Theory and History by Ludwig von Mises (1957)


One sentence summary

The fact that causality cannot be traced from the environment to human action renders many ideologies, philosophies and methodologies unsuitable for understanding human action.

One paragraph summary

The science of human action is comprised of history and praxeology. Both take ends as given and evaluate the means chosen by human actors to achieve their subjectively chosen goals. This is the appropriate method of science regarding human action because there is no established physical causality between physical phenomena and human action. There is also insufficient regularity in human action for predictive science. Only an approach that evaluates the suitability of means to achieving given ends is suitable for scientific and historical understanding. Other approaches do not respect these fundamental truths and are therefore unsuitable for understanding human action.

Detailed summary

Mises examines the fundamentals of different doctrines, ideologies and approaches to history and social science, and critiques them and compares them to his approaches to the sciences of human action: praxeology and history.

The fundamental argument of this book is that the various competing frameworks for understanding the world are ill-founded, by ignoring the fact that humans act. Human action involves consciously acting to achieve ends determined by values, which in turn are influenced by ideas, emotion and other people.The causal link between the environment, human thought and human action has not been established, while human action does not feature a sufficient degree of regularity to render it suitable to predictive methods. Due to these characteristics, human action cannot be viewed causally, but is instead teleological. Therefore, human action is fundamentally different from the subjects of the natural sciences, and must be interpreted with different epistemological and methodological approaches.

From this viewpoint, Mises criticises doctrines, ideologies and methodologies, including positivism, historicism, Marxism, determinism, behaviorism and materialism. All are found wanting compared to Mises’ proposed methods of the science of human action: praxeology and history. 

Positivism is invalid because it relies on regularity in human action that simply isn’t there. It relies on historical data and assumes they are valid inputs for prediction. Instead, Mises argues historical data is just that – historical; statistics is a representation of the history of human action at a particular time and place. 

Historicism, Mises argues, features contradictions and faulty foundations. Historicism has changed over time, but at various times has held that there is nothing generalisable from history and therefore nothing can be learned from it that is useful outside of that time. Historicism also developed theories of civilisational life cycles, a theory of regularity in social and political life. Mises, on the other hand, argues that each historical event is unique, and a universal theory of human action (praxeology) can be applied as a filter to aid in understanding historical human action.

The fundamental lack of understanding of how physical phenomena lead to changes in the mind and therefore in action forms the basis of Mises’ discussion of determinism. In discussing free-will, Mises notes the two extremes – complete free-will, or complete subjection to environmental forces – and falls somewhere in the middle in his emphasis on the role ideas play in influencing behaviour. People are influenced by ideas, which are influenced by environment and material factors. Ultimately, however, humans act, and we don’t know the causal link between the environment, thoughts and action, and so therefore have no foundational basis for determinism.

Materialism takes a substantial portion of Mises’ time, especially his dissection of Marxism. His main point with respect to materialism is his major underlying point: that we don’t yet know the mechanism between external factors and human action. We don’t know how to get from one to the other, rendering materialism invalid. Mises then spends much of the time pulling apart Marxism, which rests on the assumption that peoples’ beliefs are based on their material circumstances (their economic class). Life and society is a class struggle, with workers uniting to overthrow an exploitative capitalist system, the necessary forerunner of a socialist paradise. Mises takes this apart from many angles.

Mises’ main point – that humans engage in rational action whereas everything else doesn’t, rendering human action a distinct science – underlies his criticism of scientism, which is based on the idea of panphysicalism – the view that the method for physics is the only valid method for all branches of science (‘unified science’). Such a view leaves no room for consciousness, and leads ultimately to behaviorism, which holds that humans simply adjust to their environment. It can’t however explain why they adjust differently.

Mises argues against the idea of absolute values, which many ideologies or doctrines feature. These doctrines attempt to substitute absolute values for the subjective values of individuals. Mises views this as fundamentally wrong. It is not the role of science to discover a universal set of values, an ultimate good that we should be aiming for. All it can do is simply evaluate the means chosen to achieve individually-chosen, subjective ends, hence praxeology’s approach that treats ends as given and evaluates means chosen. Accordingly, the historian, engaging in the science of human action, should not use value judgments, but simply discover the ideas and intent of the human actors, and evaluate the means chosen to pursue their ends. Similarly, economists should not advocate for a policy, for example, even if it maximises output. He should simply state the effects on output/efficiency of a particular policy, as other considerations can be important, such as national security in the case of trade policy. The economist is not equipped to evaluate these other considerations; it is the role of the politician to make this trade-off. (This obviously applies to the Covid-19 crisis regarding the role of experts in advising government.)

