The “Austrian” Method Part Two of Two – Human Action and the Natural Sciences

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In part one of this two-part series of essays on the “Austrian” method, we explored how action forms the grounding of our epistemology. We will now, in this second and final part, determine the correct approaches for humans to go out into the world and study the complex phenomena that exist.

Methodological Dualism

The “Austrian” approach to the explanation of phenomena is that science must apply a definitive and rigorous methodological dualism – taking one approach towards the study of human action on the hand and a different approach towards the study of the actions of unconscious matter on the other. The study of humans – that is, of their conscious actions as opposed to the actions motivated by the chemical and biological physiology of their bodies, such a heartbeat – must be validated by deduction from the action axiom. Within this category of study falls praxeology and the parts of it that branch into economics and ethics. The study of unconscious matter, on the other hand, must be validated empirically, encompassing all of the areas of study to which we typically apply the epithet “science” – physics, chemistry, biology and so on. This position of the “Austrians” is contrary to that of the mainstream economics profession which takes a methodological monistic approach, with the study of human action being categorised in exactly the same way as dead, unconscious matter and subjected to validation by evidential testing. Indeed science these days is almost synonymous with “evidence” and any conclusions that are not validated through evidence are seen to be worthless. The huge myriad of facts and statistics that are gathered about society are all used as “evidence” to indicate a particular problem or that a government intervention is or is not working. Indeed the entire approach gives credence to those who seek to bring about social engineering – if humans are merely mechanical objects that always behave in manner X when action Y is imposed then society can be manipulated like a puppet on a string in accordance with the will of the political leaders. If the product of this engineering is a failure then the hypothesis is merely viewed as being incorrect and – regardless of the lives ruined or lost in the first round – perhaps we should try seeing if humans behave not in manner X but in manner Z when action Y is imposed. By failing (or refusing to acknowledge) that it is the method itself and not the specific conclusions under it that are at fault, endless rounds of programmes and interferences are justified in order to try and get government to shape society according to whatever preoccupations – justice, equality, fairness etc. – happen to rule the roost. It is not too outlandish to suggest that the biggest social experiment of this kind – the Soviet Union – took seventy gut-wrenching years and countless millions of lives before it was abandoned as a failure. The settlement of this question, therefore, and proof of the necessity of methodological dualism is one of the most important bulwarks against tyranny that liberty-minded individuals should be prepared to understand.


Our first task is not to establish whether this dualism is justified, but, rather, whether it is possible to learn anything of substance at all through reasoning and deduction. A positivist objection to validating knowledge through reasoning is that it must necessarily be analytical and tautological rather than synthetic and progressive of knowledge. In other words, everything we need to know is contained in the original proposition and deducing further knowledge from it amounts merely to an engagement in endless definitions that teach us nothing new about the world whatsoever. But just because something is deduced from a given proposition does not mean that it is simply an elaborated definition of that original fact; rather, we very much learn something new about the world that affects how we interact with it. Even a very simple proposition – such as two parallel lines will never meet – will have impacts on geometry, design, endeavours in construction and even our spatial awareness. Try building an object where your design relies on the false proposition that two parallel lines will, at some point, meet and you will probably find that it will collapse. Similarly, the fact that we derive the whole corpus of economic theory from the simple proposition that “humans act” does not mean that we are expressing redundant and pointless definitions through economic theorising. All of the subsidiary axioms – that humans choose means, towards ends, at a cost, resulting in profit or loss – as well as concepts we derive from them – supply and demand, marginal utility, prices, exchange, interest, capital goods – and not to mention all of the further complex laws that we deduce from them all collapse into the basic axiom that humans act. Yet to understand these concepts and laws is not to engage in endless tautology. Do we not learn anything new about the world by deducing from the fact that humans act that price controls will cause either a shortage or surplus of the controlled goods? Do we not gain something from realising that increased taxation will raise the cost of production and hence retard its extent? All of these concepts and laws tell us something we did not know before about how we interact with the world and we would be very much at a loss without their realisation.

Unconscious and Conscious Beings

Having established this, therefore, let us proceed to justify the methodological division between the validation of knowledge of the actions of unconscious matter on the one hand and the actions of humans on the other. As we mentioned in part one, the seeking of knowledge in inherently bound with our role as actors and how we can enhance our use of means towards ends motivated by choices. The study of all complex phenomena in the universe is fundamentally an endeavour to enhance our understanding of another fundamental category of action, that of causality and the operation of causes – how one event causes another. It is through our role as actors where we must display and utilise an inherent understanding of the causal link between events that we come to realise the necessity for methodological dualism.

