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Mises as Social Rationalist Pt II: The Rationalistic Basis of Rules of Conduct and Social Institutions

Tags Calculation and KnowledgeHistory of the Austrian School of EconomicsPhilosophy and MethodologyPraxeology

Editors note: One of the most important analysis of Ludwig von Mises's social theory and his views on the origins of human society has been Dr. Joseph Salerno's Ludwig von Mises as a Social Rationalist. This essay sparked an important debate among scholars within the Austrian school of the ideological differences between Ludwig von Mises and F.A. Hayek, enriching our understanding of the work of both great scholars. 

For the benefit of readers, we will publish during this week in six separate parts. Part I. The complete essay can be found here.  

Part II

If society and social evolution are emanations of the human will, a "will-phenomenon" as Mises says, so are the ancillary social institu­tions, customs, and rules of conduct which facilitate the establish­ment and smooth functioning of the system of social relationships. Law, the moral code, marriage and the nuclear family, private prop­erty, specialized occupations and professions, linguistic develop­ments, and the market economy itself are the outcome of conscious endeavors by human beings to adjust more effectively to the require­ments of the fundamental social relation and thereby make more productive use of the principle of the division of labor in achieving their goals. While these institutions were not created out of whole cloth by a single mind, political fiat or "social contract," they are indeed the products of rational and intentional planning by human beings, whose thoughts and actions continually reaffirm and reshape them in the course of history (1969, p. 306).

Thus Mises argues that "Compliance with the moral rules which the establishment, preservation, and intensification of social cooper­ation require is not seen as a sacrifice to a mythical entity, but as the recourse to the most efficient methods of action, as a price expended for the attainment of more highly valued returns" (1966, p. 883). In order to reap the benefits of social cooperation, each individual must refrain from seeking ephemeral advantages through actions "detri­mental to the smooth functioning of the social system" and, therefore, to his own rightly understood interests (Mises 1966, p. 148).

Law evolves as part of the system of "the rules of conduct indis­pensable for the preservation of society" (Mises 1966, p. 149). The development of these rules of conduct, like that of society itself, is an evolutionary andrational process. Mises emphatically rejects the naive rationalist explanation of society and of the legal order, which construes their origination and development as "a conscious process ... in which man is completely aware of his motives, of his aims and how to pursue them" (1969, p. 43). Nonetheless, Mises affirms that evolution of law is crucially dependent on the fact that the "position of social ends in the system of individual ends is perceived by the individual's reason, which enables him to recognize aright his own interests" (1969, p. 398). Where the naive rationalist asserts that law sprang into existence full-grown from a set of explicit presocietal contracts, Mises as social rationalist characterizes law as a "settle­ment, an end to strife" which emerges naturally from the process of social evolution and spreading awareness of the higher productivity of peaceful integration into the social division of labor (1969, p. 44). This explains, furthermore, why "The idea of Law is realized at first in the sphere in which the maintenance of peace is most urgently needed to assure economic continuity ... that is in the relations between individuals [i.e., the realm of private law]" (Mises 1969, p. 46).

As an instrument designed to increase mutual prosperity by facilitating social cooperation, the law has a teleological and rational­istic basis: "Like all other social institutions, the Law exists for social purposes" (Mises 1969, p. 77). As such, "Law and legality, the moral code and social institutions ... are of human origin, and the only yardstick that must be applied to them is that of expediency with regard to human welfare" (Mises 1966, p. 147).

However, the repression of the antisocial conduct of the intellec­tually defective, the weak-willed, or individuals who heavily discount the future consequences of their actions is not accomplished solely or even mainly by the coercive powers of the legal authorities. Broadly accepted morals and customs evolved as a first line of defense against behavior potentially destructive of social relationships. As Mises points out:

Not every social norm requires that the most extreme coercive mea­sures shall at once be put into force. In many things, morals and custom can wring from the individual a recognition of social aims without assistance from the sword of justice. Morals and custom go further than State law in so far as there may be a difference in extent between them, but no incompatibility of principle [1969, p. 399].

