelo rebatimento de argumentos suscitados pelos adversários do pensamento liberal, notadamente positivistas e marxistas.
As críticas aos marxistas são frequentes na obra de Mises (ver, por exemplo, https://www.goodreads.com/review/show...). Na visão de Mises, Marx vislumbra um sistema sobre-humano (as forças de produção) que levará ao triunfo da classe trabalhadora sobre a burguesia produtiva. Mas esse sistema sobre-humano não passa de um estratagema argumentativo, pois não existe tal entidade abstrata comum no nível social. Os “progressistas” detratores do capitalismo não passam de pessoas míopes que não enxergam os benefícios econômicos que o sistema capitalista proporcionou para a média da população enquanto desfrutam desses benefícios.
Além disso, o sistema capitalista foi implementado de modo gradual e pacífico (frase esta que chama atenção por sua possível ingenuidade). Também se verifica uma imprecisão estranha quando Mises afirma que Marx, em sua obra principal, O Capital, prevê a derrubada da burguesia. Tendo eu lido recentemente os 3 livros d’O Capital (Livro 1 https://www.goodreads.com/review/show..., Livro 2 https://www.goodreads.com/review/show..., Livro 3 https://www.goodreads.com/review/show...) posso afirmar que Marx não dedica essa obra a tal “previsão”. Marx dedica o livro essencialmente a retratar o funcionamento do sistema capitalista e explicar porque a classe trabalhadora será sempre explorada no sistema produtivo. Mises teria sido mais preciso se tivesse relacionado tal previsão ao Manifesto Comunista (https://www.goodreads.com/review/show...) ou outras obras de Marx. Trata-se de uma imprecisão menor, porém, que não compromete os pontos defendidos por Mises. Decepcionante, no entanto, é o uso de Mises da origem de Marx de não proletário para desqualifica-lo em uma passagem — e pior: Mises diz que é suficiente invocar tal origem para rebate-lo.
Quanto aos positivistas, Mises crítica que Augusto Comte e seus discípulos louvam as ciências ditas naturais sem entenderem que os métodos delas não se aplicam às ciências da ação humana, pois estas lidam com fatores como ideias e causas finais, fatores esses instáveis e variáveis. Daí porque também não há cabimento no uso indiscriminado de matemática, estatística e teoria dos jogos para entender Economia. O uso excessivo dessas disciplinas no âmbito econômico não passa de uma brincadeira de criança para Mises. A mesma crítica ele faz à figura do agente econômico estritamente racional que economistas acabaram usando. Mesmo a psicologia comportamental não é capaz de retratar a ação humana corretamente, pois procura apartar do comportamento humano exatamente a intenção e a finalidade das ações. Mises aponta que a psicologia comportamental chama a antiga psicologia da mente de psicologia literária; para ele, tal psicologia literária pode ser chamada de “timologia”.
Mises defende que, na verdade, a ciência da ação humana (que ele chama de “praxeologia”) é o ramo do conhecimento correto para entender o comportamento humano. Para Mises, “praxeologia” abarca essencialmente Economia e História.
A História lida com fatos passados e nada pode dizer sobre o comportamento das pessoas no futuro, pois analisa circunstâncias próprias do momento histórico específico, que não necessariamente se repetirão.
Já a Economia, uma vez entendida sob o prisma da praxeologia, tem condições de analisar o comportamento humano passado e futuro de modo correto. Mises discorre de forma predominantemente “adjetiva” sobre a dita praxeologia neste livro: dedica passagens para elogiá-la como modo correto e preciso de análise do comportamento, mas jamais define o que ela é com precisão neste livro. Afirma, quando muito, que é o método a priori de análise do comportamento humano, dando a impressão de ser um método possivelmente tautológico de exame dos comportamentos (isto é, o comportamento como ele se exterioriza responde a qualquer indagação de como ele teria sido). Mas isso deixo para explicação aos especialistas no pensamento de Mises.
