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Appendixes - Ludwig von Mises, Selected Writings of Ludwig von Mises, vol. 1: Monetary and Economic Problems Before, During, and After the Great War 
Selected Writings of Ludwig von Mises, vol. 1: Monetary and Economic Problems Before, During, and After the Great War, edited and with an Introduction by Richard M. Ebeling (Indianapolis: Liberty Fund, 2012).
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Maxims for the Discussion of Methodological Problems in the Social Sciences: Paper Delivered at the Private Seminar1
1. It is inadmissible to make the a priori assumption that physics, along with the empirical sciences that are based on it, and the science of human action utilize the same methodology (methodological monism, physicalism). Such commonality of methods might be maintained only a posteriori, that is, after investigating the logic of both branches of science.
2. An investigation into the logic of the science of human action leads to the conclusion that there is an unbridgeable difference in the methods used in physics and in the science of human action, a difference that is produced by the different situations in which the researcher finds himself when confronted with natural phenomena versus the phenomena of human action. In physics, experiments permit the verification or falsification of hypotheses. It is experiments, alone, that permit us to draw a posteriori inferences from experience. If we were not able to experimentally investigate the dependence or independence of elements or variables from each other, we could not describe the relations inherent in natural processes by formulating empirical laws.
3. The experience that is the subject of the science of human action is history. (All empirical economic research, economic statistics, etc., are also history, because it refers to the past, even if the most immediate past.) We observe the complex phenomena that result from the interaction of many unknown components. We cannot conduct experiments; we therefore can neither verify nor falsify hypotheses, and thus cannot derive empirical laws. We could assert anything and disprove nothing if we had no other avenue than that of simply interpreting the experience.
4. This other avenue is that of the praxeological a priori. We understand action because we are, ourselves, acting humans. This understanding enables us to develop a closed system of the categories of and conditions for human action.
5. By relying on our understanding of the universally valid (theoretical) science of human action (pure sociology, particularly its thus far most developed part, namely pure economics) and by using logic and mathematics together with the empirical sciences of nature, we are in a position to analyze the historical facts contained in the documents of the past, such that we may finally attempt to show the qualitative and quantitative forces that have led to a particular outcome. Insofar as this insight into the historical factors, in terms of their qualitative and quantitative importance, is not uniquely determined by the results of scientific research and pure praxeology, and insofar as it does not comprehend the significance of these factors by conception (begreift) but uses, instead, the understanding (Verstehen) specific to the human sciences (Geisteswissenschaften), it is subjectively influenced by the character of the researcher. Conception (Begreifen) alone affords general objective knowledge, the formulation of which may very well be influenced by the perspective of the observer while remaining independent of his character and subjective point of view. With understanding (Verstehen) there cannot be any such independent knowledge in the historical sciences. The sphere of understanding excludes the use of the terms “true” and “false,” “correct” and “incorrect” in the same sense in which they are used in discussing the empirical sciences or the theory of human action.2
(Addendum: “An interpretation determined by the viewpoint of the observer” does not imply a concession to the sociology of knowledge, which fundamentally errs in admitting within the human sciences nothing but understanding [Verstehen] and its subjective limitations, while ignoring the conception [Begreifen] of facts and their general objectivity. Rather, it implies that the use of such terms as “success” and “failure,” “favorable” and “unfavorable” depends, as a matter of course, on the observer’s viewpoint. What are imports for one are exports for the other. For the sake of illustration, a comparison with a natural science that is otherwise inappropriate may for once be used by pointing out that classical physics understands the laws of physics to be invariant with respect to a rotation of the coordinate system. If a bacillus were to write a textbook of bacteriology, it would hardly say that using dis-infecting agents yields “favorable” results. But this extends only to the interpretation, not to the content of the knowledge.)
