Last Writings

In the last phase of his life, Mises completed four major writing projects: The Ultimate Foundation of Economic Science (1962), the second edition of Human Action (1963), a booklet on the Historical Setting of the Austrian School of Economics (1969)¹¹, and the third edition of Human Action (1966). Apart from this, Mises produced a few articles.

The most important publication of this period, and in fact the only book-length work, was The Ultimate Foundation of Economic Science. The culmination of more than thirty years of meditation on the epistemological problems of the social sciences, it deals with the most difficult problems in this field, written, as were all of his works, in accessible language and with a clear presentation. In many ways it is one of Mises's finest books and clarifies important points that he had introduced in his previous work. The central thesis is (1) that there is such a thing as economic law that cannot be identified with the methods of the natural sciences; and (2) that the arguments of those who advocate these methods in economics have no scientific foundation whatever, but are based on metaphysical speculation. In short, Mises's last book was an all-out frontal attack against positivism.¹²

He stressed in particular that the positivist precept—testing economic theories by confronting them with observed data—is not itself derived from any empirical knowledge. Rather this precept is an a priori postulate that contradicts the most elementary empirical facts known about human action, in particular, that human beings make choices and that there are no known laws that determine those choices. It follows that the observed data in the social sciences have a completely different nature from the data used in the natural sciences. The latter are elements in an inexorable chain of cause and effect. Every single one of them can therefore be used to verify or refute the theories of physics, chemistry, and so on.¹³ But the observed data in the social sciences do not stand in such a universally present chain of cause and effect. More precisely, the only thing that is known about them is that they are not part of such a chain. They are singular events and must therefore be interpreted on a case-by-case basis. They cannot be used to derive any general laws. They are not a benchmark for verifying or refuting economic theories. Observation-based testing simply makes no sense in economics.

Just as the Marxists claim to have knowledge about the operation of “productive forces” that determine the course of events in ways unknown and unknowable to other people, so the positivists are unshakable in their confidence that there are some hidden constant relationships in human action that will in the future be identified with testable theories, even though all available evidence suggests that such relationships do not exist.

Mises goes to great lengths to bolster his thesis. He shows that the existence of non-Euclidean geometry does not invalidate the case for an a priori economic science. Similarly, he argues that the development of probability theory cannot possibly be a device to avoid the case for determinism. And in discussing the implications of the theory of evolution for a priori disciplines such as economics, he comes to conclusions very different from those of his friend Rougier and others. Mises stresses the hard fact that nothing is known about the future evolution of the human mind. Therefore, the logical and praxeological structure of this mind must be considered as if it were unchanging. For all practical purposes, it is an a priori for the social sciences.

In clarifying the logical nature of economic science, Mises stressed that pure reasoning can give us empirical knowledge about the real world because reasoning and acting have the very same nature. Analyzing his own thought processes in an armchair, the economist can identify the basic economic categories.

Following in the wake of Kant's analysis, philosophers raised the question: How can the human mind, by aprioristic thinking, deal with the reality of the external world? As far as praxeology is concerned, the answer is obvious. Both a priori thinking and reasoning on the one hand and human action on the other, are manifestations of the human mind. The logical structure of the human mind creates the reality of action. Reason and action are congeneric and homogeneous, two aspects of the same phenomenon. In this sense we may apply to praxeology the dictum of Empedocles: .¹⁴

The point had been overlooked in traditional epistemology because the philosophers

dealt with thinking as if it were a separate field cut off from other manifestations of human endeavor. They dealt with the problems of logic and mathematics, but they failed to see the practical aspects of thinking. They ignored the praxeological a priori.¹⁵

Mises argued that, because economic theorems were deduced from the praxeological a priori, they provide knowledge of apodictic certainty:

Every theorem of praxeology is deduced by logical reasoning from the category of action. It partakes of the apodictic certainty provided by logical reasoning that starts from an a priori category.¹⁶

And he emphasized that even the most radical skepticism cannot affect this conclusion, precisely because acting and thinking

stem from the same source and are in this sense homogeneous. There is nothing in the structure of action that the human mind cannot fully explain. In this sense praxeology supplies certain knowledge.¹⁷

Yet right on the next page of his book, he was quick to emphasize that praxeological knowledge is but one ingredient of information necessary to succeed in the world. Future choices cannot be determined in advance and for this reason alone there is therefore an all-pervading uncertainty in human affairs that the apodictic certainty of praxeology cannot alter or diminish:

Man is at the mercy of forces and powers beyond his control. He acts in order to avoid as much as possible what, as he thinks, will harm himself. But he can at best succeed only within a narrow margin. And he can never know beforehand to what extent his acting will attain the end sought and, if it attains it, whether this action will in retrospect appear—to himself or to the other people looking upon it—as the best choice among those that were open to him at the instant he embarked upon it.¹⁸

Most importantly, uncertainty also stems from our ignorance about nature in general. Mises did not at all share the conceit displayed by positivists such as Bertrand Russell that the natural sciences will ultimately penetrate all secrets of the world.¹⁹ In his view, human science barely scratches the surface of things. Important though it may be—and Mises was convinced that science was the most important tool for human progress— it is not an intellectual panacea and does not make superfluous the virtues of humility and religion:

Although the progress of the natural sciences tends to enlarge the sphere of such scientifically directed action, it will never cover more than a narrow margin of possible events. And even within this margin there can never be absolute certainty. The result aimed at can be thwarted by the invasion of forces not yet sufficiently known or beyond human control. Technological engineering does not eliminate the aleatory element of human existence; it merely restricts its field a little. There always remains an orbit that to the limited knowledge of man appears as an orbit of pure chance and marks life as a gamble. Man and his works are always exposed to the impact of unforeseen and uncontrollable events. He cannot help banking upon the good luck not to be hit by them. Even dull people cannot fail to realize that their well-being ultimately depends on the operation of forces beyond man's wisdom, knowledge, prevision, and provision. With regard to these forces all human planning is vain. This is what religion has in mind when it refers to the unfathomable decrees of Heaven and turns to prayer.²⁰

Mises probably started working on the second edition of Human Action in early 1962. Percy Greaves provided assistance and had already made suggestions for changes in the fall of 1961. While the two men worked together smoothly and productively, cooperation with the publisher was far less successful. For reasons that were never entirely clarified, Yale University Press butchered the book. Mises's life achievement now featured many misprints, different shades of print, displaced and omitted paragraphs and pages, and no more running heads. He was more than a little angry and suspected political motives:

The present management of the Press regrets, for political reasons, the fact that their predecessors published my book. They are especially angry about the great success of Human Action. If they had any sense of propriety at all, they would openly tell the author that they do not want any longer to publish his books and that he is free to look for another publisher.²¹

Eventually Yale University Press did show that sense of propriety and Mises went on to publish a third edition with Henry Regnery in Chicago, possibly with the intermediation of his friend Nymeyer.²² This time things worked out as planned and he enjoyed a beautiful new edition.

With one exception, the new editions did not feature any major changes or elaborations.²³ The exception concerned the definition of freedom. This elaboration was prompted by the fact that, in the 1950s, some of Mises's most brilliant students—most notably Murray Rothbard and his Bastiat Circle—had carried the case for the free market and against government interventionism to what they felt was its logical conclusion: political anarchism.