Chapter 17. Magic Carpet Ride

“Relativity applies to physics, not ethics.”—Albert Einstein


As physical science reduces matter to smaller components to gain understanding, so does behavior science reduce complex to simple. A symphony goes from the combined effort of the orchestra to the coincident efforts of individuals, to a composite of means designed to produce variety of goals all intended to remove uneasiness in order to increase survival. The boson, today’s smallest physical particle, is analogous to the conceptual wish to stay alive, which is the basic element in the mental world. From that concept, with the addition of means, ingenuity, talent, and energy we reach the limits of the possibilities of individual action.

But it does not stop there. Individuals form groups. Not only can people tie their own shoes as individuals, they can buy shoes as consumers, create shoes as producers, or trade shoes as speculators. They can create pictures of shoes, send those pictures to anywhere in the world in less than a second or to Mars in less than three minutes. You get the picture. None of that could be done by our furry ancestors.

Most of what we do is a product of society. On our own we barely survive, if at all. What causes us to group together? Here is where Mises leaves economics and enters into the general theory of human behavior. He has an explanation for how man forms societies, which if correct makes him Darwin of the mind. His explanation is logical, encompassing, and while conceptually sophisticated, is accessible to common sense.

Mankind has always appreciated the importance of society. It was likely first understood as the work of God. All societies had a religion, in which God’s rules were typically passed on through prophets, visions, or kings to the masses who were then to obey. There are possible natural causes as well, such as instincts, genetics, nationality, social evolution, or geography. And order can come through leaders, idealized or feared, most of whom feel they can intuit truth through special powers. Marx comes to mind. Society then can occur from natural causes or can be molded or pounded into shape by an idealized or coercise leader enforcing his superior values on the essentially incompetent population. This is where it becomes necessary to break a few eggs to make an omelet. Stalin had to break more than a few. Emperors and tyrants seldom have misgivings about “collateral damage”. Unfortunately, whether worshiped or simply feared, a centralized leadership will always end up breaking eggs. Power corrupts.

There are two common aspects of these various theories: 1) the nature of its action occurs outside our purview, and 2) the element, if natural, has a direct effect in itself--i.e. not mediated through reason. We do not directly see instincts, genetics, nationality or place of origin. And as Mises shows, these various elements tend to contradict themselves as they dance around the idea that the tie is conceptual, specifically, ideological. For example, Dominicans do not view themselves as Haitians although their soil is contiguous, and children separated from their families at birth do not intuit a connection with their estranged families.

Mises hypothesizes that social bonds are a product of the division of labor. People feel a connection to other people because they appreciate (consciously or preconsciously) that their ability to function and survive is exponentially increased through cooperation via the division of labor. If everyone, for example, only could mow lawns, few would get their lawns cut. No one would build the mowers, produce the fuel, distribute supplies, or keep away intruders. Without division of labor everyone would be spending their time hunting, gathering, or plundering. It was that way in the land of yore. There were not many people, and their yards were probably unkempt.

The division of labor is as close as we will ever get to something for nothing. It exponentially increases our capacity to survive. It provides the motive for an ever more complex society. Conceptually it has the common sense simplicity of Darwin’s natural selection and yet the functional capacity to explain whole societies. It is that big of a deal and accomplishes the complete theory of society with one turn of the card. It has everything one would want in a theoretical system: efficacy, simplicity, and intuitiveness.

Previous hypotheses about the nature of human sociability did not include a mental component. Action theory does; it is a combination of mental which determines a means and physical which brings it about. There is little we do that does not involve mind and body acting in synergy. It is not likely that the most critical element in our survival and the most gratifying part of our life experience happens outside of awareness. Also, Occam’s razor directs us to not include more than we need in our theories. Less is better. This favor’s Mises’ theory. Our appreciation of the power of the division of labor does it all: God does not have to get involved; a dictator does not have to break eggs; and people do not have to change their nature. We only need what is already there—people who act in their own interest and appreciate the power of social cooperation (plus a government that stays out of their way). How simple is that. How elegant. And even better, it is probably correct.

The logical consequences of this theory inverts a cause and effect relationship in social interaction. Social feelings, the positive ones that essentially make life worth living, are not the cause of social relationships; they are the result of them. We feel love for others not because some force flows out through us, but rather because an awareness comes to us. Those feelings are the emotional component of an appreciation that through an experience of working together we more efficiently improve our capacity to survive. They are the result of cooperation, not the cause of it. The term "wingman" popped into my head in this context and its function is relevant here:

“The idea behind the wingman is to add the element of mutual support to aerial combat. A wingman makes the flight both offensively and defensively more capable by increasing fire power, situational awareness, attacking an enemy threatening a comrade, and most importantly the ability to employ more dynamic tactics.”

The pilots like each other because they fly together. They do not fly together because they like each other.

I like our theory so far. We try to survive. We take action to improve our ability to do that. The division of labor geometrically improves our capacity to do so and our awareness of this leverage results in the reduction of uneasiness and increase in satisfaction which forms the basis of all social cooperation. It is also the source of all the positive emotions that makes life worthwhile. And it all happens merely by the nature of the system and the logic that it follows. No supernatural force is necessary. No coercive control is demanded. And we can leave our basic nature just as it is. Society happens for the same reason water flows downhill.

Chapter 16. Which Came First?

"It is often stated that of all the theories proposed in this century, the silliest is quantum theory. In fact, some say that the only thing quantum theory has going for it is that it is unquestionably correct."--Michio Kaku


From the point of view of an egg, a chicken is merely the egg’s way of making another egg. From the point of view of a chicken an egg is the chicken’s way of making another chicken. Hazlitt presented this analogy in a discussion about cause and effect. Something is obviously wrong with it, but what is wrong is not necessarily easy to explain. There exists a causal relationship between chicken and egg but also apparently many a slip between cause and effect. Hazlitt was not concerned about chickens. He was addressing buying and selling. I am not concerned about either of those issues, but rather about human action. However, perhaps we should address all three because it might be easier using analogies

Chicken and eggs have a causal connection, but that does not mean that eggs have perspectives. Perspective assumes purpose, and as far as we know eggs do not intend to do anything. Chickens just happen.

And while our interest here is human action, the world is tottering on the mistake John Maynard Keynes made in his assessment of buying and selling. It is true that for every buyer there is a seller, but that does not identify cause and effect. Actually, buying and selling is a reciprocal relationship and neither is dominant when the system is honest. But a problem occurs when the buyer is counterfeit. This is also not easy to understand, yet we are doomed if we fail to grasp it. So let’s take a look. The critical error occurs by confounding money with purchasing power.

Keynes looked at market exchange and assigned cause to the buyer. Buying, he felt, stimulated production. Austrian economics views it the other way around. The problem is that demand requires more than desire. Demand is desire plus means (something to exchange), a combination which elevates it above wishful thinking. It is wishful thinking backed up by previous effort, the physical component of which becomes the limiting factor. Desire is cheap, but supplies are dear. Means is not simply money. Goods are never exchanged for money. They are exchanged through money for other goods (and services). We value money not for itself but for the things we can obtain with it. In a sound monetary system goods and money stay in balance. The maker of bricks enters the market by exchanging his brick production for money. This money then represents real products he has contributed to the economy. The farmer can enter that market with his apples and through money exchange them for bricks.We exchange real goods and services, not wishful thinking and empty promises.

Keynes felt we could skirt natural law by simply printing more money—more money supposedly allows more buying. But there is nothing more to buy. Suppose the new money first goes to the maker of bricks. He spends it. The farmer wants bricks, but none are being produced. If the farmer has already started building a house he is in trouble because there will not be enough bricks to finish it. That is how inflation causes malinvestment. It gives false signals. Fiat money represents nothing tangible, so it loses value and measures nothing.

But in addition the new money reduces the purchasing power of the existing supply, thus raising prices. The farmer in essence trades his apples for higher prices. Buyers do in fact induce sellers and visa versa, but the brick manufacturer is no longer a genuine buyer. He is a fake, like the pretentious egg. Neither of these two pretenders represent honest authority. The egg does not produce a chicken and the buyer does not make a purchase. The egg simply evolves, and the buyer simply steals.

The horror of today’s economics hinges on this error. Something has to be terribly wrong when people fly airplanes into our buildings and Federal authorities advise us to fight back by going shopping. Frankly, if we cannot see that something is wrong with such a plan then we are all doomed.

Keynes treated desire as the mover, when in reality it is desire plus means that moves markets. Means are the limiting agent; desires are everywhere and hence free, like dandelions. Physical is the limiting factor in moving people. Causality and purpose exist in the physical world. There is no direct agency with mental. It guides. It is important. But it takes no action. Action entails entering a causal chain. Mental cannot engage that. It has no location or motion. It is a concept, not a thing. Unrefined, it does no work, is abundant, and hence cheap. No one trades apples for wishful thinking.

When it comes to a cause and effect relationship between mind and body it is clear which leans on which. It is one thing to wish to run a marathon and quite another to train for one. A person can think about losing weight with impunity but will lose weight only through effort. Actions speak louder than words. That is a metaphor, by the way; words do not really speak. People speak. Their bodies do the work, the mind never utters a peep. This is not to diminish mind. Mental directs us to goals; it just can’t take us to them. The body does the heavy lifting. Only the body enters the causal world of external reality. The mind functions in an advisory capacity, which can be extremely important, even critically so, but it is never the agent. If the chicken and egg are arguing about who is dominant, side with the chicken. If the mind and body are having such an argument, side with the body. Mental shuts down at night while the body keeps working. If the body shuts down the mental goes with it.

Mises merely threw up his hands when it came to metaphysics. Philosophers in his day were all abuzz about language. They did not start addressing mind until later in the century. Today we have the benefit of Searle or Chalmers and can pretty well put the mind/body dichotomy to rest: it is all body when it comes to agency. The body gets you to work. The body brings home the pizza. Mind is the global positioning system; body is the automobile. Causality exists in the physical world and only body can alter a chain of cause and effect. Mental presents itself only through physical. We plan and choose means in the virtual world of conception without which we would certainly disappear as a species. But for action as defined in action theory the agent is entirely physical. Mental and physical make a great team but the mental drafts on the physical. That is why we measure actions in praxeology, not wishful thinking. Something has to get us up off the couch. After all, 90% of responsibility is just showing up.

Chapter 15. Let's Make a Theory

"The truth of a theory is in your mind, not your eyes."--Albert Einstein

Human Action, by Ludwig von Mises is the cornerstone of the Austrian school of economics. They are the good guys, the ones who get it right. They keep their eye on reality rather than utopia—the no free lunch, alternatives exclude, things fade group.

The book was offered as a general theory of human behavior, although cast as a text on economics and considered, I believe, largely as that. Its power, however, goes beyond economics. Or maybe economics goes beyond economics. The cornerstone of the theory offered here for understanding human beings lies in this book. It is a general theory.

The world comes in neat parameters. Gravity varies inversely with the square of the distance. It does not just vary with the wind, stuck into place by an awkward constant. It is nice and crisp, like energy equals mass times the speed of light squared, or light decreases with the square of the distance. Quadratic equations are not necessary to solve such conditions. This is important because it makes sense to then assume that a theory of human behavior should also come neat and clean. One need not keep reaching into one’s pockets looking for variables to paste into position so the system keeps spinning. We start with one rule: people act to reduce uneasiness. (And it's not even squared.)

Freud based a system on sex. He generalized that a bit into a term called libido, but sex was always central in his construction. He also needed aggression, and finally a death instinct. It all got a bit messy. That is what we do not want. Postulating a death instinct is like postulating that the Earth rests on a giant turtle, which rests on another turtle, and so on, all the way down. It is just pulled out of a work-kit to fit an odd place. Instinct itself, let alone one for death, is also just that. Calling something instinctual means it matters, but we have no idea why. We metabolize carbohydrates through the Kreb’s cycle. Okay, that explains the physical by smaller pieces of physical; but an instinct explains nothing. It just masquerades as constructive. The question becomes “how does an instinct work” and there is no Kreb’s cycle one can draw on the blackboard.

Sexual repression was prevalent in Freud’s era. He provided a service by including sexual feelings as a dimension of behavior. But it was largely the refusal to recognize these feelings that caused the mental mischief. People developed hysterical blindness because they did not want to see. That condition has essentially ceased to exist. We have a different problem today. Perhaps a little repression now would be useful. Just ask Tiger Woods. But sex was never sturdy enough to serve as the basis of human behavior. Life is not all that much fun. It is more about staying alive. Combat vets do not have wet dreams. They have nightmares. Perhaps sex can explain black widow spiders, but it was never going to work for us.

We will hang our theoretical system here on the wish to stay alive. Pleasure comes from those things that increase our ability to survive, and pain from those things that decrease it. Life is about relieving distressing feelings. We shun those situations that jeopardize our well being. Mises says we act to reduce uneasiness. I think that puts it most clearly.

Actions are complicated events, encompassing the important dimensions and entailing a series of steps. This makes it sound complicated, but so is riding a bicycle and yet once we have mastered it we give it no attention. Action is not simply movement. It is not even necessarily movement. Action is purposeful, meaning it has a mental component and is directed at a goal. That goal enters the real world. Reflexes are not actions. Wishful thinking is not an action. Locking the door to keep someone out is an action, but so is not locking the door to allow someone in. Actions enter the causal chain of external reality to alter the sequence, or in the negative, to keep the situation as it is. In riding this bicycle one needs mind, body, and external reality. The sequence goes from uneasiness, to goal, followed by understanding causality, envisioning ways to influence reality, choosing a means, and action. This is what we do. This is what defines us as human beings. This is what defines us as individuals. It is our niche in the Universe. And it is the basis of how we should conceptualize our theory of being in the world.

Breathing is very complicated when described physiologically or biochemically. From a personal perspective it is pretty easy—just in and out. We generally pay it no attention, yet we breathe every moment of our lives. So too with actions. Do not get lost in the steps, since we do them all the time. They constitutes what we are, even if we have some trouble describing them in detail.

Having said that, mainly to help you trust that you will master action even if you can’t describe it, there is still more to say about action itself. We are talking about mind/body, subjective/objective, ordinal/cardinal. These are all major conceptual issues of living, and while we zip through them like riding a bicycle or breathing, still, looking at them closely makes sense at times.

The objective/subjective issue, for example, splits the world today. Science has been very successful in an objective world. We extract ourselves from the subject and use sensory input in measuring and making observations. Our opinions and feelings get in the way so we keep them out. We just want tensile strength or energy coefficients. This works wonderfully in calculating work loads for bridge girders or miles per gallon for rotary engines. But it does not work on measuring feelings. Love, hate, pride, confidence are entirely subjective. If we play scientist with ourselves, we eliminate ourselves. Science eliminates the subjective from its field of observation. But subjective is the field of observation in human experience. We thereby rule ourselves off limits. There is no objective measure of how much John likes Mary. There is no way to verify that John likes Mary twice as much as he does Kristen. Cardinal numbers do not work here. There is no common denominator with which we can compare the two.

Subjectivity cannot be measured with an instrument because there is no physical substrate that correlates in a fixed ratio with it. It can be observed. We are not impotent facing subjectivity. It is just that we cannot apply arithmetic to it. Instead we rank it. Another way of saying this is that subjectively is measured in ordinal numbers. Objectivity is measured in cardinal numbers. I found these terms unfamiliar, as you might as well. Quite simply, ordinal numbers arrange items in an order, while cardinal numbers measure the number of items in an assemblage. Ordinal measures how much; cardinal measures how many. Cardinal numbers measure items from an objective perspective, they can be counted; ordinal numbers measure items from a subjective perspective, they can be valued.

If we already can ride this bicycle then why all the fuss? Because we must know our limits. The science of physics can be measured. The science of human behavior can only be understood. It cannot be measured. It is not a fault of our understanding that we have no positive emission tomography that measures how much David likes his dog. That answer does not exist in the world of things. It exists in concepts. We are stuck with that. In understanding human beings we cannot employ electron microscopes. We probably cannot call on inductive reasoning either, which is what science entails. There is no physical correlate of the issues we wish to understand. So there is nothing to be measured, counted, or induced.

But we are not lost. We exist. We can observe ourselves any time we want and in fact some of us do that occasionally. We can look at ourselves knowing that we are a part of the world and deduce information from those observations. Deduction becomes the method of human behavior, and logic becomes the “experiment” that corrects our assumptions. We can, quite simply, look at ourselves, and deduce that perhaps others feel as we do. We do not need double-blind experiments to determine that Gary likes baseball more than bridge. We understand what it means to prefer something to something else. We can see what Gary does. That is ordinal. That is where we live.

It gets better. Ordinal can become objective. In action one chooses. Suppose Kevin has a choice of having dinner with Gloria or Bridget. He can weigh all the plusses and minuses of each, and does, but we have no way of measuring the intensity of his assessments. Scientific Instruments, Inc., does not offer such a device, although perhaps eHarmony might be presumptuous enough to do so. But at some point Kevin must choose Gloria or Bridget (success not necessarily implied). There are only two ordinal numbers, first and second. The factors cannot be measured. He does not value Gloria 1.174 times more than Bridget (or visa versa). There is no ratio. There is simply one or the other. Very neat. Very objective. Such is action.

So action theory does not care what determines the choice, or how close the choice is or ratios are, etc. It just asks yes or no. Does he call Gloria or Bridget? End of praxeological science. We do not need quantities of subjectivity when studying action. We just need action, and it is observable. Check the phone records.

So we have a science by seeing what people choose. Actions speak louder than words anyway. This just cuts to the bottom line. Motives are important, but they are reflected best in what people do. We seek understanding, not the construction of a mathematical language for human behavior. Leave math for the physicists. Use understanding for the social sciences. If you question why Kevin chose Bridget over Gloria you do not need differential equations. You need context and history.

All action involves exchange. This is readily apparent in the market. The farmer brings apples and trades with the baker for bread. Or more accurately in an indirect exchange economy sells his apples and uses the money to buy the bread. But exchange apparently does not only include commodities. If Betsy refuses a piece of pie because she is on a diet that does not involve an exchange of things. But it does involve an exchange. Betsy tolerates her hunger in this situation because she prefers that over not fitting into her jeans. She makes a choice, and it entails an objective, observable event—she either does not does not eat the pie.

Dr. Wilson sets the alarm at 5:30 am Sunday morning because he is on call at the hospital that day at 7 am. He prefers the benefits of his occupation over the comfort of a leisurely Sunday morning. Again, this is an exchange. And we can observe it by checking the parking lot for his car. Action entails intent, goal, means, and—well, action. It somehow all impinges on the real world. This contrasts with merely wanting to reach work, wishing one was at work, or thinking up excuses why one is not. Merely wanting to reach the hospital will never be an action until he leaves the house. Wishing one was at work chases its tail in the mental and never does the hard lifting of addressing the real world. Thinking up excuses for staying home is deliberating means, but there is no exchange. There is contemplation of exchange. The action is in the action. Yes or no. Get to work or call in sick. Pick one. All the rest is subjectivity, and we are “real” scientists. We are objective. Sleep in or show up. That is all we need know. The rest we can deduce.

So it is all pretty elementary. People want to stay alive, and they pursue activities consistent with that desire. Those things which increase one’s capacity to negotiate the world are experienced as pleasurable. Those things that threaten one’s functioning or prosperity are distressing. People act to reduce distress. All actions contain a mental and physical component and impinge on the material world. People pursue pleasure but not mindlessly like black widow spiders. Pleasure and actions to insure survival are inseparable. Increased capacity defines pleasure, although the experience typically remains discrete about it. But we are not essentially pleasure seeking organisms as Freud might impute. We are organisms striving for integrity, pursuing a process in which pleasure rides along for free. Perhaps that is Nature’s way of keeping us in the game.

We choose. We act. We seek survival and grab what gusto we can along the way. All the rest is means. Means defines who we are. It largely determines the quality of our trip in this world. If we see our earthly existence as a part of a longer journey, action theory has nothing to say on the subject. The only givens in praxeology are that we strive to maintain our existence. How we define our existence and how we seek maintaining it is our choice, but the satisfaction of our experience will be defined by how well we perceive our success in those efforts. And again, the proof of that perception will not be measured in our words, but in our actions. Panic about dying suggests we did not rate our success too highly.

We are not merely mental. We are not merely physical. We are also not simply individual. We are a perhaps arbitrarily identified mental/physical dimension of a larger synthetic whole. We can't go too wrong when all the players are in the game. Action theory encompasses mental, physical, and the external world. For now, that appears sufficient for charting a course. And while it quietly brings all these dimensions together, it conveniently offers them in neat quantum packages. One either acts or does not act. How simple is that? Darwinism for behavior.

As a quick digression, I must say that Mises uses two words in his text that few people know and that are not in the usual dictionaries: praxeology and catallactics. These words have not caught on and perhaps get in the way. Praxeology means the study of human action. It comes from the Greek word for action, but it was not coined until the nineteenth century and carries little tradition. Catallactics means the study of market exchange. I shall frequently substitute the common terms in my book, using “action theory” for praxeology and “market theory” for catallactics. Perhaps the technical terms have gathered too much dust.

Revisiting our theory it becomes apparent that after chosing our basic building block there will be no turning back. If we are wrong it will be all the way down. But this is true of any deductive line of thought. Freud faced the same problem and that is how he got on thin ice (if any ice at all) when he interpreted disfiguring trauma as displaced castration anxiety. Soldiers blinded in combat allegedly suffered from Oedipal anxiety—like one might never be concerned about becoming blind! According to Freud overwhelming environmental events had no psychological import other than by stimulating sexual conflicts. Further, Freud felt that death caused no difficulty because humans are incapable of conceptualizing death. How hard is it to imagine yourself beng gone? Apparently even brilliant people have their defense mechanisms.

Still, there is no certainty with either type of reason, deductive or inductive. The major error in deductive comes from false original premises. There is always an original given that you cannot deductively verify, much like a lens can never see itself. One can not deduce up the chain, only down. So if you start wrong, you stay wrong. But that is true for everyone, and we just live with it. Survival appears to be the primary goal for living creatures. but if that proves wrong our system collapses. If you need more assurance, try faith. But then faith has little connection with reason. It controls doubt through coercion or inspiration. Impressive and perhaps correct, but not logically compelling.

Action theory does not ask that mankind change its nature. It is the personal expression of a free market, where everyone acting in their own interest necessarily results in benefit for all. Most visions of social utopia sound attractive, but they rest on the necessity of people morphing into saints. We supposedly will lose interest in ourselves and seek good only for others. Consider the benefits: April fifteenth will become a national holiday. Hunger will disappear. Theft will cease to exist because loss will be considered social gain. In fact, people will have no possessions because they will give them all away. Do not worry though because they will live on donations, which they can re-gift as in a holistic time share program. Equality will finally be realized. The world will be complete.

Sorry about the diatribe but Mises gets pretty angry at socialist ideas also so perhaps it is in my mentoring. The bottom line here is that people act in their self interest. They always have and always will. If you think society can change that, I suggest you fold your theory.

There are many views of human behavior. Freud thought we sought pleasure and gave expression to instinctual drives. Religious views see us as placed here by God to honor him and earn an afterlife. Nihilists say human existence does not mean anything. Determinists feel we are driven entirely by physical forces and our view that we can act purposely is merely an illusion. Becker feels we are driven by a fear of death.

Praxeology or action theory sees survival as our primary motivation. On a clear day that appears obvious, but most often behavior is not seen as revolving around staying alive. Most often it is explained in terms of satisfaction rather than risk aversion. Perhaps this is a personal experience kind of thing, but I would explain the reluctance to use survival as the cornerstone as due to the fact that it would thereby always be in our minds. How could one enjoy the party with death always on the other side of the door? And since the world is largely dualist and sees mental as an independent agent that contributes directly to consequences, then why cripple it with negativity. If as you think so you become, then always smile and look up. But if mental activity offers guidance rather than impetus then we better get it right. Survival appears to be the basic building block, and merely coloring the world cheerful is not going to make it cheerful. Positive thinking might profit from a dialogue with truth.