Praxeology and Understanding: An Analysis of the Controversy in Austrian Economics

Praxeological theories, as understood by Mises, are independent of the particular psychological makeup of individuals. Praxeology does not address the content of individual preferences or the particular motives that give rise to those preferences. It is concerned with the pure logic of choice.

Concrete individual ends and values have historical but not theoretical significance; that is, they are relevant to all applications of pure theory to particular, historical circumstances, but enter only as auxiliary assumptions in constructing theory itself. Individual ends and calculations undergo continuous inexplicable change and cannot be the subject of anything like “exact laws.” In the words of Frank Knight, a non-Austrian defender of the praxeological method, “There are no laws regarding the content of economic behavior, but there are laws universally valid as to its form. There is an abstract rationale of all conduct which is rational at all, and a rationale of social relations arising through the organization of rational activity.”1

To distinguish its universally valid content from history, praxeology had to show that its most fundamental theoretical conclusions—its theoretical “hard core”—was not based upon the imputation of some “typical” motivations or values to acting people. For this reason Mises, while adopting many of Max Weber’s methodological prescriptions, regarded the latter’s “ideal-type” constructs as unnecessary to the development of pure theory. For Mises, the laws of praxeology did not refer to ideal-type “rational” or “economic” people, but to acting people as such. Only in this way could those laws be universal or, in Menger’s word, “exact.”

Weber, in contrast, had been unable to accept Menger’s notion of exact laws in economics. Thus he regarded the “law” of diminishing marginal utility and other fundamental discoveries of the pure logic of choice as “pragmatic” rather than necessary truths.2 Weber considered economic theory dependent upon the assumption of special kinds of action that might in fact only loosely approximate the actions of people in the real world. In particular, Weber referred to a type of “rational man” who was a throwback to the “economic man” of the classical economists.3 Mises, in contrast, held that such an approach was, first of all “wholly inapplicable to the subjective value theory” and, further, that it failed “to solve the question of the source of this knowledge of ‘purely economic’ behavior.”4

A more fundamental problem with the ideal-type approach is recognized by Israel Kirzner in his book The Economic Point of View. “It is apparent,” Kirzner writes, “that when conformity to an ideal-type must be assumed for the deductions of the propositions of economics, these propositions cease to be logical implications of actions, and economics ceases to be a branch of praxeology.”5 In other words, economic laws become contingent rather than necessary, and the ideal-type approach fails to provide economic theory with an epistemological basis that frees it from the defects of positivism and historicism.

Alfred Schutz, in his 1932 book, The Phenomenology of the Social World, accepted Mises’s criticisms of Weber and attempted to incorporate these into his own adaption and generalization of Weber’s method.6 Schutz proposed an ideal-type for acting man which would possess the universal applicability needed for the construction of pure economic theory. According to Schutz, ideal-types of this sort “do not refer to any individual or spatio-temporal collection of individuals. They are statements about anyone’s action, about action or behavior considered as occurring in complete anonymity and without any specification of time or place. They are precisely for that reason lacking in concreteness.”7 Schutz observed, using words taken from Mises, that any principle derived from such constructs is “not a statement about what usually happens, but of what necessarily must happen.”8

Schutz here stretches the meaning of ideal-type so as to include constructs so “typical” or general that no action can be conceived that does not conform to them. If we so define ideal-type to include a type of mankind “as such,” then we may conclude that praxeological theories must also be based “exclusively” on the use of ideal-typical constructs.

The significance of Schutz’s work to Austrian economics lies not in this semantic innovation but rather in Schutz’s use of more narrow ideal-types to derive what he calls a “common sense” understanding of social phenomena. This common sense approach is, however, not based upon the anonymous ideal-type of mankind “as such.” It is, as is readily apparent from Schutz’s own discussion of it, a historical, value-laden approach: “In order to explain human actions the scientist has to ask what model of an individual mind can be constructed and what typical contents must be attributed to it in order to explain observed facts as the results of the activity of such a mind in an understandable relation.”9 These models, Schutz continues, “are models of rational actions but not of actions performed by living human beings in situations defined by them.”10

It is clear that Schutz is describing a procedure that Mises would have regarded as historical (i.e., suitable for examining particular, concrete cases) rather than praxeological. Mises’s distinction between theory and history was a sharp one, and I shall have occasion to discuss it later. What must now be understood is that for Mises economic theory rests upon a body of certain truths independent of time and place. The presence of such a “pure” theoretical foundation distinguishes praxeology from types of economic analysis that regard even their most fundamental assertions as empirical, i.e., as “historically limited” in nature.

