Mises and Kant (part two of a three-part series) (Go to part one)(part three)

Aristotle’s categories, detailed in his work called The Categories, are fundamental concepts of reality, such as entity, quality, action, etc.
 
Immanuel Kant, using some of those terms, describes categories as fundamental, innate concepts that prevent us from knowing true, noumenal reality. We can only know appearances, says Kant, called the phenomenal world. This creates the impossibility of perceiving “things-in-themselves,” which means concept formation is limited and cannot know concretes (Rickert 1; 2, chap. 5).
 
This is what makes reason impotent to know reality and in essence is Kant’s disastrous influence on later philosophy. It has confounded nearly all who have followed him, including economists such as Ludwig von Mises.
 
But let us go back to birth—of an infant. Perception, which is to say, knowledge of concretes, begins at birth. The infant cries when hungry and cries when having to eliminate. We know this because infants, after a short time out of the womb, will give us a cute smile when sated and when vacated. This is one of our (the infant’s) first perceptions of concretes.
 
Awareness of the concretes of reality is not, or rather should not be, a philosophical problem. We live and act in the world of concretes, which in fact are the so-called things in themselves. A theory of concept formation that incorporates concretes is what has been needed for hundreds of years. Ayn Rand, I submit, has provided this solution and the answer to the philosophical problem of universals (Introduction to Objectivist Epistemology).
 
A child at around one or two, after learning some elementary words, begins to form and apply universal concepts, such as “ball,” “dog,” and “table.”
 
In briefest essence, the child, according to Rand’s theory of concept formation, observes differences and similarities in the world and focuses on the similarities of what we eventually call a ball, dog, or table. Similarities of, say, tables are abstracted from the concretes by omitting their measurable differences, then by integrating the similarities into a new mental entity called a concept. The mind is “so constituted as to be capable of this process,” to borrow a few words from Aristotle (Posterior Analytics, 100a13), which means the child does not have to think about that particular process for it to happen.
 
The concept, using Rand’s metaphor, is like a file folder that includes all concrete, specific tables past, present, or future, observed or not. The (mental) omission of measurements gives us the essential distinguishing characteristic and the nature of the concept as universal. A word labels it and its definition summarizes its meaning, tying it to the general category from which it was differentiated, and to all of those observed and unobserved concretes, its referents “out there” in reality.
 
This is the inductive process of concept formation. Application is the deductive process of recognizing an object initially unfamiliar to us and identifying it as an instance, a concrete, of the concept table.
 
Now let us see what we can say about some of Mises’ confusions caused by German, especially Kantian, philosophy.
 
 
1. A priori categories and the logical structure of the human mind (Human Action, chap. 1 & 2). If by “logical structure of the human mind,” Mises means that consciousness has an active nature, or identity, then he is correct, but Mises says that such categories as causality and human action are innate, prior to experience like, allegedly, mathematics and logic. Therefore, deduction is the fundamental method of praxeology (human science).
 
The a priori/a posteriori distinction, however, is a false dichotomy. All cognition is cognition of reality. If our concepts are true—correctly recognizing or identifying reality—then the most abstract concepts, such as the law of non-contradiction, integral calculus, causality, human action, and the law of supply and demand, are all derived from reality and therefore are empirical. The chain of abstractions required to arrive at these concepts may be extensive, but if true, will be anchored in the perceptual world. In the same way that “human-made object” is anchored in the perceptual world, derived initially from “tables,” “chairs,” and “beds,” and connected to the abstraction from abstraction “furniture,” and still further connected to the broader abstraction of the human made, all the different categories and subcategories of objects that humans create. This last notion of a broader concept becomes a big file folder holding all human-made objects.
 
Mises does not seem to have a notion of abstractions from abstractions, only directly perceivable concretes (an apparent influence from positivism) and the innate categories from which all of economics is supposedly deduced. Indeed, economics is a highly deductive science of application, but its basic concepts and laws are empirically and inductively derived from experience. The concept of human action is not a self-evident axiom, as Mises asserts. Action is an attribute of all living organisms, human action of human beings.
 
 
2. More on the logical structure of the human mind (Human Action, 35).
 
Mises writes, “The human mind is not a tabula rasa on which the external events write their own history.” True. Reality does not write on our minds. We actively identify it.
 
“[The mind] is equipped with a set of tools for grasping reality.” True. We have tools, such as perception, conceptualization, evaluation, etc. They are mental processes that we have the innate capacity or potential to perform. And they constitute the nature or identity of consciousness. But they are not content. Tabula rasa means there is no content in our minds at birth.
 
