Free Capitalist Network - Community Archive
Mises Community Archive
An online community for fans of Austrian economics and libertarianism, featuring forums, user blogs, and more.

Ludwig von Mises on Economic Laws - Is he epistemologically sound?

Answered (Not Verified) This post has 0 verified answers | 10 Replies | 3 Followers

Top 500 Contributor
304 Posts
Points 6,045
ivanfoofoo posted on Mon, Mar 1 2010 1:09 PM

From Human Action:

"Everything  that  economics asserts about demand  and supply refers  to every  instance of  demand  and supply and not only to demand and supply brought about by some special circumstances requiring  a  particular description  or  definition.  To assert that a man,  faced with  the alternative of  getting more  or Iess  for a commodity he wants  to sell, ceteris  paribus chooses the high  price,  does not require any further assumption. A higher price means for  the seller a better satisfaction of  his wants. The same applies mutatis mutandis to the buyer. The amount  saved  in  buying  the  commodity  concerned  enables him  to spend more  for  the satisfaction  of  other  needs.  To buy  in  the  cheapest market and  to sell in the dearest market is, other things being  equal, not conduct which would  presuppose  any special assumptions concerning  the actor's  motives  and morality.  It  is merely  the necessary  offshoot  of  any action under the conditions of market exchange."

Is a higher price a way for the seller to get a better satisfaction of his wants? What if he is a believer of a religion which forbids to charge a higher price for that good?

I think Ludwig von Mises always falls into the idea that "most men strive for commodities and an improvement in their material well-being" (paraphrasing him) and that renders most of his analytical framework into a "a posteriori" science instead of being apodictic. I think that the idea that "a man,  faced with  the alternative of  getting more  or Iess  for a commodity he wants  to sell, ceteris  paribus chooses the high  price", it *does* requiere further assumptions, which will somehow concern the actor's motives, morality and many other aspects. Following this, I believe that there is *no necessary offshoot* under the conditions of market exchange.

Any ideas?

  • | Post Points: 65

All Replies

Top 150 Contributor
768 Posts
Points 12,035
Moderator

I think he's (Mises) right in considering empirical and non-empirical in the argument he posits. I reason as such on the grounds that there's no strict exclusiveness between the analytic or the synthetic (that which seems like analysis often is a form of synthesis, and vice versa).

"The power of liberty going forward is in decentralization.  Not in leaders, but in decentralized activism.  In a market process." -- liberty student

  • | Post Points: 20
Top 500 Contributor
304 Posts
Points 6,045

So, according to that, it's no longer an apodictic law, it's a positive one.

  • | Post Points: 20
Top 50 Contributor
Male
2,687 Posts
Points 48,995

I think that Mises is speaking generally, although the price of a good does not always have to be measured by a certain unit of money.

  • | Post Points: 5
Top 150 Contributor
768 Posts
Points 12,035
Moderator

ivanfoofoo:

So, according to that, it's no longer an apodictic law, it's a positive one.

Should I care? If it's true, it's true, sorry.

"The power of liberty going forward is in decentralization.  Not in leaders, but in decentralized activism.  In a market process." -- liberty student

  • | Post Points: 5
Top 10 Contributor
Male
5,255 Posts
Points 80,815
ForumsAdministrator
Moderator
SystemAdministrator
Suggested by Conza88

Give Praxeology and Understanding a read. It'll disabuse you of this notion. Long's book on Wittengestein and Mises has a whole section devoted to this. The answer is no, it doesn't render it any less apodictic, because the theory applies in conditions as specified by the theory, and does not where they do not. That simple ultimately. Thymology is the art of determining when an economic theory is applicable. The law of demand itself is a priori regardless.

Freedom of markets is positively correlated with the degree of evolution in any society...

