Austrian Philosophy and Austrian

l
Economics

Barry Smith
11IStilut~fr PhilO$ophi4
Ulljv~rsily olGral

1. The Austrian School of Economics

Austrian economics has its beginnings in the publication, in 1871, of Carl

Menger's Principles ojEconomics, a work which seeks to defend the possibility
of an economics which is at one and the same time 'theoretical' and also
'subjectivistic' .
Mengerian economics is theoretical in the sense that it is to set forth
general laws comparable, say, to the laws of geometry or mechanics, and
contrasted with mere inductive hypotheses. Laws of this son are possible,
Menger argues, because there exist economic categories - such as action,
production, profit. market, money, rent, value, preference, choice, ex-
change, entrepreneurship - which are universal in the sense that they are
capable of being exemplified in principle in every economy and of being
grasped as such by the economic theorist.
And Mengerian economics is subjectivistic in the sense that the laws
of the theory, laws of economic action and of economic value, are to be
in every case related to the preferences and plans, perceptions and
146 Praxiologies and the Philosophy of Economics
decisions of individual subjects in such a way as to embrace the thesis
that all social phenomena are the result of individual activity, all value
the result of individual preference. An economy is not, from this subjec-
tivist point of view, an autonomous formation with unintelligible proper-
ties of its own. Rather, as Menger sees it, one can understand the
workings of an economy. One can see, for example, how the value of
goods at earlier stages in the process of production is derived from the
value to actual consumers of the products of the later stages.
Menger's theoretical pronouncements were directed above all against
German historicist economists who were, to different degrees, both
anti-tbeoretical and anti-subjectivist. The phrase 'Austrian school' was
in fact initially employed by Menger's historicist opponents as a term of
denigration. For the kingdoms and lands of the Empire of the Habsburgs
were still, in 1871, distinguished from their more developed neighbors
to the west in that they could look back on almost no important theoretical
or scientific achievements of their own. As we shall see however, things
were soon to change, and in the decades following the appearance of
Menger's work Austria was to experience a veritable renaissance not
merely in the scientific sphere but across the entire range of artistic and
intellectual achievement.
The first generation members of the Austrian school, Eugen von
Bhm-Bawerk and Friedrich von Wieser, were both, like Menger, profes-
sors of economics in Vienna. Their successors included Joseph Schum-
peter, Ludwig von Mises, Hans Mayer, Leo Schnfeld-my and Paul
Rosenstein-Redan, and Austro-Marxists such as Rudolf Hilferding and
Otto Bauer were also influenced by Menger's thinking. It was however
the circle of thinkers around von Mises who did most to establish the
characteristic methods and insights of the Austrian school and to spread
Austrian ideas beyond the borders of Austria itself. Mises' Vienna circle
included not only economists such as Friedrich von Hayek, Gottfried von
Haberler, Fritz Machlup and Otto Morgenstern, but also philosophers
such as Felix Kaufmann and Alfred Schutz. The impact of these thinkers
is seen, for example. in the work of Lionel Robbins and - more radically
- in that of G.L. Shackle in London, and indeed the peak of the influence
of the Austrian school was achieved in the L.S.E. in the 1930s, where
Austrians and their fellow-travellers enjoyed a virtual dominance of high
theory in the economic field - only to be shot down by a burgeoning
Keynesianism. or more precisely by historical events conceived as being
Austrian Philosophy and Economics 247
favorable to that sort of dirigisrne with which Keynes had allowed
himself to be associated.
Austrian economics since then has had a chequered career. Certainly,
a number of the subjectivist insights of Menger and his followers have
established themselves as orthodoxy within the mainstream of
economics, though they have in the process normally lost their' Austrian'
label and flavor. Certainly, too, a number of latter-day Austrians have
come to enjoy some influence in political and more recently even in
government circles in England, America and elsewhere. Austrian
economic theory. however, has enjoyed a less fortunate fate, and the
principal living genius of the Austrian school, Friedrich Hayek, has
devoted his efforts since the war not to economic theory as such but to
the working out of certain implications of the ideas of Menger and others
for our understanding of social and political formations in general.
Contemporary Austrian economic theory is represented above all by
Ludwig Lachmann. Israel Kirmer and Murray Rothbard, all of them past
students and associates of Mises in New York. Lacbmann has perhaps
done more than any other thinker within the Austrian tradition to push
back the limits of subjectivism, particularly in relation to the role that is
played by individual expectations in economic theory. Kinner, on the
other hand, has developed and refined the ideas of Mises and Hayek on
the role of knowledge, ignorance and error in economic action and has
shown how it is possible to utilize Misesian ideas on entrepreneurship in
a way which has consequences for our understanding of such economic
categories as profit, competition and the market, as also of the role of
time in economic theory. Rothbard, finally, is perhaps the most con-
spicuous of modern-day American Nee-Austrians, his notoriety deriv-
ing above all from the fact that he has welded Misesian economics and
the Misesian critique of the state to a libertarian or even anarcho-
capitalist ethics and political theory.
2. Austrian Economics and the Neoclassical Mainstream
Competition, in the Austrian view, is never 'perfect'. The plans and
expectations ofdistinct market participants are never even approximately
in harmony with one another. Yet there would appear to be certain
manifest benefits of market competition, benefits of a sort which, as the
early Austrians did much to demonstrate, are incapable of being simu-
lated by, for example, a centrally planned economy. How, then, are such

