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The Psychological Basis of the Opposition to Economic Theory

[This article is excerpted from chapter 6 of Epistemological Problems of Economics] Subjectivist economics would be guilty of an omission if it did not also concern itself with the objections that have been raised against it from political and factional standpoints. There is, first of all, the assertion that the subjective theory of value is “the class ideology of the bourgeoisie.” For Hilferding it is “bourgeois economics’ final answer to socialism.”1 Bucharin stigmatizes it as “the ideology of the bourgeoisie, which even now no longer corresponds to the process of production.”2 One is free to think what one will about these two authors, but it is to be noted that they belong to the ruling groups of the two most populous states in Europe and are therefore very capable of influencing

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[This article is excerpted from chapter 6 of Epistemological Problems of Economics]

Subjectivist economics would be guilty of an omission if it did not also concern itself with the objections that have been raised against it from political and factional standpoints.

There is, first of all, the assertion that the subjective theory of value is “the class ideology of the bourgeoisie.” For Hilferding it is “bourgeois economics’ final answer to socialism.”1 Bucharin stigmatizes it as “the ideology of the bourgeoisie, which even now no longer corresponds to the process of production.”2 One is free to think what one will about these two authors, but it is to be noted that they belong to the ruling groups of the two most populous states in Europe and are therefore very capable of influencing public opinion. The millions of people who come into contact with no other writings than those distributed by the Marxist propaganda machine learn nothing of modern economics beyond these and similar condemnations.

Then we must consider the views of those who believe it to be significant that subjectivist economics is deliberately not taught at the universities. Even Adolf Weber, who knew enough to criticize the prejudices of academic socialism, comes very close to resorting to this argument.3 It is completely in accord with the etatist thinking prevalent everywhere today to consider a theory to be finally disposed of merely because the authorities who control appointments to academic position want to know nothing of it, and to see the criterion of truth in the approval of a government office.

No one will argue that views so widespread can simply be passed over in silence.

The Problem

Every new theory encounters opposition and rejection at first. The adherents of the old, accepted doctrine object to the new theory, refuse it recognition, and declare it to be mistaken. Years, even decades, must pass before it succeeds in supplanting the old one. A new generation must grow up before its victory is decisive.

To understand this one must remember that most men are accessible to new ideas only in their youth. With the progress of age the ability to welcome them diminishes, and the knowledge acquired earlier turns into dogma. In addition to this inner resistance, there is also the opposition that develops out of regard for external considerations. A man’s prestige suffers when he sees himself obliged to admit that for a long time he has supported a theory that is now recognized as mistaken. His vanity is affected when he must concede that others have found the better theory that he himself was unable to find.4 And in the course of time the authority of the public institutions of compulsion and coercion, i.e., of state, church, and political parties, has somehow become very much involved with the old theory. These powers, by their very nature unfriendly to every change, now oppose the new theory precisely because it is new.

However, when we speak of the opposition that the subjective theory of value encounters, we have something different in mind from these obstacles, which every new idea must overcome. The phenomenon with which we are confronted in this case is not one that touches all branches of human thought and knowledge. The opposition here is not mere resistance to the new because it is new. It is of a kind to be found exclusively in the history of praxeological, and especially of economic, thought. It is a case of hostility to science as such—a hostility that the years have not only not dispelled or weakened, but, on the contrary, have strengthened.

What is at issue here is not alone the subjective theory of value, but catallactics in general. This can best be seen from the fact that today there is no longer a single theory of price determination that opposes that of subjectivism. Now and then a Marxist party official tries to defend the labor theory of value. For the rest, no one dares to expound a doctrine essentially different from the subjective theory. All discussions concerning the theory of price determination are based completely on the latter theory of value, even if many authors—like Liefmann and Cassel, for example—believe that what they are saying is very different. Today whoever rejects the subjective theory of value also rejects every economic theory and wants to admit nothing but empiricism and history into the scientific treatment of social problems.

It has already been shown in earlier sections of this book what logic and epistemology have to say about this position. In this section we shall deal with the psychological roots of the rejection of the subjective theory of value.