This is the meaning behind Mises's dictum that "Morality consists in the regard for the necessary requirements of social existence that must be demanded of each individual member of society. A man living in isolation has no moral rules to follow" (Mises 1987b, p. 33).

Like law and normative rules of conduct, private property is, at the same time, an "outgrowth of an age old evolution" and "a human device" (Mises 1966, pp. 654, 683). It originated as a rational response to scarcity, when, encountering lowered productivity due to increased population density, people deliberately decided to abandon "preda­tory methods" of hunting and gathering and to permanently appro­priate to themselves the most productive land factors (Mises 1966, pp. 656–57). Moreover, the historical development of private property was powerfully conditioned by ideology, which, as we shall see below, is the product of conscious human thought.

Monogamous marriage and the nuclear family are also social institutions that evolved as products of rational insight into the requirements of the division of labor. "As a social institution marriage is an adjustment of the individual to the social order by which a certain field of activity, with all its tasks and requirements, is as­signed to him" (Mises 1969, p. 99). In this sense, it is the application of the principle of the division of labor to those extra-catallactic tasks that are immediately prerequisite to the enjoyment of consumption goods, whether acquired on the market or produced within the house­hold, e.g., the bearing and raising of children. It is a chosen form of social cooperation in the face of the pervasiveness of scarcity in human life.

Marriage and family life are therefore not products of innate sexual drives or natural instincts. These institutions originated and continue to exist as an integral part of social life because ratiocination of individual human beings daily affirms their benefits. In Mises's words, "neither cohabitation, nor what precedes it and follows, gen­erates social cooperation and societal modes of life. The animals too join together in mating, but they have not developed social relations. Family life is not merely a product of sexual intercourse. It is by no means natural and necessary that parents and children live together in the way in which they do in the family. The mating relation need not result in a family organization. The human family is an outcome of thinking and acting'' (Mises 1969, p. 168).

Nor is the modern ideal of monogamous marriage a creation of ecclesiastical directives. Modern marriage is a product of the evolu­tion of contract law and its deliberate extension into matters of family life. Monogamy historically wins out over polygamy as conflict over control and disposition of the property that a woman brings to a marriage, including the identification of her proper heirs, is resolved through recourse to the idea of contract. This process is described by Mises in the following passage:

Thus monogamy has been gradually enforced by the wife who brings her husband wealth and by her relatives-a direct manifestation of the way in which capitalist thought and calculation has penetrated the family. In order to protect legally the property of wives and their children a sharp line is drawn between legitimate and illegitimate connection and succession. The relation of husband and wife is ac­knowledged as a contract.

As the idea of contract enters the Law of Marriage, it breaks the rule of the male, and makes the wife a partner with equal rights. From a one-sided relationship resting on force, marriage thus becomes a mutual agreement; the servant becomes the married wife entitled to demand from the man all that he is entitled to ask from her. ...

This evolution of marriage has taken place by way of the law relating to the property of married persons. Woman's position in marriage was improved as the principle of violence was thrust back, and as the idea of contract advanced in other fields of the Law of Property it necessar­ily transformed the property relations between the married couple. The wife was freed from the power of her husband for the first time when she gained legal rights over the wealth that she brought into marriage and which she acquired during marriage. ...

Thus marriage, as we know it, has come into existence entirely as a result of the contractual idea penetrating into this sphere of life. All our cherished ideals of marriage have grown out of this idea. That marriage unites one man and one woman, that it can be entered into only with the free will of both parties, that it imposes a duty of mutual fidelity, that a man's violations of the marriage vows are to be judged no differently from a woman's, that the rights of husband and wife are necessarily the same-these principles develop from the contractual attitude to the problem of marital life [1969, pp. 95–96].

In sum, family life in its modern form, as well as the morals and rules of conduct that sustain and make it possible, are the outcome of a historical process directed by reason and fueled by the eagerness of individual human beings to establish living arrangements compatible with the fullest possible satisfaction of their desires under the evolving division of labor. Thus, as Mises concludes, modern marriage "is the result of capitalist, and not ecclesiastical, development" (1969, p. 97).