The physical objects around us in the world are all capable of being categorised as means through which we may meet our ends. A particular action utilising an object as a means will give a certain result – the end may be fulfilled, unfulfilled or fulfilled to a degree short of that desired; “over-fulfilment” – that is that the means through action produce more of an end that that which was sought may also be considered but it overlaps with un-fulfilment if the result is to create a net loss by impacting on other ends. This success or non-success of actions – that is, the suitability of means for ends – determines our knowledge of causes between these two categories of action. With unconscious objects humans tend to find that the same outcomes occur from repetition of a certain action under like conditions – if I let go of a ball it drops to the ground; if I do it a second time it drops to the ground again. In other words I find that on each occasion repeated actions to attain an end display a universal causal link between means and ends. However, if I shout at the ball to wash my laundry for me, I will learn that there is no causal link between shouting at a ball and my laundry being cleaned, however much I may repeat the action. This forms the basis of all approaches to the gaining of knowledge of unconscious matter – by holding all other variables constant and altering only the variable under examination we derive the laws of physics and chemistry from our observation, through action, of this matter. Importantly, these laws are invariably true and operate whenever the conditions are fulfilled. A further aspect that we know innately from our actions is that these truths tend to be quantitative as well as qualitative – that a given quantity of means is necessary to produce the end and variations of that quantity may either enhance or spoil attainment of the end. If I wish to sweeten my hot beverage I may add a spoonful of sugar; half a spoonful giving half the sweetness would be too little and two spoonfuls giving twice the sweetness would be too much. In the laboratory this translates into quantitative or proportionate laws; when we examine the boiling and freezing points of water, for example, we do not simply form a broad, qualitative law that increasing temperature will increase the energy of water molecules and lowering it will decrease the energy; rather, we know that a temperature of 100 degrees Celsius will boil water and a temperature of 0 degrees will freeze it, with each degree towards those points approaching it incrementally. As we know from observing our kettle or a pot on the stove, water doesn’t sit their tepidly until the boiling point is reached then vaporise suddenly; rather it starts to bubble and steam at much lower temperatures. Similarly, water approaching freezing will not suddenly ice over all at once but begins to turn to frost and slush at 2-3 degrees. Quantitative laws whose effects occur in infinitely small steps are precisely those truths of unconscious matter that are determined by the natural sciences, validated fundamentally through our inherent understanding of our use of them as means in actions towards ends. As we stated in part one, the fact that we continue to act to utilise means towards ends indicates that these causal links are not random or spontaneous but are, rather, objective laws of reality.

From our actions towards humans, however, we learn something markedly different. The realm of the physiological and chemical properties of their bodies is, of course, the same as that of unconscious matter – prick a man and he will bleed; hold a flame to him and his skin will burn. The domain of his consciously chosen actions, however, is where we find two important differences. First, the same human will not necessarily behave in the same way when the same situation is repeated, even if all other variables are held constant. Second, two humans will not necessarily behave in the same way in the same situation at the same time, even though they may each be acting under the same conditions. If I walk into a busy shop and shoot a gun in the air, some of the people will dash for cover, some will stand petrified, others will scream, others still may rush to tackle me to the ground and so on. Different people respond to the event in different ways. If I then leave and, a few minutes later, walk in and do the same thing again what will I find? Will the same people who dashed for cover last time do the same thing this time? Will the exact same people who screamed last time do so a second time? The answer is likely to be no – some of those who dashed for cover or stood petrified last time may now be buoyed up by their prior experience and join the ranks of those who rush to tackle me; those who tried to stop me last time, however, may not wish to risk their lives a second time and will run for shelter. Of course it is equally possible that they will all behave in exactly the same way – what is important is the fact that this aspect cannot be determined. The conscious choice of human actions serves to break those actions free of reliance upon the laws of physics. I don’t have to wait for the wind to push me two metres to the left; I can just decide to move my legs and walk that distance in that direction. Actions must, of course, always be in congruence with natural laws; I can’t for instance, jump and expect to be propelled into space. I can, however, make the conscious decision to build a rocket that will take me into orbit if the means are available and I don’t need to sit around and wait for the inertia of physical matter to do it for me. Human choice and volition, therefore, replaces the laws of physics as the cause of human action. Importantly, the place of human choice must be regarded as not just a cause but the ultimate cause of such action. The very existence of free will precludes the possibility of universal laws regarding the substance of a given action that is motivated by that will. Either an individual is free to do what he wants or he is not and his actions are reliant upon some other inertia. Psychology – the study of why humans make the choices that they do – may one day determine whether given physical or chemical impetuses in the brain always result in a given action; but until that stage is reached we must regard human choice as a distinctly teleological phenomenon. Economic science therefore proceeds in a markedly different direction from that of the natural sciences. Economists begin from the general, ultimate cause of human action and deduce from it the specific laws of phenomena; natural scientists, on the other hand, begin with the specific phenomena and work “backwards” to determine their more general causes.

Should the teleological nature of human action be doubted then consider the case of the individual who seeks to derive knowledge of other humans. Knowledge, as we have said, is the perquisite of actors – its purpose is to determine more accurately the technical requirements for future action, enhancing the understanding of the suitability of means directed towards ends. Let’s say that a man wants to hold a dinner party and wishes to serve either steak or salmon – whichever is less expensive (or more expensive, if he was trying to impress his guests). If the steak is cheaper he will serve steak and if salmon is cheaper he will serve salmon. Before this knowledge is gained his future action – whether he will serve steak or salmon – is uncertain and conditional upon the content of the knowledge. When he receives that knowledge – let’s say that steak is cheaper – he makes a choice to serve steak at his party. But he could easily have chosen salmon if salmon had been the less expensive of the two. In other words the very seeking of knowledge itself proves the uncertainty of future action and any attempt to seek knowledge of other, equally acting human beings, and derive concrete laws concerning the substance of their action would be contradictory.

