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Source link: http://archive.mises.org/5378/what-do-austrians-mean-by-rational/

What Do Austrians Mean by “Rational”?

July 26, 2006 by

If human action always aims at a purpose, which by definition it does, then human action must be rational, that is, consistent with reason or guided by one’s will and intellect. It can never be termed irrational. What then is irrationality? According to Mises, irrationality is not the opposite of action or purposeful behavior, that is, it is not willed behavior without a purpose. All willed behavior has a purpose. Irrational behavior is behavior induced by response to stimuli, behavior that lies beyond the control of a person’s will or volition. FULL ARTICLE


F L Light July 26, 2006 at 8:18 am

5 Couplets on Irrational Pretensions

The dreamers of unfounded governments
Confide in planned constraints, not in man’s sense.

Professors of unfounded influence
Would plan affairs for corporate presidents.

Professors of unfounded influence
Know better than ten thousand presidents.

Professors of unfounded influence
Would tell all CEOs their betterments.

All Clintons of unfounded influence
Would promulgate their reckless prevalence.

Roger M July 26, 2006 at 9:44 am

“Academic papers are flowing that seize upon the findings to demand paternalistic government actions…”

Those who demand that government rescue us from our “irrationality” assume that people in government offices can never act irrationally. Somehow, just being in the office makes them infallible, like the Pope.

billwald July 26, 2006 at 10:00 am

OK, the essay is correct but all it does is give a psychological meaning: People can be simultaneously sane, ignorant and foolish.

How do we apply this to Austrian ethics? Apparently it is thus moral to use one’s economic theory to remove consumer protection and other community standards so that the intelligent Austrians can rip off ignorant and/or foolish people and degrade the environment for the sake of profit if they can get away with it.

Liberal ethics recognizes that society has an obligation to impose some minimum protection to the foolish and ignorant.

Frank N Stein July 26, 2006 at 10:37 am

“Liberal ethics recognizes that society has an obligation to impose some minimum protection to the foolish and ignorant.”

Considering that such “protection” takes the form of rights violations imposed on everyone else, this is like saying that society has an obligation to allow ugly people the freedom to rape, since they have a hard time convincing people to have sex with them.

Don B July 26, 2006 at 10:55 am

Subjectivism as a reigning (meta) physical state, versus simply reflecting the choices of the individual–the “subject”—within an objective framework, is a fundamental error on the part of Mises. Disregarding irrationality in Mises’ formulation, and in this article, is little more than a straw man that is set up to be knocked down without intelligent philosophical inquiry.

For Mises, it appears to me that such a formulation was a reaction to Marxist claims of a definable “best action” due to reason and that, therefore, society will be better off if those “best actions” are identified by intellectual elites and forced one everyone else, with Nirvana quickly ensuing.

If objective values, resulting from the nature of the species, are definable, then rationality and irrationality matter. If they are not definable, then everything is off the table—nothing is either right or wrong (including freedom and non-aggression). “It’s all relative, man.”

Human action is not an axiom, and all action is not rational. It (the need for action) is derived from our nature. Our nature requires productive work to survive, and reason is our tool for figuring that out—productive work and reason are objectively required by our nature for survival and ultimate flourishing (yes, in society, some may parasite of others and not be “productive.” This has no impact on the underlying premise). The only challenge to that might be, why is survival/flourishing of value in and of itself. If you need to ask that question, please off yourself now and stop wasting oxygen and other people’s time. The “rational” choice is the choice that supports that flourishing. If you identify survival as a value (and biological entities do, as referred to immediately prior), then stepping in front of a bus for no reason would, in fact be an irrational action. Not because survival is randomly or arbitrarily imposed from outside, but because it is inherent our nature and what reality requires (objectively) from us to satisfy that nature. To identify reality (and values) as non-objective is to identify it as non-existent, which is a contradiction in terms. The need for making rational choices in the pursuit of productive work for ultimate survival/flourishing (eudemonia anyone?) is THE fundamental reason freedom is an essential value for human beings and, pragmatically, why it works—Freedom of Action, is the path to optimal survival. That’s why capitalism works and central planning doesn’t. Freedom of Action is a fundamental, metaphysical requirement for successful human existence, precisely because reality is objective and knowable and human beings, and all things, have a definable nature. If it is not (objective), then nothing is knowable by anyone, and there is no reason to conclude that libertarianism is NECESSARILY superior to any other form of social organization, which means we are all wasting our time in defense of freedom.

Michael Rozeff July 26, 2006 at 11:36 am

I much prefer that others create the answers and blog, but I just could not resist at least saying one small thing in here – this does not answer all that has just been said.