Therefore, we need not consider the hostility that the sciences of human action encounter from without. There is, to be sure, enough of such external opposition, but it is scarcely capable of arresting the progress of scientific thought. One must be very strongly prepossessed by an etatist bias to believe that the proscription of a doctrine by the coercive apparatus of the state and the refusal to place its supporters in positions in the church or in government service could ever do injury to its development and dissemination in the long run. Even burning heretics at the stake was unable to block the progress of modern science. It is a matter of indifference for the fate of the sciences of human action whether or not they are taught at the tax-supported universities of Europe or to American college students in the hours not occupied by sports and amusements. But it has been possible in most schools to dare to substitute for praxeology and economics subjects that intentionally avoid all reference to praxeological and economic thought only because internal opposition is present to justify this practice. Whoever wants to examine the external difficulties that beset our science must first of all concern himself with those which arise from within.

The results of praxeological and historical investigation encounter opposition from those who, in the conduct of their discussion, treat all logic and experience with contempt. This peculiar phenomenon cannot be explained merely by saying that whoever sacrifices his conviction in favor of views that are popular with the authorities is generally well rewarded. A scientific investigation may not descend to the low level at which blind partisan hatred has carried on the struggle against the science of economics. It may not simply turn against its opponents the epithets that Marx used when he described the “bourgeois, vulgar” economists as villainous literary hirelings. (In doing so, he liked to use the word “sycophant,” which he apparently altogether misunderstood.) Nor may it adopt the bellicose tactics with which the German academic socialists seek to suppress all opponents.5 Even if one were to consider oneself justified in denying the intellectual honesty of all those opposed to the subjective theory of price determination, there would still be the question why public opinion tolerates and accepts such spokesmen and does not follow the true prophets rather than the false.6

The Hypothesis of Marxism and the Sociology of Knowledge

Let us consider first the doctrine which teaches that thought is dependent upon the class of the thinker.

According to the Marxian view, in the period between the tribal society of the golden age of times immemorial and the transformation of capitalism into the communist paradise of the future, human society is organized into classes whose interests stand in irreconcilable opposition. The class situation—the social existence—of an individual determines his thought. Therefore, thinking produces theories that correspond to the class interests of the thinker. These theories form the “ideological superstructure” of class interests. They are apologies for the latter and serve to cover up their nakedness. Subjectively, the individual thinker may be honest. However, it is not possible for him to pass beyond the limitations imposed on his thinking by his class situation. He is able to reveal and unmask the ideologies of other classes, but he remains throughout his life biased in favor of the ideology that his own class interests dictate.

In the volumes that have been written in defense of this thesis the question is—characteristically—almost never raised whether there is any truth in the supposition that society is divided into classes whose interests stand in irreconcilable conflict.7 For Marx the case was obvious. In Ricardo’s system of catallactics he found, or at least believed that he had found, the doctrine of the organization of society into classes and of the conflict of classes. Today, Ricardo’s theories of value, price determination, and distribution have long since been outmoded, and the subjective theory of distribution offers not the slightest basis of support for a doctrine of implacable class conflict. One can no longer cling to such a notion once one has grasped the significance of marginal productivity for income determination.

But since Marxism and the sociology of knowledge see in the subjective theory of value nothing more than a final ideological attempt to save capitalism, we wish to limit ourselves to an immanent critique of their theses. As Marx himself admits, the proletarian has not only class interests, but other interests that are opposed to them. The Communist Manifesto says: “The organization of the proletarians into a class and thereby into a political party is repeatedly frustrated by the competition among the workers themselves.”8 Therefore, it is not true that the proletarian has only class interests. He also has other interests that are in conflict with them. Which, then, should he follow? The Marxist will answer: “Of course, his class interests, for they stand above all others.” But this is no longer by any means a matter “of course.” As soon as one admits that action in conformity with other interests is also possible, the question is not one concerning what “is,” but what “ought to be.” Marxism does not say of the proletarians that they cannot follow interests other than those of their class. It says to the proletarians: You are a class and should follow your class interests; become a class by thinking and acting in conformity with your class interests. But then it is incumbent upon Marxism to prove that class interests ought to take precedence over other interests.