For Weber, in contrast (as Mises interpreted him):

The difference between [praxeology] and history is considered as only one of degree.... They are different merely in the extent of their proximity to reality, their fullness of content, and the purity of their ideal-typical construction. Thus Max Weber has implicitly answered the question that had once constituted the Methodenstreit [the famous Battle of Methods in which Carl Menger defended theoretical analysis against the attacks of the historical school] entirely in the sense of those who denied the logical legitimacy of a theoretical science of social phenomena. According to him [praxeology] is logically conceivable only as a special, qualified kind of historical investigation.11

In the analysis of history (which for Mises includes most “applied” economics), the use of content-laden ideal types is unavoidable: in order to render meaningful in other than a logical sense the particular acts of persons and the concrete consequences that arise from and in turn influence those acts, one needs to impute to the persons in question a framework of motivations, ends, and imagined means, thus making their behavior understandable. This method of historical understanding or verstehen (which is the same as Schutz’s “common sense” approach to observed facts) goes beyond the logical, necessary aspects of action and attempts to reconstruct the psychological content and orientation of actions. It analyzes actions, not merely by referring to human purposefulness, but by attempting to comprehend the subjective meaning attached to actions by the actors themselves. As such, its constructs cannot refer only to the anonymous figure of acting man or man “as such,” but instead must refer to preference-laden, idealized individuals.

For Mises, “history” deals with the concrete manifestations of action. “For history,” he observed, “the main question is: What was the meaning the actors attached to the situation in which they found themselves and what was the meaning of their reaction and, finally, what was the result of these actions.”12 In an important sense, then, the pure theory that forms the heart of praxeological analysis requires a type of subjectivism distinct from the subjectivism needed in historical analysis. Praxeologists, as developers of pure theory, must consider market phenomena without presuming any knowledge of agents’ preferences and beliefs. They must view the world, not as “understanding” beings employing “common sense” to interpret a specific historical event, but as theorists in search of the logical patterns that underlie the actions of all “understanding” individuals.

Of course, even pure economic theory is affected to some degree by considerations of history. But these considerations mainly refer to the problem of whether a certain theory is relevant to a particular historical phenomenon under investigation. Thus the law of diminishing marginal utility and its immediate corollaries apply with certainty to any historical situation where at least one purposeful individual must dispose of (or sacrifice) multiple units of a good. The Ricardian law of association, in contrast, applies only where there are numerous individuals engaged in exchange, that is, it is a law pertaining to market phenomena, or what Hayek called “catallactics.” Other praxeological laws and theories rely upon lengthier chains of reasoning into which a variety of assumptions enter. These are hypothetical-deductive theories: although their starting point is the certain fact of purposefulness, the auxiliary assumptions involved may or may not conform to any particular historical circumstances. Finally, praxeology includes exercises in “conjectural history” in which reference is made to specific institutions (money, central banking), circumstances (monopoly), and policies (tariffs, taxation). Such conjectural histories therefore make use of ideal-type constructs (these constructs, to be sure, never refer to ideal-typical people, but only to ideal-type objects or consequences of action), although their truth follows apodictically wherever all the real-life equivalents of the specified ideal-types are present in a given historical circumstance. Causal-genetic or “evolutionary” theories such as Menger’s theory of the origin of money fall into this category of conjectural history.

Praxeologists may sometimes refer to actual historical events in order to illustrate theoretical results. Here, however, a casual exercise in history proper (and, therefore, a departure from pure theory) is involved. All examinations of particular historical policies and institutions—e.g., all “applied economics,” which, to be sure, includes most of what economists do—are nevertheless outside the realm of pure theory and necessarily rely upon assumptions about individual motives and values. Thus actual history, unlike the conjectural histories of the praxeologist, makes use of ideal-type constructs, not only of institutions, policies, and industrial circumstances, but also of acting individuals. It seeks to understand the specific meaning of historical market phenomena by referring to “common sense” interpretations based upon values and goals imputed to the actors involved. The dividing line between “theory” (i.e., praxeology) and history (in Mises’s strict sense) is thus marked by the need to employ psychological understanding or “common sense.”