2.41 Prulololl- and tile Philosophy of Economics
benefits to be understood? Neoclassical economic theory has tackled this
problem almost exclusively by examining the (formal, or mathematical)
properties of the equilibrium state, a state which would involve perfect
harmony of all participants' plans. It has paid much less attention to the
problem of how the benefits of competition and of the market can be
understood under the actually prevailing circumstaneeS of endemic im-
perfection and of constantly changing external conditions. Austrian
economists, in contrast, think not in terms of an ideal state of achieved
equilibrium, but rather in terms of a faltering process of always partial
movement towards the elimination of disequilibria Taken in and ofitself,
this idea is intriguing, and seems to bear great promise. Yet it must be
admitted that, at least from the perspective of those working within the
mainstream of economic science, this promise cannot be said to have
been fulfilled.
Right, of course, is not always on the side of might, and certainly a
very different story would have to be told about the merits and demerits
of Austrian economics in a world in which Austrian ideals prevailed in
our determinations of what economic science is designed to achieve and
as to the criteria which are to be used to separate good theory from bad.
Thus for example the Austrians are sceptical as to the possibility of
obtaining meaningful measures in relations to many of the phenomena
represented parametrically in the models of equilibrium theorists. They
have accordingly tended to favor qualitative investigations of economic
phenomena, of action, intentionality, knowledge, error, perception,
choice, etc.
My aim what follows, however, is not to expound the details of
Austrian economic doctrine. Rather, I wish to show that Austrian
economics is not an isolated phenomena. but rather part and parcel of a
wider tradition in Austrian (or Austro--Hungarian, or even Austro-Hun-
garian-Polish) philosophy, a tradition which. as we sh~ see, even in
spite of its own fundamentally anti-positivistic orientation. helped to
make possible also the logical positivism of the Vienna circle. Only in
the light of this wider tradition, I shall argue, will it be possible for us to
understand what, precisely, is involved in the claims of Austrian
economics. And only then shall we be able adequately to gauge the
relation of Austrian economiCS to its neoclassical counterpart.
Austrian Philosophy and Economics 249
3. Austria vs. Germany
A:us~a and Germ~y, I want to claim, have different modes or styles
of thinking and speaking, different attitudes to learning and to tradition
~ to ~ German language itself. 2 The differences of styles of thought,
In ~cular, run so deep, that the Germans and Austrians themselves
have In most cases been unaware of them, to the extent that they have
felt the ~ to protest against those intellectual historians who have
drawn attentton to the differences in question. Austria is marked, above
all, b~ an absen~ of any entrenched philosophy of the Kantian or
~eg~lian sort. This partly a matter of psychology: the Austrians - similar
In this respect to the English - have tended to react with suspicion in the
face of metaphysical systems of the German sort. But it is partly also a
consequence of the already-mentioned intellectual backwardness of the
Habsburg Empire in the 19th century in relation to its neighbors to the
~est. ~ works of both Kant and Hegel were indeed for a time prohibited
In Austrta, whe~ philosophical education was dominated instead by
textbooks, prescnbed by the state authorities in Vienna, whose content
was drawn from Catholic school-philosophy and from a Leibnizian-
Wolffian 'Popularphilosophie' of the sort that had been current also in
Germ~y un?! ~ time of Kant. This gave way. in the period leading up
to the liberalization of the Austrian university system in the second half
of the 19th century, to a rather superficial mixture of doctrines incor-
porating in particular ideas taken over from the German Herbart. Things
were made worse by the fact that Austrians were for a long time not
!egally permitted to study outside the confines of the Empire. This was
10 pan because university education was considered more or less ex-
clusively as a training for the home civil service. But it reflected also a
fear on the part of the Imperial authorities that enlightenment ideas and
other f~rms of sedition might be imported from the west.
. Irorucally. however, there were certain advantages in this compara-
~ve ba~k~ar~ss (as there were advantages to Germany of her late
l~UStriallzatiOn as compared to England). For it meant that, when the
~e came ~or the ~tablishment of a modem and scientifically oriented
philosophy In Austrta. there was little of substance against which the new
philosophical developments had to compete. Modem philosophy was
thereby able to gain a hold in Catholic Austria. where its development in
2SO PruioJogIes and the Philosophy 01 Economics
Gennany has been repeatedly thwarted by the influence of Kantian and
Hegelian idealism and other tendencies of a metaphysical sort. 3
TIle strength of idealist metaphysics in Germany derives in no small
part from the fact that it is closely associated even in the popular mind
with the development both of German nationalist feeling and of the
German nation itself. Kant, Fichte, Hegel have come to occupy an
entrenched position in German thought and feeling that is comparable to
the position of Catholicism in modem Poland. Every German school-
teacher has his shelf of works by Kant and Hegel and Marx. Every
German town has its Kant- and Hegelstrasse,just as it has its Beethoven-
, Goethe- and Bismarckstrasse. At no time was philosophy rooted in this
way in the structure of the Austrian state and in the national conscious-
ness of the Austrian people.
Strangely, the rootedness of philosophy in the German popular mind
goes hand in hand with a quite peculiarly abstruse style of German
philosophical writings. a style which has proved inimical to the develop-
ment of a native German tradition of exact or scientific philosophy in the
modem sense. German philosophers have tended to strive for ter-
minological depth at the expense of philosophical clarity, which they
have associated with shallowness of thinking. 4
It is worth pointing out, though, that there were isolated thinkers in
Germany - one thinks in particular of Humboldt or Herder - who were
conscious of the stylistic inadequacies of their compatriots. and who were
sensitive also to the role oflanguage in philosophy. Moreover, there were
cases of Austrian philosophers who occasionally took on some of the
stylistic habits of the Germans. On all of this see Mulligan (forthcoming),
especially his treatment of the philosophical style of the later Husserl.
Even Kant can be charged with some of the responsibility of the stylistic
excesses and consequent unclarities of his successors, and Neokantians
such as Rickert and Windelband. who attempted to develop a scientifi-
cally oriented philosophy in the spirit of Kant, never achieved in their
writings that sort of clarity which we associate with Bolzano or Brentano.
TIle philosophical insights of the Germans- and it is certainly not to
be ruled out that there are philosophical insights scattered through the
writings of, say, Hegel or Heidegger - must therefore as it were struggle
to make themselves heard from behind textual barriers constructed out
of a terminology that has become an end in itself. Moreover, because the
relation of philosophy to empirical matters of fact is not, normally, a
Austrian Philosophy and Economics 251
subject for investigation, the German philosopher's world (the world of
the Philosophical Text) is in effect split apart from the world of what
happens and is the case, and this, too, has consequences for the style of
the philosophy which results.
But why should this be so? Some preliminary clues can be gathered
if we look at those isolated German thinkers of importance - one thinks
in particular of Helmholtz, Frege and Hilbert - whose philosophical
writings are not marked by Kantian-Hegelian stylistic excesses. What
such thinkers have in common is clear: they have each come to
philosophy from some extra-philosophical discipline where normal
standards of clarity prevail. TIle literary style imposed upon the
generality of German philosophers, in contrast, became entrenched