Even if we were to assume that society is divided into classes with conflicting interests and if we were to agree that everyone is morally obliged to follow his class interests and nothing but his class interests, the question would still remain: What best serves class interests? This is the point where “scientific” socialism and the “sociology of knowledge” show their mysticism. They assume without hesitation that whatever is demanded by one’s class interests is always immediately evident and unequivocal.9 The comrade who is of a different opinion can only be a traitor to his class.

What reply can Marxian socialism make to those who, precisely on behalf of the proletarians, demand private ownership of the means of production, and not their socialization? If they are proletarians, this demand alone is sufficient to brand them as traitors to their class, or, if they are not proletarians, as class enemies. Or if, finally, the Marxists do choose to engage in a discussion of the problems, they thereby abandon their doctrine; for how can one argue with traitors to one’s class or with class enemies, whose moral inferiority or class situation makes it impossible for them to comprehend the ideology of the proletariat?

The historical function of the theory of classes can best be understood when it is compared to the theory of the nationalists. Nationalism and racism also declare that there are irreconcilable conflicts of interests—not between classes, of course, but between nations and races—and that one’s thinking is determined by one’s nationality or race. The nationalists form “Fatherland” and “National” parties, which boast that they and they alone pursue the goals that serve the welfare of the nation and the people. Whoever does not agree with them—whether or not he belongs to their nationality—is forever after regarded as an enemy or a traitor. The nationalist refuses to he convinced that the programs of other parties also seek to serve the interests of the nation and the people. He cannot believe that the man who wants to live in peace with neighboring countries or who advocates free trade rather than protective tariffs does not make these demands in the interests of a foreign country, but likewise wishes to act, and thinks he is acting, in the interests of his own country. The nationalist believes so adamantly in his own program that he simply cannot conceive how any other could possibly be in the interests of his nation. Whoever thinks differently can only be a traitor or a foreign enemy.

Consequently, both doctrines—the Marxian sociology of knowledge as well as the political theory of nationalism and racism share the assumption that the interests of one’s class, nation, or race unequivocally demand a definite course of action and that for the members of a class or nationality, or for the racially pure, no doubt can arise about what this should be. An intellectual discussion of the pros and cons of different party programs seems unthinkable to them. Class membership, nationality, or racial endowment allow the thinker no choice: he must think in the way his being demands. Of course, such theories are possible only if one has drawn up beforehand a perfect program, which it is forbidden even to doubt. Logically and temporally Marx’s acceptance of socialism precedes the materialist conception of history, and the doctrine of militarism and protectionism logically and temporally precedes the program of the nationalists.

Both theories also arose from the same political situation. No logical or scientific arguments whatsoever could or can be brought against the theories of liberalism, which were developed by the philosophers, economists, and praxeologists of the eighteenth and of the first half of the nineteenth centuries. Whoever wishes to combat these doctrines has no other means available than to dethrone logic and science by attacking their claim to establish universally valid propositions. To the “absolutism” of their explanations it is countered that they produced only “bourgeois,” “English,” or “Jewish” science; “proletarian,” “German,” or “Aryan” science has arrived at different results. The fact that the Marxists, from Marx and Dietzgen down to Mannheim, are eager to assign to their own teachings a special position designed to raise them above the rank of a mere class theory is inconsistent enough, but need not be considered here. Instead Of refuting theories, one unmasks their authors and supporters.

What makes this procedure a matter of serious concern is that, if adhered to in practice, it renders impossible every discussion involving argument and counterargument. The battle of minds is replaced by the examination of opponents’ social, national, or racial backgrounds. Because of the vagueness of the concepts of class, nation, and race, it is always possible to conclude such an examination by “unmasking” one’s opponent. It has gone so far that one acknowledges as comrades, fellow countrymen, or racial brothers only those who share the ideas that are alone presumed adequate to such a status. (It is a sign of a special lack of consistency to appeal to the evidence of the existence of supporters for one’s ideology who are outside the circle of members of one’s own class, nation, or race, with such expressions as: “Even those not of our own class, nation, or race must share our view if they are enlightened and honest.” A rule for determining the doctrine that would be adequate to one’s being is unfortunately not stated, nor, indeed, can it ever be stated. A decision by the majority of those belonging to the group is expressly rejected as a criterion.

