The Global Currency Plot

Like logic and mathematics, praxeological knowledge is in us; it does not come from without.
— LUDWIG VON MISES

Generally speaking, human action means replacing a state which the actor considers less advantageous with a state which is considered more advantageous. The phrase “Humans act” may sound trivial, but it by no means is. It cannot be denied without contradiction. Anyone who says, “Humans do not act,” acts—and thus contradicts his statement. We cannot logically say or think without contradiction that humans do not act. The sentence “Humans act” therefore applies a priori.7

The expression a priori stands for experience-independent knowledge, for knowledge that, with strict necessity, is valid: something is as it is and not different; it allows no exception and can therefore claim unrestricted validity. Plato and Aristotle were among the first to distinguish real knowledge (episteme) from mere opinion (doxa).8 In this sense, the doctrine of human action can be described as an a priori science of action: the sentence “Humans act” is undeniably true, and further true knowledge can be derived from it by deduction.9

The sentence “Humans act” is not open to any ultimate justification. We cannot prove it by resorting to further justifications. In that sense it’s an ultimate given. The phrase “Humans act” is a precondition which must always be made use of and which cannot be denied when we act (for example, it is made use of when we dispute something). For this reason, the realization that humans act can serve as a true, logically undisputable starting point of scientific thought.

Human action is determined by ideas—in the sense of thoughts or theories.10 This, too, is an insight that can be derived without contradiction from the logic of human action. For it to be denied, it would have to be shown that human action is systematically determined by external, observable (chemical, biological, or physical) factors. But this has not yet been achieved—and it is also logically unthinkable that this will ever happen.11

Human action always takes place under two conditions. One is that the actor feels dissatisfaction with the present condition. If he were content, there would be no reason for him to strive for change, and he would not act—but as has already become clear, this is not imaginable without contradictions. The other condition is that the actor is of the opinion that he can alleviate the dissatisfaction, perhaps even completely eliminate it, by his actions. If it weren’t for that, he wouldn’t act. But since no one cannot not act, the opinion of the actor that he can achieve his goals through action is a necessary condition for every action.

Human action is always individual action. Only individuals (the word comes from Latin and means “indivisible particle”) act. Groups or collectives do not act. They can always conceptually be traced back to their individual participants and their actions.

Human action is goal oriented: It is intended to achieve aims and purposes. This, too, cannot be denied without becoming involved in a contradiction, because saying, “Humans do not act purposefully,” is ultimately also a form of purposeful action. So anyone who says that human action is not purposeful is committing a contradiction.

Human action can consist in doing something visible to all, or in omitting something consciously, not always visible to outsiders. Human action can be distinguished from purely reflexive action (which is expressed, for example, in the form of winking or a cry of pain). For example, to the extent that the actor suppresses a reflex, he expands the scope of his goal-oriented action.

From the undeniably true sentence “Humans act” further true statements can be derived in a logical and deductive way—these are the basic terms of human experience, or categories. For example, the realization that humans act presupposes a cause-and-effect relationship (causality). The fact that action is taken implies causality: if there were no cause-and-effect relationship, a human could not act; he would have no prospect of being able to achieve his goals through action.

Action requires the use of means (one can also say commodities). Commodities are necessarily scarce: scarcity is a logical realization of action. If means were not scarce, human action would not be dependent on them. They wouldn’t have to be rationed, and they wouldn’t be means.

Every action takes time. It is a means that the actor must use to achieve goals. If action could be taken without a temporal extension, the goals that the actor strives for would be instantly achieved—and he could not act, which however, as we have seen, is unthinkable; that is, action that takes no time is unthinkable.

Because action always requires time, and because time is a means of achieving goals, the actor prefers to achieve his goals earlier rather than later. This means that his time preference is always and everywhere positive. Currently available goods are valued higher than goods (of the same type and quality and under the same conditions) that are only available later. Future goods therefore suffer a reduction in value compared with goods currently available. The originary interest represents this discount. Time preference and its manifestation, the originary interest rate (Urzins), are elementary value phenomena of human action; they cannot disappear.