precisely during a period when philosophical thinking was carried out in
virtual dissociation from modem science. This style was shaped, rather,
by religion and politics, by romanticism, Sturm und Drang, and by
German nationalist ideology. Contrast the case of England, whose native
philosophical style had been established 100 years before Kant during
the heyday of the British scientific enlightenment And contrast also the
case of Austria, which found its feet philosophically only at the tum of
our present century, and whose stylistic forms are accordingly deter-
mined by models derived from logic, physics and experimental psychol-
ogy.
4. The Marks of Austrian Philosophy
Philosophy, we have said, plays no central role in the national con-
sciousness of the Austrians. Yet. as philosophers and historians of ideas
have come gradually to recognize, there is a peculiarly Austrian way (or
family of ways) of doing philosophy, sharply to be distinguished from
that of Kant. Hegel. Fichte. Schlegel. Schelling. Schopenhauer, Schleier-
macher and their modern-day successors. 5
TIle characteristic marks of this Austrian philosophy are difficult to
defme precisely. If, however, we consider the thinking of Bolzano,
Brentano,6 TwardOWSki, Meinong, Ehrenfels, Husserl, Mach,
Boltzmann. Wittgenstein, Wertheimer, Iogarden, Gdel, Popper, and the
members of the Vienna circle, then we can reach the very tentative
conclusion that this thinking is at least to some degree marked by:
i) the attempt to do philosophy in a way that is inspired by or closely
connected to empirical science. It is indeed remarkable to consider the
252 PraxJoIo(pes aDd the Philosophy 01 Ecooomks
extent to which modern philosophy of science has been a charac-
teristically Ausman phenomenon. or at least a phenomenon marKedly
influenced by Ausman thought and culture in the period around the turn
of the century. One thinks in this connection not only of Bolzano and
Mach. Popper and Polanyi. Wittgenstein and Hayek, 1 but also of Ludwig
Boltzmann. Ludwik Fleck.' Otto Neurath, Friedrich Waismann, Herbert
Feigl, Leon Chwistek, Gustav Bergmann, Paul Feyerabend and
Wolfgang Stegmller- all of them Ausmans (or Austro-Hungarians) who
have done much to determine the shape of the philosophy of science as
we know it today.' The logical positivism of the Vienna circle (itself a
multifaceted phenomenon that is all too often treated over-simply in the
standard texts) is in this respect merely one partial moment of a much
richer tradition of scientifically-oriented philosophy, a tradition whose
implications for the practice of science have not, as yet, been harvested
in full.
ii) a sympathy towards and in many cases a rootedness in British
empiricist philosophy, which goes hand in hand with a concern to
develop a philosophy 'from below', on the basis of detailed examination
of particular examples, rather than 'from above' in the fashion of most
German philosophers (with manifest consequences, again, for the literary
style of the philosophy which results).
iii) a concern with the language of philosophy. This sometimes
amounts to a conception of the critique of language as a tool or method
of philosophy, sometimes to a conception of language itself as a proper
object of philosophical investigation; sometimes it leads to attempts at
the construction of a logical ideal language; in many cases it manifests
itself in the deliberate employment of a clear and concise language for
the purposes of philosophical expression and in the cultivation of a
philosophical style that is not cut free from the empirical world of what
happens and is the case.
iv) a special relation to realism. understood both in an ontological
sense (the world exists, more or less as we fmd it) and in an epistemologi-
cal sense (knowledge of the world is possible and we are already in
possession of substantial portions of such knowledge). The Kantian
revolution was not accepted by the Ausmans, and neither were the
various sorts of relativism and historicism which came in its wake. This
means that there is no divorce of a 'phenomenal' and 'noumenal' world
within Austrian philosophy. The world that is experienced and known
Austrian Philosophy and Eeooomlcs 253
and the world as it is in itself are one and the same (which does not, of
course, imply that it is in any sense a trivial matter to set out what this
world is like in philosophical terms).
v) realism is associated further with a commitment - in the end
derived from Aristotle and the scholastics- to descriptive or ontological
ade~uacy. This is marKed especially by a concern with how the parts of
reality fit together to form different kinds of structured wholes. In some
cases it involves the recognition of differences of ontological level
amo?g the entities revealed to us by the various science and a consequent
readiness to accept a certain stratification of reality.
vi) a special relation to the a priori, or more generally a concern with
what is prior to observation and experiment. This is revealed first of all
in that tradition of Austrian philosophy of science which insists that
observation in the Baconian sense is not unproblematic, that observation
is, in some sense, 'theory laden'. It is revealed also however in the
willingness of a number of Austrian philosophers to accept one or other
fonn of Platonism (in logic, ontology, value theory, and elsewhere), 10 or
to accept disciplines such as phenomenology and Gestalt theory which
are (as Wittgenstein expressed it) 'intennediary between science and
logi~:. Finally, it is revealed, in the work of Austrian philosophers in the
tradmon of Brentano who argued - following Aristotle - that the world
as it is in itself is at least to some degree meaningful or intelligible, so
that we are able, even without appeal to experiment or induction, to read
off certain structures or relations directly from experience.
vii) an overriding interest in the relation of macrophenornena (for
example in ethics, or in ontology) to the microphenomena (especially
mental experiences) which underlie or are associated with them. This
does not of necessity imply any reduction of complex wholes to their
constituent parts or moments: certainly a reductionism of this sort is
present, again, in Mach and in some of the Vienna positivists. But it is
explicitly rejected by almost all the other Austrian thinkers to be dis-
cussed below.
s. Austria vs. Germany Revisited
Even cursory reflection will tell us that not all of the given features
~ ~d in common by all the thinkers mentioned. Some philosophers
m Austna are marked precisely by the ways in which they modified or
reacted against what was characteristic of Austrian philosophy in
254 Praxiologies and the Philosophy 01 Economics
general. Some (for example Wittgenstein and Husserl) changed the~r
relationship to these features over time. What is n:markable, ho,:"ever, IS
extent to which the features mentioned have 10 German philo~phy
played almost no role at all- and this. is all the more re~arkable given
the extent to which successive generations of German philosophers have
differed so widely amongst themselves. . . .
German philosophers since Kant have shown no marked mclmation
to see logic as a tool of philosophy, and -leaving aside important (tho~gh
again isolated) exceptions such as Frege - they have fought ~ succes~lon
of rearguard actions against what they see as the dangerous ~nnovauons
of modem logic, as also against the kind of clear and straightforward
weighing of arguments and examples which marks at least the bulk of
philosophy in the Anglo-Saxon world (as, in a different way, it marked
the philosophy of the scholastics). . .
German philosophers since Kant have rarely emb~ realism 10 any
form, and they have typically scorned thatsortofdescnpttve bread~ and
detail which we find, for example, in Aristotle or Locke. Ontology, I? so
far as this is treated at all, is normally more or less absorbed mto
epistemology. Attentions are directed not to the ~Orl~, but to ?ur
knowledge of the world. and even the latter is con~lved 10 .abs~cti~n
from knowledge actually gained and from the praruces of sCientists - 10
a way which. again. can be seen to have done much to thw~ the
development of a native German tradition in the philosophy of science.
German philosophers since Kant are typically ~toricist and ~llec
tivist in their methodologies; they are prone to consider the expenence