The three axioms that these antiliberal doctrines all assume are:

1. Mankind is divided into groups whose interests are in irreconcilable conflict.
2. Group interests and the course of action that best serves them are immediately evident to every member of every group.
3. The criterion of the separation into groups is (a) membership in a class, (b) membership in a nationality, or (c) membership in a race.

The first and the second propositions are common to all these doctrines; they are distinguished by the particular meaning that they give to the third.

It is regrettable that each of these three propositions taken individually, or the conjunction of all three into one, is completely lacking in the self-evidence and logical necessity required of axioms. If, unfortunately, they are not capable of proof, one cannot simply say that they do not require proof. For in order to be proved, they would have to appear as the conclusion of an entire system of praxeology, which would first need to be drawn up. But how should this be possible when they logically and temporally precede every thought—at least every praxeological (the sociologists of knowledge would say “situationally determined”) thought? If a man begins to take these axioms seriously in his thinking, he will fall into a skepticism far more radical than that of Pyrrho and Aenesidemus.

But these three axioms form only the presupposition of the theory; they are not yet the theory itself, and, as we shall see, their enumeration by no means exhausts all its axiomatic assumptions. According to the doctrine of the Marxian sociology of knowledge, to which we return and which is the only one we wish to consider in the rest of this discussion, a man’s thought is dependent on his class membership to such an extent that all the theories which he may arrive at express, not universally valid truth, as their author imagines, but an ideology that serves his class interests. However, there can be no doubt that for members who want to further the interests of their own class as much as they can, the knowledge of reality, unclouded by any sort of ideological error, would be extremely useful. The better they know reality, the better will they know how to select the means for the promotion of their class interests. Of course, if knowledge of the truth were to lead to the conclusion that one’s class interests should be sacrificed for other values, it could lessen the enthusiasm with which these alleged class interests are championed, and a false theory that avoided this disadvantage would be superior to the true one in tactical value. But once this possibility has been admitted, the basis of the whole doctrine has been given up.

Consequently, a class can be aided in its struggles by means of a false theory only in so far as it weakens the fighting power of opposing classes. “Bourgeois” economics, for example, helped the bourgeoisie in the struggle against the precapitalist powers, and then later in its opposition to the proletariat, in spreading among its opponents the conviction that the capitalist system must necessarily prevail. Thus we arrive at the fourth and last of the axiomatic presuppositions of Marxism: The help which a class gets from the fact that its members can think only in terms of apologetics (ideologies), and not in terms of correct theories, outweighs the consequent loss to it of whatever advantages a knowledge of reality unclouded by false ideas might have afforded it for practical action.

It must be made clear that the doctrine of the dependence of thought on the class of the thinker is based on all four of these axioms. This relation of dependence appears as an aid to the class in carrying on class warfare. That its thinking is not absolutely correct, but conditioned by its class origin, is to be attributed precisely to the fact that interest points the way for thought. Here we definitely do not in any way wish to challenge these four axioms, which are generally accepted without proof for the very reason that they cannot be proved. Our critique has to do only with answering the question whether a class theory can be used in unmasking modern economics as the class ideology of the bourgeoisie, and we must attempt to solve this problem immanently.

In spite of everything that has been said, one may still perhaps maintain the fourth of the axioms set forth above, according to which it is more advantageous for a class to cling to a doctrine that distorts reality than to comprehend the state of affairs correctly and to act accordingly. But at best this can hold true only for the time during which the other classes do not yet possess theories adequate to their own social existence. For later, the class that adjusts its action to the correct theory will doubtless be superior to the classes that take a false—albeit subjectively honest—theory as a basis for action; and the advantage that the class-conditioned theory formerly afforded, in that it weakened the opposition of enemy classes, would now no longer obtain, since the latter would have already emancipated their thinking from that of other classes.

