Saturday, March 19, 2005

Re: A Critique of Social Science (part III)

In an effort to get to the bottom of the Austian theory I went to and downloaded Mises' Human Action. I hardly have time to digest the entire thing, but I figured I'd read through the first 20 pages or so, and in doing so struck upon a passage that describes precisely the challenge offered to Austrians by behavioralists. The Austrian theory apparently is built entirely upon the analysis of (surprise) human action. They do indeed dispose of the need for rational utility maximizing preferences, however, they do so by imputing those preferences into action:
Human action is necessarily always rational. The term "rational action" is therefore pleonastic and must be rejected as such. When applied to the ultimate ends of action, the terms rational and irrational are inappropriate and meaningless. The ultimate end of action is always the satisfaction of some desires of the acting man. Since nobody is in a position to substitute his own value judgments for those of the acting individual, it is vain to pass judgment on other people's aims and volitions. No man is qualified to declare what would make another man happier or less discontented. The critic either tells us what he believes he would aim at if he were in the place of his fellow; or, in dictatoria1 arrogance blithely disposing of his fellow's will and aspirations, declarcs what condition of this other man would better suit himself, the critic.
Mises, Human Action, p. 19.

It is precisely the claim of the behavioralist that an individual's actions do not rationally correspond to that individual's own value judgments. It is not a matter of imposing outside values (which Mises here argues against), but merely questioning the validity of assuming the rationality of action as defined by consistency with the desires and value judgments of the actor. My online dictionary turns up the following definition of rational: Consistent with or based on reason; logical. Behavioralists question whether all action is actually consistent with or based on reason and logic, as Mises flatly assumes that it is. Mises also states:
Concrete value judgments and definite human actions are not open to further analysis. We may fairly assume or believe that they are absolutely dependent upon and conditioned by their causes. But as long as we do not know how external facts--physical and physiological--produce in a human mind definite thoughts and volitions resulting in concrcete acts, we have to face an insurmountable methodological dualism.
Mises, Human Action, p.18.

Beyond assuming that action is necessarily rational, Mises believes it futile to try and determine what cognitive processes lie behind action. Behavioralists disagree. Their experimentation on this matter, while, as previously discussed, falling short of full scientific rigor, provide results that should certainly be troubling to Mises in his claims above. This, I think, poses a serious challenge to the Austrian theory of action and ought not to be dismissed out of hand. Am I wrong on this?

Moreover, I think it is a challenge that Miseians would be hard-pressed to answer. I fail to see how the Austrian school avoids any of the problems of rationality attributed to Homo Economicus. The difference, it seems to me, between the Homo Economicus theory and the subjectivist Austrian theory is merely in their analysis of the desired ends of human action. Homo Economicus, I take it, assumes that actions are directed towards wealth maximization, whereas the subjectivists don't care what the objective is, but only "whether or not the means chosen are fit for the attainment of the ends aimed at." (p. 21) Both theories, however, assume rationality in pursuing their chosen ends, and both are therefore subject to behavioral defects.

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