Como outras obras de Mises, trata-se de um livro escrito com bastante clareza e incisividade — uma defesa aguerrida da liberdade individual. Embora reconheça, como em “Liberalismo” (https://www.goodreads.com/review/show...), que a sociedade humana é fruto de cooperação e divisão do trabalho, e que Estado e governo são necessários para se garantir a ordem e coibir a violência, afirma que apenas a liberdade individual é capaz de resultar em prosperidade econômica e plena cidadania para a maioria da população.
December 1, 2020
A very learned book. This is certainly not for beginners. And you should already be familiar with the Misesian battles in methodology (and even with the context of his intellectual life) in order to fully understand his points. In that sense, it is a book for mature students of Austrian economics or for students of the philosophy of science and economics. One thing is for sure, Mises's impressive breadth of knowledge and culture is displayed from start to finish, even though some of his assertions may sound a bit too harsh. Even though I consider myself fairly well read in his works, I still learned many interesting insights from this book, and was pleased with some innovative ways of looking at some philosophical and "civilizational" questions.
But, once again: do not jump into this one until have an idea of what epistemology means haha
But, once again: do not jump into this one until have an idea of what epistemology means haha
April 26, 2020
Important distinction between the method of natural science and economics is made. The Criticism of Behavioral economics is also enlightening.
January 19, 2022
The Ultimate Foundation of Economic Science was written 10 years before the Austrian Economist's death, and it was his final book. Ludwig von Mises is the modern father of that school of economics we call today Austrian Economics. He remade the whole discipline from the 1910's till the 1960's, and he remade it so as to retain its philosophical substructure. This is mostly recapitulated in his magnum opus, Human Action. This book, the Ultimate Foundation, is a recap of the fierce debate between the positivists and the metaphysicians (Austrians) who build economics upon an axiomatic basis, whose axioms and tools were influenced by what would the German-speaking people call, Verstehen (an understanding to which we would now consider to be deeply rooted not only in the human experience but in the coherent analysis of social and economic events).
The Ultimate Foundation offers semi-disjoint chapters all relating to the progress (in change, though not for the better) of economic thinking in the last hundred years (1850's - 1860's), where the discipline has grown to be unrecognizable from its previous form. The central issue of this book is the position of the social sciences, and specifically, economics, among the disciplines.
The book starts with chapters relating to the essence of human character and the limitations of man, and how they are dealt with and considered in the social sciences. Starting with the philosophical structure of the science of man, epistemology and praxeology (a science Mises invented himself, by which he extracts economics and sociology) of the social sciences and their limitations due to man's ability to alter nature's course through his will. Then the book considers the mind by itself and how he affects those changes to nature. (Keep in mind that whether freedom of will exists or not, and whether we conceive of the world as it is, is a matter that the social sciences do not engage but must take a definite position from the start.) By the third chapter, the book gets to the essential point: The activistic basis of human knowledge. This idea is very important and a lot of the book is based on it. Human knowledge is limited by our actions to attain it, but moreover, because of the nature of human action in which we substitute better conditions for worse, and because knowledge is gained by action, our attempts to gather and collect knowledge are activistic attempts in which we also aim to improve our lives; and here lies some of the folly. Because we often will want our own conclusions to be reached due to our belief that our conclusions are conducive to a better world, we will often try to accept beliefs as true, which ultimately distort our worldviews. (This result is essential for his discussion of hypostatization.) The third chapter ends with a discussion of thymology, which is the branch of history that attempts to reconstruct the thoughts in the minds of men whom the discipline of history and biography study. One thymological method which is often used by economists and historians is called Cui bono which is Latin for, to whose benefit? When we try to reconstruct history, we often wonder why person X has done action Y, and reason that they did it for Z1, Z2, or Z3, all the while postulating that the logical structures of our minds (the subject of study, and the author of the study) are sufficiently similar so that the analysis holds.