Mises argues for rational utilitarianism over natural law. He argues that natural law is contested, similar to religious doctrine. Nature couldn’t be interpreted unequivocally, for nature is not clear in its ways.  Also, there is no natural tendency for these supposed natural laws to come about. Wars had to be fought and won, and bad laws had to be recognised as such, fought over and overturned. In the end, Mises argues, natural law ultimately fails because the idea of natural law simply substituted debate over interpretations of nature for debate over values. It didn’t solve the problem of disagreement or subjectivity. However, Mises noted the major accomplishment of natural law: the destruction of legal positivism – the idea that the only legitimate source of law is the government or ruler. In fact, every law could be subject to ‘critical examination by reason’. Mises concedes that there is a kernel of truth in natural law, and it aligns with Mises’ worldview. Mises argues that there is a ‘nature-given order of things…to which man must adjust his actions….’, acknowledging there is something to the idea of natural law. However, it seems that what Mises was referring to were the laws of economics (human action), and not, for example, some universal aspect of human nature beyond the idea of rational human action. From this recognition, Mises lays out his approach to assessing the world of human action: there is a ‘nature-given order of things’ (economics) that can be discovered by reason, according to their effects (utilitarianism). Natural law therefore leads to rational utilitarianism. Utilitarianism involves evaluating the means chosen, not the ends aimed at.

From this fundamental contention, Mises proposes that there are two main branches of the science of human action: praxeology and history. His method for history is explained in the following paragraph. According to Mises, praxeology is the theoretical science of human action, a deductive science based on axiomatic aspects of human life. It begins with the idea that humans act to improve their situation. Actions are based on values, which are subjective. People act by choosing means to achieve their desired ends. Thus, praxeology takes ends as given, and evaluates the means chosen. It evaluates human action with respect to chosen ends. It is non-judgmental of ends and values; it simply takes them as given. From this starting point, Mises establishes important, universal aspects of human action, such as cost and uncertainty. These then inform the doing of history. 

The second main field in the science of human action is history. Mises’ historical method involves combining knowledge from logic, mathematics, the natural sciences, the science of human action (praxeology), and thymology (psychology, or why people act the way they do) to form a specific understanding – an understanding of a specific historical event. Historical analysis uses the lens of praxeology as a filter to understanding the immutable laws of human action that apply in any historical setting, as well as the knowledge from the natural sciences, etc. and adds to that with specific, circumstantial data about the person, such as emotion, motivation, ideas, value judgments, etc. (thymology). It therefore attempts to understand the ends people were aiming at, and evaluate the means they chose to achieve them. Therefore, Mises’ history is always teleological – a history of purposeful actors, as opposed to a causal explanation of phenomena. The historian does not know the causal link between the environment and the action. However, he can evaluate the actions (means) taken by people in seeking their chosen ends.

Take-aways from the book

Given my lack of formal training in philosophy or methodology, there was a lot of low hanging fruit in reading Theory and History. Part of the value was simply from taking the time to unpack many of the ideas that underlie different perspectives that are still seen today (Theory and History was published in 1957).

With my recent attention on the limitations of science, I enjoyed Mises’ clearly correct point that humans are fundamentally different to the subjects of the natural sciences and therefore need to be examined and studied using different approaches. This is obviously contrary to the trend in economics, which is increasingly empirical, as economists seek guidance about the future from the past, and engage in forecasting. Economics uses historical data in predictive models, or finds relationships from the past and assumes they may be indicative of the world today. 

Mises doesn’t quite address an issue that arose for me, which is that while human action is not of sufficient regularity to enable accurate prediction, it has, as Mises acknowledges, a degree of regularity. Indeed, somewhere in either this book or Human Action, Mises concedes that history may have some use in speculation about the future. So, while positivism may fall south of the bar of ‘science’ in the realm of human action, of what use is it? Can Mises be correct and yet we be able to continue on with our methods, in some more modest form? If not, is Mises’ alternative up to the task? What is possible with Mises’ approach? Economists coming out of George Mason University, such as Peter Leeson and Christopher Coyne, apparently employ a Misesian approach, which is something to investigate further. Dani Rodrik’s book Economics Rules is a further text to examine this issue, as it assesses economic methodology in recent times and suggests a way forward.

