Empirical Laws, Exact Laws, and Human Action: A Short Essay on the Austrian Distinction between Exact and Empirical Regularities
What we refer to as praxeology can be traced back to Carl Menger’s distinction between empirical laws and exact laws. As Menger explains:
The types and typical relationships (the laws) of the world of phenomena are not equally strict in all cases. A glance at the theoretical sciences teaches us rather that the regularities in the coexistence and in the succession of phenomena are in part without exception: indeed they are such that the possibility of an exception seems quite out of the question. However, some are such that they do indeed exhibit exceptions, or that in their case exceptions seem possible. The first are called laws of nature, the latter empirical laws. (Investigations into the Method of the Social Sciences, 1985, p.50)
Menger was careful to clarify that by “laws of nature” he meant exact laws.
The aim of this orientation, which in the future we will call the exact one, an aim which research pursues in the same way in all realms of the world of phenomena, is the determination of strict laws of phenomena, of regularities in the succession of phenomena which do not present themselves to us as absolute, but which in respect to the approaches to cognition by which we attain to them simply bear within themselves the guarantee of absoluteness. It is the determination of laws of phenomena which commonly are called “laws of nature,” but more correctly should be designated by the expression “exact laws.” (p.59)
In the above passage Menger defines the exact approach to theoretical research. Menger’s term for praxeology would have been something like “the exact orientation of theoretical research in the realm of human phenomena.” According to Menger, the exact approach may be pursued in the realm of natural phenomena (the realm of nature) and in the realm of “human” or “ethical” phenomena (the social realm). When Mises introduces the term praxeology into the Austrian lexicon, he means to denote Menger’s exact approach applied to social—as opposed to natural—phenomena.
As Austrian scholars do today, Menger sought to defend the exact approach to social cognition against those who claimed that only empirical laws and empirical regularities are to be found in the social world:
The realistic-empirical orientation of theoretical research, as we saw, offers us in all realms of the world of phenomena results which are formally imperfect, however important and valuable they may be for human knowledge and practical life. They are theories which give us only a deficient understanding of the phenomena, only an uncertain prediction of them, and by no means an assured control of them. From the very beginning, too, the human mind has followed another orientation of theoretical research beside the one discussed above. It is different from the latter both in its aims and in its approaches to cognition. (p.59)
…with the assumption of strictly typical elements, of their exact measure, and of their complete isolation from all other causative factors, it does to be sure, and indeed on the basis of the rules of cognition characterized by us above, arrive at laws of phenomena which are not only absolute, but according to our laws of thinking simply cannot be thought of in any other way but as absolute. That is, it arrives at exact laws, the so-called “laws of nature” of phenomena. (p.61)
Thus we arrive at a series of sciences which teach us strict types and typical relationships (exact laws) of phenomena, and indeed not only in respect to their nature, but also to their measure. We attain to sciences, no single one of which teaches us to understand full empirical reality, but only particular sides, and therefore must not be judged rationally from the point of view of one-sided empirical realism. But the totality of these sciences conveys to us an understanding of the real world which is just as distinctive as it is profound. (p.62)
In the sense in which this term is used by Menger and Mises, a law is a statement of a relationship of copresence or succession between two nonidentical phenomena, A and B. When we refer to social or economic laws we mean that if A happens or occurs then B will happen or occur either copresent with A or following A. If someone writes “the end of Bretton Woods might produce soaring income inequality” the meaning of this in Austrian economics as practiced by Menger and Mises is that if A happens B might happen. As Mises explains:
The starting point of experimental knowledge is the cognition that an A is uniformly followed by a B. The utilization of this knowledge either for the production of B or for the avoidance of the emergence of B is called action. The primary objective of action is to bring about B or to prevent its happening. (The Ultimate Foundation of Economic Science, 2002, p. 20)
Knowledge of the laws of phenomena is important for the simple reason that if one desires to bring about B or prevent B’s happening, and one has knowledge of a law in the relationship between A and B, one is thereby empowered to bring about or prevent B by bringing about or preventing A.
The purpose of the theoretical sciences is understanding of the real world, knowledge of it extending beyond immediate experience, and control of it. We understand phenomena by means of theories as we become aware of them in each concrete case merely as exemplifications of a general regularity. We attain a knowledge of phenomena extending beyond immediate experience by drawing conclusions, in the concrete case, from certain observed facts (A) about other facts (B) not immediately perceived. We do this on the basis of the laws of coexistence and of the succession of phenomena. We control the real world in that, on the basis of our theoretical knowledge, we set the conditions of a phenomenon (A) which within our control, and are able in such a way to produce the phenomenon (B) itself. (Menger, Investigations into the Method of the Social Sciences, 1985, p. 56)(A’s and B’s added by AK)
In other words, if ending Bretton Woods (A) produces soaring income inequality (B), then, to produce soaring income inequality, end Bretton Woods. Conversely, to avoid soaring income inequality, avoid ending Bretton Woods. This is the meaning of the terms law and regularity in both Mengerian and Misesian social thought.