“Man acquired these tools, i.e., the logical structure of his mind, in the course of his evolution from an amoeba to his present state.” True. “But these tools” Mises continues, “are logically prior to any experience.” They are built-in from birth, yes, and we use them, as mental tools, to identify, not passively receive, reality and to guide our choices and actions.*
 
 
3. Does Mises believe we can know reality? Yes, and this, along with his methodological individualism and emphasis on the nature of things (money, capitalism), makes him Aristotelian, or as Hülsmann (liii) says, “a representative of Aristotelian realism.” In his last book on epistemological issues, Mises writes, “From the praxeological point of view it is not possible to question the real existence of matter, of physical objects and of the external world” (Ultimate Foundation of Economic Science, 6).
 
In Human Action (36), though, he is more equivocal: “It is idle to ask whether things-in-themselves are different from what they appear to us, and whether there are worlds which we cannot divine and ideas which we cannot comprehend. These are problems beyond the scope of human cognition.”**
 
To clarify, nothing is unknowable—with emphasis on the -able—to the human mind. We do not live in a phenomenal world, unable to know the noumenal. We live in reality. And the appearance of a bent stick in water is a correct perception of what looks like, or rather appears to be, a bent stick, though with the use of our sense of touch and our knowledge of the causal effects of light in water, we know that the thing-in-itself stick is not bent. (See the form-object distinction in Rand, 279-82.)
 
 
To be continued next month. At this point, let me emphasize that my comments about Mises are not meant to be serious criticisms of his work. His accomplishments are vast and exemplary, even his partially mistaken epistemology, and especially considering his professional life where he was not offered a professorship in either Vienna or New York. In spite of this he taught and wrote tirelessly as a decades-long lone voice for laissez-faire capitalism. He needs to be read.
 
 
* Ayn Rand rejects the correspondence theory of truth and the misleading notion of “grasping” reality, a relic of naïve realism (though she does use the word in a metaphorical sense). Hers is an identification theory of truth. Our minds must actively focus on reality and form those concepts to identify correctly what is “out there.” The “out there” is what Rand would say is metaphysical, whereas the “in here,” the mental processing of our consciousness, is epistemological. The empirically derived and recognized principles of the applied science of logic, and especially the law of non-contradiction, are the tools by which we judge whether or not our mental content has correctly identified reality or contradicted it.
 
** This quotation apparently is Mises’ way of dismissing as unimportant Kant’s dilemma of appearance versus reality and of asserting his emphasis on analyzing the world in which we live—the Aristotelian world. A few pages later (Human Action, 39), he writes, “Praxeology conveys exact and precise knowledge of real things,” and in Ultimate Foundation, 18, he says, “We see reality, not as it ‘is’ and may appear to a perfect being, but only as the quality of our mind and of our senses enables us to see it,” which I would take to mean reality with no Kantian distortions.

Read part one, part three.

A General Theory of Value

Ayn Rand defines value as “that which one acts to gain and/or keep” and applies the concept to all living organisms. A value presupposes answers to the questions “to whom?” (or “what?” in the case of lower living species), and “for what purpose?”*
 
Can we apply this definition to the economic concepts of value and utility, especially as used by the Austrian economists? When I was teaching, I would tell my students that the law of marginal utility can more clearly be called the law of marginal value. Was I correct? Let us see what we can come up with.
 
The answer to Rand’s two questions, as applied to all living organisms, is to sustain and enhance that organism’s life. The amoeba takes in nourishment from its environment, the plant strives to get as much sunlight and nitrogen as possible, and the family dog may stare at us and give an affectionate growl to communicate when it is time for dinner.
 
For human beings, the term is not just a moral concept. While Rand uses it to develop her ethical theory, “value” applies to every action humans take in life, moral or immoral, healthy or unhealthy, law-abiding or criminal, productive or indolent, correct or mistaken.
 
Human beings—each one of us as individuals—because we possess free will, must choose what will sustain and enhance our lives. We must declare something to be a value and then pursue it.
 
An important note here: value is not “out there,” intrinsic in the thing that we like. It is a relationship to us that we rate (evaluate) as beneficial. And we may be mistaken in our judgment or choose what is harmful either to ourselves or to someone else.
 