If we are to persist with positivism, training in the limitations of positivism, of which Mises’ critique could form a part, would be most useful. I received no training in the limitations of economics, to the detriment of my education. Theory and History was of such value to me precisely because of the lack of awareness I had of these issues from my education. But Theory and History is by no means an introductory text. It took perhaps 5-6 years of on- and off-again thinking and reading on this topic, with more focused recent attention, to be ready to read and understand this book. It is dense, erudite, and focused – whether to its detriment or not – on a single idea: the fact that humans act and are thus different to other natural phenomena in that there is no causal relationship between external phenomena and human action. What is beyond dispute in my mind is the incredible degree of knowledge Mises brings to the topic. 

Mises’ discussion of universal values was incredibly stimulating, as I’ve considered this question in recent years. Mises’ contention that all values are subjective and that there are no universal values, goes against religion, collectivism, even Marxism. Marxists and collectivists have values they wish to force on the population – the true values that others have been blinded by ideology to see. As Mises argues, historically, those that have argued for true, higher values have not lived up to them themselves, and there has been perpetual disagreement over such values. Instead, what is needed is a society where the subjectivity and diversity of values is allowed, allowing everyone to pursue their own subjectively defined values. Social cooperation is the ultimate means for enabling that. Therefore, maintaining social cooperation is just. This aligns nicely with Hayek’s advocation of general rules for the maintenance of an extended order society. Hayek refers to these general rules as morals.

Mises’ contention that values are subjective may ultimately be true, but I wonder if it may be only partly true, and a truth that is not widely observed. While there is clear disagreement between people over values, there is a large degree of commonality across cultures and religions. So while Mises rightly argues that there is conflict over values, he seems to underappreciate the cross-cultural agreement and therefore the possibility of some shared values that may be considered ‘objectively true’. Further, as Henry Hazlitt later noted, people see value as all important; ‘it is the very standard by which we judge importance’. It is therefore a rudder and a tool for assessment, and will naturally form a major part of philosophy. Is Mises throwing the baby out with the bathwater by focusing purely on means and not on ends or values? In fairness to Mises, he saw his role as that of a scientist, evaluating means, not ends, but philosophy, as Roger Scruton argued, is a field for areas of inquiry where science cannot shed light.

Mises was utterly convinced of his worldview. He argued against the tide, unwilling to compromise in his academic work (he was willing to compromise in his political work, though that, he maintained, was appropriate, for politics is about compromise). Mises was a very concrete and opinionated thinker. There was little room for equivocation. This is what makes him so compelling, but may also be a weakness. It’s all or nothing for Mises.

There were so many interesting tidbits that I enjoyed in this book. It was interesting to note that it was the ‘antisecularists’, as Mises referred to them as, that viewed capitalism as an unjust system. It seems that that has switched around in the present, with much of the modern radical left being, seemingly, secular. (However, many have pointed out the ‘religious’ aspects of their behaviour – the outing of ‘heretics’, the quest for moral purity, etc. This seems to align with ideas put forward by, for example, Joseph Bottum in An Anxious Age.) Mises’ discussion of the Irish who want to take back their language at the time of Mises’ writing was interesting. His discussions of interactions with other cultures also grabbed my attention. 

There were many others, but I won’t go on. However, below I’ve posted some interesting passages from the book.

Overall, Theory and History  was an incredibly stimulating and challenging read. I appreciate his major point about the uniqueness of human action, his discussion of values, his incredible breadth of knowledge, and I’ll remember his critiques of different doctrines, ideologies and philosophies as I evaluate different arguments put forward in discussion today.


On value

“It is one of the tasks of the specific understanding of the historical sciences to establish what content the value judgments of the acting individuals had. It is a task of history, for example, to trace back the origin of India’s caste system to the values which prompted the conduct of the generations who developed, perfected, and preserved it. It is its further task to discover what the consequences of this system were and how these effects influenced the value judgments of later generations. But it is not the business of the historian to pass judgments of value on the system as such, to praise or to condemn it. He has to deal with its relevance for the course of affairs, he has to compare it with the designs and intentions of its authors and supporters and to depict its effects and consequences. He has to ask whether or not the means employed were fit to attain the ends the acting individuals sought. It is a fact that hardly any historian has fully avoided passing judgments of value. But such judgments are always merely incidental to the genuine tasks of history. In uttering them the author speaks as an individual judging from the point of view of his personal valuations, not as a historian.”