Survival (living or not living) is a choice at all times. Survival has value, but so do many things that decrease our life span. We choose many actions that decrease or may decrease our life span. The quality of a few minutes spent now climbing Mt. Everest while smoking a cigar and risking my life may be worth lying in bed when I’m 90. We don’t choose in order to survive. We survive in order to choose.

Sorry if I hit and run – I’ll button my pen and let others comment.

Roger M July 26, 2006 at 12:26 pm

I don’t want to presume to interpret Mises, but I think what he had in mind was that, by definition, people can’t act irrationally. Action can’t be irrational, only thinking. Action can result from irrational thinking, but if humans thought that a particular action would not produce the results they wanted, they wouldn’t act that way.

A few year ago, a group of people in LA poisoned themselves so that they could join the mother ship they believed was coming for them. It may have been irrational to believe in the coming of the mother ship, and that the path to it was suicide, but the action wasn’t irrational, because they were acting consistenly with their assumptions.

Even though schizophrenics think irrationally, they don’t act irrationally. If you truely believe that you’re the King of Morocco, you would be rational in acting like it.

Ike Hall July 26, 2006 at 12:38 pm

Don B said, “Human action is not an axiom, and all action is not rational. It (the need for action) is derived from our nature. Our nature requires productive work to survive, and reason is our tool for figuring that out—productive work and reason are objectively required by our nature for survival and ultimate flourishing (yes, in society, some may parasite of others and not be “productive.” This has no impact on the underlying premise).”

If this is true, it certainly took us long enough to puzzle it all out! Most other animals are in the same boat, but they seem to manage survival sans reason and without acting in the human sense.

If mere survival were the issue, I would imagine that humans would just be another specie of chimpanzee, which zoologically we are. But we are the chimps who act, and that makes all the difference.

All action is a means to a preferred end, and humans can’t not act. I’ll give you my favorite example. On an episode of Cops, they profiled two brothers whose main pastime was huffing paint to get high off the fumes. Naturally, their brains were almost completely fried, and they lacked much of what most people would call intellectual capacity, but they still had subjectively preferred ends (to get high) and acted purposefully to achieve those ends (searching for, recognizing, and huffing paint).

Was their behavior irrational? Absolutely not. One may not share their value(s), but no one can deny that they had a goal and were working to achieve that goal. (I for one would love to attend a Tony Robbins-style personal achievement seminar with these guys.)

Does this case require state intervention? I cannot even make that case, provided they only used their own paint that they either bought or appropriated from discarded stock. Does their “survival” take precedence over their desire to get high? I’m not sure they’ve ever really considered the question, but I would guess not.

However, your point about Freedom of Action is entirely correct, and that only humans that are free to act can fully realize their potentials, whatever their potentials may be. But it is primarily because we act, and secondarily because we must survive, that we should be free to do so. Such action should be in accordance with justice, but that really goes without saying.

Lisa Casanova July 26, 2006 at 12:40 pm

There’s one problem with your analysis- who decides if you’re foolish? If you’re ignorant? Do you want someone else deciding that for you?

Don B July 26, 2006 at 1:15 pm

Roger M: That’s a bit like saying, I didn’t kill someone, the gun did! You are your values.

Michael Rozeff: The fact that we all make differing choices at the margin doesn’t in any way change my basic premise. Flourishing also isn’t necessarily only about life span per se, though I suspect most people would put that high on the list. Life is full of choices because of finite resources, including time. The more rational your values, the more beneficial the outcomes, on average. Naturally, nothing can pervert outcomes and values like government. So it may be in fact be quite rational to do nothing in a Soviet factory, rather than get punished for doing the right thing, if that is not what you were told to do (there’s a famous example of waiting for authorization for nine months to paint some sort of component green instead of red since they weren’t authorized by the plan to paint them green, but that’s all the paint they had—screwing the supply line—because the factory manager didn’t want to get punished. Quite rational under the circumstances). Hence the importance of freedom and capitalism for human success—because reality objectively requires it.

Ike Hall: We are the chimps who have to act–on reason. It’s our only tool for survival. Nature didn’t give us instincts like lower animals (don’t tell me about fight or flight—that doesn’t build a car or put a man on the moon, or grow crops). A bear doesn’t wake up and ask, “what kind of bear shall I be today.” It doesn’t have a choice. It is little more than a programmed machine. Also, you may be able to logically deduce your next step based on irrational beliefs or bad information, but that correct logical deduction doesn’t make the underlying value rational. Banks acted quite “rationally” in the 1920′s (or today) given the environment they were in and the rules they were given to play with, but those underlying rules (extreme inflation/fiat currencies/fractional reserve banking) were/are incompatible with optimal human existence because they represent a denial of reality—of something for nothing—and are, therefore, irrational and interfere with true freedom of action in the metaphysically necessary sense.