The final chapters of the book focus more on the moral, ethical, and scientific problems of the modern economics. For an example, there are many problems with the use of statistics in economics, one of which is that the extreme complexity of human behaviour does not allow us to extrapolate data about the future from the ones from the past, and our datapoints, when interpolated, miss a lot of the picture because the data itself is insufficient (even given The Weierstrass Theorem). Statistics offer yet another insurmountable problem. When collecting data, we have to edit the data for it to be meaningful. We have to eliminate double-counting, factor in ages, and give weights to price-differences in different geographical locations, all of which would yield different results if we operate within one theory or another. Moreover, we cannot be very certain of the reliability of our collected data, and we cannot even measure uncertainty without expectation values provided from theoretical estimates, which also differ from theory to theory.
The book talks about a huge problem affecting the social sciences, and are destroying economics and sociology from within. That problem is called Hypostatization. It can be summarized as follows. When I create a social categorization scheme, like dividing society into castes, and assuming the real existence of those castes, instead of them existing as classification schemes, and inferring from the existence of the caste some metaphysically emergent feature, like the coupling of people's actions with the motive to move forward the benefits of their caste (capitalists, the bourgeoisie, the proletariat, etc...). Hypostatization is assuming into existence the theoretical items that one aims to talk about or the tools one uses to understand a certain subject of interest.
We all, for example, recognize that society exists. But society exists as a set, and not as a metaphysical entity (such as the ones Hegel talks about, or Stirner mocks). Society cannot act, but we attribute the statistical action of people to society. And so on. The problem occurs when we infer from some attribute of this 'society' the attributes of the people, which is not simply an exemplification of the fallacy of division but is an exemplification of a more lethal fallacy, which is extracting something from nothing.
The final chapter is characteristic of Mises, in which he demonstrates that the social sciences' appeal to the 'scientific' method perfectly explains its rationalization of totalitarianism. That though logical fallacies riddle their arguments, and their premises are unfounded, they were from the beginning predisposed to accumulate power and this was only their guise.
The Ulimate Foundation is an excellent closure to Mises' career as a philosopher, economist, and a social thinker who not only tackled the problems of the world, but had put his mark on many of its disciplines.
The Ultimate Foundation offers semi-disjoint chapters all relating to the progress (in change, though not for the better) of economic thinking in the last hundred years (1850's - 1860's), where the discipline has grown to be unrecognizable from its previous form. The central issue of this book is the position of the social sciences, and specifically, economics, among the disciplines.
The book starts with chapters relating to the essence of human character and the limitations of man, and how they are dealt with and considered in the social sciences. Starting with the philosophical structure of the science of man, epistemology and praxeology (a science Mises invented himself, by which he extracts economics and sociology) of the social sciences and their limitations due to man's ability to alter nature's course through his will. Then the book considers the mind by itself and how he affects those changes to nature. (Keep in mind that whether freedom of will exists or not, and whether we conceive of the world as it is, is a matter that the social sciences do not engage but must take a definite position from the start.) By the third chapter, the book gets to the essential point: The activistic basis of human knowledge. This idea is very important and a lot of the book is based on it. Human knowledge is limited by our actions to attain it, but moreover, because of the nature of human action in which we substitute better conditions for worse, and because knowledge is gained by action, our attempts to gather and collect knowledge are activistic attempts in which we also aim to improve our lives; and here lies some of the folly. Because we often will want our own conclusions to be reached due to our belief that our conclusions are conducive to a better world, we will often try to accept beliefs as true, which ultimately distort our worldviews. (This result is essential for his discussion of hypostatization.) The third chapter ends with a discussion of thymology, which is the branch of history that attempts to reconstruct the thoughts in the minds of men whom the discipline of history and biography study. One thymological method which is often used by economists and historians is called Cui bono which is Latin for, to whose benefit? When we try to reconstruct history, we often wonder why person X has done action Y, and reason that they did it for Z1, Z2, or Z3, all the while postulating that the logical structures of our minds (the subject of study, and the author of the study) are sufficiently similar so that the analysis holds.