“Common sense,” however, is not used only by social scientists. Praxeology recognizes it is an essential tool of all people who act in the social world. All entrepreneurial action (i.e., speculative action in the marketplace) requires understanding of other people’s motives and intentions: “To know the future reactions of other people is the first task of acting man. Knowledge of their past value judgments and actions, although indispensable, is only a means to this end.”13 Thus, while history and common sense or psychological understanding of people’s past values and actions are essential for understanding the future, they are not necessarily sufficient. Moreover, entrepreneurship derives only limited practical guidance from praxeology, the “predictions” of which, being simply examples of its conjectural histories, are always qualitative and contingent; they cannot inform us of the actual choices people will make. “The a priori discipline of human action, praxeology, does not deal with the actual content of value judgments. It deals only with the fact that men value and then act according to their valuations. What we know about the actual content of judgments of value can be derived only from experience.”14

With these considerations in mind, it is possible to state the dilemma at the heart of the present controversy in Austrian economics: If, in fact, “action [in society] implies understanding of other men’s reactions”15 and “no action can be planned or executed without an understanding of the future,”16 then how can praxeology proceed to the elucidation of market phenomena unless it first addresses “the main epistemological problem of… understanding,” viz.: “How can a man have any knowledge of the future value judgments and actions of other people?”17 The current controversy within the Austrian school is due mainly to the conviction on the part of some Austrians that praxeology must address and resolve this problem of understanding. Otherwise, its theorems must be regarded, not as necessary truths about the world, but as empty and arbitrary tautologies referring to a hypothetical society populated, not necessarily by man “as such,” but by “understanding man”; not by homo agens, but by homo percipiens (perceiving man) and, even more crucially, by homo divinans—“man who grasps the future.”

_____________

18Frank Knight, “The Limitations of Scientific Method in Economics,” in The Ethics of Competition and Other Essays (New York: Harper Bros., 1935), p. 25.

19See Ludwig Lachmann, The Legacy of Max Weber (Berkeley, Calif.: The Glendessary Press, 1971), p. 25.

20Thus, in his Methodology of the Social Sciences, Weber writes:

Pure economic theory … utilizes ideal-type concepts exclusively. [It] makes certain assumptions which scarcely ever correspond completely with reality but which approximate it in various degrees and asks: how would men act under these assumed conditions if their actions were entirely rational? It assumes the dominance of pure economic interests and precludes the operation of political or other non-economic considerations, (pp. 43-44; emphasis added)

Compare this to Mill’s summary of the classical method: “Political economy . . . reasons from assumed premises—from premises which might be totally without foundation in fact, and which are not pretended to be universally in accordance with it” (John Stuart Mill, Essays on Some Unsettled Questions of Political Economy, 2nd ed. , p. 137).

21Ludwig von Mises, Notes and Recollections (South Holland, Ill.: Libertarian Press, 1978), p. 122. See also, Epistemological Problems of Economics, pp. 74-79.

22Israel Kirzner, The Economic Point of View (Menlo Park, Calif.: Institute for Humane Studies, 1976), p. 159.

23Alfred Schutz, The Phenomenology of the Social World, George Walsh and Frederick Lehnhart, trans. (1932; Evanston, Ill.: Northwestern University Press, 1967), pp. 242-45.

24Ibid., p. 244.

25Ibid., p. 245. Mises refers to Schutz’s book in Epistemological Problems of Economics (pp. 125-26 fn.), but proposes to “reserve dealing with [Schutz’s] ideas for another work.” The promised discussion has never appeared in print.

26From the reprint in Maurice Natanson, Philosophy of the Social Sciences (New York: Random House, 1963), p. 342; emphasis added.

27Ibid., p. 345.

28Mises, Epistemological Problems of Economics, p. 77.

29Mises, The Ultimate Foundation of Economic Science, p. 43; emphasis added.

30Mises, Theory and History, p. 311.

31Ibid.

32Mises, The Ultimate Foundation of Economic Science, p. 49.

33Ibid., p. 50.

34Mises, Theory and History, p. 311.