Let us apply this to our problem. Marxists and sociologists of knowledge call modern subjectivist economics “bourgeois” science—a last hopeless endeavor to save capitalism. When this reproach was directed against classical economics and its immediate successors, there was a grain of truth in it. At that time, when there was not yet a proletarian economics, it might be thought that the bourgeoisie could, by means of its science, hinder the awakening of the proletariat to class consciousness. But now “proletarian” science has entered the scene, and the proletariat has become class-conscious. It is now too late for the bourgeoisie to try anew to formulate an apologetic, to construct a new bourgeois science, to develop a new “ideology.” All attempts to destroy the class consciousness of the proletarian, who can no longer think otherwise than in conformity with his class, can redound only to the detriment of those who would undertake them. Today the bourgeoisie could do nothing but harm to its own interests if it were to endeavor to concoct a new class ideology. The classes opposed to it could no longer be brought under the influence of such a doctrine. But because the action of the bourgeoisie would itself be determined by this false theory, the latter would necessarily endanger the outcome of the struggle against the proletariat. If it is class interest that determines thought, then today the bourgeoisie has need of a theory that expresses reality without contamination by false ideas.

Therefore, one could say to the Marxists and the sociologists of knowledge, if one wanted, in turn, to take one’s stand on one’s own viewpoint: Until the appearance of Karl Marx, the bourgeoisie fought with an “ideology,” viz., the system of the classical and “vulgar” economists. But when, with the appearance of the first volume of Capital (1867), the proletariat was provided with a doctrine corresponding to its social existence, the bourgeoisie changed its tactics. An “ideology” could henceforth no longer be useful to it, since the proletariat, awakened to consciousness of its social existence as a class, could no longer be seduced and lulled to sleep by an ideology. Now the bourgeoisie needed a theory that, dispassionately viewing the true state of affairs and free from every ideological coloration, offered it the possibility of always availing itself of the most suitable means in the great decisive battle of the classes. Quickly the old economics was given up; and since 1870, first by Jevons, Menger, and Walras, and then by Böhm-Bawerk, Clark, and Pareto, the new, correct theory has been developed as now required by the changed class situation of the bourgeoisie. For it has become apparent that in this stage of its struggle against an already class-conscious proletariat the doctrine adequate to the existence, of the bourgeoisie as a class, that is, best serving its class interests, is not an “ideology,” but knowledge of the absolute truth.

Thus, with Marxism and the sociology of knowledge you can prove everything and nothing.

The Role of Resentment

In his De officiis Cicero prescribed a code of social respectability and propriety that faithfully reflects the conceptions of gentility and merit that have prevailed in western civilization through the centuries. Cicero presented nothing new in this work, nor did he intend to. He availed himself of older, Greek standards. And the views that he expounded corresponded completely to those that had been generally accepted for centuries both in the Greek and Hellenistic world and in republican Rome. The Roman republic gave way to the empire; Rome’s gods, to the Christian God. The Roman empire collapsed, and out of the storms created by the migration of entire populations a new Europe arose. Papacy and empire plunged from their heights, and other powers took their place. But the position of Cicero’s standard of merit remained unshaken. Voltaire called the De officiis the most useful handbook of ethics,10 and Frederick the Great considered it the best work in the field of moral philosophy that had ever been or ever would be written.11

Through all the changes in the prevailing system of social stratification, moral philosophers continued to hold fast to the fundamental idea of Cicero’s doctrine that making money is degrading. It expressed the convictions of the great aristocratic landowners, princely courtiers, officers of the army, and government officials. It was also the view of the literati, whether they lived as paupers at the court of a great lord or were permitted to work in security as the beneficiaries of ecclesiastical prebends.

The secularization of the universities and the transformation of the precarious posts of the court literati into publicly supported sinecures served only to aggravate the distrust that the intellectual who was paid a salary for his work as a teacher, scholar, or author felt toward the independent scholar, who had to support himself on the generally meager proceeds from his writings or by some other activity. Set apart by their position in the hierarchy of church, public office, and military service, they looked down with contempt upon the businessman, who serves Mammon. In this respect they took the view common to all who by virtue of an income derived from taxes are relieved of the necessity of earning a living on the market. This contempt turned to gnawing rancor when, with the spread of capitalism, entrepreneurs began to rise to great wealth and thus to high popular esteem. It would be a grievous error to assume that the hostility felt toward entrepreneurs and capitalists, toward wealth and quite especially toward newly acquired wealth, toward money-making and in particular toward business and speculation, which today dominates our entire public life, politics, and literature stems from the sentiments of the masses. It springs directly from the views held in the circles of the educated classes who were in public service and enjoyed a fixed salary and a politically recognized status. This resentment is, accordingly, all the stronger in a nation the more docilely it allows itself to be led by the authorities and their functionaries. It is stronger in Prussia and Austria than in England and France; it is less strong in the United States and weakest in the British dominions.