The final chapters of the book focus more on the moral, ethical, and scientific problems of the modern economics. For an example, there are many problems with the use of statistics in economics, one of which is that the extreme complexity of human behaviour does not allow us to extrapolate data about the future from the ones from the past, and our datapoints, when interpolated, miss a lot of the picture because the data itself is insufficient (even given The Weierstrass Theorem). Statistics offer yet another insurmountable problem. When collecting data, we have to edit the data for it to be meaningful. We have to eliminate double-counting, factor in ages, and give weights to price-differences in different geographical locations, all of which would yield different results if we operate within one theory or another. Moreover, we cannot be very certain of the reliability of our collected data, and we cannot even measure uncertainty without expectation values provided from theoretical estimates, which also differ from theory to theory.
The book talks about a huge problem affecting the social sciences, and are destroying economics and sociology from within. That problem is called Hypostatization. It can be summarized as follows. When I create a social categorization scheme, like dividing society into castes, and assuming the real existence of those castes, instead of them existing as classification schemes, and inferring from the existence of the caste some metaphysically emergent feature, like the coupling of people's actions with the motive to move forward the benefits of their caste (capitalists, the bourgeoisie, the proletariat, etc...). Hypostatization is assuming into existence the theoretical items that one aims to talk about or the tools one uses to understand a certain subject of interest.
We all, for example, recognize that society exists. But society exists as a set, and not as a metaphysical entity (such as the ones Hegel talks about, or Stirner mocks). Society cannot act, but we attribute the statistical action of people to society. And so on. The problem occurs when we infer from some attribute of this 'society' the attributes of the people, which is not simply an exemplification of the fallacy of division but is an exemplification of a more lethal fallacy, which is extracting something from nothing.
The final chapter is characteristic of Mises, in which he demonstrates that the social sciences' appeal to the 'scientific' method perfectly explains its rationalization of totalitarianism. That though logical fallacies riddle their arguments, and their premises are unfounded, they were from the beginning predisposed to accumulate power and this was only their guise.
The Ulimate Foundation is an excellent closure to Mises' career as a philosopher, economist, and a social thinker who not only tackled the problems of the world, but had put his mark on many of its disciplines.
February 20, 2020
Not quite what I had in mind. I thought it would be focused on 'praxeology', and it is in a sense, but more in contrast to the ideas of positivism and socialism. It is not a step-by-step derivation of the principles of Austrian economics, but is centered on the basic axiom of action and how Mises justifies it. It is a short and fairly easy read, but I think most of it has passed me by somehow. Perhaps for lack of philosophical education? I intend to one day read his magnum pous Human Action. Perhaps things will be clearer then.
November 24, 2018
Um tratado de epistemologia no campo da ação humana. Novamente, é uma pena que Mises não escreva de forma muito fácil, como o fazia Rothbard.
Mises esclarece que devemos usar os métodos corretos para ciências distintas. Apesar de um cientista agir ao fazer um experimento, o seu alvo de experimento natural em si não age. As ciências naturais buscam pesquisas de causalidade, enquanto as praxeológicas são teleológicas. Critica a filosofia materialista marxista por eles considerarem que as forças produtivas materiais geram as relações de produção, independente da vontade do homem.
Critica a máxima positivista, de que "ciência é medição", e as abordagens quantitativas e econométricas, que não passam de brincadeiras com números históricos e nada podem representar de condições futuras.
Mises lembra do grave erro epistemológico de hipóstase, isto é, atribuir existência real a constructos, especialmente no caso de considerar a "sociedade" como um ente descolado dos indivíduos.
Prossegue com críticas à ideia de infalibilidade das maiorias e até dos filósofos, como no caso de Platão em seu projeto tirânico de governo. Escreve depois suas minarquisses de governo mal necessário pra garantir a segurança.
No geral é um bom livro, mas que teria sido melhor escrito por um autor anarquista, visto Mises não poder criticar ou enxergar como autoritarismo a coerção estatal.