6. The thinking that involves understanding (Verstehen) in the human sciences may be conceived of as dialectical thinking in Hegel’s sense, as a thinking of things in their totality, or with Lasson as “cognition of everything particular from the concept of organic context, which posits it at that moment.”3 The thinking that involves praxeological conception (Begreifen), on the other hand, is founded on Kant’s sharp rejection of dialectics.4
7. Einstein’s often-repeated dictum, “As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality,” has no bearing on praxeological knowledge. The verdicts of conception are certain, but the assertions of understanding are not; and yet both refer to reality. What Einstein regards as a conundrum, how “human reason can through pure thought and without experience fathom properties of real things,” praxeology answers by pointing out that both thinking and action have their origin in the same human mind.
8. One may say that the path of physics is one of increasing abstraction: it leads from less abstract and more intuitive concepts to more abstract and less intuitive ones. The path of praxeological conception is one of decreasing abstraction: it leads from highly abstract and un-intuitive concepts to those of less abstraction and greater intuitiveness (Wieser).5 This formulation may give rise to misgivings from a logical point of view, but rightly understood, it may pass as an approximate characterization of the difference.
9. The historical-realist school of opponents of economics has made the following claims:
10. From the above, it follows that it is inadmissible to refer to the propositions of the theoretical science of human action as conventions in the sense in which this is done for the propositions of physics.7 It is inadmissible to say that the propositions of this theory might not correspond to facts, since the impossibility of experiments does not enable us to determine their conformity or incompatibility with the facts.
11. It is inaccurate to make the assertion that whenever there is an inconsistency between the propositions of economics and the facts, that economists simply give the reply that this is due to “interfering factors” without being able to clarify the nature of these factors. It has already been demonstrated that the sciences of human action do not admit of any contradiction between theory and the facts in the way it may exist in physics. Nor are the propositions of economics undermined by not corresponding to the facts. Economists tried to show that other motives also guide human action besides the motives of action investigated by Classical economics, and thus tried to identify those factors that are supposedly left out of the analysis. Modern economics, on the other hand, includes the effects of all those motives that previously were regarded as “non-economic,” and therefore finds no inconsistent facts in the form of “interferences” or “resistances” that might serve as challenges to the validity of its laws.8
12. The subjective theory of value regards all action as “given,” and therefore can never assert that any action was “right” or “wrong.” It must not and cannot make any assertion that there is a dichotomy between an actual action and an “economic plan.”9 It is the task of history to investigate if a particular action was able to attain the desired ends; and in determining whether, indeed, the action did attain those goals, history must avail itself of the methods of analysis provided by economic theory. If one applies the insights of economic theory to the problems of economic policy, one may say in reference to particular policy measures whether, from the actor’s point of view, they are appropriate and consistent or, instead, inappropriate and inconsistent, depending on whether or not they seem appropriate to attain the desired end aimed through a particular political action.10
Short Curriculum Vitae of Mayer Rachmiel Mises of Lemberg1
I was born on June 23, 1801, in Lemberg, the son of the wholesaler and real estate owner Fischel Mises, who had been awarded, as a distinction, the right of domicile and of conducting business in the so-called “restricted district.”2 In 1819, I married Rosa, daughter of Mr. Hirsch Halberstamm of the town of Brody, who was at the time Brody’s most important Russian-German export trader.
In 1832, while still co-owner of my father’s business, I was appointed commissioner at the commercial court, a function I was to exercise for 25 years.
Following my father’s death in 1842, I went into the wholesale business on my own, which enabled me to stay in the family home located on Ringplatz.
In 1854 I employed my oldest son, Abraham Oscar, in my company. In 1856 he went on to establish a wholesale business in Vienna and played a prominent role in the foundation of the Galician Carl-Ludwig Railroad, on whose board of directors he then served.
In 1859, under my said son’s leadership, the Viennese branch of my company was commissioned with the purchase of Galician corn for the Austrian army in Italy. The business was conducted to the full satisfaction of Creditanstalt, the bank responsible for all monetary transactions in the contract. In 1860, Creditanstalt made my son director of its new Lemberg branch office, which resulted in the liquidation of my Viennese company.
Fifteen years later I also liquidated my Lemberg wholesale business and eventually retired from active business.