Som July 26, 2006 at 2:04 pm

Well humans and rational and irrational. Computers are doomed to be rational, and therefore cannot “enjoy” natural rights like humans do. Likewise, animals are only irrational, not making choices but acting on impulse and instinct. However, as mises pointed out, the means of human action are always rational, however, the ends of action, are not subject to rationality. how does one rationalize wants such as happiness or survive (they could come from our instincts, our elan vital), but if you read the last chapter on human action on science and life, the ends of our existence is not in the realm of science and human action. We just to act. Animals have stimuli responses, while computers have only calculation and memory. Humans are so unique that they have both and so much more, and the proof of this was shown by hoppe, that humans argue. That’s why human action is so unique.

jeffrey July 26, 2006 at 2:07 pm
Michael Rozeff July 26, 2006 at 2:09 pm

Mises, I think, wanted to argue that praxeology and economics were value-free. There was no way to make value judgments within them. One had to import an ethics from elsewhere. Within praxeology, one couldn’t make sense out of the word “irrationality.” One had to import an external value judgment. That’s what you are arguing for, an external standard. Yours is survival. I can’t tell whether you mean survival of each person or survival of the survivors, with some dying to assure that others live, or survival of the species (actually part of the species.) You are welcome to your ethic, but I don’t like it. Someone might judge that survival (theirs? the species?) depended on killing off half the world. This criterion of survival doesn’t strike me as even working to assure the thing it’s supposed to assure us of.

Paul Marks July 26, 2006 at 2:58 pm

The idea that government regulations are the basic protection of the environment or of the consumer is absurd – even some non Austrian school people understand that (see Milton Friedman’s chapter “Who Protects the Consumer?” in his “Free to Choose” 1980).

A business that sells its customers poor quality products will soon be exposed (both the media and the competitors of the business will see to that).

Contrary to Ralph Nader and co it is not in the interests of (for example) auto companies to kill their customers.

As for the environment it is PRIVATE PROPERTY (not government) that is the key defence.

If people own such things as forests and rivers they will tend to care much more about the long term than if than if the government (sorry “the people”) own them. If everyone owns something, nobody owns it (and people will plunder it).

Also such things as air and waters supplies are (or should be) a matter of tort action – if someone damages your supply of air or water private property legal thinking dictates that this is a tort. And no “public interest” or “general welfare” defence should be allowed.


Since when did Mises (or any other economist) say that it was “moral” to lie or cheat?

People like Mises and Rothbard suffered greatly in their lives because they would NOT lie and cheat (if they had gone with the statist flow they would have been offered much nicer jobs).

“Value free economics” does not mean that economists are free of values, it means that an economist will tell you the consequences of the policy you suggest.

For example, price controls will produce a black market – this is a “value free” comment.

If I had typed “price controls are evil, because they violate the freedom of people to buy and sell without the threat of violence” that would not be a value free comment.

It so happens that statism (price controls, welfare schemes, ……) BOTH fails to achieve the objectives that the statists think it will achieve (so one can tell them “this will not work” without making an ethical statement) AND is evil as well – in that statism involves aggression (i.e. extortion [taxes] and control of people’s nonviolent civil interaction by the threat of violence – regulations).

It is “value free” to say that a given government policy (such as a minimum wage law)will not achieve the objectives that the statists hope it will, but it is not value free to state that such a policy is evil (as it violates the nonaggression principle).

Economics is not like physics, it does not (or rather should not) use the method of the natural sciences (it is a logical not an empirical subject), but it is a “science” in the old sense of a “body of knowledge”.

When an economist says “X policy will not achieve the objectives you have set for it” he is speaking as scientist, but when the same person says “X policy is evil” he is no longer speaking as an economist.

None of the above means that economists (as people) do not have ethical standards.

As for rationality.

A person can make judgements based on fundementally false ideas.

Sometimes this is ignorance – for example a person may vote for an increase in government spending thinking that it will lead to a long term improvment in the economy (reading such writers as Bastiat might cure this ignorance).

And sometimes it is madness – for example a person (let us call him Mr Jones) may be under the delusion that he is President Bush and give various orders to the United States military.