The very fact that many of these people in government service are related to businessmen by blood or marriage or are closely connected with them by school ties and social acquaintance exacerbates still further these sentiments of envy and rancor. The feeling that they are in many ways beneath the contemptible businessman brings about inferiority complexes that only intensify the resentment of those removed from the market. Standards of ethical merit are fashioned not by the active man of affairs, but by the writer who lives procul negotiis. A system of ethics whose authors are to be found in the circles of priests, bureaucrats, professors, and officers of the army expresses only disgust and contempt for entrepreneurs, capitalists, and speculators.

And now these educated classes, filled with envy and hatred, are presented with a theory that explains the phenomena of the market in a manner deliberately neutral with regard to all value judgments. Price rises, increases in the rate of interest, and wage reductions, which were formerly attributed to the greed and heartlessness of the rich, are now traced back by this theory to quite natural reactions of the market to changes in supply and demand. Moreover, it shows that the division of labor in the social order based on private property would be utterly impossible without these adjustments by the market. What was condemned as a moral injustice—indeed, as a punishable offense—is here looked upon as, so to speak, a natural occurrence. Capitalists, entrepreneurs, and speculators no longer appear as parasites and exploiters, but as members of the system of social organization whose function is absolutely indispensable. The application of pseudomoral standards to market phenomena loses every semblance of justification. The concepts of usury, profiteering, and exploitation are stripped of their ethical import and thus become absolutely meaningless. And, finally, the science of economics proves with cold, irrefutable logic that the ideals of those who condemn making a living on the market are quite vain, that the socialist organization of society is unrealizable, that the interventionist social order is nonsensical and contrary to the ends at which it aims, and that therefore the market economy is the only feasible system of social cooperation. It is not surprising that in the circles whose ethics culminate in the condemnation of all market activity these teachings encounter vehement opposition.

Economics refuted the belief that prosperity is to be expected from the abolition of private property and the market economy. It proved that the omnipotence of the authorities, from whom wonders had been hoped for, is a delusion and that the man who undertakes to organize social cooperation, the ****, as well as the homo faber, who directs organic and inorganic nature in the process of production, cannot go beyond certain limits. This too had to appear to the servitors of the apparatus of violence, both those in the imperium and those in the magisterium, as a lowering of their personal prestige. They considered themselves as demigods who make history, or at least as the assistants of these demigods. Now they were to be nothing but the executors of an unalterable necessity. Just as the deterministic theories, entirely apart from the condemnation they received from the ecclesiastical authorities on dogmatic grounds, encountered the inner opposition of those who believed themselves to be possessed of free will, so these theories too met with resistance on the part of rulers and their retinue, who felt free in the exercise of their political power.

No one can escape the influence of a prevailing ideology. Even the entrepreneurs and capitalists have fallen under the sway of ethical ideas that condemn their activities. It is with a bad conscience that they try to ward off the economic demands derived from the ethical principles of the public functionary. The suspicion with which they regard all theories that view the phenomena of the market without ethical judgment is no less than that felt by all other groups. The sense of inferiority that arouses their conscience to the feeling that their acts are immoral is all too often more than compensated by exaggerated forms of antichrematistic ethics. The interest that millionaires and the sons and daughters of millionaires have taken in the formation and leadership of socialist workers’ parties is an obvious case in point. But even outside of the socialist parties we encounter the same phenomenon.

Freedom and Necessity

The ultimate statement that the theory of knowledge can make without leaving the solid ground of science and engaging in vague speculations on fruitless metaphysical concepts is: Changes in what is given, as far as our experience is concerned, take place in a way that allows us to perceive in the course of things the rule of universal laws that permit of no exception.