Our knowledge of humans, as opposed to that of unconscious matter, therefore appears to be curtailed by a very wide margin. For we cannot, in our actions, approach other humans in the same way as we approach other matter – we cannot mould and shape humans in the way that we can other means to which we devote our ends. Does this mean, then, that we can know nothing at all about human action? Does our attempt at any study at all necessarily lead us into a dead end and should we give up? Not at all; we learnt in part one how our actions form the bedrock of our epistemology and how it necessarily constrains and conditions our search for knowledge. In exactly the same way, while we cannot form strictly substantive laws of human action, we can discover laws regarding their formal requirements – laws that exist by virtue of action itself regardless of the content of the individual action. In short, if we cannot examine the impetus towards the substance of actions and derive no laws at all from their observation we need to return to the root of the formal constraints of action by examining action itself.

The Characteristics of Laws of Human Action

There are three important qualities regarding the truths that we derive from the fact of action – first, they are deduced logically from the action axiom; second, they are formal and not substantive laws; and third, they are qualitative and not quantitative. They are deduced because only an actor has the innate ability to understand the meaning of action. In our own role as actors, we have an introspective understanding of the meaning of action and what it is to be an actor and we rely upon this understanding to draw conclusions about other actors. When a person picks up a cup in order to drink for instance, we know that this is not a random movement instigated by the laws of physics; rather, we know, from the knowledge we have validated from our own action, that this person is using means towards ends as the result of a choice. Simply observing and cataloguing the physical movements would tell us nothing at all – we might know that his arms move 46.3 centimetres to the left and his fingers clasp the cup and raise it 31.7 centimetres from the height of the table; but only reflection upon these movements, derived from our own role as actors, will tell us anything about these movements as freely chosen actions using means towards ends. Any kind of empirical validation of this knowledge is therefore impossible. Second, the laws are formal in that they specify the qualities of actions as a general category but have nothing to say about their substance. We may deduce, for example, the law that, all else being equal, an increase in the demand for a good will raise its price. But we have nothing to say on precisely what this good will be and when it will be demanded. Indeed, nothing about the physical quality of objects tells us whether they will be economic goods at all – such a categorisation being dependent upon the volition of the human mind. What is desired today may be discarded as useless tomorrow and vice versa. And finally, these truths are qualitative and not quantitative because actions occur in whole, discrete and concrete steps that take place in one go and do not proceed in infinitely small increments or decrements. If the temperature of a room is raised by one degree per minute water in the room may gain energy gradually by a measurable step per degree. Yet a human in the same room will not start shedding small parts of his jersey gradually at each degree; rather, there will come a point later where he perceives himself to be too hot and will take off the entire jersey in one go. Further, the impetuses that result in a change of choice resulting in an action are not uniform between human beings – others might find that they get too hot at a lower or higher temperature. And on a different day they may all make a different decision. Similarly, two objects that contain minute, physical differences may be regarded as the same good by the acting human. One bottle of water might contain exactly one litre of water; another might contain 1.0001 litres. Yet to the acting human this difference may be negligible and he will happily regard each bottle as interchangeable. It is partly for this basic reason that the application of mathematical formulae to explain (or rather, to predict) human action is invalid – mathematical sequences proceed in infinitely small gradations, the result of which would lead one to expect that human action also proceeds in such tiny, measurable steps.

It is these aspects that cause much ire and infuriation in the mainstream economics profession. Under the mantle “science is measurement” any method that rejects the formation of quantitative and substantive laws is seen as inherently unscientific. Science, however, is the seeking of knowledge as it exists in the universe; it is therefore perfectly scientific to state that laws must be qualitative if that is all they ever can be; grossly unscientific behaviour – indeed, an aberration on the part of anyone who proclaims to respect discovery of the truth – is to attempt to make known that which never can be. If quantitative laws cannot be determined then that is the boundary of scientific discovery.

The attempt to ascertain laws of human action through empirical validation produces only statistics and historical truths about the choices that were made at that particular time and place by those particular humans. Simply because the price of meat doubled during a shortage of cattle in Ruritania in 1952 does not mean that such a shortage in 2014 will also cause a doubling in price – or any change in price at all. Empirical validation fails to work in the realm of human action because none of the variables are ever held constant in two situations. The laws must instead be validated by holding the variables constant in one’s mind and deducing what must be the necessary result by virtue of the formal qualities of action. It follows from this also that the laws cannot be used to predict, with any scientific accuracy, future action – something that “Austrians” sometimes unwittingly overlook in their zeal to promote their otherwise correct understanding of economic theory. “Austrians” who have predicted a heavy increase in price inflation following the Federal Reserve’s money printing have had to cope with the smug retorts of the mainstream as this inflation has not emerged, largely because the demand to hold cash, particularly by the banks, has also increased. We cannot ever say that, for example, if the quantity of money is increased that there will be price inflation of any measurable quantity or even if price inflation will appear at all. All we can say is that, if all else remains equal, one is betting very heavily on the result of price inflation by carrying out the action of printing money. The focus of “Austrian” economists is to explain phenomena and not to engage in the Friedmann-ite obsession with the prediction of future events. Ironically, however, given their superior explanatory power, “Austrian” predictions tend to be more accurate than those of the mainstream – “Austrians”, for example, were among the few to recognise the instability of the housing bubble prior to the 2008 crash. Furthermore, being derived from absolutely true, self-evident premises the laws themselves – should our logic be correct – must also be absolutely true for the entirety of time, regardless of whether the particular phenomenon with which the law is concerned ever appears in society. A Robinson Crusoe island, for example, would be devoid of interpersonal exchange; and yet the laws of interpersonal exchange would still be true and valid. Phenomena which appear in society may determine the scope and direction of that which we wish to study, but they do not preclude the truthfulness of phenomena that have not made an appearance or do so to a lesser extent. Even if empirical validation in this field was possible, therefore, its limitation to present and visible phenomena would result in knowledge of a markedly poorer tapestry. It is unlikely that the Robinson Crusoe situation of unilateral exchange has ever existed to be observed and yet so informative is this situation of our basic economic understanding that we would be worse off without it.