Mises esclarece que devemos usar os métodos corretos para ciências distintas. Apesar de um cientista agir ao fazer um experimento, o seu alvo de experimento natural em si não age. As ciências naturais buscam pesquisas de causalidade, enquanto as praxeológicas são teleológicas. Critica a filosofia materialista marxista por eles considerarem que as forças produtivas materiais geram as relações de produção, independente da vontade do homem.
Critica a máxima positivista, de que "ciência é medição", e as abordagens quantitativas e econométricas, que não passam de brincadeiras com números históricos e nada podem representar de condições futuras.
Mises lembra do grave erro epistemológico de hipóstase, isto é, atribuir existência real a constructos, especialmente no caso de considerar a "sociedade" como um ente descolado dos indivíduos.
Prossegue com críticas à ideia de infalibilidade das maiorias e até dos filósofos, como no caso de Platão em seu projeto tirânico de governo. Escreve depois suas minarquisses de governo mal necessário pra garantir a segurança.
No geral é um bom livro, mas que teria sido melhor escrito por um autor anarquista, visto Mises não poder criticar ou enxergar como autoritarismo a coerção estatal.
October 23, 2023
MISES APPLIES HIS IDEAS TO SOME AREAS OF THE ‘THEORY OF KNOWLEDGE’
Ludwig von Mises wrote in the Preface to this 1962 book, “This essay is not a contribution to philosophy. It is merely the exposition of certain idea that attempts to deal with the theory of knowledge ought to take into full account… This essay proposes to stress the fact that there is in the universe something for the description and analysis of which the natural sciences cannot contribute anything. There are events beyond the range of those events that the procedures of the natural sciences are fit to observe and to describe. There is human action. It is a fact that up to now nothing has been done to bridge over the gulf that yawns between the natural events in the consummation of which science is unable to find any finality and the conscious acts of men that invariably aim to definite ends. To neglect, in the treatment of human action, reference to the ends aimed at by the actors is no less absurd than were the endeavors to resort to finality in the interpretation of natural phenomena… It may even be doubted whether it is possible to separate the analysis of epistemological problems from the treatment of the substantive issues of the science concerned… My own contributions to the theory of knowledge… are in my economic and historical writings… The present essay is merely a supplement to and a commentary on what economics itself says about its own epistemology.”
He asserts, “The characteristic feature of man is action. Man aims a changing some of the conditions of his environment in order to substitute a state of affairs that suites hi better for another state that suits him less. All manifestations of life and behavior with regard to which man differs from all other beings and things known to him are instances of action can be dealt with only from what we may call an activistic point of view. The study of man, as far as is not biology, begins and ends with the study of human action.” (Pg. 34)
He observes, “Every action is a speculation, i.e., guided by a definite opinion concerning the uncertain conditions of the future. Even in short-run activities this uncertainty prevails. Nobody can know whether some unexpected fact will not render vain all that he has provided for the next day or the next hour.” (Pg. 51)
He acknowledges, “We do not know how out of the encounter of a human individuality, i.e., a man as he has been formed by all he has experienced, and a new experience definite ideas result and determine the individual’s conduct. We do not even have any surmise how such knowledge could be acquired…. It is precisely the lack of such knowledge that generates the fundamental difference between the natural sciences and the sciences of human action.” (Pg. 58)
He explains, “Economics can predict the effects to be expected from resorting to definite measures of economic principles. It can answer the question whether a definite policy is able to attain the ends aimed at and, if the answer is in the negative, what its real effects will be. But of course, this prediction can only be ‘qualitative.’ It cannot be ‘quantitative’ as there are no constant relations between the factors and effects concerned. The practical value of economics is to be seen in this neatly circumscribed power of predicting the outcome of definite measures.” (Pg. 67)
He argues, “The concept of national income entirely obliterates the real conditions of production within a market economy… This mysterious something produces a quantity called ‘national income,’ and then a second process ‘distributes’ this quantity among the various individuals. The political meaning of this method is obvious. One criticizes the ‘inequality’ prevailing in the ‘distribution’ of national income. One taboos the question that makes the national income rise or drop and implies that there is no inequality in the contributions and achievements of the individuals that are generating the total quantity of national income.” (Pg. 85-86)