We are not capable of conceiving of a world in which things would not run their course “according to eternal, pitiless, grand laws.” But this much is clear to us. In a world so constituted, human thought and “rational” human action would not be possible. And therefore in such a world there could be neither human beings nor logical thought.

Consequently, the conformity of the phenomena of the world to natural law must appear to us as the foundation of our human existence, as the ultimate basis of our being human. Thinking about it cannot fill us with fear, but, on the contrary, must comfort us and give us a feeling of security. We are able to act at all—that is to say, we have the power to order our conduct in such a way that the ends we desire can be attained—only because the phenomena of the world are governed not by arbitrariness, but by laws that we have the capacity to know something about. If it were otherwise, we should be completely at the mercy of forces that we should be unable to understand.

We can comprehend only the laws that are revealed in the changes in the given. The given itself always remains inexplicable to us. Our action must accept the given as it is. However, even knowledge of the laws of nature does not make action free. It is never able to attain more than definite, limited ends. It can never go beyond the insurmountable barriers set for it. And even within the sphere allowed to it, it must always reckon with the inroads of uncontrollable forces, with fate.

Here we encounter a peculiar psychological fact. We quarrel less with the unknown that comes upon us in the form of fate than with the result of the operation of the laws we have comprehended. For the unknown is also the unexpected. We cannot see its approach. We do not apprehend it until it has already taken place. Whatever follows from a known law we can foresee and expect. If it is inimical to our wishes, there is sheer torment in waiting for the approaching disaster that we cannot avoid. It becomes unbearable to think that the law is inexorable and makes no exceptions. We build our hopes on the miracle that this time, this one time, the law, contrary to all expectations, might not hold true. Faith in a miracle becomes our sole comfort. With it we resist the harshness of natural law and silence the voice of our reason. We expect a miracle to turn aside the foreseen course of events, which we find disagreeable.

It was thought that in the field of human conduct, and accordingly in that of society, men are free from the pitiless inexorability and rigor of law, which our thought and action had long since been compelled to recognize in “nature.” Since the eighteenth century the science of praxeology, and especially its hitherto most highly developed branch, economics, has enabled “law” to be apprehended in this realm too. Before the dawn of the realization that the phenomena of nature conform to laws, men felt themselves to be dependent upon superhuman beings. At first these deities were thought to possess complete free will; that is, they were believed to be raised above all bounds in their acts of commission and omission. Later they were thought to be at least sovereigns who in individual cases are capable of decreeing exceptions to the otherwise universal law. Likewise in the domain of social relations, until that time men were aware of nothing but dependence on authorities and autocrats whose power over others seemed boundless. Everything and anything could be expected from these great and noble beings. In good as well as in evil they were bound by no earthly limitations. And one liked to hope that their consciences, mindful of retaliation in the life to come, would most often restrain them from misusing their power for evil purposes. This whole way of thinking was violently shaken in a twofold way by the individualist and nominalist social philosophy of the Enlightenment. The Enlightenment disclosed the ideological12 basis of all social power. And it showed that every power is limited in its effect by the fact that all social phenomena conform to law.

The opposition to these teachings was even stronger than the resistance to the doctrine of the subjection of nature to law. Just as the masses want to know nothing of the inexorable rigor of the laws of nature and substitute for the God of the theists and the deists, who is subject to law, the free ruling divinity from whom mercy and miracles are to be eagerly expected, so they do not allow themselves to be deprived of faith in the boundless omnipotence of the social authorities. As even the philosopher catches himself hoping for a miracle when he is in distress, dissatisfaction with his social position leads him to long for a reform that, restrained by no barriers, could accomplish everything.

