Edited and written by David Gordon, senior fellow of the Mises Institute and author of four books and thousands of essays.

Why The Austrian School Is Austrian

Winter 1995

Barry Smith
Open Court, 1994, xii + 381 pgs.

As any reader in the tradition will know, Austrian economics has deep links to philosophy. To understand the philosophical background out of which the Austrian School emerged is essential to a grasp of the School's doctrine. Barry Smith, in his exhaustively researched and carefully argued book, has done more than any other scholar to elucidate that background.

Lenin once observed that one cannot understand Marx without studying Hegel's Logic. After reading Smith, we can say: one cannot fully understand Mises without knowing something about Franz Brentano.

In Smith's view, Brentano inaugurated an approach to philosophy that became influential in the Austro-Hungarian Empire. Brentano's style of philosophy broke sharply with that prevailing in Germany, where the idealist philosophy of Kant and his successors held sway.

The "strength of idealist metaphysics had derived in no small part from the fact that it was closely associated with the development both of German national consciousness and of the German nation itself, so that Kant, Hegel, Fichte, and Schelling have come to occupy an entrenched position in German thought and feeling of a sort that is unparalleled in any other culture" (p. 13).

Philosophers in Kant's tradition tended to concentrate heavily on the theory of knowledge. Human beings have no direct knowledge of the world as it exists in itself. Instead, the mind (also unknowable in itself) imposes categories on reality. Given this view, Smith argues, it is hardly surprising that German philosophy developed independently of the work of scientists. Stress on the "ultimate unintelligibility of the world is often inimical to scientific theory" (p. 4).

Defenders of Kant might contend that he in fact did allow knowledge of the real world. J.N. Findlay has made a case for this view in Kant and the Transcendental Object. And if Kant exalted epistemology, Hegel argued strongly against its primacy. But Smith is certainly right that many in Germany read Kant in exactly the way he describes.

Even more important, in my view, is Smith's remark that the "main currents of German philosophy . . . have tended to strive for philosophical depth, often at the expense of clarity, which they have associated with shallowness of thinking" (p. 4).

Franz Brentano, who taught at the University of Vienna for twenty years, conceived of philosophy in an entirely different way. In his view, philosophy should be carried out in a rigorously scientific manner. Against the neo-Kantians, those in the tradition of Brentano think that "we can know what the world is like both in its individual and in its general aspect, and our knowledge will likely manifest a progressive improvement, both in depth of penetration and in adequacy to the structures penetrated" (p. 323).

We can, if this view is right, know reality as it is in itself. But how do Brentano and his successors prove that we have such knowledge? This question, however natural to ask, is in the Austrian view radically misconceived. We do not have to prove that we know the world: for Brentano, the problem of skepticism is not of prime importance.

Instead, the nature of the world is "read off" directly, using both external observation and introspection. Not only is it held that we know the actual world: sometimes, just by operating in a commonsense way, we can see how the world must be.

Here there is a precise parallel with the views of Carl Menger about economics; and this parallel is, as the Trotskyists would say, "no accident." "There are, he [Menger] holds, certain simple economic categories which are universal . . . and which are capable of being grasped as such by the economic theorist. Propositions expressing the relations among such categories are called by Menger exact laws'" (p. 301).

Ludwig von Mises also maintained that economics grasps a priori truths; but, under neo-Kantian influence, he took these truths to be purely logical implications of the concept of action, rather than perceived necessities in the world. Smith boldly contends that Mises misdescribed his own practice. The laws of praxeology are not, as Mises sometimes described them, tautologies. Mises operated in a fashion that the Brentanist tradition enables us to understand better than he himself did.

Smith seems to me on firm ground here; and I venture one point as a supplement, though I fear it so obvious as hardly to be worth stating. Mises often described the propositions of economics as "synthetic a priori"; but a proposition can hardly be both a tautology and synthetic. I suspect that Mises did not write on these issues from a fixed philosophical standpoint. Smith's analysis, further, is entirely in accord with the views and practices of Murray Rothbard.

Smith again and again makes illuminating remarks about Austrian methodology. He rejects the attempt by several recent writers to connect Austrian economics with the problem of interpretation studied by hermeneutics. Claims of this sort are "quite astonishing" and reflect a "muddled confounding of the distinct intellectual traditions of Austria and Germany" (p. 320 n. 21).

Smith's treatment of the a priori is a model of clarity. At only one point in it am I inclined to dissent. Against Kantians and positivists who take a priori truths to be entirely imposed by the mind, Smith directs this argument: "Imagine that the totality of all laws or propositions is laid out before us. Is it to be completely arbitrary which of these laws or propositions are to enjoy the imposed' quality of aprioricity? A positive answer . . . is belied by the extent to which there is wide agreement across times and cultures as to which the candidate a priori laws or propositions might be. A negative answer, on the other hand, implies that there is some non-arbitrary quality on the side of certain laws or propositions themselves, in virtue of which precisely those laws or propositions do indeed serve as the targets of imposition" (p. 310).

I think that the positivist has an escape. He can grant that there is a real quality possessed by the propositions that people take to be a priori. This quality, he may concede, is not imposed by the mind. But why need it make these propositions a priori true in a stronger sense than the conventional? What if, for example, evolutionary pressures lead people to regard some truths as a priori?

At this point I fear I must be grossly unfair to Smith. The bulk of his book is devoted to a painstaking elaboration of the views of Brentano and several of his followers. He presents, for example, a brilliantly illuminating discussion of the correspondence theory of truth, as developed by Anton Marty (pp. 113 119. He calls this section "The Martian Theory of Truth"). And he carefully expounds Brentano's often misunderstood view of intentionality (pp. 42 45).

Unfortunately, a detailed discussion of these and other points far exceeds the scope of The Mises Review, and my abilities as well. But I think that if, say, you are seriously interested in learning the differences between Brentano's and Kotarbinski's doctrines of reism, you need no help from me and can consult the book directly.

Everyone interested in the Austrian School needs to study thoroughly this outstanding book, at the very least the Introduction and the Chapters "Austrian Philosophy and the Brentano School" and "Carl Menger: On Austrian Philosophy and Austrian Economics."


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