or action or knowledge of the individual subject as subsidiary to or as
dependent parts oflarger socio-historical Wholes., This is co~ted with
what we might loosely call the romantic ele~ent 10 ~erm~ .p~osophy.
a mode of though which. in stressing the ultimate unmtelllgibility of the
world. is inimical to science.
6. Vienna and the Rise of Scientific Philosophy 11
We have adverted already to some of the reasons why Vienna in
particular. should have provided such especi~y fertile soi.l for .the
development of a scientific philosophy. The rapId growth of~berabsm
in Austria, and especially in Vienna, in the second half of the mneteenth
century brought with it ideas stemming from the enlightenment and from
empiricism and utilitarianism in especially concentrated form. Mach was
Austrian Philosophy and Economics 2SS
himself ~ product of this Viennese liberal enlightenment. and his in-
fluence did m~Ch to encourage an interest in epistemological and lOgical
problems ~d m problems connected with the foundations of physics and
of theoretical PSychology - to the extent that Hayek can report that he
and. his co~temporaries, on arriving in Vienna to take up their studies in
the ~mmedlate POSt-war years. 'found in Mach almost the only arguments
ag~t a metaphysical and mystificatory attitude' such as was
mamfested by the dominant German-inspired philosophers of the day
(1966,pp.42() .
Carl Menger, too, contributed something to this scientific outlook on
the part of AuStri~ inU:llectuals. Menger's subjectivistic dOctrines rep-
rese~~ a SyntheSIS ~f lIberal economic ideas with the affirmation of the
POSSlblhty of theoretical rigour in economics along the lines discussed
already ~ve.. ~is WOrk.can ~ndeed be seen as standing in OPPOSition to
German histonClst doctrines m the sphere of economics in a way which
almost exactly parallels the opposition of, say, Bolzano or Brentano to
the philosophies of Kant and Hegel. Certainly it is true that many of the
~orerunners of Menger in Vienna were Germans, and that Menger was
~uen~ by these and other non-Austrian thinkers in the details of his
views. This ~hanges nothing, however, in the fact that Menger bears
strong and eVident affinities with his Austrian compatriots as far as the
central tenets of his thinking in the Principles are concerned.
Brentano ~~lf.wOuld later play an important role in the spreading
of modem sclent~fic tdeas and of scientific philosophy in the Empire of
the Habshl:'rgs. Sm~ he moved from Wurzburg to Vienna only in 1874,
however (I? the belief that Austria, which was at the time both liberal
~ Catholic, would be more congenial to his ways of thinking than his
native Germany had been) and since he published no influential work
before that year, it would be wrong to see a direct influence Brentano
upon ~enger hi~sel~. Brentano subsequent influence through his lec-
tures. m the. Umversl!y of Vienna was however tremendous, and he
remam:d a smgularly influential figure among the Austrians even when,
for dubiOUS legal reasons connected with his marriage as an ex-priest
he was forced to resign his chair in 1880. '
Brentano remained in Vienna as a mere Privatdozentuntil1895. He
was thereby able to continue to exert his influence as a teacher. But his
students and diSCiples were largely forced to tum elsewhere in order to
pursue their philosophical careers, and in this way the Brentanian em-
lS6 Praxloloiles ud the Philosophy 01 Economics
piricist philosophy came to predominance in other centres of learning.
both within and without the Empire. TIle positive attitude towards
empiricism and scientific theorizing which Brentano had cultivated in
his followers was thereby to an extent able to create a fertile soil for the
development of other scientifically oriented brands of philosophy (some-
times alien to Brentano's own ideas). including the logical positivism of
the Vienna circle. In this light, it is interesting to note that the major
centres of Brentanian or of Brentano-inspired thought established
around the turn of the century were in precisely those four cities- Vienna,
Prague, Lemberg and Berlin - which were to become, in the 208 and 308,
the principal centres of modem, scientific philosophy in continental
Europe.
For our present purposes it is especially useful to consider the case of
Lemberg, where Brentano's student Kasimir Twardowski was respon-
sible for establishing a tradition of scientific philos ophy which was to
include all of the important figures of the Polish logical and philosophical
renaissance of the first decades of the present century, many of whom
enjoyed a special relationship also with the logical positivists of the
Vienna circle as well as with analytic philosophers in England and
America. Twardowski was responsible for the modernization of Polish
philosophy also in the linguistic sense, and his work brought about a
break with the German-inspired romantic-Hegelian styles of philosophy
that had hitherto predominated.
It was to Twardowski's circle that Tadeusz Kotarbifiski belonged, and
present at different times in Lemberg and falling under Twardowski's
influence were in addition the historian of philosophy Wladystaw
Tatarkiewicz, the phenomenologist and aesthetician Roman Ingarden,
the logicians St. ldniewski, Jan Lukasiewicz and Tadeusz Czeowski,
the already mentioned Ludwik Fleck, as well as 'logical rationalist'
philosophers such as Kazimierz Ajdukiewicz. Members of the circle
around Twardowski were gradually transplanted to Warsaw, where
Legniewski, especially, was dominant, and it was from there that contacts
with the Vienna circle were initiated in the spring of 1930 by Alfred
Tarski. Carnap in tum visited Warsaw in November 1930. He gave
lectures to the Warsaw Philosophical Society and had discussions with
Legniewski, Kotarbifiski and Tarski, at just about the time when Tarski
himself was developing his semantic conception of truth.
Austrian Philosophy and Economics 257
7. Austrian Economics and Austrian Philosophy
What. now, of Austrian economics? The two movements of Austrian
philosophy and Austrian economics are, first of all, historically linked. 11
B?1h Meinong and Ehrenfels, for example, were students of Menger in
Vienna. Both attempted to establish a 'general theory of value' on a
partially ~o~~c basis, drawing on subjectivistic ideas on imputation
and margmal utility put forward by Menger in his Principles of 1871. So
close were these affinities that Brentano, Meinong and Ehrenfels were
du~ the '~nd' ~us~an SC~1 of value-theory, in recognition of
their links With the first Austrian school of Menger, Wieser and
Bhm-Bawerk.
Prague, also, was a centre of Austrian economics, and there, too, the
first and second Austrian schools of value theory were closely linked,
above all through the acquaintanceship of Ehrenfels and Wieser and
through the activities of Brentano's disciple Oskar KraUs. Bhm-Bawerk
in his magnum opus on capital theory (l909-14) takes explicit account
of the work of Brentano and Kraus in his attempts to establish a
psychological foundation for his theory of the role of time in interest-rate
formation, and Kraus attempted in his turn to lay bare what he saw as the
Aristotelian roots of Austrian economic theory - thereby demonstrating
also its affInities to certain Brentanian ideas. 13
~ two ~ovements are linked together in their common relationship
~ Bn~sh philosophy, in their opposition to historicism in Germany, and
In theIr shared readiness to employ the compositive method as a basis of
what they each called 'exact theory'. Brentano and Menger share also a
common subjectivistic or 'methodologically individualist' concern to
rel~te all macro-phenomena to the undedying beliefs. decisions, expec-
tations, preferences, habits, tastes, etc. of individuals.
There exist also affinities and historical links between the second
generation of Austrian economists and Austrian philosophers of science.
Thus for example Karl Menger, son of Carl, was an active member of
the Vienna Circle. prominent mathematician and author of a number of
works in ethics and decision theory. Hayek (a distant cousin of Wit-
tgenstein and friend of Popper) had himself seriously considered joining
the Vienna circle, though he had been averted from taking this step by
the somewhat naive economic views of Otto Neurath. Richard von Mises,
brother of Ludwig, was a member of the Vienna circle and author of a
251 PraxJoIo&Ies and the Philosophy 01 Economics Austrian Philosophy and Economics 259

