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Matt McCaffrey Defends Misesian Economics

Matt McCaffrey defended Austrian economics against John Mueller’s odd claim (in the Quarterly Journal of Austrian Economics!) that there’s a missing element in Austrian economics; namely, that it cannot account for things like love because Austrian economics (especially Misesian economics), centered on the methodology of praxeology, which sees all human action as a result of self-interest. Stated differently, all human beings have ends that need to be satisfied and therefore they act; this action constitutes employing means to accomplish that end.

Mueller then, presupposing that love itself must not be self-interested, states that there is a missing element in Austrian economics. For in his eyes Austrian economics is limited to action stemming from self-interest.

I think Mueller’s claim is remarkably silly.  McCaffrey easily overcomes Mueller’s observation, first by stating Mueller’s example:

For example, a mother who feeds her child is not acting out of self-interest, but of love for her infant, which explains why she feeds her child rather than consuming all her food herself. According to Mueller, standard economic assumptions cannot account for either the mother’s loving behavior or her distribution of food to her child. Likewise, there are an enormous number of similar non-exchange behaviors that fall outside economic analysis. What is needed then is a thorough revision of theory to incorporate these missing actions, and this is what Mueller sets out to do.

Nevertheless, readers of Mises will perhaps see the difficulty with Mueller’s argument: praxeology suggests that all action is self-interested in that it tries to substitute a more for a less satisfactory state of affairs, from the point of view of the actor. Action is thus a kind of exchange, though not necessarily an exchange of goods and services. Rather, when a loving mother feeds her child, she exchanges the less desirable state of the child’s hunger for the more desirable state of the child’s nourishment. Taken this way, selflessness, or love, does not pose much of a problem for economic theory.

And actually, I think there is a much stronger defense of Mises’ praxeology than McCaffrey himself gives.  Beyond McCaffrey’s point, the fact remains that the mother actually is acting in self-interest (properly understood) in feeding her child.  And this is proven by the action itself! Every single act is a revelation of the value placed on a given means/ends relationship as considered by the human actor.  The mother does not feed her child even though she would rather feed herself; she actually feeds her child because she sees the act of feeding her child as bring her more satisfaction than the act of feeding herself.  In other words, she weighs the value, mentally, of the satisfaction that would be brought about in her mind by feeding herself, against the value of the satisfaction that would be brought about by feeding her child.  Praxeology explains why she acted in that way: her self-interest made her choose the option that would satisfy her more.

In a previous post, I quoted Jonathan Edwards:

A man never, in any instance, wills any thing contrary to his desires, or desires any thing contrary to his will.

…but yet his Will and Desire do not run counter all: the thing which he wills, the very same he desires; and he does not will a thing, and desire the contrary, in any particular.

[…]

And therefore I observe, that the Will (without any metaphysical refining) is, That by which the mind chooses any thing. The faculty of the will, is that power, or principle of mind, by which it is capable of choosing: an act of the will is the same as an act of choosing or choice.

[…]It is sufficient to my present purpose to say, It is that motive, which, as it stands in view of the mind, is the strongest, that determines the will. But may be necessary that I should a little explain my meaning. By motive I mean the whole of that which moves, excites, or invites the mind to volition, whether that be one thing singly, or many things conjunctly. Many particular things may concur, and unite their strength, to induce the mind; and when it is so, all together are as one complex motive. And when I speak of the strongest motive, I have respect to the strength of the whole that operates to induce a particular act of volition, whether that be the strength of one thing alone, or of many together.

And then I commented on Edwards:

If the will is the faculty that chooses, and the will cannot choose anything contrary to the desires, then it is impossible to conceive of a situation in which we don’t choose that which satisfies the chief desires of our heart.  Thus, to obey God without our minds considering this activity the most satisfying thing at the moment is an idea that runs contrary to the entire nature of man himself.  This is an anthropological consideration; can man distance himself from his desires?  Can he act contrarily to his own will?  Piper and Edwards say no, and to disagree seems to fly in the face of reason and consistency.

Indeed, Mises economic theory does not overlook the role of love in praxeology, it merely incorporates it into the system. Mueller should understand this.

Published in C.Jay Engel

  • Brian K. Jacobson

    What hath Austria to do with New England? Much apparently.

  • Brian K. Jacobson

    Hipster Edwards did praxeology before it was Austrian.

  • Pater Tenebrarum

    Indeed, Mises several times makes the point in essays and also in Human Action, that the distinction between the economic and non-economic spheres of life is spurious, that it was,as he put it, “untenable” to differentiate between economic and non-economic motives in human action. A critic of Mises would apparently do well to actually read Mises first.

    • C.Jay Engel

      Thanks Pater. I’m honored to have you commenting here. Your site is daily must-read for me. I completely agree with you. I’m surprised that Mueller’s critique has been given as much attention as it has.

      Since I have your audience here, I was hoping you had read my recent defense of full reserve banking over against a proponent of “free banking.” If not, here they are if it interests you (I suspect that you take the side of Hoppe and Salerno over White/Selgin in this debate, though I could be wrong). Either way, thanks again for stopping by and for all the great work you do.

      1. http://reformedlibertarian.com/articles/economics/full-reserve-bionic/

      2. http://reformedlibertarian.com/articles/economics/fractional-reserve-banking-and-the-present-system/

      • Pater Tenebrarum

        Thank you for the kind words – I have recently discovered your site and have also become a regular reader. I’m definitely in the Salerno-Hoppe-de Soto-Rothbard, etc. camp with respect to fractional reserve banking. I think the final point of Hoppe’s you mention – namely that fractional reserve banking also harms innocent third parties is especially noteworthy. It is a bit of a mystery to me how Austrians like White and Selgin could overlook this, as they presumably accept Austrian business cycle theory as valid and also agree that expanding the money supply will ceteris paribus dilute the purchasing power of existing monetary units. On these grounds alone it becomes impossible to argue that the whole thing is merely a matter of voluntary contractual agreements.