Investigations into the Method of the Social Sciences

The Starting Point and the Goal of All Human Economy Are Strictly Determined

Particularly with advanced economic civilization, we do not have need only for consumers’ goods, i.e., for goods which serve directly for the preservation of our life and well being. We also have need, on the one hand, for means of production1 (e.g., for raw materials, auxiliary materials, machines for technical production, for technical efficiency of labor, etc.) and, on the other, for means of exchange (e.g., for money, or other wares meant for exchange). These are needs which could be designated as indirect, in contrast to the first-mentioned, the direct ones. Our need for means of production and means of exchange is limited, however, by our need for consumers’ goods2 and the ultimate goal of all human economy is thus to cover our direct material needs, to assure the satisfaction of our direct needs. However comprehensive the economic measures which we take to attain this goal, and even if we strive first for the satisfaction of our indirect need and consider this in concrete cases as the first goal of our economic activity—the ultimate goal is always, as said, the meeting of our direct material needs.

The starting point of every economy, however, is the goods directly available to economic subjects. In respect to future times, or periods, we also have goods available in an indirect way (through the means of production or exchange in our possession). The goods which we have available in this way (the pertinent products and materials) are, however, limited quantitatively and qualitatively by the goods that we have directly available. The most obvious starting point of our economy is always the latter only.

We understand by economy premeditative activity aimed at satisfying our material needs. If we sum up what has previously been said together with this characterization of the nature of economy, it is clear that “economy” ultimately means that activity by which we satisfy our direct material needs with the directly available goods (the directly available means of production, means of exchange, and consumers’ goods, and, indeed, by way of production, commerce, and management). Economy is really nothing else than the way which we travel from the previously indicated starting point of human activity to the previously indicated goal.

The direct needs of each economic subject are given in each case by his individual nature and previous development (by his individuality). The goods directly available to him are strictly given by the economic situation of the moment. Our direct need and the immediately available goods are in respect to any present moment given facts that are not within our discretion. Thus the starting point and the goal of every concrete human economy are ultimately determined strictly by the economic situation of the moment.

What lies between the two above limits of all human economy, the economic activity of people, may at first glance seem ever so complicated, irregular and arbitrary. Our ultimate goal is always to assure the satisfaction of the direct needs strictly determined by our nature and previous development. It is always the directly available goods strictly determined by the state of things at the moment which form the most obvious starting point for us. What we can do to maintain our life and well being, what in this respect depends on our power and volition, is to travel the road from a strictly determined starting point to a just as strictly determined goal in as suitable a way as possible, i.e., in our case, in as economic a way as possible.

There is scarcely need to allude particularly to the significance of these circumstances for the solution of the theoretical problems of our science from the point of view of exact research. However, it comes to light much more clearly still if the following fact is considered.

If the starting point and the goal of a human endeavor are given, of whatever conceivable type this endeavor may be, the way which can really be taken or actually will be taken by human agents for attaining the desired goal is by no means strictly determined a priori. Volition, error, and other influences can, on the contrary, and actually do, bring it about that human agents take different roads from a strictly set starting point to a just as strictly determined goal of their action. On the other hand, it is certain that under the above presuppositions only one road can be the most suitable.

Of course, this also holds true of human economy. If it is correct that the starting point and the goal are given in each concrete case by the economic situation, there can in each such case be only one most suitable road, only one economic road to the pertinent goal. In other words, if economic humans under given conditions want to assure the satisfaction of their needs as completely as possible, only one road prescribed exactly by the economic situation leads from the strictly determined starting point to the just as strictly determined goal of economy. This road, or what is the same thing, the economic activity of people, is thus determined economically even if, to be sure, not de facto, since the above conditions apply in each concrete case. In every concrete economy innumerable orientations of the action of the economic subjects are conceivable. However, it is certain that only one orientation of economic conduct can be the most suitable, can be the economic one, if we disregard economically irrelevant differences. In other words, in every economy innumerable uneconomic forms of enterprise are conceivable; however, disregarding economically irrelevant differences, only one form of enterprise is conceivable, namely, that in which a strictly determined economic orientation prevails.

It is not hard to recognize the importance of this result of our investigation for the methodology of our science, especially, however, for the understanding of the nature of the exact orientation of research in the economic field and its relationship to the empirical-realistic orientation. The real phenomena of human economy, as paradoxical as it may sound at first, are to no small extent of an uneconomic nature, and as a result of this fact are by no means strictly determined phenomena, viewed from the standpoint of economic reality. The realistic orientation of theoretical research in the field of economy cannot, however, and just for the reason given, lead to “exact laws,” but only to more or less strict “regularities” in the coexistence and succession of the real phenomena of human economy. The exact orientation of theoretical research in the above field, on the contrary, examines the phenomena of abstract economic reality, phenomena which are strictly determined, as we saw. It thus, to be sure, does not arrive at exact laws of the real, in part extremely uneconomic, phenomena of human economy but it does arrive at exact laws of economic reality.

