Weber's Sociological Elements in Mises' Economics of Human Action

Abstract

This essay analyzes the relations between Austrian Praxeology and sociology. It argues that Praxeology is not only a codification and ramification of pure market economics but also to some degree the Austrian school's variant or proxy of sociology. This argument particularly applies to Mises' Praxeology as the general theory of human action, with Weber's sociology understood as the science of social action, taken as Mises' acknowledged sociological source, inspiration or anticipation. The essay develops and substantiates the argument by identifying certain sociological premises, concepts and observations in Mises' Praxeology, which are classified into the fields of general sociology, economic sociology and political sociology. The essay builds on and contributes to the growing economics and sociological literature on the relationship between Austrian economics and Weberian (and other) sociology.

Keywords:

• Sociology
• Praxeology
• Economics

Notes

[1] Anderson (2004, 3) claims that, “although similar in some respects,” Weber's and Mises' (and other Austrian) theories and approaches “are two genuinely different ways of doing sociology.” But this view is exceptional within contemporary Austrian economics, as Boettke and Storr (2002) suggest.

[2] For example, Kurrild‐Klitgaard (2001) analyzes the relations of Alfred Schütz and the Austrian School in respect of rationality, ideal types and economics. In turn, Forstater (2001) examines Schutzian–Weberian themes in Adolph Lowe's political economics to illustrate the use of phenomenological and interpretive–structural methods in economics and sociology.

[3] Anderson (2004, 4) comments that Weber and Mises “were not only acquainted, they shared an admiration for each other's work. Mises considered Weber a ‘great genius’ and his death a blow to Germany.” Likewise, Weber (1968, 107) comments that Mises' Theory of money and credit is the “monetary theory most acceptable to him.”

[4] Mises (1966, 3) adds that French philosopher Alfred Espinas first used the term Praxeology in 1890 in his article “Les Origines de la technologies” (published in Revue Philosophique) and later in a book with the same title published in 1897. Curiously, Mises does not mention and treat Marx's conception of praxis as the variant of or stepping‐stone to Praxeology. In fact, the original or literal meaning of Praxeology is the science of praxis or human practices and actions. Marx's key statement in this respect is that “people make their own history, but not in circumstances of their own choosing” (Lewis 2005, 308).

[5] Secondarily, Mises' Praxeology sometimes looks like another name for sociology in general, including in part the non‐Weberian positivist versions espoused by Durkheim et al. (yet see Parsons 1967). This is what he suggests by his secondary inclusion of the “study of society, societal relations, and mass phenomena” (Mises 1966, 651), or what sociologists call macro‐sociology à la Durkheim, into the primary subject matter of Praxeology as the “study of all human actions.” In doing so, Mises approaches or evokes, but albeit does not fully adopt, Durkheim's conception of sociology as the “study of society,” “societal relations” (social facts, notably structures and institutions), and “mass phenomena” (collective representations and effervescence), but this rapprochement is secondary and atypical. Moreover, Lewis (2005, 301–303) suggests that it is ambiguous or in tension with the primary thrust or tone of Praxeology; namely, Mises “reductionist assertion that ‘definite actions of individuals constitute the collective’,” in so far as it recognizes that “social structures are causally efficacious” relative to agency, not just conversely. Lewis (2005) proposes that critical realism, which stresses the ontological “interplay of social structure and human agency,” resolves these “tensions and ambiguities” in Mises' Praxeology and its versions in contemporary radical subjectivist Austrian economics, by the concept of structural–material causation.

[6] Weber (1968, 15) adds that natural scientists “do not ‘understand’ the behavior of cells but can only observe the relevant functional relationships and generalize on the basis of these observations.”

[7] Mises occasionally makes concessions to the methodology of physical science and to that extent what Hayek dismisses as “scientism” or positivism. For illustration, Mises (1966, 2 and 184) contends that “one must study the laws of human action and social cooperation as the physicist studies the laws of human nature [i.e. by] the scientific methods of Praxeology.” Further, he says that the “reality of the laws of Praxeology is revealed to man by the same signs that reveal the reality of natural law, namely, the fact that his power to attain chosen ends is restricted and conditioned. The [natural and praxeological] laws [are] independent of the human will [i.e.] primary ontological facts rigidly restricting man's power to act” (Mises 1966, 761). Still, Mises' Praxeology is in general a far cry from and even refutation of Comtean “social physics” but an elaboration of Weberian interpretive sociology.