tract on logical positivism. And ideas accepted by the Vienna circle did From the Kantian perspective the world as it is in itself is (from the
have some influence on the thinking of Ludwig Mises. though the major ~int of view of the cognising subject) a sheer unintelligible chaos. There
influence of Viennese positivism on contemporary economics has, ames an a priori dimension in our thinking only as a result of the fact
familiarly, been in helping to determine the methodological ideas of the that we ourselves ('transcendentally') impose a spurious order on this
neoclassical mainstream, most conspicuously through the work: ofMilton chaos. an order which reflects the structures of the human mind. (Recall
Friedman and the Chicago school. All of which might be summarized in Hume's doctrine of the causal relation as something that is superadded
the form of a diagram as follows:
My thesis. however. is not so much that there are strong historical
links between the two traditions of Austrian economics and Austrian ~,..ntaM Schoof . .nger_
philosophy - the latter to be conceived henceforth in its broadly Bren- Franz Brenl8no
Alexiua \I0I'l MeInog
CartUenger
Friedrich von Wieser
tanian form. Rather. I want to argue that these historical links reflect a Chr!alian \I0I'l Ehrenfela Eugen \I0I'l B6hm-Bawerk
deep-seated affmity between the respective methods and doctrines of the OecarKr_

economists and philosophers, the awareness of which can help us to

understand certain peculiarities of Austrian economics as it has
developed from the time of Menger to the present dayt4

8. The Auslro-Aristotelian vs. the Kantian A Priori ' _ _CIrcle

U .... SChool
Move_lit MorilZ Schlick
Edmund HuaHtl ludwig von Mises
Otto Neuralh
It is especially in regard to the problem of apriorism that a knowledge Adolf Relnach Richard von Mises
Friedrich von Hayek
Roman Inga!den Oskar von Morgenstarn
of the specific character of the Austrian tradition in philosophy can be of Allred SchOlZ. etc.
Karl Menger. ere. FrilZ Machlup. ere.
r---
use in helping us to understand the claims of Austrian economists. For
there is in fact a special Austrian (which is to say: non-Kantian) account
of the a priori. an account which is rooted in Aristotle, present in I


Leibniz's doctrine of the disparatat!5 and even in Hume's treatment of
colour-relations, 16 hinted at by Brentano, and developed explicitly by "Ulllnan
of Science
y


Aulltro-Phenomenologlcal
Husser! and Reinach. And once this fact is recognized, then the much- Social Science
Mach Kotatbinskl Allred SchOlZ
mooted 'aprorism' of Austrian economics comes to be seen in a entirely BollZman Popper
Felix Kaufmann
Polany! Willgenstein
different light. Fleck Feyerabend
That a proposition is 'synthetic' I take to mean that it is not logically
empty in the sense that it is not capable of being reduced to a truth of
logic by a process of successive elimination of defined terms. This I take
to be the salvageable core of the Kantian conception of synthetic judg- ,
ments as judgments whose predicate (concept) is not 'contained in' the I
ChIcago Schoof
Mal,..,..,.. t- American Neo-Au.trlans Heurmeneullca
Israel Kirzner of EconomIca t4
(concept of the) subject. Kant, as we know, sees the realm of the synthetic Murray Rolhbard I-- ludwig Lachmann
a priori as residing in the quite special realm of what he calls pure or Mario Rizzo Oonlavoie
Gerald O'Oriscoll
transcendental consciousness. The Austrian claim. in contrast, is that ere., ere.
there is an a priori dimension across the entire material range of both
science and everyday experience, so that vastly more propositions tum
out to be synthetic and a priori on the Austrian view than on that of Kant. - one way Inlluence _ . mutual inlluence - - - - - - - .Inlormalinfluence
260 Pnxloloales and the Philosophy of EcoDomks
to what is given in sensation.) Realism in science is thereby not merely
unattainable in fact, but is in fact misconceived even as a goal towards
which one might strive. It is a thesis of this SOlt which underlies the
positivist view of science as a matter of the building of models. Cognitive
access to the things themselves is, after all, excluded. Hence it does not
make sense to suppose that, in order to gauge the adequacy of a given
theory or model, we might compare it with reality: adequacy has to be
established, rather, via some roundabout means such as predictive suc-
cess.
1be logical positivists themselves went further than Kant, however,
in embracing the thesis that all knowledge is either analytic (tautological,
empty) or empirical (knowledge of contingent matters of fact). They
were thereby called upon to provide demonstrations of how candidate
examples of synthetic a priori propoSitions can be reduced to truths of
logic, demonstrations of a SOlt which, especially through the work of
Frege and Russell, had already been obtained with some success in the
sphere of mathematics. When it came to driving home these successes
in other spheres, however, the results were much less convincing. And
in this respect it is significant that the most intractable problems for the
Vienna positivists, including Wittgenstein, were created precisely by
examples deriving from the Austrian aprioristic tradition, especially as
represented in the work of Hussed and the early phenomenologists. 11
Thus the Viennese were especially concerned, for example, with proposi-
tions like 'nothing can be both red and green all over', 'if something is
red then it is not green', 'all colours are extended' , and so on, examples
which would not have been at home in the framework of the Kantian
philosophy.
Philosophers in the tradition of Brentano, Husserl and Reinach, in
contrast, embrace the tripartite division of propositions into analytic-
necessary, empirical-oontingent and synthetic a priori. In this respect,
of course, they agree superficially with Kant. They, however, understand
propositions in this third class as corresponding to certain 'universal and
necessary' structures in reality, structures investigated by such a priori
diSCiplines as phenomenology,legal theory , phonology, universal gram-
mar, speech act theory, and so on, as well as by that proto-science of
human action we call Austrian economics.
We can provisionally summarize the differences between the two
approaches to the a priori in the fonn of a table as follows:
Austrian Philosophy and Economics 261
Kamian Appoacbea (Epi~A Aristotle BrentanoHuslerl Reinach
/'ri.orl)
(Ontological A Prum)
The iii priori is a I1UItIer d. I\IlaIiona The iii priori is a matter of relation. bet ween
between universal concepu whidl enjoy a
puRlly mental exiJtfIlce.
essences or species of objects in the world
relations which would obtain even if there'
were no minds to apprehend them.
The iii priori is a matter of non-<:ontingent The iii priori is in the first place a matter of
knowledge
non-rontingent (universal and necessary)
structures in reality; propositions are iii
priori in a derivative sense to the extent that
they relate 10 structures of this sort.
A priori know1edae is prior to and therefore A priOf'i knowledge i. triggered by our
independent of experience. k is in this sense familiarity withcorresponding iii priori
a matter of what isinnate to the human structures in the world.
mind.
A priori knowledge is in some sense a
A priori knowledge is read of( the world.
cootribution of the knowina subject; it
isread into the world.
It is in a certain sense the only immediate
sort of knowledge.
A priori knowledge i. priorto experience; A priori knowledge is prior to induction:
such knowledge is therefore either empty some structures in reality are intrinsically
(analytic), or it isa result of the fact that intelligible.
we see the world through 'conceptual
spectacles' whidllOlllehow allow us to
make SfIlIe d. what would otherwise (as
far as our knowledge is concerned) be
chaotic.
The clu. d. a iii priori propositions is There are whole families of iii priori
restricted; leaving aside the case of propositions constituting entire disciplines.
physics, it amounts to a more or less ad hoc
selection d. isolated examples.
9. The Marks of the A Priori
A whole forest of notions is involved here, and much ground-clearing
would be necessary before we could truly get to grips with what is
~uliar to the Austrian conception of an 'ontological a priori' . Consider
~ne~y ~ more recent 'universal of language' research programme in
ImgulStiCs..He~ th~ a.ssump~on is made that there are (ontological)
structures .m (lmgwsnc~ reality which are universal to all languages.
There ~ different ways m which this universality might be understood.
One mlgh!, for e~ample, be able to demonstrate that (some of) the
structures m question reflect the hard wiring of the human brain of the
make-up of the organs of speech and hearing. Alternatively one might
seek to show that they are structures manifested (in prinCiple) by every
utterance as such, or to every act of communication, to every promise,