“Value” is also not subjective, as many economists believe. The concept of value arises in our heads, our consciousness, when we judge the something outside of us to be valuable—with emphasis on the last four letters. What is outside of us is only potentially a value. We must recognize it as such, then actualize it by acting to gain and/or keep it.
 
If we are accurate in our judgments, the value is objective—in its epistemological meaning, as Rand would say. It is not metaphysical in the sense that essences and values are “out there,” in the thing. This is the naïve realist view that has caused so much havoc in our understanding of the meaning of objectivity, especially in the field of economics. If we are inaccurate in our judgments and the value is harmful for us, we can then say that we are mistaken and the chosen value is merely subjective.
 
To illustrate further the meaning and role of values in our lives, some of us may choose honesty as a way of life, others dishonesty or theft to acquire values. Some may build bridges for a living, while others become truck drivers. Some may eat vanilla ice cream, while others prefer chocolate, and still others may not eat ice cream at all.
 
Many values that we pursue, as I have written before—a specific food, career, romantic partner, etc.—are optional and do not need to be pursued by everyone, whereas moral values are universal requirements for the sustenance and improvement of human life as a rational being.
 
Now let us look at the meaning of value and utility in economics, taking value first. Austrian economists Carl Menger (pp. 115, 121) and Ludwig von Mises (p. 96) define value as the importance of something to us, Menger adding that it satisfies a need and maintains our lives and well-being. Mises goes on to emphasize that value means preferring one thing to another. Both consider values subjective (cf. Hülsmann, pp. xxxiv–xli).
 
As stated above, values are not subjective. Also, the words “importance” and “preference” are close synonyms of “value,” making the definitions circular: “I value what is important to me and I value what I prefer.” The economic concepts do not clarify the meaning of value, though Menger’s additions that values satisfy needs and maintain our lives and well-being are real properties of accurately identified values.
 
Rand’s definition is general with a broad genus (“that”) and differentia (“one acts to gain and/or keep”).** For human beings, it is the latter, our action, that actualizes those things outside of us to make them values. Iron ore and oil, for example, before they were extracted and turned into steel and gasoline, did not have value for anyone—until entrepreneurs acted to turn them into economic goods.
 
Economic goods, incidentally, are things that have been turned into values that consumers desire and pursue, in contrast to “free goods,” such as oxygen in the air we breathe. Oxygen is a value required for life, but we do not have to pay a price for it, that is, unless we are going deep sea diving. Then it becomes a highly valued economic good (cf. Reisman, pp. 40-41).
 
Now the economic concept of “utility,” as I also said to my students, does not seem to be especially useful. Its meaning is “usefulness” or “serviceableness” to meet our needs, which again is a synonym of value. It predates the philosophy of utilitarianism, but was popularized by the utilitarians who introduced many errors into ethics and economics, not least the subjectivism, relativism, and collectivism of values.
 
The law of marginal utility can indeed be stated as the law of marginal value, meaning the larger the quantity of something that is available to us as a value, the lower the value we will place on a single (or “marginal”) unit.
 
The law, of course, resolves the so-called paradox of value of the classical economists who could not explain why diamonds are so much more valuable, in economic terms, that is, higher priced, than water, the answer being the quantity of each that is available to us. Stranded in a desert, fully dehydrated, we would value a glass of water as equal to life itself. But neither value—diamonds or water—is subjective. The values are contextual and determined by each individual in his or her situation.
 
Thus, Rand’s definition of value gives us a general theory of value, applicable to all living organisms, including the wide range and types of values held by human beings.
 
All human action, to borrow a few words used by Mises (chap. 1 & 4), is guided by a goal that becomes the standard by which we identify the steps or means (intervening values) required to achieve the goal. The goal is the ultimate end or value that we seek. This description of human action applies to ethics, economics, psychology, engineering, and so on. Every action we take is motivated by our desire to acquire and use a specific value.***
 
 
* Rand’s words (her italics): “of value to whom and for what?”
 
** The genus of human values can also be elaborated as anything that we view as sustaining and enhancing our lives, keeping in mind that mistakes can be made and anti-life conduct can be willfully chosen. Action to acquire and use the chosen value remains the differentia.
 
*** This last differs from Mises who says that we are motivated by a “felt uneasiness” to seek those values. Sometimes we might be so motivated. Sometimes we act out of habit, such as eating lunch because it is time, not because we feel any “uneasiness” in our empty stomachs. Sometimes, when we are confident of acquiring a value, the expected pleasure is the motivator.