He states, “the concept of the perfect system of government is fallacious and self-contradictory. What elevates man above all other animals is the cognition that peaceful cooperation under the principle of the division of labor is a better method to preserve life and to remove felt uneasiness than indulging in pitiless biological competition for a share in the scarce means of subsistence provided by nature. Guided by this insight, man alone among all living beings consciously aims at substituting social cooperation for what philosophers have called the state of nature… or the law of the jungle.” (Pg. 97)
He contends, “Government and state can never be perfect because they owe their raison d’être to the imperfection of man and can attain their end, the elimination of man’s innate impulse to violence, only by recourse to violence, the very thing they are called upon to prevent. It is a double-edged makeshift to entrust an individual or a group of individuals with the authority to resort to violence. The enticement implied is too tempting for a human being…” (Pg. 98)
He suggests, “Planning other peoples’ actions means to prevent them from planning for themselves, means to deprive them of their essentially human quality, means enslaving them. The great crisis of our civilization is the outcome of this enthusiasm for all-round planning. There have always been people prepared to restrict their fellow citizens’ right and power to choose their own conduct. The common man always looked askance upon all those who eclipsed him in any regard, and he advocate conformity… What is new and characterizes our age is that the advocates of uniformity and conformity are raising their claims on behalf of science.” (Pg. 129)
This book may be of interest to those studying Mises, Austrian economics, and similar topics.
Ludwig von Mises wrote in the Preface to this 1962 book, “This essay is not a contribution to philosophy. It is merely the exposition of certain idea that attempts to deal with the theory of knowledge ought to take into full account… This essay proposes to stress the fact that there is in the universe something for the description and analysis of which the natural sciences cannot contribute anything. There are events beyond the range of those events that the procedures of the natural sciences are fit to observe and to describe. There is human action. It is a fact that up to now nothing has been done to bridge over the gulf that yawns between the natural events in the consummation of which science is unable to find any finality and the conscious acts of men that invariably aim to definite ends. To neglect, in the treatment of human action, reference to the ends aimed at by the actors is no less absurd than were the endeavors to resort to finality in the interpretation of natural phenomena… It may even be doubted whether it is possible to separate the analysis of epistemological problems from the treatment of the substantive issues of the science concerned… My own contributions to the theory of knowledge… are in my economic and historical writings… The present essay is merely a supplement to and a commentary on what economics itself says about its own epistemology.”
He asserts, “The characteristic feature of man is action. Man aims a changing some of the conditions of his environment in order to substitute a state of affairs that suites hi better for another state that suits him less. All manifestations of life and behavior with regard to which man differs from all other beings and things known to him are instances of action can be dealt with only from what we may call an activistic point of view. The study of man, as far as is not biology, begins and ends with the study of human action.” (Pg. 34)
He observes, “Every action is a speculation, i.e., guided by a definite opinion concerning the uncertain conditions of the future. Even in short-run activities this uncertainty prevails. Nobody can know whether some unexpected fact will not render vain all that he has provided for the next day or the next hour.” (Pg. 51)
He acknowledges, “We do not know how out of the encounter of a human individuality, i.e., a man as he has been formed by all he has experienced, and a new experience definite ideas result and determine the individual’s conduct. We do not even have any surmise how such knowledge could be acquired…. It is precisely the lack of such knowledge that generates the fundamental difference between the natural sciences and the sciences of human action.” (Pg. 58)
He explains, “Economics can predict the effects to be expected from resorting to definite measures of economic principles. It can answer the question whether a definite policy is able to attain the ends aimed at and, if the answer is in the negative, what its real effects will be. But of course, this prediction can only be ‘qualitative.’ It cannot be ‘quantitative’ as there are no constant relations between the factors and effects concerned. The practical value of economics is to be seen in this neatly circumscribed power of predicting the outcome of definite measures.” (Pg. 67)