161 Praxiologies and the Philosophy of Economics
and SO on. The given structures are at least tacitly familiar to everyone
who has dealings with the objects concerned (i.e. to every speaker of a
language). Yet this does not by any means imply that it is a simple matter
to discover what such structures are and to formulate workable theories
about them.11 Nor, either, does it imply that the issue as to which sorts of
linguistic structures are universal is a matter of the 'conceptual
spectacles' of the language-using subject. And nor does it imply that this
issue is merely a matter for arbitrary legislation by the linguistic theorist.
Universals of language are not created by the linguist. They are dis-
covered through painstaking theoretical efforts.
Similarly in the case of, for example, Husserlian phenomenology.
Here, also, (or so at least Husserl claims), we are dealing with universal
structures of experience (of perception and judgment, feeling and im-
agination) which are at least tacitly familiar to every individual. Yet this
does not imply that it is a simple matter to discover what such structures
are and to formulate workable theories about them. And nor, either, does
it imply that the issue as to which structures of experience are universal
is a matter for arbitrary legislation by the phenomenologist, or that it is
a matter of the 'conceptual spectacles' brought to bear on his experience
by the experiencing subject. Universals of experience are not created.
either by the phenomenologist or by the experiencing subject. They are
discovered through painstaking theoretical efforts.
Austrian economics, now, holds that in the sphere of economic
phenomena. too, we have to deal with structures which are universal in
. the sense that - because they are indispensable to every economic action
as such, or to every instance of exchange, barter. rent. profit. etc. - they
are manifested (in principle) in every economy. The given structures are
also at least tacitly familiar to everyone who has dealings with the objects
concerned (i.e. to every economic agent, to every observer of the be-
haviorofmarkets). Yet this does not by any means imply that it is a simple
matter to discover what such structures are and to formulate workable
theories about them. And nor, either, does it imply that the issue as to
which sorts of economic structures are universal is a matter for arbitrary
legislation by the economic theorist or of the 'conceptual spectacles' of
the economic agent. Universals of economic reality are not arbitrary
creations of the economist. They are not created in any sense. They are
discovered through painstaking theoretical efforts.
Austrian Philosophy and Economics 163
It seems indisputable, now, that it is the non-Kantian notion of the a
priori which underlies Menger's work in economics. Consider for ex-
ample Menger's letter to Walras of 1884, in which Menger insists that
economists 'do not simply study quantitative relations, but also the nature
(das Wesen) of economic phenomena.' They study the qualitative na-
tures of and the relations between such structures as, for example, value,
rent, profit, the division of labor, money. etc. It could be said in this light
that Menger seeks to develop a categorial ontology of economic reality,
to establish how the various different sorts of building blocks of
economic reality can be combined together in structured wholes, and to
establish - through the application of what he himself called a genetico-
compositive method - how such wholes may originate and how they may
develop and become transformed over time into other kinds of wholes.
Of course an ontological apriorism of this sort does not mean (any
more than in the case of linguistic universals) that economic theory is
free of any empirical components. As we shall see, it is a difficult matter
to sort out what. precisely, the appropriate role for empirical investiga-
tions in economics (and in related disciplines) might be. What is certain,
however, is that quantitative investigations in economics can be coherent
and can have implicatiOns for the world outside the theory only to the
extent that they are carried out on the basis of a prior understanding of
the natures of at least some of the entities to be measured and compared.
For otherwise the economist is not merely measuring in the dark, he is
also without any means to tie down the results of his theorizing to
economic reality itself. Every empirical science must in this sense be
accompanied by some a priori proto-discipline. whether or not this fact
is consciously realized by the scientist himself.
10. A Priori Laws can have Exceptions
Further light on the above can be thrown by considering the a priori
theory oflaw developed by Husserl's disciple AdolfReinach. In his "A
Priori Foundations of Civil Law" of 1913 Reinach seeks to develop a
categorial ontology of the legal sphere almost exactly parallel to the
categorial ontology of economic phenomena outlined above. Reinach's
theory of the relations between such basic legal phenomena as contract,
obligation. promise, etc. is especially interesting for us here because he
deals explicitly with the ways in which the corresponding a priori
structures may become modified in their instantiation in given context.
2M Praxiologies aad the Philosophy of Economics
for example through the acts of legislators and ju~ges. '~a cl~m is
extinguished by being fulfilled is,' Reinach argues, surely Just as eVIdent
as any logical or mathematical axiom'. Yet:
if it should prove useful. why should not the positive law enact that ctain claims are
extinguished only when their fulfillment is officially notarized at the nearest court-
house? (Reinach 1913. p. 802, Eng. p. 1(4)
As Reinach himself recognizes, this possibility constitutes what is
probably the most problematic aspect of the very idea ~f an a T?~iori
theory of law: 'how can one want to put fo~ard a priOri p~opos~uons
which claim absolute validity, when any poSluve law can set Itself tn the
most flagrant contradiction thereto?' (loc. cit.) No contradiction arises,
according to Reinach however, because the issuing of a leg~ ~rm by
an institution of the positive law is a speech act of a very Special kind, ~
distinct from an act of judgment as is a question or command. Hence It
can stand in logical contradiction with a judgment just as little as can a
question or command. It is a proposition of the ~ priori theory of .law,
for example, that my claim on you cannot be asSigned br .me at Will to
some third party. But suppose in some system of poSluve law such
assignment is allowed. Then, Reinach argues, it would not follow that
the claim changes its bearer through the act of tranSferring. Rather, the
}X>sitive law' enacts that whereversuch an act of transferring takes place,
the given effect should come about.' (p. 803, Eng. p. 1(4) Hence th~re
are legal enactments which bring about deviations from the essential
legal relations which are given a priori. But this does not. Reinach argues,
in any way affect the apriori relations themselves; rather their validity ~ presupposed
by these very enactments. For it is the very function of the enaclment either to ~stroy
legal formations which ari~ according to a prio~i l~ws, or to generate out of Its own
power legal formations which are excluded apru:m. (p. 812, Eng. p. 111)
Even the formations of the positive law, that is to say, are what they
are only in virtue of certain a priori laws and categories which provide
as it were the building blocks from out of which they can be constructed.
And even positive legal formations are correctly characterized as le~al
only in virtue of the underlying a priori categories from out of which
they are built up. But now Menger, similarly, is ready to admit
Austrian Philosophy and Economics l6S
that the results of the exact orientation of theoretical research appear insufficient and
unempirical in the fteld of ecxmomy as in all other realms of the world of phenomena,
when measures by the standard of realism. This is, however, self-evident, since the
results of exact research. and indeed in all realms of the world of phenomena, are true
only with certain presupposition&, with presuppositions which in reality do not always
apply.
All the laws of a priori economics, that is to say, 'hold only in rare
cases';
as a rule real prices deviate more or less from economic ones (those corresponding
to the economic situation). In the practice of economy people in fact endeavor only
rarely to protect their economic interests completely. Many sorts of considerations,
above all. indifference to economic interests of lesser signiftcance. good will toward
others, dC., cause them in their economic activity not to protect their economic
interests at all in some cases. in some cases incompletely. They are, furthermore,
vague and in error concerning the economic means to attain their economic goals;
indeed they are often vague and in error concerning these goals themselves. Also the
economic situation, on the basis of which they develop their economic activity, is
often insuffICiently or inrompletely known to them. Finally their economic effort is
not infrequently impaired by various kinds of relationships. A defmite economic
situation brings to light precisely economic prices of goods only in the rarest cases.
Real prices are, rather more or less different from economic. (Menger 1963, p. 69)
This passage has been seen as a defense of model building,19
Menger's'economic prices' being the prices predicted by a model, which
then deviate here and there from reality. Looking at the matter against
the background of Reinach's work, however, suggests another, quite
different interpretation which sees Menger's economic theory as an a
priori proto-discipUne relating to the basic categories from out of which
economic phenomena are built up. The laws of a priori economics relate
to these categorial structures as it were in their purest and simplest forms,
before they have been affected by the various sorts of interreference and
modification which are involved in specific empirical instantiations.
Wieser, too, in his methodology of economics defends a conception of
economic theory as beginning with the deSCription which is then supple-
mented and to some extent corrected by empirical investigations into the
various ways in which these simple structures may come to be affected
contingently in different context.