Does this mean that we can never say anything at all about the content of actions? We can, but only on the basis of empathetic understanding of our fellow human beings and not upon any strictly defined laws. The realms of entrepreneurship and historical analysis use this method to determine and explain the actions and choices of humans in the future and the past respectively. Profit opportunities exist precisely because future actions cannot be embedded in concrete law; if they were everyone would know what they would be and every good and service would consequently be bidded up or down to precisely its cost. Rather, entrepreneurs must take their empathetic understanding of human desires in the future and combine it with superior logistical and technical knowledge of his goods or services and methods of production in order to make a profit. The historian, in forming explanation of past choices, must do this retrospectively. Use of the natural sciences and the sciences of human action will provide a circumscribed explanation for the most part – an historian who attempted to explain the effects of the Irish potato famine as the result of witchcraft would clearly be a charlatan, for example. Yet the key question of why historical figures acted as they did, their thoughts and feelings that motivated them towards action – a branch of historical investigation that Mises labelled thymology – can only ever be based on the historian’s empathetic view of the factual conditions under which the historical character was acting. The result is historical explanations that are based not upon concrete and certain knowledge but are simply more or less persuasive than others.


What we have outlined in these two parts is only the briefest possible sketch of the “Austrian” method as it applies both to economics specifically and to wider epistemology. It is therefore appropriate to end with a core bibliography of works that explore the “Austrian” method in more detail than we have been able to here:


Introductory Works:

Gordon, David                    An Introduction to Economic Reasoning

White, Lawrence                The Methodology of the Austrian Economists



Menger, Carl                          Investigations into the Method of the Social Sciences

Mises, Ludwig von               Epistemological Problems of Economics

Human Action, Part One, “Human Action”

Theory and History

The Ultimate Foundation of Economic Science

Robbins, Lionel                    Essay on the Nature and Significance of Economic Science

Rothbard, Murray N            The Logic of Action, Section One, “Method”

Hoppe, Hans Hermann      Economic Science and the Austrian Method

                                                   The Economics and Ethics of Private Property, Part Two , Chs. 9, 10, 14

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The “Austrian” Method Part One of Two – Foundations of “Austrian” Epistemology

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One of the primary dividing lines between practitioners of the “Austrian” School of economics and those of the mainstream is the appropriate method of economic reasoning – how are economic theorems validated and thus known to be true? “Austrians”, of course, are famous for their assertion that all of economic theory is deduced from a handful of axioms concerning human action, plus one or two empirical truths, such as the desire for leisure time. The mainstream, on the other hand, treats economics as being more akin to the natural sciences, where propositions are first formulated as hypotheses that must then be tested and validated empirically by sensory observation.

In commenting on this disagreement we shall, in this first part of our examination, go to the very heart of the matter and first of all define what we mean by epistemology and secondly to examine how it is that we know absolutely anything whatsoever. This is necessary before we look more closely at the “Austrian” method as it applies specifically to economics in part two.

Once more we must say that we are tackling here a very deep and extensive area of philosophy and much of that which we present will necessarily be brief, undeveloped and possibly incomplete. Nevertheless we hope here to outline the foundations of this important and much derided area of “Austrian” theory and its implications not only for economics but also for the social sciences and philosophy more widely.

The Purpose of “Austrian” Epistemology

One of the most frequent objections to the “Austrian” method is the misunderstanding that its chief concern is with how knowledge is acquired. Surely, these critics contend, we must have experience of, for example, what is supply and what is demand, or how to use money before we can formulate any theorems that concern them? We cannot just sit back and muse in our mind over these concepts divorced from any real, sensory interaction with what these things mean. However, the a priori nature of “Austrian” economic reasoning has less to do with how knowledge is attained and more to do with the cardinal question of how knowledge is validated – in other words, how do we know a given proposition to be true? Take, for example, the assertion that two parallel lines will never meet. We are not interested in the particular origins of my experience of parallel lines; rather, the question we want to answer is given that I have an experience of parallel lines what validates my conclusion that they will never meet? Do I need to construct the proposition “two parallel lines will never meet” as a hypothesis and then validate that hypothesis by empirical testing? Or will critical reflection upon the problem resolve the matter? In other words, do I need to go out and test a large sample of parallel lines in the real world in order to determine whether they will never meet; or can I reason in my mind that this must be absolutely and undeniably true?

The two titans of the twentieth century “Austrian” School, Ludwig von Mises and Murray N Rothbard, disagreed on the epistemological status of the fundamental categories of human action. Mises, who was influenced by Kantian epistemology, regarded them as “categories of the mind” and that they therefore existed prior to any experience. On the other hand Rothbard, an Aristoletian, denied this and regarded them as “broadly empirical”, something that could only be realised through experience. In other words they did not share the same theory concerning how we come to know the fundamental categories of human action. This divergence of opinion, however, did not prevent them both from recognising the essential self-evident truth of these fundamental categories and from recognising that such categories, regardless of how they come to be known, will always be a priori to the complex phenomena for which economics seeks an explanation. In spite of their differences in some of the more esoteric questions of epistemology, therefore, both could agree that all of the laws of economics are validated by reasoning and deduction from these self-evident categories and not from empirical testing. It is, therefore, the requirements for the validity of economic theory that separates practitioners of the Austrian School from their mainstream colleagues. This will be the focus of our attention in these essays.