He argues, “The concept of national income entirely obliterates the real conditions of production within a market economy… This mysterious something produces a quantity called ‘national income,’ and then a second process ‘distributes’ this quantity among the various individuals. The political meaning of this method is obvious. One criticizes the ‘inequality’ prevailing in the ‘distribution’ of national income. One taboos the question that makes the national income rise or drop and implies that there is no inequality in the contributions and achievements of the individuals that are generating the total quantity of national income.” (Pg. 85-86)
He states, “the concept of the perfect system of government is fallacious and self-contradictory. What elevates man above all other animals is the cognition that peaceful cooperation under the principle of the division of labor is a better method to preserve life and to remove felt uneasiness than indulging in pitiless biological competition for a share in the scarce means of subsistence provided by nature. Guided by this insight, man alone among all living beings consciously aims at substituting social cooperation for what philosophers have called the state of nature… or the law of the jungle.” (Pg. 97)
He contends, “Government and state can never be perfect because they owe their raison d’être to the imperfection of man and can attain their end, the elimination of man’s innate impulse to violence, only by recourse to violence, the very thing they are called upon to prevent. It is a double-edged makeshift to entrust an individual or a group of individuals with the authority to resort to violence. The enticement implied is too tempting for a human being…” (Pg. 98)
He suggests, “Planning other peoples’ actions means to prevent them from planning for themselves, means to deprive them of their essentially human quality, means enslaving them. The great crisis of our civilization is the outcome of this enthusiasm for all-round planning. There have always been people prepared to restrict their fellow citizens’ right and power to choose their own conduct. The common man always looked askance upon all those who eclipsed him in any regard, and he advocate conformity… What is new and characterizes our age is that the advocates of uniformity and conformity are raising their claims on behalf of science.” (Pg. 129)
This book may be of interest to those studying Mises, Austrian economics, and similar topics.
August 1, 2020
Wise words for our time
This book is an update to his amazing book "Human Action" The main arguments are the same what he calls a priori praxesology, the key role of ideas with capital and entrepreneurship make a new world. His main attack here is not religion but collectivism. This collectiveism ( socialism, communism, fascism, logical positivism) has now appropriated for itself the mantle of science for their ideas . Even though philosophically these ideas are unsustainable the new ruse is to attack enemies not in ideas but class. If you belong to a certain class you are immediately wrong. This leads to a destructive totalitarianism. Phenomenal book.
This book is an update to his amazing book "Human Action" The main arguments are the same what he calls a priori praxesology, the key role of ideas with capital and entrepreneurship make a new world. His main attack here is not religion but collectivism. This collectiveism ( socialism, communism, fascism, logical positivism) has now appropriated for itself the mantle of science for their ideas . Even though philosophically these ideas are unsustainable the new ruse is to attack enemies not in ideas but class. If you belong to a certain class you are immediately wrong. This leads to a destructive totalitarianism. Phenomenal book.
April 13, 2021
it is a great work on methodology of studying economics in particular and huamn action in general, the method or framework discussed in the book are very essential, for most of the books on economics go straight to the application and telling solutions, rather than discussing the foundations upon which they stand, it takes you to the very starting of what it means to be a human as compared to other species and what makes the way of acting as humans do, is entirely different from and unique, rest you learn in the book
March 1, 2018
Mises was one of a kind. The more I look at the world and discover new ideas the more timeless his work becomes. One the great unsung heroes of the 20th century.
July 15, 2021
The man who even in death is doing his best in words to hold back the tide of socialism we are now awash in.
If he was alive today he would be attacked and vilified as he writes the truth.
If he was alive today he would be attacked and vilified as he writes the truth.
July 25, 2011
This book is "a must read" for all business students. In this book Ludwig von Mises explains the ultimate foundation of economics as a theory and practice. It is a shame that business schools in general still teach Marx, but forget von Mises. Like all Mises' books, highly recommended to read!
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September 23, 2010The Ultimate Foundation of Economic Science: An Essay on Method by Ludwig von Mises (2006)
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