“All judgments of value are personal and subjective. There are no judgments of value other than those asserting I prefer, I like better, I wish. It cannot be denied by anybody that various individuals disagree widely with regard to their feelings, tastes, and preferences and that even the same individuals at various instants of their lives value the same things in a different way. In view of this fact it is useless to talk about absolute and eternal values. This does not mean that every individual draws his valuations from his own mind. The immense majority of people take their valuations from the social environment into which they were born, in which they grew up, that moulded their personality and educated them. Few men have the power to deviate from the traditional set of values and to establish their own scale of what appears to be better and what appears to be worse. What the theorem of the subjectivity of valuation means is that there is no standard available which would enable us to reject any ultimate judgment of value as wrong, false, or erroneous in the way we can reject an existential proposition as manifestly false. It is vain to argue about ultimate judgments of value as we argue about the truth or falsity of an existential proposition. As soon as we start to refute by arguments an ultimate judgment of value, we look upon it as a means to attain definite ends. But then we merely shift the discussion to another plane. We no longer view the principle concerned as an ultimate value but as a means to attain an ultimate value, and we are again faced with the same problem.” 

“Value is not intrinsic. It is not in things and conditions but in the valuing subject.”

“Contrary to popular conceptions, it [the theory of comparative advantage] does not say that free trade is good and protection bad. It merely demonstrates that protection is not a means to increase the supply of goods produced. Thus it says nothing about protection’s suitability or unsuitability to attain other ends, for instance to improve a nation’s chance of defending its independence in war.”

“From the bewildering diversity of doctrines presented under the rubric of natural law there finally emerged a set of theorems which no caviling can ever invalidate. There is first the idea that a nature-given order of things exists to which man must adjust his actions if he wants to succeed. Second: the only means available to man for the cognizance of this order is thinking and reasoning, and no existing social institution is exempt from being examined and appraised by discursive reasoning. Third: there is no standard available for appraising any mode of acting either of individuals or of groups of individuals but that of the effects produced by such action. Carried to its ultimate logical consequences, the idea of natural law led eventually to rationalism and utilitarianism.”

“The chief accomplishment of the natural law idea was its rejection of the doctrine (sometimes called legal positivism) according to which the ultimate source of statute law is to be seen in the superior military power of the legislator who is in a position to beat into submission all those defying his ordinances. Natural law taught that statutory laws can be bad laws, and it contrasted with the bad laws the good laws to which it ascribed divine or natural origin. But it was an illusion to deny that the best system of laws cannot be put into practice unless supported and enforced by military supremacy.”

“Marxism is a revolutionary doctrine. It expressly declares that the design of the prime mover will be accomplished by civil war. It implies that ultimately in the battles of these campaigns the just cause, that is, the cause of progress, must conquer. Then all conflicts concerning judgments of value will disappear. The liquidation of all dissenters will establish the undisputed supremacy of the absolute eternal values.”

[On those who seek justice…in social institutions.] “Social institutions…must be just. It is base to judge them merely according to their fitness to attain definite ends, however desirable these ends may be from any other point of view. What matters first is justice. The extreme formulation of this idea is to be found in the famous phrase: fiat justitia, pereat mundus . Let justice be done, even if it destroys the world.”

“Although some intolerance, bigotry, and lust for persecution is still left in religious matters, it is unlikely that religious passion will kindle wars in the near future. The aggressive spirit of our age stems from another source, from endeavors to make the state totalitarian and to deprive the individual of autonomy.”

On statistics

“In the field of human action statistics is a method of historical research. It is a description in numerical terms of historical events that happened in a definite period of time with definite groups of people in a definite geographical area. Its meaning consists precisely in the fact that it describes changes, not something unchanging. In the field of nature statistics is a method of inductive research. Its epistemological justification and its meaning lie in the firm belief that there are regularity and perfect determinism in nature. The laws of nature are considered perennial. They are fully operative in each instance. What happens in one case must also happen in all other like cases. Therefore the information conveyed by statistical material has general validity with regard to the classes of phenomena to which it refers; it does not concern only definite periods of history and definite geographical sites.”

On dialectical materialism

“Marx obfuscated the problem by confusing the notions of caste and class. Where status and caste differences prevail, all members of every caste but the most privileged have one interest in common, viz., to wipe out the legal disabilities of their own caste. All slaves, for instance, are united in having a stake in the abolition of slavery. But no such conflicts are present in a society in which all citizens are equal before the law. No logical objection can be advanced against distinguishing various classes among the members of such a society. Any classification is logically permissible, however arbitrarily the mark of distinction may be chosen. But it is nonsensical to classify the members of a capitalistic society according to their position in the framework of the social division of labor and then to identify these classes with the castes of a status society.” “This socialist or communist doctrine fails entirely to take into account the essential difference between the conditions of a status or caste society and those of a capitalistic society.”