  • | Post Points: 20
Top 25 Contributor
Male
4,249 Posts
Points 70,775

ivanfoofoo:

From Human Action:

"Everything  that  economics asserts about demand  and supply refers  to every  instance of  demand  and supply and not only to demand and supply brought about by some special circumstances requiring  a  particular description  or  definition.  To assert that a man,  faced with  the alternative of  getting more  or Iess  for a commodity he wants  to sell, ceteris  paribus chooses the high  price,  does not require any further assumption. A higher price means for  the seller a better satisfaction of  his wants. The same applies mutatis mutandis to the buyer. The amount  saved  in  buying  the  commodity  concerned  enables him  to spend more  for  the satisfaction  of  other  needs.  To buy  in  the  cheapest market and  to sell in the dearest market is, other things being  equal, not conduct which would  presuppose  any special assumptions concerning  the actor's  motives  and morality.  It  is merely  the necessary  offshoot  of  any action under the conditions of market exchange."

Is a higher price a way for the seller to get a better satisfaction of his wants?

If he gets more money then he will be able to satisfy more wants. Thats what money is for.

What if he is a believer of a religion which forbids to charge a higher price for that good?

That's a very good point. It's why Mises tossed in the phrase "ceteris  paribus" into that second sentence. I looked it up, and apparently it means "all other things being equal". Meaning that Mises is talking about when the only difference between the higher and lower price is exactly that, that one is lower and one is higher, but everything else is unchanged. Your interesting case is differfent from what he is discussing. You have introduced a new twist, that the higher price has a different religious flavor than the lower one. Saying "ceteris  paribus" is Mises' way of saying "I'm talking about when religion doesn't care which price he sells for."

I think Ludwig von Mises always falls into the idea that "most men strive for commodities

That idea sounds pretty true to me. However, true or not, the Mises edifice of philosophy is NOT built on that. The poet who would rather write poetry, the saint who would rather help the unfortunate, the nutcase who would cut off his nose to spit his face, all are taken into consideration. And the axioms aplly to them as well.

and an improvement in their material well-being" (paraphrasing him)

I'm interested in the original that you paraphrased this from. Thanks to the miracle of copy and paste, should be no problem for you to display it.

and that renders most of his analytical framework into a "a posteriori" science instead of being apodictic.

To sum up your argument, you are saying A is true [A being your paraphrase above], and so B follows [that he's doing a posteriori science].

But I think A is not true, as I tried to show. [Indeed the burden of proof is on you, because you are paraphrasing]. Thus B has no leg to stand on.

I think that the idea that "a man,  faced with  the alternative of  getting more  or Iess  for a commodity he wants  to sell, ceteris  paribus chooses the high  price", it *does* requiere further assumptions, which will somehow concern the actor's motives, morality and many other aspects.

The motives, morality and many other aspects are indeed important, sometimes crucial. However, good ole ceteris  paribus strikes again here, as I explained at length above.

Following this, I believe that there is *no necessary offshoot* under the conditions of market exchange.

Once again we have the same skeleton. You claim C is true [it does require further assumptions] therfore D follows [that there is no offshoot].

But I hope I have shown C not to be true, and thus D has no support.

Any ideas?

A nice cold beer sounds like a good idea right now.

 

My humble blog

It's easy to refute an argument if you first misrepresent it. William Keizer

  • | Post Points: 20
Top 25 Contributor
Male
3,055 Posts
Points 41,895

Do you know what ceteris paribus means?

  • | Post Points: 20
Top 25 Contributor
Male
4,249 Posts
Points 70,775

Caley McKibbin:

Do you know what ceteris paribus means?

In which language?

My humble blog

It's easy to refute an argument if you first misrepresent it. William Keizer

  • | Post Points: 20
Top 25 Contributor
Male
3,055 Posts
Points 41,895

Not you.

  • | Post Points: 5
Top 500 Contributor
304 Posts
Points 6,045

Yes, I do know what ceteris paribus means and that doesn't apply to what I said.

Thanks Jon Irenicus for the great reply!

I'll try to read what you told me, but as I was re-reading Mises I understood that he just uses the praxeologic categories and "fills them with values" that are known to be real (in the sense that people actually behave like that, for example, charging higher price when demand goes up). So, given that assumptions, those laws hold true, no matter what. There it lies its solid epistemological value.

  • | Post Points: 5
Page 1 of 1 (11 items) | RSS