Nevertheless, knowledge about the inexorability of the laws of nature has so long since forced its way into the mind of the public—at least of the educated public—that people see in the theories of natural science a means by which they can attain ends that would otherwise remain unattainable. But, in addition, the educated classes are possessed by the idea that in the social domain anything can be accomplished if only one applies enough force and is sufficiently resolute. Consequently, they see in the teachings of the sciences of human action only the depressing message that much of what they desire cannot be attained. The natural sciences, it is said, show what could be done and how it could be done, whereas praxeology shows only what cannot be done and why it cannot be done. Engineering, which is based on the natural sciences, is everywhere highly praised. The economic and political teachings of liberalism are rejected, and catallactics, on which they are based, is branded the dismal science.

Scarcely anyone interests himself in social problems without being led to do so by the desire to see reforms enacted. In almost all cases, before anyone begins to study the science, he has already decided on definite reforms that he wants to put through. Only a few have the strength to accept the knowledge that these reforms are impracticable and to draw all the inferences from it. Most men endure the sacrifice of the intellect more easily than the sacrifice of their daydreams. They cannot bear that their utopias should run aground on the unalterable necessities of human existence. What they yearn for is another reality different from the one given in this world. They long for the “leap of humanity out of the realm of necessity and into the realm of freedom.”13 They wish to be free of a universe of whose order they do not approve.


The romantic revolt against logic and science does not limit itself to the sphere of social phenomena and the sciences of human action. It is a revolt against our entire culture and civilization. Both Spann and Sombart demand the renunciation of scientific knowledge and the return to the faith and the bucolic conditions of the Middle Ages, and all Germans who are not in the Marxist camp joyfully agree with them. The Marxists, however, are eager in this regard to transform their once sober “scientific” socialism into a romantic and sentimental socialism more pleasing to the masses.

Science is reproached for addressing only the intellect while leaving the heart empty and unsatisfied. It is hard and cold where warmth is required. It furnishes theories and techniques where consolation and understanding are sought. Yet it cannot be argued that the satisfaction of religious and metaphysical needs is the task of science. Science cannot go beyond its own sphere. It must limit itself to the development of our system of knowledge and with its help undertake the logical elaboration of experience. In this way it lays the foundations on which scientific technology—and all politics in so far as it is the technology of the domain of social phenomena comes under this head—constructs its system. In no way does science have to concern itself with faith and peace of soul. The attempts to establish metaphysics scientifically or to produce a kind of substitute for religion by means of “ethical” ceremonies copied from religious worship have nothing whatever to do with science. Science in no way deals with the transcendent, with what is inaccessible to thought and experience. It can express neither a favorable nor an unfavorable opinion about doctrines that concern only the sphere of the metaphysical.

A conflict between faith and knowledge develops only when religion and metaphysics pass beyond their proper domains and challenge science in its own realm. They do so partly out of the necessity of defending dogma that is not compatible with the state of scientific knowledge, but more often in order to attack the application of science to life if this does not conform to the conduct that they prescribe. It is not difficult to understand why, under such conditions, subjectivist economics is most vehemently attacked.

We should not deceive ourselves about the fact that today not only the masses, but also the educated public—those who are called intellectuals—are not to be found on the side of science in this controversy. For many this position may be a heartfelt necessity. However, a great many others justify their taking this point of view by arguing that it represents the “wave of the future,” that one cannot cut oneself off from what the masses most passionately desire, that the intellect must humbly bow before instinct and the simplicity of religious emotion. Thus the intellectual voluntarily steps aside. Full of self-abnegation, he renounces his role as a leader and becomes one of the led. This reversal of roles on the part of those who regard themselves as the bearers of culture has been by far the most important historical occurrence of the last decades. It is with horror that we now witness the maturation of the fruits of the policy that results from this abdication of the intellect.

In all ages the pioneer in scientific thought has been a solitary thinker. But never has the position of the scientist been more solitary than in the field of modern economics. The fate of mankind—progress on the road that western civilization has taken for thousands of years, or a rapid plunge into a chaos from which there is no way out, from which no new life as we know it will ever develop—depends on whether this condition persists.

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Mises Institute
The Mises Institute, founded in 1982, teaches the scholarship of Austrian economics, freedom, and peace. The liberal intellectual tradition of Ludwig von Mises (1881-1973) and Murray N. Rothbard (1926-1995) guides us. Accordingly, we seek a profound and radical shift in the intellectual climate: away from statism and toward a private property order.

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