Forgetting Mises When Doing Comparative Political Economy

In the field of Constitutional Political Economy, analysis often starts from the assumption that "political agents act to fulfill their interest just like everyone else."

But then the analysis immediately assumes that the interest of political actors consists solely of seeking monetary gain. Since most of the people I read working in this area (for instance, this post is inspired by a paper I am currently refereeing in this field) are at least passingly familiar with Austrian economics, this is a somewhat surprising assumption.

One of the things Mises was surely correct about is that "pursuing one's interest," if it is to be a priori true of all agents, must be interpreted extremely broadly. In this sense, as Mises taught us, "one's interest" must include anything that might motivate an agent to act: an aescetic's efforts to abjure all worldly goods, a hero's noble sacrifice of his life for his comrades, and a serial killer's attempts to create as much destruction and suffering as possible, are all examples of agents acting in "their own interest" in this broad sense. Mises was entirely dismissive of the idea that acting in one's own interest could only mean pursuing material gain. And yet, I keep encountering papers that seem to equate the two, from people who I would think ought to know better.

When someone presented a paper at NYU equating "a political agent pursuing his interests" with his "maximizing the revenue he can draw from his position," I offered two notable examples of quite different behavior, and could have offered many more if time had permitted.

My first case was Alexander the Great: if he had merely wanted to maximize the wealth he could extract from his realm, after conquering Persia, he would have simply stopped his campaign, and enjoyed the fabulous wealth of the Persian Empire. But Alexander was obsessed with becoming the greatest warrior-king who had ever existed, and so continued eastward well beyond any point of "revenue maximization."

On the other hand, Ashoka, a king in India, converted to Buddhism (or at least began to support it strongly: there is some historical debate here) after being filled with horror at the deaths resulting from his Kalinga War. In any case, he began to promote Buddhism, erect Buddhist monuments, and do things like use his wealth to establish healthcare facilities for his subjects.

Another obvious counter example would be Hitler: once he had acquired the Rhineland, Austria, Bohemia, and half of Poland, he had a whole lot of territory from which to draw revenue. But his racial obsession would not allow him to stop at that point, leaving him to make decisions that, from a revenue-maximizing point of view, were quite insane.

In Misesian terms, all of three of these rulers were "pursuing their own interest." But the interests that political agents can embrace are no less diverse than those of any other agent.

Now, I have no problem with someone creating a model that assumes political agents are "personal (monetary) revenue maximizing," and seeing what results that model yields. But the papers I have read in this field generally do not do that: they seem to simply assume that what political agents pursue must be gains in material wealth. And I do not see any warrant for that assumption.


  1. Great points, Gene. If I may point something else out, this is exactly where Rothbard went off-course. Mises, if I have read him correctly, intends to say that praxeological laws are the laws common to all the social sciences, while catallactical laws are specific to economics, sociological laws specific to sociology, etc. (I think he makes this explicit somewhere in Chapter Two of Human Action, but it's clear enough from his repeated use of the phrase "general theory of human action" to describe praxeology.) Rothbard, however, blurred the lines between the lines between praxeology and catallactics, and rarely made a clear distinction between the two. (Anyone know a Rothbard quote where he equates the two?)

    I hereby deem Rothbard a quasi-Misesian.

  2. History provides an excellent kick in the pants for many economists.

  3. "One of the things Mises was surely correct about is that 'pursuing one's interest,' if it is to be a priori true of all agents, must be interpreted extremely broadly. In this sense, as Mises taught us, "one's interest" must include anything that might motivate an agent to act…"

    Let's say I grant this. Where does it get me? It seems like something that falls into the "no ****, Sherlock" category. Perhaps an example would help.

    Since you're someone whose gone through and come out of Austrianism, I feel like you'd be able to give me a fair evaluation. So, I have a few questions:
    1. Would I be wrong in thinking of Mises as a doddering old crank?
    2. Would I be wrong in viewing him as someone who is economistic?
    3. He espoused utilitarianism, so doesn't this conflict with his statements of moral relativism?

    1. "Gone through and come out of Austrianism"

      Look at my 2002 book: it explains Austrian ideas, but is by no means saying "only Austrians understand economics."

      I really don't feel that differently about the topic today.

      What HAS changed more is my political views. It is only an incorrect identification of Austrian economics with libertarianism that would make people say "oh he's turned against Austrian economics." Weiser was an important Austrian school thinker who was also a socialist.

      1) No.

      2) Tough question: can't answer in a combox.

      3) I would not consider him a utilitarian, precisely because of his moral relativism. Utilitarians quite definitely align morality with the greatest good for the greatest number.

    2. Gene, do you think praxeology is a logically sound system? That is to say, do you think that Mises and Rothbard really succeeded in deriving complex conclusions in economics just from the assumption that humans act?

    3. 1. Wait, what?
      2. Email me, then.
      3. Yes, but I thought he has said is a utilitarian. He supported laissez-faire because he believed that it was the best thing for everyone. Did his radical subjectivism derive from his economics?

    4. Keshav, I answer at length here:

    5. Gene, I only skimmed section VI of your paper, so I may have missed something, but you don't be seem to leveling any criticisms of the soundness of "logical economics" or praxeology. You criticize people who unconsciously import logical economics into their mathematical economics work, and you say mathematical economics can be used "to clarify and check the sort of reasoning that characterizes logical economics."

      But regardless of how you try to check the reasoning of logical economics, what do such checks reveal? Do the complex economic conclusions of Mises and Rothbard really follow logically from the assumption that humans act?

    6. An Austrian socialist? Isn't that like a divide by zero or something? Wouldn't the beliefs of a socialist be in direct contradiction with the tenets of Austrian economics?

    7. Wouldn't socialist beliefs be in direct contradiction with the tenets of Austrian economics? That "intervention" in "the market" gives things a "false value"?

    8. Only if one conflates Austrian economics with libertarianism. This conflation is done by many proponents as well as opponents, but it is incorrect.

  4. Samson, I would blame you for thinking Austrian economics is a "doctrine" with certain "tenets" if Murray Rothbard himself had not promoted that sort of nonsense so vigorously. Viewed sensibly, as a group of thinkers who approached economics and a roughly similar way, Austrian economics has no "tenets."

  5. Samson -

    Here's a link to some short articles by J. Patrick Gunning on the differences between Mises' and Rothbard's views, both economic and socio-political:


    1. Thanks, Karl. Those look interesting.

  6. (I should have added this to my last comment.) I suggest reading "Rothbard’s Distorted Image of the Free Market" and "Rothbard’s Critique of Mises’s Value Freedom" as a defense of Gene's comment that the early Austrians had no tenents.


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