As Menger conceives, there are two kinds of laws: empirical laws and exact laws. We can illustrate the difference between the two using an example of intentional action, my attempt to walk to a given location. If I walk toward a location (action A), my arrival at that location (result B) may or may not occur. Cases in which phenomenon B may or may not follow or coexist with phenomenon A Menger calls empirical laws. By contrast, if I walk toward a location (action A), my walking away from a different location (result B) is necessary or certain. Cases in which phenomenon B must follow or coexist with phenomenon A Menger calls exact laws.
It is important to note that the exact law relating phenomenon A and phenomenon B does not result from a sequential observation of A and B nor from an observation of A and B in copresence. The exact law relating A and B derives from my presuppositions or assumptions about A which necessitate that I consider B’s happening as entailed in A’s happening. Here is Mises’s explanation of the nature and source of exact laws which he refers to as a priori propositions or a priori knowledge:
But the characteristic feature of a priori knowledge is that we cannot think of the truth of its negation or of something that would be at variance with it. What the a priori expresses is necessarily implied in every proposition concerning the issue in question. It is implied in all our thinking and acting.
If we qualify a concept or a proposition as a priori, we want to say: first, that the negation of what it asserts is unthinkable for the human mind and appears to it as nonsense; secondly, that this a priori concept or proposition is necessarily implied in our mental approach to all the problems concerned, i.e., in our thinking and acting concerning these problems. (The Ultimate Foundation of Economic Science, 2002, p. 18)
The mental basis of a priori knowledge is also evident in Menger’s thought as indicated by these passages:
There is one rule of cognition for the investigation of theoretical truths which as far as possible is verified beyond doubt not only by experience, but simply by our laws of thinking. (p.60)
…strictly typical phenomena of a definite kind must always, and, indeed in consideration of our laws of thinking, simply of necessity, be followed by strictly typical phenomena of just as definite and different a type. (p.60)
This rule holds true not only of the nature of phenomena, but also of their measure, and experience not only offers us no exception to it, but such a thing simply seems inconceivable to the critical mind. (p.60)
…it does to be sure, and indeed on the basis of the rules of cognition characterized by us above, arrive at laws of phenomena which are not only absolute, but according to our laws of thinking simply cannot be thought of in any other way but as absolute. That is, it arrives at exact laws, the so-called “laws of nature” of phenomena. (p.61)
(bolded italics added)
The mental basis of a priori knowledge is today a seldom discussed topic. Perhaps people no longer understand or believe in the possibility of a nonphysical, objective science of subjective experience. However, according to Mises, praxeology is precisely such a science:
For as must be emphasized again, the reality the elucidation and interpretation of which is the task of praxeology is congeneric with the logical structure of the human mind. (The Ultimate Foundation of Economic Science, 2002, p. 65)
Human knowledge is conditioned by the structure of the human mind. If it chooses human action as the subject matter of its inquiries, it cannot mean anything else than the categories of action which are proper to the human mind and are its projection into the external world of becoming and change. All the theorems of praxeology refer only to these categories of action and are valid only in the orbit of their operation. (Human Action, 3rd rev. p. 36)
For man every cognition is conditioned by the logical structure of his mind and implied in this structure. (p. 86)
One way to understand the difference between empirical social science and praxeology is to conceive that empirical science treats the changing content of action whereas praxeology treats the universal form of action.
Praxeology is not concerned with the changing content of acting, but with its pure form and its categorical structure. (Human Action, 3rd rev. p. 47)
[praxeology] does not concern itself with the accidental and environmental features of this action and with what distinguishes it from all other actions, but only with what is necessary and universal in its performance. (p.44)
Let’s recall that an action is any conscious or differentiable “doing.”
Any conscious behavior counts as action—an action is anything that you do on purpose. (Gordon, An Introduction to Economic Reasoning, 2000, p. 18)
Our various actions need not be preceded by conscious deliberation. Many actions are “routine” actions—actions we do without a preceding conscious deliberation. Looking, observing, walking, waving, imagining, and contemplating, are all actions, but these actions need not be preceded by a deliberative process in which the doing of these things is compared to the possibility of doing something else.
Most of man’s daily behavior is simple routine. He performs certain acts without paying special attention to them…The fact that an action is in the regular course of affairs performed spontaneously, as it were, does not mean that it is not due to a conscious volition and to a deliberate choice. Indulgence in a routine which possibly could be changed is action. (Human Action, 3rd rev. p. 47)
Thus, when we refer to the content of action, this means the content of any kind of action, whether the action in question is routine or preceded by conscious deliberation. The content of action is content of action because we are acting, not necessarily because we “chose” it. If I look at a price or observe a price in a marketplace, the observed price is a content of my action. This doesn’t mean I chose it to be content of my action in the deliberative sense.