For nearly a half century I have been in public life in various positions and capacities.
I have already mentioned that for a period of 25 years I served as commissioner at the commercial court while also repeatedly serving on the city council and as a full member of the Chamber of Commerce.
Already in 1831 I became president of the Lemberg Jewish Community and have remained in this position ever since, with only a brief interruption in the years 1843-1845.
At the beginning of 1840, I was cofounder of the Lemberg Savings Bank, and for a period of nearly 16 years I was its internal auditor. I only resigned in 1857 when the Austrian National Bank appointed me to the board of its Lemberg branch; I served in this capacity for 22 years until this institution was transformed into the Austro-Hungarian Bank.
In 1848 I was a member of the “Confidential Committee” appointed by Governor Count Stadion,3 and also a member of the committee for the integration of émigrés returning from exile, which in the following year had to facilitate the reemigration of those among them who had not found gainful employment within the country.4
I have been substantially involved in the foundation of an orphanage, a reform school, a secondary Jewish school, a charitable institution for infant orphans, a Jewish library, and several other charitable and educational foundations, some of which I endowed out of my own financial means.
I dedicated myself no less to the administration of the Jewish Hospital in Lemberg, which owes its existence largely to one of my father’s foundations.
And last, I may add that my marriage has produced five children. Only my two daughters, Mrs. Esther Klärmann and Mrs. Elise Bernstein, are still alive. My two older sons, Abraham Oscar Mises, director of the Galician Carl-Ludwig Railroad and director of the Lemberg branch of Creditanstalt, and Hirsch Mises, partner and director of the Halberstamm and Nirenstein banking institutions, and my youngest daughter, Clara Bodek, are no longer alive.
My male grandchildren are:
Hermann Mises, publisher and deputy to the Reichsrat in the years 1873-1879, and an honorary citizen of the city of Drohobycz;
Max Mises, privatier;5
Dr. Felix Mises, medical director emeritus of the Imperial-Royal General Hospital;
Emil Mises, engineer at the Galician Carl-Ludwig Railroad;
Arthur Mises, engineer at the Lemberg-Czernowitz Railroad Company.6
Lastly, my great-grandson is Heinrich Mises, son of Dr. Felix Mises.
Lemberg, June 1881
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[1. ][Ludwig von Mises delivered this paper at his “private seminar” on March 9, 1934, in his office at the Vienna Chamber of Commerce. From 1920 until the spring of 1934, Mises organized and chaired a private seminar of interested scholars in the fields of economics, history, sociology, political science, and philosophy. It met twice a month between October and June on Fridays at 7 p.m. The private seminar came to an end when Mises accepted a full-time teaching position at the Graduate Institute of International Studies in Geneva, Switzerland, as professor of international economic relations beginning in the autumn of 1934. Many of those who participated in the seminar recalled in later years that they considered it to be one of the most rewarding and challenging intellectual experiences of their lives because of the consistent quality of the papers delivered and the discussions that followed. For accounts of the seminar by some of the participants, see Ludwig von Mises, Memoirs (Auburn, Ala.: Ludwig von Mises Institute,  2009), pp. 81-83, and the recollections of other members of the seminar in the appendix to Margit von Mises, My Years with Ludwig von Mises, 2nd ed. (Cedar Falls, Iowa: Center for Futures Education, 1984), pp. 201-10.