“If a man expresses opinions at variance with the ideology of a definite class, that is because he does not belong to the class concerned. There is no need to refute his ideas by discursive reasoning. It is enough to unmask his background and class affiliation. This settles the matter. But if a man whose proletarian background and membership in the workers’ class cannot be contested diverges from the correct Marxian creed, he is a traitor. It is impossible to assume that he could be sincere in his rejection of Marxism. As a proletarian he must necessarily think like a proletarian. An inner voice tells him in an unmistakable way what the correct proletarian ideology is. He is dishonest in overriding this voice and publicly professing unorthodox opinions. He is a rogue, a Judas, a snake in the grass. In fighting such a betrayer all means are permissible.”

On the philosophy of history

“Simplified accounts of history, adapted to the capacity of people slow of comprehension, have presented history as a product of the feats of great men…. No serious historian ever shared in such nonsense. It has never been contested that the part played even by the greatest figures of history was much more moderate. Every man, whether great or small, lives and acts within the frame of his age’s historical circumstances. These circumstances are determined by all the ideas and events of the preceding ages as well as by those of his own age. The Titan may outweigh each of his contemporaries; he is no match for the united forces of the dwarfs. A statesman can succeed only insofar as his plans are adjusted to the climate of opinion of his time, that is to the ideas that have got hold of his fellows’ minds. He can become a leader only if he is prepared to guide people along the paths they want to walk and toward the goal they want to attain. A statesman who antagonizes public opinion is doomed to failure. No matter whether he is an autocrat or an officer of a democracy, the politician must give the people what they wish to get, very much as a businessman must supply the customers with the things they wish to acquire.”

On historicism

“History is a sequence of changes. Every historical situation has its individuality, its own characteristics that distinguish it from any other situation. The stream of history never returns to a previously occupied point. History is not repetitious.”

“There is no harm in comparing different historical events and different events that occurred in the history of various civilizations. But there is no justification whatever for the assertion that every civilization must pass through a sequence of inevitable stages.”

“Those who want to set the clock of history back ought to tell people what their policy would cost.”

On religion as a substitute for science

“Where people did not know how to seek the relation of cause and effect, they looked for a teleological interpretation. They invented deities and devils to whose purposeful action certain phenomena were ascribed. A god emitted lightning and thunder. Another god, angry about some acts of men, killed the offenders by shooting arrows. A witch’s evil eye made women barren and cows dry. Such beliefs generated definite methods of action. Conduct pleasing to the deity, offering of sacrifices and prayer were considered suitable means to appease the deity’s anger and to avert its revenge; magic rites were employed to neutralize witchcraft. Slowly people came to learn that meteorological events, disease, and the spread of plagues are natural phenomena and that lightning rods and antiseptic agents provide effective protection while magic rites are useless. It was only in the modern era that the natural sciences in all their fields substituted causal research for finalism.”

On phsychology

“What characterizes the neurotic as such is not the fact that he resorts to unsuitable means but that he fails to come to grips with the conflicts that confront civilized man. Life in society requires that the individual suppress instinctive urges present in every animal. We may leave it undecided whether the impulse of aggression is one of these innate urges. There is no doubt that life in society is incompatible with indulgence in the animal habits of satisfying sexual appetites. Perhaps there are better methods of regulating sexual intercourse than those resorted to in actual society. However that may be, it is a fact that the adopted methods put too much strain upon the minds of some individuals. These men and women are at a loss to solve problems which luckier people get over. Their dilemma and embarrassment make them neurotic.”

On fiction

“Fiction is free to depict events that never occurred. The writer creates, as people say, an imaginary story. He is free to deviate from reality. The tests of truth that apply to the work of the historian do not apply to his work. Yet his freedom is limited. He is not free to defy the teachings of thymological [psychological] experience. It is not a requirement of novels and plays that the things related should really have happened. It is not even necessary that they could happen at all; they may introduce heathen idols, fairies, animals acting in human manner, ghosts and other phantoms. But all the characters of a novel or a play must act in a thymologically [psychologically] intelligible way. The concepts of truth and falsehood as applied to epic and dramatic works refer to thymological [psychological] plausibility. The author is free to create fictitious persons and plots but he must not try to invent a thymology—psychology—different from that derived from the observation of human conduct.”