In the field of human action there is no balance in the sense of a state of rest, an unchanging situation. For that would mean that humans no longer act—and we cannot think that without contradicting ourselves. By acting, humans can come closer to the desired state. But there can be no final attainment of a state of equilibrium, of “complete satisfaction.”

Human action takes place under uncertainty. Experience has shown that we don’t know everything about the future: for example, we don’t know today which companies and which products there will be in the future. There is a logical reason why human action takes place in uncertainty: if there were no uncertainty, the actor would already know what is going to happen in the future. But then he could no longer act. His actions could no longer influence the future course of things—but it is not conceivable without contradiction that man does not act.12

It has already been stated that scarcity is a category of human action. The sentence “Humans act” therefore also includes the two following perceptions: (1) The greater the stock of goods that the actor has, the greater the (marginal) benefit that the stock of goods provides. This is because goods are scarce and a larger stock of goods allows more goals to be achieved. (2) The marginal utility provided by an additional unit of goods decreases with increasing stock. The first available unit of a good is used to satisfy the most pressing need. The second available unit of the good is used to satisfy the most pressing of the remaining needs—which, of course, is less pressing than the previously satisfied need. And so on. Together, (1) and (2) represent the law of diminishing marginal utility.

Human action logically requires the category of property, or private property. Property is not an arbitrarily created institution—the introduction of which brought evil into the world, as Jean-Jacques Rousseau (1712–78) claimed. It is rather an a priori. Whether we like it or not, property cannot be excluded from the logic of human action. The central role that property plays in human action, and in particular in the coexistence of people in the community, will be discussed in more detail in the next chapter.

IMMANUEL KANT’S CRITIQUE OF REASON AND HUMAN ACTION

What epistemological status does the sentence “Humans act” have? To find an answer to this question, let us go back to the reflections of the Königsberg philosopher Immanuel Kant (1724–1804). Kant noted that progress in the natural sciences and empirical science was increasingly calling into question the ideal of enlightenment that he advocated—he spoke of reasonable autonomy. He couldn’t accept that so easily. According to him, we humans can understand ourselves as reasonable autonomous persons only if we adhere to the following metaphysical assumptions. Man has free will; he has an immortal soul; God is the ultimate cause of the universe; and the world is functionally tailored to man. But does metaphysics (and the assumptions based on it) qualify as science?

Metaphysics deals with questions that cannot be answered by observations (experiments)—like the question of the existence of God or the immortality of the soul. Science has it easier in this regard. Its statements can be verified by observations. Kant refers to statements that derive knowledge from experience as a posteriori (in retrospect). He describes experience-independent knowledge, i.e., statements that on the basis of perceptions cannot be regarded as either false or true, as a priori. Seen in this light, metaphysical statements must be a priori because they cannot be supported or rejected by experience.

That, however, does not yet sufficiently determine metaphysical statements. “Bodies are extended” is a sentence that is a priori true because it is by definition true: what constitutes bodies is that they are extended. Kant calls statements analytic that are true or false solely because of the meaning of the terms they contain. Empirical scientific statements that are not analytic are described by Kant as synthetic: “God is the final cause of the universe” is such a statement (it does not follow from the definition of “God”). Metaphysical statements are thus characterized by a second characteristic: they’re also synthetic. When Kant asks whether metaphysics is possible as science, he asks about the possibility of synthetic judgments a priori—an investigation which he calls transcendental: “I call all knowledge transcendental, which does not deal with objects, but with our type of knowledge as such of objects, if this is to be possible a priori.”13