Because concrete prices and concrete statistical figures are specific contents of action, it follows that they are not the subject matter of praxeology. The prediction of a future content of action—a future price, a future statistic—is simply knowledge of a type that praxeology does not seek to attain. Therefore, the attempt to appraise the utility of praxeological knowledge using the standard of contentual prediction signifies a failure to understand praxeology and exact science. As Menger explains:
Nothing is so certain as that the results of the exact orientation of theoretical research appear insufficient and unempirical in the field of economy just as in all the other realms of the world of phenomena, when measured by the standard of realism. This is, however, self-evident, since the results of exact research, and indeed in all realms of the world of phenomena, are true only with certain presuppositions, with presuppositions which in reality do not always apply. Testing the exact theory of economy by the full empirical method is simply a methodological absurdity, a failure to recognize the bases and presuppositions of exact research. At the same time it is a failure to recognize the particular aims which the exact sciences serve. To want to test the pure theory of economy by experience in its full reality is a process analogous to that of the mathematician who wants to correct the principles of geometry by measuring real objects, without reflecting that the latter are indeed not identical with the magnitudes which pure geometry presumes or that every measurement of necessity implies elements of inexactitude. Realism in theoretical research is not something higher than exact orientation, but something different.
The results of realistic orientation stand in an essentially different relationship to the empirical method than those of exact research. The former are based, of course, on the observation of phenomena in their “empirical reality” and complexity, and of course the criterion of their truth is accordingly the empirical method. An empirical law lacks the guarantee of absolute validity a priori, i.e., simply according to its methodological presuppositions. It states certain regularities in the succession and coexistence of phenomena which are by no means necessarily absolute. But bearing this firmly in mind, we note that it must agree with full empirical reality, from the consideration of which it was obtained. To want to transfer this principle to the results of exact research is, however, an absurdity, a failure to recognize the important difference between exact and realistic research. To combat this is the chief task of the preceding investigations. (p.70)
If praxeological knowledge does not enable us to predict the future in a contentual sense—does not enable us to predict the appearance of any concrete object or event—then what is the utility of praxeological knowledge? Mises maintains that praxeology does provide predictive knowledge.
Praxeological knowledge makes it possible to predict with apodictic certainty the outcome of various modes of action. (Human Action, 3rd rev. p. 117)
We may gain an initial understanding of the nature of praxeological knowledge by means of another simple illustration. In a wooded area, a pet has fallen into an abandoned well. Among the possible methods and means for extracting the pet, two are under consideration. One method (A) entails my tying the end of a rope to a nearby tree and lowering the other end into the well. I will then descend into the well by climbing down the rope and ascend up out of the well with the pet by climbing up the rope. The other method (B) entails lifting myself up over the well by grabbing the bottoms of my feet and lifting upward. Once over the well, I will push down on my hands harder with my feet, thus pushing myself down into the well. After retrieving the pet, I will again grab the bottoms of my feet and lift upward hard enough so that myself and the pet are lifted up and out of the well.
When we speak of praxeological knowledge in reference to this example, we may remain silent on the question of whether the pet will be successfully retrieved. We will not say that the pet will be retrieved and we will not say that the pet won’t be retrieved (two positive assertions or predictions about a future constellation of events). Instead, we will say that if the pet is retrieved, then it cannot be due to method or means B. Result X may or may not happen, but X cannot happen as a result of means B. X can only happen as a result of something else. This is the general nature of praxeological knowledge. And thus we can understand Mises’s meaning when he claims that praxeology is a science of means and not ends, and that praxeology provides certain knowledge.
Praxeological knowledge tells us either that means X cannot possibly result in Y, or that means X must necessarily result in Y. I cannot lift myself up (Y) by pulling up on the bottoms of my feet (X) and if I walk toward a location (X) I must walk away from a different location (Y).
Mises’s Insights about Human Action
An action is an attempt to reach a goal. Mises realized that there were various kinds or classes of actions and that economics, as the study of market phenomena, was the study of a specific kind of action. He referred to the kind of action studied by economics as calculative action (p. 198).
…the field of catallactics or of economics in the narrower sense is the analysis of the market phenomena. This is tantamount to the statement: Catallactics is the analysis of those actions which are conducted on the basis of monetary calculation. (p. 234)
For Mises, economics in the narrow sense is catallactics: the study of market phenomena or those actions based on monetary calculation. Economics in the wider sense is praxeology: the study of those aspects of action common to each and every action. Economics in the sense of market study is a branch or subset of praxeology. It is important to realize that to the extent economics is differentiable from praxeology, and to the extent calculative action is differentiable from other kinds of action, then economic theory which deals with calculative action must have thymological (i.e., nonnecessary) elements. This is because economics or the theory of calculative action can only be differentiated from praxeology by the introduction of some concrete situation or attribute that is not shared by each and every action.