• 1Frank Knight, “The Limitations of Scientific Method in Economics,” in The Ethics of Competition and Other Essays (New York: Harper Bros., 1935), p. 25.
• 2See Ludwig Lachmann, The Legacy of Max Weber (Berkeley, Calif.: The Glendessary Press, 1971), p. 25.
• 3Thus, in his Methodology of the Social Sciences, Weber writes:
• 4Ludwig von Mises, Notes and Recollections (South Holland, Ill.: Libertarian Press, 1978), p. 122. See also, Epistemological Problems of Economics, pp. 74-79.
• 5Israel Kirzner, The Economic Point of View (Menlo Park, Calif.: Institute for Humane Studies, 1976), p. 159.
• 6Alfred Schutz, The Phenomenology of the Social World, George Walsh and Frederick Lehnhart, trans. (1932; Evanston, Ill.: Northwestern University Press, 1967), pp. 242-45.
• 7Ibid., p. 244.
• 8Ibid., p. 245. Mises refers to Schutz’s book in Epistemological Problems of Economics (pp. 125-26 fn.), but proposes to “reserve dealing with [Schutz’s] ideas for another work.” The promised discussion has never appeared in print.
• 9From the reprint in Maurice Natanson, Philosophy of the Social Sciences (New York: Random House, 1963), p. 342; emphasis added.
• 10Ibid., p. 345.
• 11Mises, Epistemological Problems of Economics, p. 77.
• 12Mises, The Ultimate Foundation of Economic Science, p. 43; emphasis added.
• 13Mises, Theory and History, p. 311.
• 14Ibid.
• 15Mises, The Ultimate Foundation of Economic Science, p. 49.
• 16Ibid., p. 50.
• 17Mises, Theory and History, p. 311.
• 18Concrete individual ends and values have historical but not theoretical significance; that is, they are relevant to all applications of pure theory to particular, historical circumstances, but enter only as auxiliary assumptions in constructing theory itself. Individual ends and calculations undergo continuous inexplicable change and cannot be the subject of anything like “exact laws.” In the words of Frank Knight, a non-Austrian defender of the praxeological method, “There are no laws regarding the content of economic behavior, but there are laws universally valid as to its form. There is an abstract rationale of all conduct which is rational at all, and a rationale of social relations arising through the organization of rational activity.”
• 19Weber, in contrast, had been unable to accept Menger’s notion of exact laws in economics. Thus he regarded the “law” of diminishing marginal utility and other fundamental discoveries of the pure logic of choice as “pragmatic” rather than necessary truths. Weber considered economic theory dependent upon the assumption of special kinds of action that might in fact only loosely approximate the actions of people in the real world. In particular, Weber referred to a type of “rational man” who was a throwback to the “economic man” of the classical economists. Mises, in contrast, held that such an approach was, first of all “wholly inapplicable to the subjective value theory” and, further, that it failed “to solve the question of the source of this knowledge of ‘purely economic’ behavior.”
• 20Weber, in contrast, had been unable to accept Menger’s notion of exact laws in economics. Thus he regarded the “law” of diminishing marginal utility and other fundamental discoveries of the pure logic of choice as “pragmatic” rather than necessary truths. Weber considered economic theory dependent upon the assumption of special kinds of action that might in fact only loosely approximate the actions of people in the real world. In particular, Weber referred to a type of “rational man” who was a throwback to the “economic man” of the classical economists. Mises, in contrast, held that such an approach was, first of all “wholly inapplicable to the subjective value theory” and, further, that it failed “to solve the question of the source of this knowledge of ‘purely economic’ behavior.”
• 21Weber, in contrast, had been unable to accept Menger’s notion of exact laws in economics. Thus he regarded the “law” of diminishing marginal utility and other fundamental discoveries of the pure logic of choice as “pragmatic” rather than necessary truths. Weber considered economic theory dependent upon the assumption of special kinds of action that might in fact only loosely approximate the actions of people in the real world. In particular, Weber referred to a type of “rational man” who was a throwback to the “economic man” of the classical economists. Mises, in contrast, held that such an approach was, first of all “wholly inapplicable to the subjective value theory” and, further, that it failed “to solve the question of the source of this knowledge of ‘purely economic’ behavior.”
• 22A more fundamental problem with the ideal-type approach is recognized by Israel Kirzner in his book The Economic Point of View. “It is apparent,” Kirzner writes, “that when conformity to an ideal-type must be assumed for the deductions of the propositions of economics, these propositions cease to be logical implications of actions, and economics ceases to be a branch of praxeology.” In other words, economic laws become contingent rather than necessary, and the ideal-type approach fails to provide economic theory with an epistemological basis that frees it from the defects of positivism and historicism.
