February 6, 2015

Ludwig von Mises and B.B. Warfield

By In Blogs, C.Jay Engel

Economic theory is founded on the principle that human beings act purposefully.  From that starting point, we can then discover inferences deductively and systematically.  This understanding of the nature of economic science is what sets apart the Austrian School of Economics from all other schools.  Most other schools assume some sort of empirical or positivist epistemology which the Austrians, especially in the tradition of Ludwig von Mises, reject.

Christian epistemology is deductive in nature as well.  We do not learn truths by discovering them with our senses.  Rather, absolutes are propositional and are discovered in the mind, which is rational.  Thus, economic conclusions must be found by deducing from a starting point, not by reading data, which only (usually inaccurately) describes past events.  Christians therefore can and should endorse the Austrian School (I have more comments on this here).

Ludwig von Mises describes the starting point of economics by stating:

Human action is purposeful behavior. Or we may say: Action is will put into operation and transformed into an agency, is aiming at ends and goals…

Will… aiming at ends.  And ends require means.  We must get from here to there.  Mises says:

A means is what serves to the attainment of any end, goal, or aim. […] A thing becomes a means when human reason plans to employ it for the attainment of some end and human action really employs it for this purpose.

The basis of economics, as articulated by a now (it wasn’t always this way) heterodox school.  The genius of Mises was that he articulated human action as the basis for economic science in a way that had never been done before.  It is interesting though that one can find similar statements in Christian writings which precede Mises.  For instance, I found the following by BB Warfield, written in his The Plan of Salvation in 1915 (Mises’ Human Action was published in 1949):

It does not seem necessary to pause to discuss the previous question whether God, in his saving activities, acts upon a plan. That God acts upon a plan in all his activities, is already given in Theism. On the establishment of a personal God, this question is closed. For person means purpose: precisely what distinguishes a person from a thing is that its modes of action are purposive, that all it does is directed to an end and proceeds through the choice of means to that end.

There you have it. The Warfieldian school of Economics.

Written by C.Jay Engel

Editor and creator of The Reformed Libertarian. Living in Northern California with his wife, he writes on everything from politics to theology and from culture to economic theory. You can send an email to reformedlibertarian@gmail.com