l66 Praxiologies and the PbUosopby of Economics
11. The A Priori and the Empirical
1l1ere are different ways in which a priori structures may be related
to contingent matters of fact. A priori structures may themselves. firs.tly.
have a foundation in underlying regularities for example ~f a phYSical
as linguistic universals. for example, may be founded ~ the proper-
of incident light It would take us too far fr~ our malO p~se to
deal with the issue of such a foundation here. an Issue closely tied to the
question of emergence. Let is suffice to point out that. ~ co~ce~ ~e
phenomena of economics at least. the prospects for reduCtive elimmation
seem less than promising. od'fied
A priori structures of certain sorts may. secondl~, come to be m 1
in their instantiation through a posteriori conventions o~ through. other
sorts of contingent affects. as for example on the theones of Remach.
Menger and Wieser referred to above. . .
Thirdly however - an aspect not yet sufficiently stres~ - a p'r~o"
structures are themselves such as to involve an all~rvading empmcal
component in virtue of the fact that it will be a cont1Dgent matter w~~
the struCtures in question are in fact instantiated at all. The laws of a prIOri
proto-disciplines will themselves therefore typically be of the form:
or
(*) if an instance of the species as a matt.:r emplrlcal fact exists. then as a matter
or necessity the species 2. etc. are instanuated also.
The form of such 'implicative universals:lll has done much to ~n
courage the idea that a priori science is merely a matter of the unpacki?g
of certain concepts. so that its laws can be counted as merely an~yUc.
For if we can define 'x is an instance of concept' as an abbrevlato.ry
equivalent of some more complex expressi~n incl~di~g as one of Its
conjuncts a statement of the form: 'x is associated With Ins~ceS of ~e
concepts ~1. ~2, etc. then it will indeed follow that ~.la~ (*) IS anal yUc.
Closer inspection shows, however, that an a priOri SCle?ce can count
as analytic in the given sense only if it is built up on the basIS of (at most)
one single primitive non-logical concept For suppose there be t~~ or
more such concepts at the root of the theory and consider the proPOSltiO~
asserting the primitive relations between these concepts. Such ~POSI
tions, however trivial they may seem, cannot themselves be ar:'alyUc, for
they are certainly not logical truths, and there are ex hypotheSI no deeper
Austrian PbUosopby and Economics 267
propositions from which they could be derived by substituting defIni-
tions. 21 Hence we can conclude that the given sciences must either contain
at least some propositions which are synthetic, or be reducible to some
single primitive non-logical concept. This second alternative seems
however to be rules out where we are dealing with disciplines, like
Austrian economics or a priori legal theory A La Reinach, whose subject
matters are rich enough to manifest a plurality of dimensions of inde-
pendent variation.
Bat must we now conclude that the disciplines in question are
synthetic and a priori, or could we not regard the given argument as
establishing that, leaving aside certain peculiarly simple cases, the very
idea of an a priori discipline is to be called into question? To find our
way here. let us suppose that and are the primitive non-logical concepts
of a given candidate a priori discipline. Among the primitive relations
between these concepts will be relations of non-identity, expressed by
propositions like' (X ~ , Can (X is not a W: redgreen. frequency
amplitude, and so forth), i.e. the Leibnizian disparatae referred to
already above. Can these relations be contingent? Can they be empiri-
cally established? Or must it not rather be the case that, as we have argued
above, they are normally presupposed in all empirical investigations?
Interestingly, there are disparatae not only within a given discipline but
also between one discipline and another (a man :#a cardinal number, a
phoneme something drinkable, etc.). These propositions. too. are a
priori in the Austrian sense, and it might be suggested that the structures
to which they correspond, when taken together, constitute that matrix of
intelligibility in virtue of which we are able to distinguish one area of
scientific investigation from another.
12. Fallibilistic Apriorism
Let us return for a moment to our list of the marks of Austrian
philosophy above. We have reached the stage where we can begin to
understand how the apriorism of the Austrians can be consistent with
their pronounced willingness to be influenced by empirical research. The
Austrian doctrine implies that. in relation to each of range of empirical
sciences. there exist certain underlying structures with which we are
pre-theoretically familiar. and that it is our (sometimes merely tacit)
knowledge of such structures which yields the preliminary framework
268 PrulolotJles aDd the Philosophy 01 Economics
for that activity of measuring and calculating and correlating which (as
we normally suppose) forms the heart of empirical science.
Euclidean geometry. we might say. (or something like it). constitutes
one such a priori proto-discipline of the science of physics. And now
we see that. as the case of geometry makes clear, empirical research,
measuring and calculating, may in certain circumstances come to exert
an ex post control on the relevant proto--<iiscipline, so that we may come
to regard the propositions of the latter in a new light; the results of
empirical research may even lead us to reject as false propositions
hitherto accepted a priori true.
This does not mean that the opposition between what is empirical and
what is a priori is itself undermined. No single a priori proposition of a
proto--discipline may be falsified by empirical means: even the pos-
sibility of direct logical contradiction is here ruled out. The control
exerted by empirical research is, rather. at most indirect, as further
reflection on the case of geometry will make clear. It is such indirect
control which is at work when physicists come to employ non-Euclidean
geometries in their descriptions of -reality. That such control is possible
at all, however. shows that we have only partially trustworthy access to
the a priori structures in the world, so that it is not to be ruled ~ut that
Austrian economists. too might one day have to countenance the Idea of