• 23Alfred Schutz, in his 1932 book, The Phenomenology of the Social World, accepted Mises’s criticisms of Weber and attempted to incorporate these into his own adaption and generalization of Weber’s method. Schutz proposed an ideal-type for acting man which would possess the universal applicability needed for the construction of pure economic theory. According to Schutz, ideal-types of this sort “do not refer to any individual or spatio-temporal collection of individuals. They are statements about anyone’s action, about action or behavior considered as occurring in complete anonymity and without any specification of time or place. They are precisely for that reason lacking in concreteness.” Schutz observed, using words taken from Mises, that any principle derived from such constructs is “not a statement about what usually happens, but of what necessarily must happen.”
• 24Alfred Schutz, in his 1932 book, The Phenomenology of the Social World, accepted Mises’s criticisms of Weber and attempted to incorporate these into his own adaption and generalization of Weber’s method. Schutz proposed an ideal-type for acting man which would possess the universal applicability needed for the construction of pure economic theory. According to Schutz, ideal-types of this sort “do not refer to any individual or spatio-temporal collection of individuals. They are statements about anyone’s action, about action or behavior considered as occurring in complete anonymity and without any specification of time or place. They are precisely for that reason lacking in concreteness.” Schutz observed, using words taken from Mises, that any principle derived from such constructs is “not a statement about what usually happens, but of what necessarily must happen.”
• 25Alfred Schutz, in his 1932 book, The Phenomenology of the Social World, accepted Mises’s criticisms of Weber and attempted to incorporate these into his own adaption and generalization of Weber’s method. Schutz proposed an ideal-type for acting man which would possess the universal applicability needed for the construction of pure economic theory. According to Schutz, ideal-types of this sort “do not refer to any individual or spatio-temporal collection of individuals. They are statements about anyone’s action, about action or behavior considered as occurring in complete anonymity and without any specification of time or place. They are precisely for that reason lacking in concreteness.” Schutz observed, using words taken from Mises, that any principle derived from such constructs is “not a statement about what usually happens, but of what necessarily must happen.”
• 26The significance of Schutz’s work to Austrian economics lies not in this semantic innovation but rather in Schutz’s use of more narrow ideal-types to derive what he calls a “common sense” understanding of social phenomena. This common sense approach is, however, not based upon the anonymous ideal-type of mankind “as such.” It is, as is readily apparent from Schutz’s own discussion of it, a historical, value-laden approach: “In order to explain human actions the scientist has to ask what model of an individual mind can be constructed and what typical contents must be attributed to it in order to explain observed facts as the results of the activity of such a mind in an understandable relation.” These models, Schutz continues, “are models of rational actions but not of actions performed by living human beings in situations defined by them.”
• 27The significance of Schutz’s work to Austrian economics lies not in this semantic innovation but rather in Schutz’s use of more narrow ideal-types to derive what he calls a “common sense” understanding of social phenomena. This common sense approach is, however, not based upon the anonymous ideal-type of mankind “as such.” It is, as is readily apparent from Schutz’s own discussion of it, a historical, value-laden approach: “In order to explain human actions the scientist has to ask what model of an individual mind can be constructed and what typical contents must be attributed to it in order to explain observed facts as the results of the activity of such a mind in an understandable relation.” These models, Schutz continues, “are models of rational actions but not of actions performed by living human beings in situations defined by them.”
• 28The difference between [praxeology] and history is considered as only one of degree.... They are different merely in the extent of their proximity to reality, their fullness of content, and the purity of their ideal-typical construction. Thus Max Weber has implicitly answered the question that had once constituted the Methodenstreit [the famous Battle of Methods in which Carl Menger defended theoretical analysis against the attacks of the historical school] entirely in the sense of those who denied the logical legitimacy of a theoretical science of social phenomena. According to him [praxeology] is logically conceivable only as a special, qualified kind of historical investigation.
• 29For Mises, “history” deals with the concrete manifestations of action. “For history,” he observed, “the main question is: What was the meaning the actors attached to the situation in which they found themselves and what was the meaning of their reaction and, finally, what was the result of these actions.” In an important sense, then, the pure theory that forms the heart of praxeological analysis requires a type of subjectivism distinct from the subjectivism needed in historical analysis. Praxeologists, as developers of pure theory, must consider market phenomena without presuming any knowledge of agents’ preferences and beliefs. They must view the world, not as “understanding” beings employing “common sense” to interpret a specific historical event, but as theorists in search of the logical patterns that underlie the actions of all “understanding” individuals.