Like the morals underlying marriage, all spiritual or intellectual phenomena, including religion and culture, are powerfully condi­tioned by the development of the social division of labor. As Mises points out, "all inner culture requires external means for its realization, and these external means can be attained only by economic effort. When the productivity of labor decays through the retrogression of social co-operation the decay of inner culture follows" (1969, p. 310). Mises illustrates this historically by noting the decline of the Roman Empire, which "was only a result of the disintegration of ancient society which after reaching a high level of division of labor sank back into an almost moneyless economy" (1969, p. 309). The "disintegration" of the social division of labor delivered a devastating setback not only to human population, productivity, and prosperity, but also to scientific, technical, and artistic pursuits. In short, "The Classical culture died because Classical society retrogressed" (Mises 1969, p. 309).

Linguistic evolution is also intimately connected with changes occurring in the division of labor. Language is "a tool of thinking and acting'' and, as such, "changes continually in conformity with changes occurring in the minds of those who use it" (Mises 1985, p. 232). When communication between members of a linguistically homogeneous group is impaired or altogether cut off, the consequence is a divergent evolution of the language among the isolated groups from that point onward. Thus Mises explains the emergence of local dialects as a "disintegration of linguistic unity" that results "When communica­tion between the various parts of a nation's territory was infrequent on account of the paucity of the interlocal division of labor and the primitiveness of transportation facilities ... " (1985, p. 233).

Along with genetic endowment and natural environment, Mises identifies the social division of labor as an important factor operating to constrain the possibilities of the individual's "being and becoming'' at any point in history (1969, pp. 314–15). The individual is born into a social environment characterized by pre-existing rules of conduct, linguistic conventions, legal and moral codes, customs, and social institutions whose raison d'etre is to render possible human cooper­ation under the division of labor. In choosing to integrate himself into society, the individual must consciously adapt himself to the division of labor both physically and spiritually: physically, by forgoing the exercise and development of his abilities and skills in a whole range of tasks designed to serve directly his own wants and by pursuing a highly specialized profession or occupation oriented to satisfying the wants of other human beings; and spiritually, by adopting behavior in accordance with social norms and institutions.

Thus, according to Mises (1969, p. 304), "The most important effect of the division of labor is that it turns the independent individual into a dependent social being. Under the division of labor, social man changes. ... He adapts himself to new ways of life, permits some energies and organs to atrophy and develops others. He becomes one-sided."

Moreover, as Mises points out, the very concept of an isolated human being is a fiction, a useful mental construct for the elaboration of economic theory but impossible of realization in history (Mises 1966, pp. 243–44; Mises 1969, pp. 291–92). Homo sapiens is necessar­ily a creature of social cooperation under division of labor, because language, the prerequisite of conscious thought, cannot be developed by an isolated being. As Mises expresses it:

The biological passing of a species of primates above the level of a mere animal existence and their transformation into primitive men implied the development of the first rudiments of social cooperation. Homo sapiens appeared on the stage of earthly events neither as a solitary food-seeker nor as a member of a gregarious flock, but as a being consciously cooperating with other beings of his own kind. Only in cooperation with his fellows could he develop language, the indis­pensable tool of thinking. We cannot even imagine a reasonable being living in perfect isolation and not cooperating at least with members of his family, clan, or tribe. Man as man is necessarily a social animal. Some sort of cooperation is an essential characteristic of his nature [1985, p. 252].

These considerations lead Mises to conclude that "The develop­ment of human reason and human society are one and the same process" (1969, p. 291). Elsewhere Mises affirms "the inner and necessary connection between evolution of the mind and evolution of society" (1969, p. 300). But if social cooperation is a necessary pre­condition of the origination of the human mind, the existence and evolution of the social division of labor beyond the rudimentary level depends on the ability of the human intellect to operate with cardinal numbers in order to calculate the outcome of social production pro­cesses. This is another sense in which, for Mises, society can be considered a rational phenomenon.


Contact Joseph T. Salerno

Joseph Salerno is academic vice president of the Mises Institute, professor emeritus of economics at Pace University, and editor of the Quarterly Journal of Austrian Economics.

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