Now these orders may actually be better than the orders of the real President Bush – however the madman is still wasting his time as the military will not obey the orders of Mr Jones.

Normally ignorance is more common in politics than in private life.

It is not sensible to spend lots of time in the study of political issues when one is only one voter out of tens of millions (one vote is not likely to make a difference).

So people vote on things like “image”.

Even a Senator is only one vote out of hundred – and even if he votes “correctly” (i.e. he studies the issues and understands that a given policy will not achieve the objectives claimed for it), the voters “back home” may not understand (having no real incentive to study these matters) and vote him out of office.

Also madness is more dangerious in politics than in private life.

A private person may go mad and kill a few people with an axe (Plato’s example in the “Republic”), but a political leader who has developed some mental problem may kill millions of people via war.

Overall it is sensible to build in “checks and balances” into a political system (to limit the danger of what an unbalanced politician may do) and it is sensible for as few things as possible to be decided by the political process.

As no one in politics has any real incentive to make good choices. It is not their money they are spending, their lives are not dominated by the regulations they pass, and correct choices will not be rewarded by being reelected (the voters will either not know what the politician’s choice was or only have a very vague idea about the issue involved).

Reelection has very little to do with getting choices right.

Pleasing special interests, and just plain luck have a lot more to do with it.

Praise July 26, 2006 at 6:18 pm

Brilliant article!

billwald July 27, 2006 at 12:05 pm

30 years ago most every state had a usuary law. Now days a loan company has a libertarian right to charge any interest they can get away with. Sheister loan shops have sprung up around military bases. Many enlisted personnel are getting themselves in big money trouble which is harming their family situations and job performance.

Excepting the rare raving patriot, estimate the IQ and education level of anyone who would think military enlistment was his best chance for success and survival during this presidential admninistration.

Is it in the nation’s best interest that inlisted personnel be permitted to sell their souls to the loan shop?

Vince Daliessio July 27, 2006 at 12:23 pm


Aren’t these people adults? Aren’t they responsible for their own affairs? Why should government intrude in their voluntary private dealings, no matter how inequitable?

The terrible government meddling in the banking and monetary systems destroy the assets of these people even faster than the loan shops and check-cashing agencies. What do you propose to do about that?

Don B July 27, 2006 at 5:30 pm

Nation’s don’t have interests.

Individuals have interests.

Some may abuse the national organization to forcibly advance their own interest or agendas at the expense of other indivudals.

Jonathan July 28, 2006 at 7:02 am

By redefining rational to mean something with regards to humans that most people would not accept on face value means Mises definition inaccurately fits peoples interpretation of the word.
Most people would accept if asked ‘Can humans act irrationally’ in the affirmative. Therefore, Mises must be incorrectly defining the word as it means to them.
I understand his definition, and I understand the sense in which contemporary society uses the word but they are not the same.

billwald July 28, 2006 at 12:36 pm

Talk is cheap. I don’t see any Libertarian charities to replace the terrible government meddling.

Brett Celinski July 28, 2006 at 12:59 pm


You have not proved Mises’ definition wrong by simply saying the majority believes otherwise. The majority of people today use the term liberal far differently. And still Mises is correct in defining liberalism.


You mean charities like health insurance? I’m sure people have the right to keep their money from the taxpayers and instead use it to establish charities. Of course the government wouldn’t mind… Enforcement is cheap for the government when they have our money.

jonathan July 28, 2006 at 2:13 pm

Brett you say ‘You have not proved Mises’ definition wrong by simply saying the majority believes otherwise’
This is a tricky area but I am not trying to prove him wrong… I just disagree with the direction this post is headed when applying Mises defintion of what rational means with regards to human action to the contemporary understanding of the word.
There are many words whose meaning have evolved over time to mean something quite different.
I can understand and follow the logic of Mises and NOT disagree with his conclusions. However I strongly disagree that his defintion is THE one applicable today and is incorrectly used by, say, behavioural finance. I understand clearly what they mean by irrational behaviour… as I am sure you do… it is the same word but it has a different meaning. I can understand what Mises means by rational too but to take his meaning and apply it to contemporary use will predictably lead to confusion but it doesnt mean the contemporary writers are wrong, language evolves.
I can understand the different uses of the word gay for example but won’t deliberately misapply one understanding to another’s use and then mock them. Straw man etc.

James July 30, 2006 at 11:28 pm

billwald writes: “Talk is cheap. I don’t see any Libertarian charities to replace the terrible government meddling.”

So it’s a *problem* that private organizations don’t engage in the sorts of terrible and meddlesome behavior that governments engage in?

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