Epistemology and Human Action

Let us therefore turn to the foundations of the “Austrian” method in wider epistemology. Contrary to what empiricists and relativists may claim, what is true and valid is heavily constrained by certain conditions of the universe in which humans find themselves. Truth and knowledge are not a tabula rasa upon which we can scribe whatever interesting pieces of information happen to come along. Even if they were we would first have to presuppose the existence and understanding of certain concepts simply to make such a record and communication – concepts such as identity, non-contradiction, alternatives, possibilities, causality, language, quantities, and of course, at the base of it all,  truth itself. You cannot record or communicate unless you have a common understanding of the concepts that you are recording or communicating. It is such presupposed concepts that heavily anchor the ambit of that which constitutes objective knowledge. Where does our knowledge of all of these aspects come from and how does it constrain or condition our search for further veracity?

It is submitted that at the very basis of all knowledge are a limited number of self-evident truths – truths that are proven simply by the endeavour of attempting to validate them. Furthermore, these self-evident truths are revealed to us through our action and the action axiom – the fact that we act in the universe and interact with reality – as all human endeavours in acquiring knowledge are actions and it is the formal conditions of actions that constrain the boundaries of knowledge.

The unique quality of self-evident truths is that they do not need further validation – to validate a proposition is to make it evident; yet if either stating or enquiring into the proposition is to validate it then one does not need to waste time and effort seeking further validation through observation, evidence or whatever; it is absurd to endeavour to make evident that which already is.

The first self-evident truths that we can derive from the action axiom are the individual actor’s identity, his consciousness and his existence. For any enquiry into the question of whether he exists and whether he is conscious answers that very question itself; for he cannot make such an enquiry without demonstrating to himself his existence and his consciousness. Furthermore, he presupposes his identity and his separation from other beings and objects – his enquiry being “do I exist?” and not whether a tree or China exists. He would settle the former question by introspection but not the latter questions, indicating his realisation of his identical separation from those other concepts, objects or beings. Any attempt by the individual to deny his existence, consciousness and identity would be to prove them – one cannot deny that one exists or is conscious; nor can one construct such an argument without recognising that he and he alone is the subject separate and distinct from other beings and objects.

Second, we have the constraints imposed by the formal categories of action itself – ends, means, choices and so on. All action must make a choice to direct means to an end at the exclusion of other ends with the outcome of either a psychic profit or a psychic loss. All enquiries are themselves actions that make use of these categories and so any attempt to disprove them would be futile. But what other self-evident truths are revealed by these categories of action? All actions must combine two or more means to produce an end at the cost of another end; what this reveals is our knowledge of conjunctions – “and” and “or” – for we must combine one means and another in order to produce either end A or end B. We also reveal our knowledge of quantities – for every end requires a specific quantity of a combination of means. A single cup and half a pint of water may be enough to satisfy the end of quenching my thirst; fewer cups or less water would fail to quench it; more cups would be superfluous and more water would cause a flood. Our actions always aim at combining means in the correct proportions. Quantities, incidentally, are a praxeological concept and are not reliant upon whatever we choose to represent them in notation or communication. We know that 2 plus 2 will always equal 4 whenever we act in relation to goods in the real world. The numbers themselves – 1, 2 3, 4 etc. – are simply symbols that we apply to the praxeological concept of each given quantity, routed in our understanding of action – 1 to a single unit of a good, 2 to double that quantity of units, 3 to triple the quantity, and so on. On paper 2 plus 2 could equal 5 but this only serves to change the symbols that we apply to these concepts and all that we have done is renamed that which we once called “4” as “5”. The concepts of 2, 4 and 5 always remain constant and routed in our action and regardless of what we call these quantities a fixed quantity of a good plus another fixed quantity will always arrive at the same quantity in sum however much the operation is repeated. Moreover, regardless of the symbols we choose our expression of quantities is always in a form or magnitude that best serves to meet our ends – both the diameter of a screw and the distance between London and New York City are lengths in space, yet it is praxeologically convenient for us to express the former in millimetres and the latter in either kilometres or miles.

As well as further embedding the law of identity in our recognition of these categories of action, we also reveal an understanding of the law of non-contradiction (A or not-A). For an action is motivated by the condition of scarcity thus revealing that we know that we cannot have our cake and eat it; nor can we swim and remain dry; nor can we be in two places at once. To believe the contrary would mean that a human would never act as he would expect all of his ends to arrive at his doorstep immediately. Action pursues either one end or another and is routed in the realisation that to achieve both or all of them would be a contradiction.

Third, actions all have to take place in space and we interact with this space in order to fulfil our ends. Hence we know automatically that our world is constructed in three dimensions and that certain interactions with space will fulfil our ends whereas others will not. If an apple is to my right then I reach out to my right and I am able to take possession of the apple; if it is on my left then I reach out to the left. More importantly, from this knowledge we derive all of the laws of Euclidean geometry that we use in order to interact with space.