[8] According to Chipman (2004), Eugen Slutsky (a Russian economist) provided in a paper (from the 1920s) cited by Mises, Hayek and others (e.g. Lange) an “abstract formulation” of a theory of human action or Praxeology as the underlying basis of economics. In turn, Langlois (1988, 684–685) comments that the “basis of the Misesian system is that there are certain categories of human action so fundamental to human beings that they are incontrovertible. For Mises, then the a priori nature of these fundamental categories guarantees not only the logical validity but also the meaningfulness of theoretical propositions.”

[9] Swedberg (1998,302) adds that, for such participants as Haberler, Weber's interpretative sociology (verstehende Soziologie) was among the favorite subjects of the Mises seminar.

[10] The (Ernst) Weber–Fechner law of psychophysics postulates decreasing psychological or physiological sensitivity as stimuli (e.g. temperature, weight, light) increase their duration or magnitude; that is, as Max Weber ([1908] 1975, 26) put it, the “strength of a stimulus must increase in geometric ratio if the perceived strength of sensation is to increase in arithmetic ratio.” Among early neoclassical economists, Edgeworth “flirted” with the law “at first but later rejected it as arbitrary (Stigler 1950, 376), by contending that the principle of diminishing marginal utility can be “confirmed” by “ratiocination” from “simpler inductions” in the Fechner law. Also, Edgeworth's main influence and predecessor Jevons (in reviewing Mathematical Psychics) placed the Fechner law among the “empirical bases” of marginalism. By contrast, early Austrian economists like Böhm‐Bawerk and Wieser were opposed to or skeptical of such confirmation of the law of marginal utility by this or other psychological and physiological principles. For instance, specifically referring to Weber's essay, Böhm‐Bawerk ([1884] 1959, 430–431) registered the “divergence” between psychology and economics, while warning against converting this difference into an “outright opposition.” In turn, according to Stigler (1950), Weber's “famous essay” was a definitive demonstration that the Fechner psychological law should be ignored by economics. Notably, Böhm‐Bawerk admits what Weber (and other economic sociologists) argues; namely, that “habit, custom, humanity, nationality and the like” represent “other highly important factors of social economy”, alongside enlightened self‐interest.

[11] Mises (1966, 51) adds that the comprehension of human action is attained by “two different methodological procedures: conception and understanding. Conception is the mental tool of Praxeology; understanding [is] of history.” This seems to self‐contradict his statement that understanding, as a proper method of the science of human action, “makes us recognize social entities.” One way to resolve this seeming contradiction is provided by Weber's definition of sociology as a science employing the “interpretative understanding” and the “causal explanation” of social action. This is what Parsons (1965, 174) suggests, noting that Weber “combined ‘interpretative understanding’ with the ‘causal explanation of the course and effects’ of action.” Specifically, if Mises' “conception” (theory, explication) is deemed equivalent to Weber's “causal explanation,” then, like sociology, Praxeology can employ, without contradiction or tension, both “different methodological procedures” (“conception and understanding”).

[12] In general, apparently following on or echoing Weber, Mises (1957a, 34) argues that “scientific theory of what must and ought to be does not exist. Science is competent to establish only what is—it never can dictate what ought to and must be, nor to fix ends toward which people aspire, because people have different ends (or value judgments).” Also, Mises (1960, 201) adds, apparently targeting both theology and Marxism or socialism, that “science does not deal with the transcendent but with what is accessible to thought and experience. Science is radically opposed to metaphysics and ideology since it does not deal with the transcendent, i.e. with what that is inaccessible to experience.”

[13] Mises (1960, 59–60) contends that ideal types in Weber's sense are “specific notions employed in historical research [so] concepts of understanding [but] entirely different from praxeological categories and concepts.” He adds that in many cases a “term used by Praxeology to signify a praxeological concept serves to signify an ideal type for the historian,” citing the concept of “entrepreneur” in pure economics as different from the ideal type “entrepreneur” in economic history and descriptive economics (Mises 1960, 61). In particular, he insists that homo oeconomicus is not an ideal type in “Weber's sense,” on the ground that ideal types are “not an embodiment of one side or aspect of man's various aims and desires [but] the representation of complex phenomena of reality” (Mises 1960, 62). At this juncture, Mises distinguishes praxeological concepts as theoretical, universal, or general and belonging to the theory of human action (including pure economics) from ideal types as historical, empirical or concrete and used in historical research (including economic history). In Weber's framework, Mises' distinction is one between ideal types with varying degrees of generalization, abstraction, or scope, given that an ideal type is a more or less theoretical, abstract (“pure”) or generalizing construct of specific actual and historical phenomena. Hence, in a Weberian interpretation, praxeological concepts and ideal types are essentially interchangeable methodological tools; namely, both are what Mises, apparently echoing Weber calls, the “representation of complex phenomena of reality.”