• 30“Common sense,” however, is not used only by social scientists. Praxeology recognizes it is an essential tool of all people who act in the social world. All entrepreneurial action (i.e., speculative action in the marketplace) requires understanding of other people’s motives and intentions: “To know the future reactions of other people is the first task of acting man. Knowledge of their past value judgments and actions, although indispensable, is only a means to this end.” Thus, while history and common sense or psychological understanding of people’s past values and actions are essential for understanding the future, they are not necessarily sufficient. Moreover, entrepreneurship derives only limited practical guidance from praxeology, the “predictions” of which, being simply examples of its conjectural histories, are always qualitative and contingent; they cannot inform us of the actual choices people will make. “The a priori discipline of human action, praxeology, does not deal with the actual content of value judgments. It deals only with the fact that men value and then act according to their valuations. What we know about the actual content of judgments of value can be derived only from experience.”
• 31“Common sense,” however, is not used only by social scientists. Praxeology recognizes it is an essential tool of all people who act in the social world. All entrepreneurial action (i.e., speculative action in the marketplace) requires understanding of other people’s motives and intentions: “To know the future reactions of other people is the first task of acting man. Knowledge of their past value judgments and actions, although indispensable, is only a means to this end.” Thus, while history and common sense or psychological understanding of people’s past values and actions are essential for understanding the future, they are not necessarily sufficient. Moreover, entrepreneurship derives only limited practical guidance from praxeology, the “predictions” of which, being simply examples of its conjectural histories, are always qualitative and contingent; they cannot inform us of the actual choices people will make. “The a priori discipline of human action, praxeology, does not deal with the actual content of value judgments. It deals only with the fact that men value and then act according to their valuations. What we know about the actual content of judgments of value can be derived only from experience.”
• 32With these considerations in mind, it is possible to state the dilemma at the heart of the present controversy in Austrian economics: If, in fact, “action [in society] implies understanding of other men’s reactions” and “no action can be planned or executed without an understanding of the future,” then how can praxeology proceed to the elucidation of market phenomena unless it first addresses “the main epistemological problem of… understanding,” viz.: “How can a man have any knowledge of the future value judgments and actions of other people?” The current controversy within the Austrian school is due mainly to the conviction on the part of some Austrians that praxeology must address and resolve this problem of understanding. Otherwise, its theorems must be regarded, not as necessary truths about the world, but as empty and arbitrary tautologies referring to a hypothetical society populated, not necessarily by man “as such,” but by “understanding man”; not by homo agens, but by homo percipiens (perceiving man) and, even more crucially, by homo divinans—“man who grasps the future.”
• 33With these considerations in mind, it is possible to state the dilemma at the heart of the present controversy in Austrian economics: If, in fact, “action [in society] implies understanding of other men’s reactions” and “no action can be planned or executed without an understanding of the future,” then how can praxeology proceed to the elucidation of market phenomena unless it first addresses “the main epistemological problem of… understanding,” viz.: “How can a man have any knowledge of the future value judgments and actions of other people?” The current controversy within the Austrian school is due mainly to the conviction on the part of some Austrians that praxeology must address and resolve this problem of understanding. Otherwise, its theorems must be regarded, not as necessary truths about the world, but as empty and arbitrary tautologies referring to a hypothetical society populated, not necessarily by man “as such,” but by “understanding man”; not by homo agens, but by homo percipiens (perceiving man) and, even more crucially, by homo divinans—“man who grasps the future.”
• 34With these considerations in mind, it is possible to state the dilemma at the heart of the present controversy in Austrian economics: If, in fact, “action [in society] implies understanding of other men’s reactions” and “no action can be planned or executed without an understanding of the future,” then how can praxeology proceed to the elucidation of market phenomena unless it first addresses “the main epistemological problem of… understanding,” viz.: “How can a man have any knowledge of the future value judgments and actions of other people?” The current controversy within the Austrian school is due mainly to the conviction on the part of some Austrians that praxeology must address and resolve this problem of understanding. Otherwise, its theorems must be regarded, not as necessary truths about the world, but as empty and arbitrary tautologies referring to a hypothetical society populated, not necessarily by man “as such,” but by “understanding man”; not by homo agens, but by homo percipiens (perceiving man) and, even more crucially, by homo divinans—“man who grasps the future.”