something like a non-Euclidean Austrian economics in their dealings
with economic reality.n In any event, the very possibility of such empiri-
cal control signals the fact that in another respect, too, the Austrian a
priori must be divorced from epistemological concerns of a Kantian sort.
For if a priori structures exist independently of the mind (or inde-
pendently of what the mind reads into reality), then we have no good
cause to expect that our knowledge of such structures will in every case
have that evidential character with which the Kantian a priori is normally
associated. It thereby becomes possible to conceive a doctrine of what
we might call fallibilistic apriorism. parallel (perhaps) to doctrines of
fallibilistic intuitionism in ethics. 23
When the above considerations are taken into account, then many of
the unfortunate connotations of the term a priori' will be seen to fall
away. Thus one common objection to the notion of the a priori turns on
the fact that different individuals may have different intuitions as to what
counts as a priori. The possibility of indirect empirical control does much
to render this objection harmless. TIle thesis that the a priori is a matter
Austrian Philosophy and Eeonomlcs 269
of what can be read off from certain sorts of structures in reality may
even serve to make understandable the fact that such different intuitions
exist. Certainly it tells us that the acquiSition of a priori knowledge may
7
be no asy malter, where a priori knowledge on the Kantian conception
ought In some way to be both incorrigible and immediately accessible to
all.
Notes
1. My thanks go to Axel BhIer, Rudolf Haller, Don Lavoie, Allan Megill, J. C. Nyiri,
Werner Sauer, Karl Schuhmann and Jeremy Shearmur for conunents on early
versions of this paper.
2. See Grassl and Smith 1986 and the references there given.
3. Of course nothing is as simple as one might wish. As the case of Herbart, for
~xample, makes clear: there were on both sides exceptions to and discountinuities
m the g~ ~~cs referred to in the text, and the most important of these will
be menlloned m passmg below. For a more rounded picture see Sauer 1982. To talk
of. 'Austrian ' and 'German' philosophy at all is, admittedly, an oversimplification.
It 15 ~ eve'.' greater overs~plifi~ation, however, When Austrian philosophy and
Austnan philosophers. are sunply Ignored, as has all too often happened in the past.
One recent example IS the stark confounding of the quite different intellectual
traditions of Austria and Germany in McCloskey 1985, p. 39.
4. Consider WID?elband's famous description of Locke's philosophy as 'shallow'
(selcht). Consider, too, the enormous difference in style as between Mach on the
one hand and such German or German-inspired philosophers as Schuppe or
Avenarius on the other.
5. On Austrian philosophy in general see Haller 1979, 1981, 1986, and Nyiri (ed.)
19~1 and 1986. On its stylistic moments and on those of classical German
philosophy see, again, Mulligan (forthcoming).
6. Brentano.was in fact a native of Germany, though. as we shall see, he was the founder
of what IS from our present perspective the most important stream of modem
Austrian philosophy.
7. See especially the latter's TM COIUIIer-Revollllion ofScience.
8. FIec~ was bom in 1896 in Lemberg, capital of Galicia on the Eastern fringes of the
Emp1l"e. He was the author of some 200 scientific papers in the areas of medicine
and ~cro.biology. B~t he was also the author of a longer, philosophical work,
~bllShed m 1935, enlltled Genesis and Development ofa Scientifu: Fact. Introduc-
I~ to 1M DoctriN: ofCogniJive Style and oftM Tlwught-Colleclive. This work is
of m~st~.' 1eas~ ~ause, as a contribution to the nascent discipline of'sociology
?f sc~ .' It antiCIpates and perhaps even served to inspire some of the now so
int1uen~alldeas of Thomas Kuhn. (Kuhn in fact contributed a Jreface to the English
translatlon of the work.)
9. C~. Nrm 19~. It is noteworthy also that later German philosophers who favored
SCIentific philosophy over metaphysical speculation were, at least in the 20s and
30s, to ~me extend able to fmd a receptive audience in Vienna and Prague.
10. One thinks here first of all of Bolzano and his followers, but also of Meinong
especially his later writings in the theory of value. '
11. This section sununarizes a thesis defended in more detail in Smith 1987.
110 PraxloJoaies aDd the Philosophy 01 Economics
12. For furthec details see Fabi.an and Simons 1986 and Grassl 1983.
13. Cf. Kraus 1905,1937.
14. See Lavoie (forthcoming)..
15. See e.g. Burkhardt 1980, 134ff.
16. See Reinach 1911 and the discussions in Smith 1982 and 1986.
11. See, on this, especially Hoche 1964, Delius 1963. The extent to which the Vienna
positivists were influenced (sometimes positively, more often negatively) by the
early pumomenologists is nowadays too often overlooked. Cf. Smith 1987.
18. For a more detailed account of these matters see Holenstein 1986.
19. Diamond 1979.
20. See Holenstein 1986.
21. For a more detailed version of this argument. see Smith 1986, pp. 17f.
22. It is difficult to foresee how far such revision might go. COUld further research in
economics lead us to conclude, for example that methodological individualism is
false?
23. See Shearmur 1988.
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Don Lavoie
Celller for tlu Study ofMarut Procuses
George Masoll Ulliversity.
Fairvax. VA

In Professor Barry Smith's paper he makes, as I see it, three kinds of

criticisms of those Ausman economists, like myself, who have recently
taken up the banner of henneneutics, referring, respectively, to the
content, the style, and the historical roots of this philosophy.smith argues
that the content ofhenneneutics is, if not relativistic, at least "dangerous-
ly close to relativism," that its style is unnecessarily confusing, and at
times impenetrable, and that in both style and content its historical roots
are distinctively Gennan as opposed to Austrian, and as such alien to
Austrian economics. I would like to at least indicate briefly how I would
respond to each of these kinds of arguments.

Relativism

One the charge of relativism Smith distinguishes between two kinds

of "subjectivism," a moderate (or objectivist) kind which the traditional
Ausman economists defended, and a more extreme kind defended by
henneneutics which issues in "a sort of relativistic scepticism which

273