Fourth, we have an understanding of the nature of causality as all actions are designed to produce a causal interference in the world that alters the assumed chain of events. If I wish to eat an apple and proceed to pick an apple from a tree I demonstrate that I know that my action will cause me to take possession of the apple and will cease its hanging from the branch. If I kick a ball my action causes it to fly through the air to another location. If humans did not have an innate understanding of causality then they would never act as they would not know that their movements would bring about the end desired. Action therefore demonstrates an understanding of the phenomenon of causality.

Fifth, we must know through our actions that we live in an aura of uncertainty – uncertainty in the sense that the actor does not know whether a given event is certain to materialise – not whether it is actually certain to do so in practice. If the actor knows that it is certain that event A will happen at point T then there would be no purpose in acting in order to bring about event B. An action to bring about event B at point T indicates that the actor knows that the materialisation of event A at point T is not certain and is subject to change. In any case, regardless of the knowledge of the certainty of events, action itself – the individual motivation towards ends by desires and choices – demonstrates that the world is not ruled by determinism. If it was the materialisation of all future actions of any individual would be motivated not by the individual desires of the human but by a pre-ordained plan that is written into the fabric of the universe. The fact that an actor expresses desires and choices that result in actions that change the course of events demonstrates that there is no fixed course to occurrences in the universe and that they can be altered by an expression of free will, if the means are sufficient. Furthermore, the act of making an enquiry also demonstrates the universal fact of uncertainty – the nature of an enquiry is that the answer is uncertain and could be one way or another. If the answer was certain then we would never bother to make an enquiry as we would already know the correct answer.

Finally, we have an understanding of the nature of time. All actions must take place through time and thus we know that we exist in a linear continuity. If actions did not have to take place through time then the ends would be achieved instantly and thus there would be no action – nor would there be any need to sequence the attainment of ends in order of preference. Indeed time, like quantities, is an inherently praxeological phenomenon. If humans were not subject to the condition of scarcity that motivated them to act and all of their ends were attained to their fullest instantly then the universe might physically exist in what we know as the “passage of time” but humans would have no awareness of this concept. All events would be contemporaneous and all enjoyments received instantly – there would be no comprehension of historical sequence and temporal distance would be non-existent. Any measurement of this non-existent distance in hours, minutes and seconds – let alone centuries, decades and years – would clearly be impossible.

By virtue of the inescapable fact that humans act we lay the groundwork for epistemology through our revelation of these self-evident truths – self-evident because any attempt to deny them must reveal their truth. We therefore realise that there is a body of truths that we know to be absolutely and apodictically true. The fundamental importance of this realisation cannot be denied – these categories of action that we have elaborated constrain and condition our search for knowledge and we cannot imagine knowledge that is incompatible with them. They are not mere conventions or choices of enquiry but are, rather, incontestably and undeniably true presuppositions of all arguments and theorems that may be posited. They are not the results of such arguments but are, rather, the starting blocks – that with which we must work in order to deduce further truth. More importantly, however, it anchors our search for objective truth of reality without having to investigate metaphysical and supernatural problems. In the deepest and murkiest waters of epistemology “truth” could mean pretty much anything we want it to mean. We could hold that simply because something is perceptible and realisable to us does not mean that it is “truthful” according to some as yet unknown, higher plain of understanding. Take, for example, the sensory perceptions. The fact that I can see an object, can touch it, can smell it taste it and if I drop it I can hear it break does not necessarily mean that the proposition “this object exists” is necessarily true – I am just perceiving it to be true. The world is not really full of colour nor do noises actually exist – these are simply interpretations by the brain of particular frequencies of light wave and sound wave respectively. Indeed there may be other senses that I do not possess that may depict hidden reality that I cannot perceive. Taken to an extreme, for all I know nobody else may exist and nothing of what I can perceive around me may be real – it might be some giant hallucination or a video game concocted by some other being who inhabits the genuinely real universe. Is it not possible that reality could just be a product of my consciousness and could I not be deluding myself when I try to concoct objective truths to comprehend that reality? These questions, however, do not concern us when we ground our epistemology upon action. If I act so as to use a cup as means from which to drink a beverage in order to satisfy the end of quenching my thirst I demonstrates my knowledge of the cup’s existence and its possession of certain qualities that affect its suitability as means in action and its direction towards the end of quenching thirst. I can try and deny this and reason that, upon some “higher” plain of understanding, this cup does not exist or that it possesses qualities which it does not. Yet my actions towards this object will always prove the opposite, from actions that both succeed in attaining their ends and those that fail. I might claim that the law that the angles of all triangles sum to 180 degrees is not really true according to some mystical level of knowledge. And yet when I act so as to construct one, or if I try to build a structure that relies on triangles, I will always have to use triangles with angles that sum to 180 degrees; if I did not the outcome would be a failure to attain my end. There is therefore a distinct epistemological harmony and coherence that is revealed to us through the categories of actions – choices, means, ends, results – that ground our knowledge in objective reality and rescue it from ethereal musings. If there was no such coherence between these categories then a person would simply never act at all as there would be no objective laws that link these categories. The characteristic of genuine hallucinations is that they display discordance between the categories of action. In a real case, an individual experienced a hallucination induced by LSD in which he believed his partner had turned into a vicious snake; terrified, he grabbed a knife and proceeded to stab the snake. His end was to kill the snake – a being that looked like a snake, behaved like a snake, hissed like snake and to all intents and purposes was, to him, a snake. And yet the result was that he killed not a snake but his partner. It is clear that where the identities and qualities of means and ends change randomly at will it would be impossible to ground our epistemology on any plain of reality at all. The fact that we are able to continue to act, to meet ends through means motivated by choices indicates that this is not so. Even the failure to meet ours ends indicates not a lack of objective law but the fact that the means were not appropriate for the ends sought – and will be inappropriate once again if the action is repeated under the same conditions. Unless interactive flaws, such as the appearance of the snake, begin to emerge in our current reality then we can be content that we are not all undergoing a mass hallucination, that this is the reality in which we live and this is what we are interested in as the object of our study. More powerfully, however, any action whatsoever demonstrates an individual’s belief in an objective knowledge of this reality that he is powerless to deny – for to do so would itself be an action that displays knowledge of the harmony between choices, means and ends.

