A Reply to Aguilar
Robert P. Murphy
Part II: The Legacy of Ludwig von Mises
Section XIV: Mises’ Pseudo-Axiomatic Praxeological Method
In this section Aguilar makes many sweeping statements about the value of Mises’ approach and his ignorance of mathematics. I certainly agree that Mises never formally lays out his praxeological system the way he says it should be done; a pithy summary would be to question whether Mises’ method agreed with his methodology. It is also humorous when Aguilar asks, “Who ever heard of an axiomatic system with only one axiom?” (p. 34).
This is a huge dispute even within the broad Austrian community; plenty of Austrians think we should stop harping on “philosophy” and stick to “real economics.” I myself used to think along these lines. However, more and more I think there is far more to the Misesian approach, and that the action axiom is not “really just a platitude” (p. 34) as Aguilar claims. I encourage Aguilar to reread Chapter IV of Human Action. Here Mises shows that the very concept of action implies the economic categories of value, cost, profit, and loss. Say what you will about this, it is not something that all mainstream economists already know and consider too obvious to discuss.
Before leaving this section I must object to Aguilar’s footnoted assertion that “the utility of a given stock is measured by the quantity of money which stands beside it on one’s value scale” (p. 33). A value scale is an ordinal ranking; it makes no sense to say one thing is beside another on the value scale. Consequently, utility cannot be measured. Every action is a choice, a demonstration of higher preference for one thing over another. If a man buys a total of two boxes of cereal at $4 each, that shows that he valued the first box more than his last $4, the second box more than his (new) last $4, and his (even newer) last $4 more than the third box.9 There is no question of saying how much money stands beside a box of cereal on his value scale.
9 As Caplan and presumably Aguilar could point out, if we assume infinitely divisible units of goods, we only avoid paradox by assuming a point of indifference. But surely the purist Austrian needn’t worry about the implications of an impossible assumption.