The high value of these laws for the theoretical understanding of the economic aspect of social phenomena has already been stressed by us repeatedly,3 as well as the fact that their formal nature is no different from that of the laws of all other exact sciences and of the exact natural sciences particularly.4 Also, the charge that these laws show an unempirical nature and all those objections which the one-sided adherents of the empirical-realistic orientation of theoretical social research make against them only show by how much the social philosophers who make the objections fail to recognize the true nature of exact research in the realm of social phenomena.

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5 See my Grundsätze der Volkswirtschaftslehre, I, p. 4. The expression “goods of the first order” which I use to designate consumers’ goods and the designation of the levels of means of production, varying in respect to consumers’ goods as goods of the second, third, fourth, and higher orders, seem to me not only suitable per se. The classification of goods at the basis of this terminology seems really indispensable for the exact understanding of the phenomena of value and price.

6 Cf. for the whole following investigation my Güterlehre, p. 35 ff.

7 See especially p. 62.

8 Appendix V, pp. 214–215.

• 1See my Grundsätze der Volkswirtschaftslehre, I, p. 4. The expression “goods of the first order” which I use to designate consumers’ goods and the designation of the levels of means of production, varying in respect to consumers’ goods as goods of the second, third, fourth, and higher orders, seem to me not only suitable per se. The classification of goods at the basis of this terminology seems really indispensable for the exact understanding of the phenomena of value and price.
• 2Cf. for the whole following investigation my Güterlehre, p. 35 ff.
• 3See especially p. 62.
• 4Appendix V, pp. 214–215.
• 5Particularly with advanced economic civilization, we do not have need only for consumers’ goods, i.e., for goods which serve directly for the preservation of our life and well being. We also have need, on the one hand, for means of production (e.g., for raw materials, auxiliary materials, machines for technical production, for technical efficiency of labor, etc.) and, on the other, for means of exchange (e.g., for money, or other wares meant for exchange). These are needs which could be designated as indirect, in contrast to the first-mentioned, the direct ones. Our need for means of production and means of exchange is limited, however, by our need for consumers’ goods and the ultimate goal of all human economy is thus to cover our direct material needs, to assure the satisfaction of our direct needs. However comprehensive the economic measures which we take to attain this goal, and even if we strive first for the satisfaction of our indirect need and consider this in concrete cases as the first goal of our economic activity—the ultimate goal is always, as said, the meeting of our direct material needs.
• 6Particularly with advanced economic civilization, we do not have need only for consumers’ goods, i.e., for goods which serve directly for the preservation of our life and well being. We also have need, on the one hand, for means of production (e.g., for raw materials, auxiliary materials, machines for technical production, for technical efficiency of labor, etc.) and, on the other, for means of exchange (e.g., for money, or other wares meant for exchange). These are needs which could be designated as indirect, in contrast to the first-mentioned, the direct ones. Our need for means of production and means of exchange is limited, however, by our need for consumers’ goods and the ultimate goal of all human economy is thus to cover our direct material needs, to assure the satisfaction of our direct needs. However comprehensive the economic measures which we take to attain this goal, and even if we strive first for the satisfaction of our indirect need and consider this in concrete cases as the first goal of our economic activity—the ultimate goal is always, as said, the meeting of our direct material needs.
• 7The high value of these laws for the theoretical understanding of the economic aspect of social phenomena has already been stressed by us repeatedly, as well as the fact that their formal nature is no different from that of the laws of all other exact sciences and of the exact natural sciences particularly. Also, the charge that these laws show an unempirical nature and all those objections which the one-sided adherents of the empirical-realistic orientation of theoretical social research make against them only show by how much the social philosophers who make the objections fail to recognize the true nature of exact research in the realm of social phenomena.
• 8The high value of these laws for the theoretical understanding of the economic aspect of social phenomena has already been stressed by us repeatedly, as well as the fact that their formal nature is no different from that of the laws of all other exact sciences and of the exact natural sciences particularly. Also, the charge that these laws show an unempirical nature and all those objections which the one-sided adherents of the empirical-realistic orientation of theoretical social research make against them only show by how much the social philosophers who make the objections fail to recognize the true nature of exact research in the realm of social phenomena.