We are with confidence, therefore, able to take a position contrary to those of positivism, relativism, skepticism, nihilism and the like and hold that there is a body of truths that are absolutely and undeniably true, undeniable because their self-evidence is revealed to us through the fact their denial would simply end up proving them. It is this springboard – epistemology grounded upon an action – that leads directly to the “Austrian” understanding of how to derive knowledge of other humans and of inanimate, unconscious objects.

Finally, we must also state the fact that the endeavour to attain knowledge and truth is itself bound inherently with our role as actors. Our goal in explaining complex phenomena and gaining an understanding of the world around us is to enhance the effectiveness of our actions – even if the end is merely to attain knowledge for some aesthetic purpose such as the exercising of the mind and the enjoyment of an inherent sense of beauty and order that one may perceive in truth. Non-actors, those creatures whose movements are motivated simply by instinct, never seek the attainment of knowledge for they do not possess the rational mind through which to process it; and if we were humans living in a world of total abundance the seeking of knowledge would be superfluous. Not only would a lack of knowledge itself indicate scarcity but when all enjoyments and satisfactions are achieved instantaneously the attainment of knowledge would have no purpose. Al things would be known and enjoyed immediately and there would be no enquiry into anything whatsoever. At its most basic level, therefore, knowledge itself is a category of action and is intimately bound with our role has human actors.


Having sketched the foundations of our epistemology, therefore, we can go on in the next part to the “Austrian” understanding of human action and the actions of non-humans and the implications of this understanding for economics.

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Conspiracy Theories

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The slur “conspiracy theorist” is like an ejector button. It seemingly has the power to jettison from respectability its hapless and often unsuspecting victim, never to be listened to or taken seriously again. In some regards, as will be seen below, this is justified but it is also, and more seriously, the case that “conspiracy theorist” is a convenient label used to dispose of anyone who challenges official wisdom.

Specifically, “conspiracy theorists” are theorists of history, providing a narrative of and explanation for past events. What they all have in common is that their resulting explanations differ from the “accepted” or “official” version that people believe or are supposed to believe, selecting and interpreting their facts and evidence in light of a specific theory that the alleged “conspiracy theorist” holds1. In short, it is nothing more than “revisionist history”, but the nomenclature of this discipline as dealing with “conspiracies” is used as a veneer to denote a cover-up or a secret, something that is not supposed to be known, that there are sinister forces at work secretly manoeuvring to exploit the hapless know-nothings. People are often willing to believe that the Establishment2 does things that harm the very people it is supposed to serve (or at least live in peaceful co-existence with) but this is normally only due to the specific actions or policies that were adopted at the time. Far fewer are willing to consider that the system, adorned with all the comfortable rhetoric of “democracy”, “representation”, “accountability” and so on, is per se harmful and exploitative, the very conclusion that must be drawn from most of that which “conspiracy theorists” claim. Hence it becomes easy to dismiss revisionists as cantankerous crackpots and their verbage as panic-stricken paranoia.

In the first place let us state clearly and emphatically that no one person, whether they be a democratically elected Government, a university department, a particular scholar, biographer, or whoever has the monopoly on the interpretation of history. Simply because somebody challenges accepted wisdom does not mean that he or she should be dismissed out of hand or that old and accepted paradigms should remain rigidly enforced3. Indeed it should be unnecessary to labour the point given that contrarianism has so often been the green shoot of truth, discovery and invention and that daily all entrepreneurs, for example must, be practising contrarians by seeing and understanding things which other people do not do so as of yet. However when the logical result of a specifically historical theory is to undermine the existing structure of society itself there is an understandable reluctance to engage with it. This does not mean, of course, that all theories need to be taken seriously. A theory suggesting that flying pigs murdered Julius Caesar, or that Marie Antoinette could draw thunderclouds with a clap of her hands should, for instance, rightly be ridiculed. For theories of history cannot violate established laws of the natural sciences or of the social sciences such as praxeology (although the attempted violation of economic law is a favourite pastime of Governments and their court intellectuals). If they do then the revolution properly takes place within those sciences and not within history. If pigs were discovered to fly, for instance, an historical theory concerning their cause of the Caesar’s assassination would have to come after this was established scientifically. But where a theory is in harmony with established laws then one should not shy away from the full extent of its logic.