[14] Mises (1966, 29–30) adds that both Praxeology and History have “nothing in common” with philosophy of history, as represented by Hegel, Comte and Marx, in the sense of the “true, objective, and absolute meaning of life and history.”

[15] Mises (1966, 3) adds that “out of the political economy of the classical school emerges the general theory of human action, Praxeology,” but this remark is somewhat in tension with stating that “economics becomes a part, although the hitherto best elaborated part, of a more universal science, Praxeology.” Also, he states that “economics widens its horizon and turns into a general science of all and every human action, into Praxeology,” but this is again in uneasy relationship with the suggestion that economics or catallactics “must start from a comprehensive theory of human action” (Mises 1966, 199).

[16] For example, targeting Comte et al., Mises (1957b, 200) notes that these positivists “accepted the thesis that it is possible to derive from historical experience a posteriori laws which, once they are discovered, will form a new—not yet existing—science of social physics or sociology or institutional economics.” In particular, he dismisses Comte's project of sociology as “social physics, shaped according to the epistemological pattern of Newtonian mechanics [as] so shallow and impractical that no serious attempt was ever made to realize it” (Mises 1957b, 241). Similarly, Mises rejects Durkheimian sociology, although primarily for reasons of metaphysics or romanticism rather than positivism or scientism (in contrast to Hayek) as in the case of its earlier Comtean version. In Mises' (1957b, 242) view, “without any value [are] the writings of those who termed sociology their arbitrary metaphysical effusions about the recondite meaning and end of the historical process which had been previously styled philosophy of history. Thus, Emile Durkheim and his school revived under the appellation group mind the old specter of romanticism and the German school of historical jurisprudence, the Volksgeist.” Lastly, and perhaps most vehemently, Mises repudiates Marxism, including the Marxian sociology of knowledge. Thus, in an apparently dismissive and sarcastic tone, he remarks that “it is the task of a ‘sociology of knowledge’ to unmask philosophies and scientific theories and to expose their ‘ideological’ emptiness. Economics is a ‘bourgeois’ makeshift, the economists are ‘sycophants’ of capital. Only the classless society of the socialist utopia will substitute truth for ‘ideological lies’” (Mises 1966, 5).

[17] Schumpeter (1956, 301) comments that historical sociology (or sociological history) was Wieser's “first interest, and it was to be the last [for] the chief work of his later years centered in sociology,” as indicated by his “great sociological book” on power (Das Gesetz der Macht) published at the age of 74. Also, Wieser contributed to Weber's project of Grundriss der Sozialökonomik during the 1910s by writing an essay entitled Theory of social economy (translated and published in English as Social economics). Moreover, the young Hayek (1992, 138) reportedly praised Wieser's essay as the “greatest synthesis [of economics and sociology] in our time [the 1910–20s],” although it seems that Mises has been more influenced by or receptive to this “synthesis.” In passing, Schumpeter (1956, 150/162) contrasts Wieser and partly Menger to Böhm‐Bawerk, described as advancing “an analysis of the general forms of the socio‐economic process [in which] the sociological framework is only hinted at.”

[18] In particular, Wieser ([1914] 1967, 152–153) suggests that the theory of values and prices is a field of sociology in noting that the “fact that economic value is a commensurable quantity in which the motives which lead to an economic intercourse are clearly expressed made possible more rapid and certain progress in explaining these relations than in other sociological fields.”

[19] Examining the relations between Alfred Schutz and the Austrian School of economics, Prendergast (1986, 23) comments that its members “always believed that economics was a branch of general sociology, as a universal science of social phenomena.” In particular, he remarks that Weberian interpretive sociology “is for Schutz what general sociology was for Menger,” and adds that “whereas economics reduces social action to one type, the rational‐instrumental, interpretive sociology studies the interplay of rational, value‐rational, emotional, and traditional action” (Prendergast 1986, 23). Another analysis of the relations of Schutz's sociology and Austrian economics, with similar implications, is found in Pietrykowski (1996).

[20] Mises (1957b, 212) specifically states that Darwin's principle of natural selection is not a “law of historical evolution.”

[21] For Hayek (1950, 17), “it is questionable whether the introduction of the terms statics and dynamic into economics (by S. Mill following Comte's similar division in sociology) was beneficial.”