Kant focuses on the possibility of the necessary conditions for being able to make objective experiences of the reality of life. According to him, only that which satisfies the conditions under which man can make experiences can be experienced by us humans: “The conditions of the possibility of experience in general are at the same time conditions of the possibility of the objects of experience, and therefore have objective validity in a synthetic judgment a priori.”14 The philosopher Holm Tetens (b. 1948) interprets the statement of the above quotation as follows: “There are necessary conditions of experience that come about through the exercise of our cognitive faculty. All objects of experience must meet these conditions. Therefore, the statements that claim that the objects of experience are subject to these conditions are synthetic statements a priori.”15

Man therefore does not experience the objects of his experience as they are, but rather imposes on them qualities which spring from his cognitive faculty. The sentence “Humans act” can be interpreted as a necessary condition for the possibility of experience; it is condition and precondition of experience. For this reason, the categories of human action can be used to test the truth content of economic theories: theories that contradict the categories of human action must raise serious doubts as to their accuracy.16

Ludwig von Mises describes the doctrine of human action as praxeology: “The propositions of praxeology gained through consistent and error-free thinking are not only completely certain and indisputable like the propositions of mathematics; they refer with all their certainty and indisputability to action as it is practiced in life and in reality. Praxeology therefore conveys exact knowledge of real things.”17 With praxeological thinking, with the logic of action, we can also counter the criticism of idealism that Kant’s theory was and is exposed to; see the explanations in the appendix of this book.

• 7A priori statements can be realized in advance, that is, before any perception, as true or false. They are not concerned with the temporal dimension between perception and statement, but with the role of perception in justifying statements. An a priori statement can be substantiated or rejected (refuted) independently of perceptions.
• 8See Otfried Höffe, Immanuel Kant: Eine philosophische Einführung (Stuttgart: Philipp Reclam jun., 2001), pp. 57–63, esp. 58.
• 9On the logic of action, see Ludwig von Mises, Nationalökonomie: Theorie des Handelns und Wirtschaftens (Geneva: Edition Union, 1940), pp. 11–114; Murray N. Rothbard, Man, Economy, and State, with Power and Market, 2d scholar’s ed. (Auburn, AL: Ludwig von Mises Institute, 2009) chap. 1; “Praxeology as the Method of the Social Sciences” in Economic Controversies (Auburn, AL: Ludwig von Mises Institute, 2011), pp. 29–58; and “Praxeology: The Methodology of Austrian Economics,” in Economic Controversies, pp. 59–80; Hans-Hermann Hoppe, “On Praxeology and the Praxeological Foundation of Epistemology,” in The Economics and Ethics of Private Property: Studies in Political Economy and Philosophy, 2d ed. (Auburn, AL: Ludwig von Mises Institute, 2006), pp. 265–94.
• 10See Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution (Auburn, AL: Ludwig von Mises Institute, 1957), p. 3f. and 64.
• 11See also, for example, Holm Tetens, Geist, Gehirn, Maschine: Philosophische Versuche über ihren Zusammenhang (Stuttgart: Philipp Reclam jun., 1994).
• 12This does not mean, by the way, that everything is uncertain. If there is uncertainty in human action, there must also be certainty; certainty is the logical correlate to uncertainty.
• 13Immanuel Kant, Kritik der reinen Vernunft, ed. Ingeborg Heidemann (Stuttgart: Philipp Reclam jun., 1968), p. 25.
• 14Ibid., p. 197.
• 15Holm Tetens, Kants “Kritik der reinen Vernunft”: Ein systematischer Kommentar (Stuttgart:  Philipp Reclam jun., 2006), pp. 35–36.
  
   
• 16The logic of action makes the attempts to identify economic theories as right or wrong decidable issues of truth, to adopt the philosopher Rolf W. Puster, “Dualismen und ihre Hintergründe,” in Theorie und Geschichte: Eine Interpretation sozialer und wirtschaftlicher Entwicklung, by Ludwig von Mises (Munich: H. Akston Verlags GmbH, 2014), pp. 7–50, esp. 31.
• 17Mises, Nationalökonomie, p. 20.