However, having defended the right of anyone to present a revisionist theory of history, it is frequently the cases that these theorists do not set themselves up to be taken particularly seriously. The basic problem is that “conspiracy theories” too often use the same tools as the establishment in their narratives. Accepted or conventional narratives are notorious for using abstractions that fail to examine the actions and motivations of the specific individuals who were responsible for the historical events. With the War between the States, for example, the historical narrative is that “The South” seceded from “The United States” to preserve “slavery” and the resulting war brought “freedom” and “union“; “Britain” declared war on “Nazi Germany” to defend “Poland“; “The United States” was forced into the “Cold War” and to create a “Military-Industrial Complex” to defend “the Western World” from “the Communist threat“; The “US Government” launched the “War on Terror” to defend us from “terrorists” who want to destroy “us“. By grouping people and events into large, homogenous classes that can be easily categorised as “good” (if they are on “our” side) or “evil” (if they are on the “other” side) one eradicates from examination any question of individual behaviour and motives. Yet history is nothing but a string of individual actions presaged by their motives and if any leeway in developing alternative explanations is to be gained then these must be the ripest fruits for examination. Unfortunately “conspiracy theorists” do not tend to do this and instead themselves ascribe all of the worlds evils to large, homogenous classes. So you have feminists explaining history as being primarily concerned with the domination of “men” over “women”; Marxists as the struggle between exploitative and an exploited classes; still others ascribing causative events to “Jews”, “Freemasons”, “capitalists”, or believers in a “New World Order”. A subset of this failure is a concentration on the mechanics or the method ahead of the motive, often to a rather futile extent. For example, however many studies are done on the audio, visual and witness evidence, however many elaborate recreations of the shooting(s) are carried out, no one is ever going to establish once and for all that Lee Harvey Oswald was not a lone gunman in Dealey Plaza on November 22nd 1963. Nor is watching endless loops of the World Trade Center collapsing going to absolutely establish whether the twin towers were detonated internally. This does not mean that the “how” of history is unimportant as it is, of course, important to show the ways in which motivated individuals brought their desires to fruition. But this discipline is simply a disembodied wraith when unconnected to any “why”, especially when it is inconclusive.

There is, however, one proud tradition that does not succumb to this failing, a tradition that systematically scrutinises the motivations and actions of the participating individuals in historical events with a rigorous degree of scholarship. The Austro-Libertarian school of thought, although relegated to the fringes of academic circles, has good reason for being able to do this. The field of praxeology, the study of the logical consequences that unfold from human action, endow these scholars with the appropriate tools to not only explain individual motivations and actions but specifically to explain why people are likely to behave the way they do when they gain membership of a particular homogenous class. Rather than dealing with countries, states, groups, peoples etc. Austro-Libertarian history deals with the particular interests that particular people are able to have and, in many cases, are able to satisfy by virtue of the positions that they occupy within these classes. By accepting that all people, whether they are private citizens, emperors, presidents, generals, company CEOs or whatever, are subject to the same praxeological laws, by knowing the precise benefits and limitations which certain persons in history faced, not to mention a strong passion for justice grounded on the important Libertarian principle that all individuals are subject to the same moral law, Libertarian historians can construct a much richer and more convincing tapestry of history than any of the officially accepted narratives or other revisionist disciplines. Central to all of this is the theory of the State, that as an entity it alone enjoys the use of violence and possesses the ultimate decision making authority over a given territory. As it is a praxeological necessity that all humans maximise their benefits and minimise their costs the charge that individuals will use the framework of the state to enrich themselves at the expense of others becomes not only convincing but practically a scientific requirement. If one should ever doubt this then Rothbard’s Wall Street, Banks and American Foreign Policy reads almost like a directory of the interests and motivations of the key political players and financiers of US foreign policy from the beginning of the progressive era to the Reagan Administration. Or how about Hans Hermann Hoppe’s examination of the democratic ruler vs the monarchical4? How democracy, relegating leaders to mere caretakers rather than owners of the realm must, by praxeological necessity, lead to a widespread ravaging of resources, increased suppression of the populace and the debt-fuelled growth of the welfare-warfare state. And how, by coating the State with a veneer of legitimacy, it can expand to heights that monarchs of ages past could only have dreamt of – the dubious achievement of a worldwide paper money entirely issued and controlled by Government institutions is something kings never brought about yet democracy, a rarity before 1900, was able to make it a reality by 1971. Still others such as Tom Woods, Thomas DiLorenzo, and Ralph Raico have tackled big taboos in American and world history, DiLorenzo’s work on Abraham Lincoln in particular bringing a much needed sledgehammer to a mountain of largely mythical, established wisdom.

So if you want real history, real explanations of past events, the movers, the makers, the shakers, the wheelers, the dealers, supported by the rigorous science of praxeology and a deep-felt understanding of justice, then look no further than the great historians of the Austro-Libertarian tradition.


1For a detailed explanation on how history is necessarily an interpretation of events in light of theories, see the excellent treatise by Ludwig von Mises, Theory and History.

2We shall use this as a catch-all word to describe the subjects of “conspiracy theories”, ranging from Governments, multi-national corporations and the corporate state, the military, intelligence agencies, secret societies, etc.

3Apparently this problem also exists in the natural sciences even capturing seemingly reluctant revolutionaries – for example the co-discover of oxygen, Joseph Priestly, categorised his own discovery as “dephlogisticated air” owing his allegiance to the prevailing phlogiston theory. Thomas S Kuhn, The Structure of Scientific Revolutions, pp 53-6, quoted in Murray N Rothbard, Ludwig von Mises and the Paradigm of our Age, Ch. 14 in Rothbard, Egalitarianism as a Revolt Against Nature and other essays.

4Hans Hermann Hoppe, Democracy – The God that Failed.

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