[22] By contrast to Weber, who distinguishes rational and non‐rational (e.g. traditional and emotional) actions, as well as two different types of the first (aim‐rational and value‐rational), Mises argues that human action is by assumption or necessarily rational in the specific sense of Weberian instrumental‐purposive rationality. Consequently, Mises suggests abandoning the concept of rational human action as tautological or pleonastic. However, despite such categorical statements Mises occasionally adopts or echoes the Weberian distinction between rational and non‐rational actions. For illustration, he does so by stating that “no other distinction is of greater significance than that between calculable action and noncalculable action” (Mises 1966, 199), as an apparent variation of Weber's between instrumental and value‐rational, traditional and emotional actions, or formal and substantive rationality. Recall that Weber defines formal rationality in terms of monetary calculation (“quantitative speculation or accounting”) and so as identical to “calculable action,” and substantive rationality by pursuit of “ultimate values” and thus as equivalent to “noncalculable action” in which, as Mises puts it, things “are not sold and bought against money.” Yet, unlike Weber, he seems to equate economic and rational actions by contending that “every rational action is an act of economizing” (Mises 1960, 148). In another contrast with Weber, who considers social action the chief content of sociology, Mises (1966, 42 and 143) treats it as a “special case of the more universal category of human action,” contending that the “social or societal element is a certain orientation of the actions of individual men.” This is due to their respective different definitions or descriptions of social action. Mises defines social action as characteristic of a “social collective,” contrary to human action defined as an attribute of individuals, thus implicitly adopting Durkheim's rather than Weber's definition. Still, the difference from the latter is only apparent or superficial, because what Weber denotes and defines as social action—one of individual actors that “takes account of the behavior of others and is thereby oriented in its course”—is essentially identical to Mises' human action as defined and different from Durkheimian collective actions, including mass behaviors. In short, Mises and Weber only use different terms for the same concept: (individual) human action in economy and society. Further, Mises (1966, 11) defines human action in general—“purposeful behavior”—in the same way as Weber defined action as such; that is, behavior to which the “acting individual attaches a subjective meaning [or purpose].”

[23] Also, Mises (1950, 175) describes sociological Darwinism as “not a social theory, but a theory of unsociability” due to its being “unable to explain the phenomenon of the rise of society.”

[24] Mises (1953, 414) adds that the system of private property is the “only social system that has brought about civilization” in apparent repudiation of socialism or communism defined as the (inefficient) system of public ownership.

[25] In reviewing Mises' Human action, Hayek (1941, 126) comments that the “result is a really imposing unified system of liberal social philosophy [but is not] just a simple restatement of the laissez‐faire views of [19th‐century Liberalism].” Further, Smith (1999, 196) claims that no social scientist other than Mises “was better at articulating the primacy of the individual and the need to define and nurture individual rights.”

[26] Mises makes the seemingly surprising assertion (“Conservatism can only be achieved by Socialism”) in the section on “Christian Socialism”. So, the surprise perhaps disappears or is weakened in his specific remark that “Christian Socialism appears to be conservative because it desires to maintain the existing order of property, or more properly it appears reactionary because it wishes to restore and then maintain an order of property that prevailed in the past” (Mises 1950, 141). Hence, the above assertion can be modified by substituting “Christian Socialism” for “Socialism”. Mises also comments that, for Christian Socialism, just as its secular or state form, “Enlightenment and liberal thought have created all the evil which afflicts the world today.”

[27] A theoretical qualification or disclaimer is needed to pre‐empt possible objections of sociological reductionism. Namely, to argue that Praxeology represents the Austrian economics school's variant or proxy of sociology is not completely or nominally valid in so far as Mises' (and Hayek's) “science of human action” opposes or contrasts with some sociological, especially what are seen as collectivist and positivist Comtean–Durkheimian, schools, as does, for that matter, Weber's subjectivist theory. To paraphrase Popper, such an opposition simply “falsifies” the thesis of Praxeology as sociology in general. In this respect, Praxeology can be and usually is deemed the Austrian school's individualistic, non‐positivist and market‐economic alternative, counterpart or substitute for sociology in the meaning or form of perceived Comte–Durkheimian sociological collectivism, positivism and anti‐economism, imputed and strongly rejected by Mises, Hayek and others. Still, as Lewis (2005, 307–308) implies, Mises, as well as Hayek, also by incorporating “society, societal relations, and mass phenomena” into, rather than excluding them from, the subject of Praxeology, admit, alongside the prime or explicit causality of individual agency, the secondary or implicit “causal efficacy of social structure,” and so seeming “tensions and ambiguities” to be resolved by the concept of material–structural causation.