In thinking about the nature of economics and of human action, Mises came to an important insight which is probably still not fully understood today. Mises realized that there existed various formal sciences such as mathematics, geometry, and formal logic. Each formal science may be conceived as a discipline that attempts to apply a scheme of formal or necessary relations to a specific realm or aspect of human conduct. For example, “if I have X amount, and I subtract Y amount, then I must be left with Z amount” or “if I travel in X direction, and then I travel in Y direction, I must end up at Z location” or “if I say X, and I say Y, then I must say Z.” Mises held that economics is a formal science of this nature and that its propositions are of the same kind as those expressed in mathematics, geometry, and formal logic. His theory of the business cycle holds, essentially, that if I am presented with interest rate X, and if I change the interest rate in a certain way Y, then I must cause Z to happen. Mises holds that economics is a scheme of formal or necessary relations applied to the market realm of human conduct—the realm of calculative action.
If there are several differentiable formal sciences, each applicable to a different realm of human conduct, this implies a more general science whose form we can discover by abstracting from each of the particular sciences those attributes which differentiate them from one another. Doing so with respect to the four formal disciplines above results in the conception of a formal science that studies the general form of conduct “If X is the situation I am confronted with, and I do Y, then Z must be the result.” This is the general formal science of human action: praxeology.
It was Mises’s insight to conceive of a formal science of conduct, praxeology, that would be more universal than any of the various “branches” of formal social science. As indicated, praxeology would be the most universal formal science because it would not treat a specific kind of doing—a specific kind of goal-directed conduct—but would treat the phenomenon “doing” (action) in general. As Mises conceives things the most general form of action is that in which an actor is faced with a situation and attempts to replace that situation with a different one. Here is how Mises described his vision in a lecture at FEE in 1951:
Man’s actions on the market, in the government, at work, at leisure, in buying and selling, are all guided by reason, guided by choice between what a person prefers as against what he does not prefer…Every action can be called an exchange insofar as it means substituting one state of affairs for another…In an a prioristic science, we start with a general supposition—action is taken to substitute one state of affairs for another. This theory—meaningless to many—leads to other ideas that become more and more understandable and less abstract. (The Free Market and its Enemies, 2004, p. 16)
In these brief passages we can see the fundamental elements of Mises’s praxeological vision: his realization that there are various kinds of actions; his realization that every action entails an attempt to replace one situation with another; and his vision to apply a scheme of formal necessity (a prioristic science) to the notion of action, the attempt to replace one situation with another. Previously, formal science had been applied to the distinction between “this much” and “that much,” to the distinction between “over here” and “over there,” and to the distinction between “saying this” and “saying that.” Mises’s insight was to apply formal science to the distinction between the situation faced by an actor and the actor’s attempt to replace that situation with a different one. He referred to this science as praxeology.
"It would be preposterous to assert apodictically that science will never succeed in developing a praxeological aprioristic doctrine of political organization..." (Mises, UF, p.98)
Quickly scanned... may have some quibbles. Hans Hoppe on Austrian method.
Clayton -
******
Thank you.
Yes, I'm fully aware of Hoppe's epistemology, ethics, and concept of action.
Adam
@Adam: I haven't had time to read the article properly. My initial quibble is that I don't think that Menger is talking about the same thing in an "exact law" as Mises is talking about in praxeological laws. Praxeological laws are more than exact, they are "apodictically certain". They are tautological. If I'm not mistaken, I believe Menger is using the term "exact law" in the Weberian sense of a law which is simply very well established, such as the law of conservation of energy. The Weberian concept of exact law is still empirical (unless I've misunderstood it), whereas a praxeological law is not. It really is synthetic a priori or, as Hoppe puts it, "a statement about reality that is not hypothetical."
Hi Clayton
I don't agree. Both Menger and Mises are talking about the difference between regularities in the relationship between A and B that are absolutely certain, versus regularities in the relationship between A and B that are not certain. The difference between my walking toward a location (action A) and my arriving at that location (result B), (uncertain) and, my walking toward a location (action A) and my walking away from a different location (result B), (certain).
Mises and Menger provided slightly different accounts of the nature and source of a priori or exact knowledge, but above I provided key passages from Menger that show he was aware of a mental basis of exact knowledge.
These passages demonstrate that when Menger was pressed to account for the source of a priori knowledge, he sought to explain it in terms of the notion that our minds cannot think of the negation of the relationship concerned. Mises followed Menger in this, developing, extending, and revising: