Episode Eighty Nine

0:00welcome to smith and mark's walk into a bar a history of economics podcast i'm jennifer jean one of your hosts and i'm joined here today by my fellow host francois alisson who is are you back in lausanne yeah absolutely how are you doing you're fine yeah it's it's good to be back home but it's also strange to to be back home but i'll have to get used to that but i'm very happy to be

0:36with you again and um yeah great and i'm also joined by jinla akter in ankara turkey hi jinla how are you hello thank you it's so nice to see you well i'm in turkey it's not an ordinary day as usual to do students boycotts have begun today we will see what will happen how are you i'm doing very well and i am very pleased to be introducing our guest here today alexander lindspickler who

1:09i actually know from about 2020 2021 you were a hope fellow here at duke university back in the day that's where i met you and we had some overlapping philosophical interests so i was very pleased that you're around professor lindspickler is someone who wears many hats he's a senior postdoc at the institute of philosophy and scientific method at johannes kepler university linds but he's also a lecturer at the university of vienna university of grass has got some interesting projects going on so

1:41is the principal investigator for a project called adverse allies logical empiricism and austrian economics and another one called carl menger as a central banker question mark from the origin to the future of money alexander welcome to the show thanks so much jennifer thanks everyone and francois got the first question to kick us off so i'm going to hand it over to him yes absolutely so we will start at a general level and then we'll dig into some of your specific projects alexander so you sent us a paper

2:15that is due to appear soon in mit press anthology and methods in the philosophy of science and your contribution to the anthology is on rational reconstructions maybe we can begin by asking you what is rational reconstruction as a method and what purpose a rational reconstruction mean to serve and eventually i will add um if there is a difference between reconstruction and interpretation

2:47yes i mean there's regarding methods in philosophy there's this this saying and i'm drawing on sarah ackleman for this as a philosopher you read you think and you write not necessarily in that order and there's nothing more to say about methods in philosophy and i think that's maybe not quite true and there's in some work coming up but not much so i'm it's really great i think that sophie feigl and adrian curry decided to edit this volume on methods in philosophy of science um maybe also because

3:19the perceived lack of of methods in philosophy is one of the reasons that economists and philosophers and and scientists often quote when they try to argue that they are skeptical towards philosophers of science and they don't want to cooperate with them so philosophers being aware of their methods and being able to tell economists these are our methods might help uh corporations in the future and i think in history of economics and history of science the situation is a bit better but still it's nowhere

3:53near the sophistication of methods in say applied economics or in molecular biology and it will never be near that sophistication but i think some work and reflection on methods will help history of science and philosophy of science and that includes reflection on rational reconstructions and basically as i presented rational reconstruction is the presentation of the content of a text in a clear manner

4:23so you present what someone else or you yourself in a previous work has said or written i know i mean everyone has done this and is almost continuously doing this economists do this historians of economics do this laypersons do this all the time so we present what someone else did said and for various purposes it can be the literary review at the start of your paper you can set up what

4:54someone else said in order to criticize it then you can ask what follows from what someone else said you can set up what someone else said in order to test it and criticize it maybe empirically you can do it to compare it to what someone else said in history maybe to to show a development in in the ideas or to uncover influences of one author on the other

5:21or you can present what someone else said in order to improve it so these these are some very broadly speaking some of the purposes that can that the rational reconstructions can play i think so that's already quite broad and yes i would say that rational reconstruction is a a kind of interpretation rational reconstructions are a subset of interpretations but i think interpretations that's even broader so i might think i interpret i might interpret a poem by performing a dance or i might

5:58interpret a painting by talking about the emotions that it evokes invokes in me or i might describe the form of a text it's measure it's rhyme form that's also an interpretation that's all these examples are not rational reconstructions so it's about the content and i'm vague with content here as well the content of a text it's also not so much about the intentions of the author although if i know something about the intentions of the author that might help me give a good portrayal of the content of the text

6:33but yeah i mean the restrictions to text that's that's a bit of a problem we might talk about this afterwards but basically i think a text or something with semantic content has to be the the primary source for a rational reconstruction so if you're if you're into legal interpretations i mean the legal scholars legal philosophers maybe especially in the us they talk about they talk a lot about different ways of interpreting texts in in the language of legal philosophy rational reconstruction would be a

7:07textualist and originalist interpretation as opposed to maybe intentionalism or purposivism

7:15that's really helpful one of the things that we also wanted to ask you was why does the method of rational reconstruction tend to have a bad reputation and is there a way to engage in that method that's less objectionable or unobjectionable like what would it look like to do rational reconstruction the right or some good way i mean there i think there's a tendency to equate this this label rational reconstruction with very specific examples of rational reconstructions that used to be popular in

7:52philosophy of science or also in philosophy and history of economics and i'm thinking particularly on the one one hand of the snitch stegmüller like structuralist reconstructions of research programs and theories that has been done quite a lot in the 70s and 80s in economics and history of economics for instance to check whether there is progress that was one of the purposes there or the carnap sentence ramsey sentence way of reconstructing scientific theories in general

8:28and those two examples and rational the received few of rational reconstructions in general is often associated with heavy use of formal methods maybe formal logic and axiomatization and that's one way to do it that usually improves the clarity and the precision and that's one of the goals that rational reconstructions have but as i tried to argue in in the paper and and elsewhere

8:57formalization axiomatization are by no means necessary for rational reconstruction and those two popular examples are just two examples that maybe have yeah they have fallen out of fashion the problems they were so were solving in a in a you know quite quite good manner i would say aren't at the center of of research anymore but that doesn't mean we should abandon all types of rational reconstruction broadly conceived as that's that's the that's the argument i want to make

9:30um i mean some rational reconstructions that's maybe more relevant from the from the historian's point of view so some quite anachronistic questions sometimes are answered or there are attempts to answer them by using rational reconstruction so questions like what would hayek say to social media or what how would marx react to climate change i mean there are youtube channels on out there that answer such questions and you have to do a lot of rational imports to get any answer out on what hayek might have said

10:07on on these matters and you should be aware and explicit i think of all these rational imports and there's there are problems with such anachronistic questions i would say but again not all rational reconstructions engage in anachronistic questions is there an unproblematic way to do that um i would say no every method has its problems and its challenges um but i think doing rational reconstructions for

10:37many endeavors it's just unavoidable and depending on your purpose um be it in history of economic thought or in economics um yeah you you might you will very often have to describe what someone else wrote or said and do it as clearly as possible and i would say a good rational reconstruction that what is that that depends really on the purpose you have

11:05so i wouldn't i wouldn't recommend one way to do it what i would say is um maybe i'm that's the prescriptive philosopher overstepping here but it's it's a quite modest prescription i think it's helpful to reflect on what type of rational reconstruction you're performing so how big is the rational import that you're doing are you just clarifying a few concepts or are you actually removing some

11:35premises or adding some premises or really changing something in the theory of the of the original author to to make it consistent for instance so be what my i hope modest recommendation would be be conscious and reflective of what type of rational reconstruction you're using and maybe even be explicit about it so that other people know what you think you have done to your to the source text yes considering the

12:06source text i have a question about it in economics including the history of economics uh do you think uh do we often encounter texts texts that contradict the premises of their sources

12:24i mean certainly there are a lot of examples in the history of economics where this this quest for consistency and the debate is there in a contradiction or not doesn't play a major role but i think one can point to a lot of prominent examples where this question is there a contradiction to the sources or not is at the very center of the debate among scholars in the secondary literature

12:56so one famous example that i briefly mentioned in the chapter also is the adam smith problem i mean okay people gave rational reconstruction of the theory of moral sentiments people gave rational reconstructions of the wealth of nations and then some people said okay there seems to be a contradiction between those two how should we deal with that did smith change his mind maybe there is no contradiction but then some people have maybe reconstructed it in a wrong or in a problematic manner and then there's there's a load of literature on

13:32on on this question and i think it would help i mean some people are very explicit about their ways of rationally reconstructing in that literature but yeah there are different do you want to show that there is a an inconsistency or maybe do you want to correct smith a tiny bit or clarify smith in a tiny in a tiny manner in order to get him to get a consistent entire theory another example is the

14:03boom hilferding debate on whether there's a contradiction between the first and the third volume of marx's capital and if there is a contradiction is there a way to go beyond marx in a marxian manner so to speak that is to do away with the contradiction by some corrections but still get a lot of the marxian conclusions another example would be john stuart mill who writes a lot about the impossibility of experiment in the social sciences but then also says at the end of what he writes about the rules of

14:40causal inference which primarily apply to the natural sciences but in the end of that he writes all of that also applies to the social sciences so is there a contradiction or can we if we really do a close reading of mill we can we find out that there isn't really a contradiction so that's this question is big there's the the question in on in hayek whether he changed his mind a few times that is whether at certain stages in his career he contradicted earlier statements of himself or not in epistemology and

15:16also in politics similarly with with i mean the friedman paper on positive economics has been there's a huge literature as as you all know on whether he contradicts himself i think it's pretty clear that literally on a literal reading he contradicts himself in this one paper but how to deal with that different ways to rationally reconstruct what friedman is doing and yeah as some of you know there's also a few there are a few examples in ludwig von mises's writing where there seems to be a

15:49contradiction and some people have noted that um and i've done some work on rational reconstructing and other people have rationally constructed mises in in different ways in different ways of dealing with the perceived inconsistencies in in his writings so yes in the debate whether there are inconsistencies in the sources or in some of the interpretations that's in a lot of debates in the history of economic thought plays a role i think but not in all of them certainly you just mentioned ludwig von mises in uh in the

16:26response that you just gave us and you actually discuss uh von mises in that in the at the end of your paper um and so we wanted to ask how does rational reconstruction relate to ludwig von mises's ideas about rationality which is the topic that you address i don't think the rational in rational reconstructions is something that mises addressed in his writings at all mises wrote a lot on rationality in very

16:58different i uh areas on he wrote on social rationalism that is the question whether some people rational reconstructions as saying for instance on division of labor but also on the market economy in general that people realized so became conscious about the advantages of that and therefore implemented division of labor or the market economy and that's at least in in some tension

17:30to the general approach in Austrian economics, starting with Karl Menger, that a lot of social phenomena are explained as the unintended outcome of intended individual action. That is, division of labor or the market economy are an unplanned and not a designed result that people consciously drew up, but an unintended result of people going about their business. So there's this idea of rationalism of the social institution

18:02that Mises writes a bit about. There's this other area on the rationality of individual action. I mean, developing a general theory of human action, that was one of the big projects of Ludwig von Mises. And he has a theory of human action and also writes about rational action. And he has this ultra-thin or almost empty notion of rationality there by, quote Mises, action is by definition always rational.

18:34End of quote. So he writes somewhere else, it's saying a person acts irrational, that's just meaningless. You haven't understood the concept of action if you say something like that. So action for Mises is just purposeful behavior. That's all there is to action. And that's also all there is to rationality in Mises. Now there's this third area where he uses, at least uses the term rational a lot. And that's in the socialist calculation debates,

19:04where he says things like, quote, socialism is the abolition of rational economy. End of quote. And he also says that without private ownership of the means of production, the individual, especially the individual social planner, cannot act rationally. And that, at the face of it, seems to clearly contradict what he says in his writings about the rationality of individual action.

19:34I mean, if the social planner just does anything, doesn't he act and therefore doesn't he act rationally by definition?

19:42And again, there are different strategies to deal with this, to deal with what seems to be an inconsistency here. And yeah, in one paper, I criticized one solution to that problem as not really being in line with a lot of things that Mises thinks and writes in other places. So that's the idea that one solution to the problem that was proposed directly and indirectly is that there are just two different notions

20:13of rationality in Mises. And it doesn't clearly say that. I mean, in Germany, sometimes uses rational and sometimes rational, but also not in a consistent manner. And then in English, it's always just rational. And some of the English texts were approved by me and written by Mises himself. So there's this one idea that in the socialist calculation debates, there is a specific meaning for rational and that is algorithmic monetary maximization. If you do that as an individual,

20:45then you're irrational. It's not purposeful behavior anymore. It's this more specific thing.

20:52And thereby, of course, what seemed to be a contradiction goes away. There are two different notions without Mises clearly saying, so problem solved. But there are other problems with this. And I think looking closely at the passages in Mises, there is a way to read that and use the same notion of rationality for all contexts and still get a consistent reading.

21:21Sounds like an ordeal, this rational reconstruction of von Mises' notion of rationality.

21:30Sorry, could you say again? Sorry, that was supposed to be a joke. I'll try again.

21:37Sorry, don't lie at me. Oh, sorry. I said that it sounds like an ordeal, making a rational reconstruction of the notion of rationality that we find in von Mises.

21:52No, I think actually the writings on rationality, I want to jump in to some extent to defend Mises here. I think you don't have to apply a lot of interpretative force, so to speak, to come up with a consistent reading there. The other big example, maybe the more popular example in Mises is his

22:22inconsistency in the justification of praxeology.

22:28There several authors, including your former co-host and now producer, Kajil, have pointed out that over the decades, but sometimes even within one and the same publication, Mises gives justifications of praxeology which are mutually incompatible. So, coming up with a consistent rational reconstruction there is the real ordeal, I think.

23:01Yes, you just talked about that, actually, the contribution of von Mises to praxeology. Speaking of von Mises, yes, actually, you've made significant contributions to the literature on praxeology, Mises' methodology of economics and the social sciences. You sent us a paper on Murey Rothbart's version of praxeology. Please tell us who was Rothbart and what are the similarities and differences

23:32in Rothbart's and Mises' epistemological positions. Well, thanks for your kind words on my work on praxeology.

23:42Now, Merey Rothbart was, I think, together with two other scholars, Israel Kerstner and Ludwig Lachmann. So, those three, I think, were the most important non-Austrian economists of the first generation. that is, Austrian economists that were not born and raised in Austria, but in the US or in South Africa to some extent.

24:13And they were largely responsible for the revival of Austrian economics, mainly in the US, but also internationally in the 50s, 60s, and 70s.

24:26And Rothbart was extremely productive as an academic, so he wrote on economics, maybe the most important work applying praxeology, man economy and state. He worked a lot on history, economic history, applying the theory, but also general history, history of the US. He wrote on ethics, entire volumes on ethics, he even wrote a play. Certainly, he wrote on history of economic thought, so a really productive

24:56scholar.

24:59And on top of that, and that distinguishes him from Kölzner and Lachmann, he was also very active politically in a wide sense. So he engaged in public debate and certainly attempted to steer public opinion in a certain direction. And he was instrumental in building the now very influential Ludwig von Mises Institute in Auburn.

25:26And with his writings, sometimes addressed to scholarly world, but oftentimes also tried to address a more general public. And that's still with us today. Different camps of the Austrian school being on the one hand, academically active, driving forward research, but then also being active in public discourse.

25:55Maybe sometimes in the Enlightenment manner, that some of the Austrians back in Vienna were active, sometimes maybe overstepping the boundaries of Enlightenment and education towards more propagandistic endeavors. You also asked about the relationship between Mises and Rothbard epistemologically speaking. I mean, generally speaking, Rothbard clearly saw himself following in the footsteps of Mises. So he always wrote and

26:25spoke very highly of his mentor. There are a few deviations in economic theory, for instance, on monopoly theory. And politically, Rothbard is even a bit more radical than Mises. So beyond Mises' liberalism, minarchist liberalism, Rothbard advocated for anarcho capitalism. But generally speaking, he agreed on a lot of topics. And also in the other direction, Mises spoke very highly

26:55of Rothbard's first work. So quote Mises, I would subscribe to every word Rothbard has written in his study. And Mises is speaking about some chapters of man economy and state here. So for the purposes of being an economist, they too are they agree on almost everything. In epistemological matters, they certainly both agree that the aim is to establish with certainty an apriori

27:25starting point for praxeology. They also agree on other requirements for the starting point of praxeology. truth, the apriorism, some weak notion of empirically meaningfulness and the starting point cannot be conceivably falsifiable is a phrase that Rothbard uses and there are similar phrases in Mises

27:56as well. So they agree on the goal.

28:01The way there, that is how they justify this apriori starting point, whether they agree on that or whether they differ there, that depends on your interpretation or on your rational reconstruction, if you will, of Mises. So in Rothbard, it's quite clear. The starting point is an axiom, a sentence or several sentences, and you justify it by a specific kind of intuition. that's probably not very convincing from today's perspective,

28:31but that's the way Rothbard clearly goes about it. In Mises, it's not so clear.

28:40There's this talk about the categories of action as the starting point, and some people, for instance, Berbülund, has also argued that it's not really an axiom or a sentence, but more the delineation of an area of research that is given by the starting point.

29:00Most people, though, would interpret Mises in the way that I hinted at, namely that the starting point is an axiom and a sentence. He speaks about the truth of the starting point a lot, and he also wants to do deduction all the time. So in praxeology deduction plays a major role. And you can do deduction and you can apply truth values only two sentences. So it would be a real problem if the starting point of praxeology for Mises,

29:30who wants truth and who wants deduction weren't a sentence.

29:36The role of intuition in Mises, that's also quite unclear and uncontroversial, I would say. there are passages which sound very much like Rothbard, that a special kind of intuition or introspection gives you certified truth of the starting point. But then in other passages, he criticizes for instance Spahn for using exactly this method. Quote Mises, there's a problem of the,

30:06now quote, arbitrariness of intuitive flights of fancy. So that could be directed towards some of his own passages or towards Rothbard. So it's, there might be some passages where Mises invokes the same methods to justify praxeology, but then there are other passages in Mises which are different from the justifications in Rothbard, more conventional realistic ones or more in the direction of a genetic a priori. So it depends on

30:36how you interpret Mises or which passages in Mises you pick how similar you think that Mises and Rothbard are in methods epistemological. Thank you. That's, that's quite clear the difference between Rothbard and Mises for me now. And, and I want to, that you speak a bit more about that fundamental axiom of praxeology. What is it and why is the standard justification of the axiom as a

31:08priori problematic? You argue in your own work that the axiom should be given a conventionalist interpretation. Could you also say what you mean by this? What is the fundamental axiom of praxeology? That's a very good question. I've been wondering about that myself for some years now and ask that question to praxeologists and try to help a bit in answering the question. I mean the standard answer you

31:38get in writings of Mises Rothbard and other praxeologists is fundamental axiom says man acts and the idea of praxeology is that this fundamental axiom man acts together with a few auxiliary axioms like the disutility of labor and a statement according to which different individuals have different tastes

32:10and different talents and also that resources are distributed unevenly across the globe. So that alone as a basis is sufficient to deductively develop all of economic theory.

32:26And important the one fundamental axiom man acts not the other ones just man acts that's a priority too.

32:36Obviously if you want to get up to capital theory and explanations of business cycles you need more than man acts if deduction is the only means available to move forward.

32:53So I mean I don't think you get that far even if you explicate a bit more what the fundamental axiom says.

33:03But I mean even very close to man acts for instance these things like the scarcity theorem there are debates and I think very good debates for instance by Michael Oliver Cordoba or Igor Wisotsky who try to check certain steps in the deductions of praxeology whether they are okay or not. So whether certain conclusions follow or not. but even in those very sophisticated discussions it's not specified and it's not always clear what exactly the content of

33:34this statement man acts is.

33:38Because only if the fundamental axiom was clearly spelled out we could check what exactly follows from it and we would also be in a better position to check the justifications. I mean there's all this debate on different justifications of the fundamental axiom but it's not so clear what exactly it is that we have to justify.

34:03I mean I've made one attempt to give the rough structure of what a spelled out fundamental axiom I think looks like in how it's actually used in Mises Rothbard and other praxeologists and that would consist of two statements the one being for all x if x is a human individual then there are certain theoretical terms think of goals preferences ideas desires

34:34beliefs such that certain relationships between that individual and those preferences goals and so on and so forth exist. What exactly those relationships are that has to be spelled out. But this first sentence takes care of what is important to praxeologists namely that human individuals act but there are a lot of other objects which do not act including social collectives like states classes

35:05nations and also planets atoms stones tables they all don't act. There's some debate on whether animals act or not but there are clear examples in the writings of most praxeologists of things that do act and clear examples of objects that do not act and that I used human individual here but that's

35:35open to debate what exactly are the objects that act. Now the second statement takes care of the fact that praxeologists are aware that not every human behavior is an action.

35:54So the second statement is something like I think for all x and y if y is behavior of x then the following holds if and only y is an action then psi so another relationship between that action the human individual and the preferences goals beliefs so then something more holds and again this something more has to

36:25be spelled out. so that's just the general structure of what the fundamental axiom spelled out would have but the sentences phi and psi they have to be worked out.

36:41Now how to justify all of that? The standard justification that many people ascribe to Mises is that the fundamental axiom is something similar to a Kantian synthetic a priori.

37:00Now some of the problems with that are one most of the arguments for synthetic a priori that Kant gave and that people after Kant gave so there's almost no one in philosophy that thinks those arguments are sound. one of the problems there is that in order to be a Kantian synthetic a priori all alternatives

37:30would have to be inconceivable.

37:36For instance in Kant there was the idea that Euclidean geometry is one such synthetic a priori but people later conceived of non Euclidean geometries and that was a problem for this one example of apparent example of a synthetic a priori. So if we take man acts purposefully as a synthetic a priori

38:06I can perfectly conceive of human actions just behaving just like stones not just describe the behavior extreme behaviorism actually does that so no talk about intentions plans beliefs preferences of individuals I describe the behavior of individuals just like I describe the behavior of planets or stones that

38:37might be not very successful to give me good economic predictions or economic explanations but it's perfectly conceivable and that's a problem for the idea that it is a Kantian synthetic a priori now even if you think as some Austrian economists do that all the contemporary philosophers are wrong and a Kantian synthetic a priori actually is still a tenable

39:08way to go then there's still a pragmatic problem from that praxeological perspective because justifying praxeology