[2. ][On the meaning and distinction between “conception” and “understanding” developed in more detail, see Mises, “Conception and Understanding” (1930) in Epistemological Problems of Economics, pp. 130-45, and Human Action: A Treatise on Economics (Irvington-on-Hudson, N.Y.: Foundation for Economic Education [3rd rev. ed., 1966] pp. 51-58. In essence, “conception” refers to those general or universal propositions in economic theory that are logically correct and valid within the context in which they are formulated. Thus, insofar as individuals have goals or ends that they desire to attain, and insofar as they discover that the means available to achieve them are scarce, they will, by necessity, have to rank the ends in order of importance and assign the means to achieve those ends ranked more highly before others ranked less highly; and in this process they will have to weigh the “costs” and “benefits” of pursuing one goal rather than another, and decide on the trade-offs (at the margin) that they consider the relatively more “profitable” ones in the context of the given circumstances. This would be universally and “objectively” true of any person, and therefore of all people, in which the means are found to be insufficient in relation to the ends that they can serve. “Understanding” refers to those unique and individual historical events that may be interpreted with the assistance of the logic of human action and the theorems of economics, but which are open to different “subjective” (“intuitive”) interpretations as to their meaning and the relative importance of the factors that have brought about the observed outcome. Thus, historians may study the same historical event, say, the Battle of Waterloo, but they may differ concerning the “weight” or relevance of the various factors that brought about the historically unique outcome, the defeat of Napoleon. See also Kurt R. Laube, “Begreifen und Verstehen: Some Remarks on the Methodological Position of the Austrian School,” in Kurt R. Laube, Angelo M. Petroni and James S. Sadowsky, eds., An Austrian in France: Festschrift in Honor of Jacques Garello (Torino: La Rosa, 1997), pp. 267-79.—Ed.]
[3. ][Adolf Lasson (1832-1917) was a German philosopher and served as professor at the University of Berlin. He was a Hegelian who emphasized the idea of the organic unity of the universe.—Ed.]
[4. ][Immanuel Kant (1724-1804) was one of the leading German philosophers of the Enlightenment. What Mises interpreted as Kant’s insight for the grounding of a universally valid science of human action was Kant’s idea in his Critique of Pure Reason (1781) that the mind operates in terms of certain categories outside of which thought and reasoning are impossible, for those categories are the context in which the mind can reflect on anything, including itself. Or in the words of Ernst Cassirer, The Philosophy of the Enlightenment (Princeton, N.J.: Princeton University Press,  1951), p. 94: “The nature of human knowledge can only be explained in terms of the ideas which the mind finds within itself.” These a priori categories, for Mises, are the ones in which both human reasoning and human action occur, and are the only ones in the context of which man can reflect upon, through introspection, to understand the logic of his own conscious conduct. Since man’s reasoning and ability to act are both conditioned by these same categories of thought, they are “prior to” experience and yet explain the reality of how men must and do act. Hence they are both logically valid and empirically true.—Ed.]
[5. ][See Friedrich von Wieser, Social Economics (New York: Augustus M. Kelley,  1967), p. 6: “The theorist starts from the most abstract isolating and idealizing assumptions. . . . However, if he would accomplish his task he must not stop with these extreme abstractions. Should he do so, he would fail to convey an understanding of reality. Step by step by a system of decreasing abstraction, he must render his assumptions more concrete and more multiform.”—Ed.]
[6. ][Werner Sombart (1863-1941) was professor of political economy at the University of Breslau and, beginning in 1917, at the University of Berlin. While never labeling himself a Marxist, in the 1890s and 1910s he strongly sympathized with Marx’s critique of capitalist society. However, beginning in the 1920s, he became highly critical of Marx, and of Marxism for its positive outlook on the progress to industrial society. Sombart came to oppose what he considered to be the uniformity and ugliness of modern civilization. Instead, he looked back to the world before industrial development as a more desirable one of social hierarchy and stable order. By 1934, he had become a supporter of German National Socialism, endorsing the corporativist state, the führer (or leader) principle for Germany, state intervention and planning of the economy, national autarky, and partial reagrarianization of German society.—Ed.]
[7. ][See Felix Kaufmann, Methodology of the Social Sciences (London: Oxford University Press, 1944), pp. 46-47.
[8. ][See Mises, “Remarks on the Fundamental Problem of the Subjective Theory of Value,” (1928) in Epistemological Problems of Economics, pp. 167-82, and Human Action, p. 3:
[9. ][See Mises, Human Action, p. 21: “In this sense we speak of the subjectivism of the general science of human action. It takes the ultimate ends chosen by acting man as data, it is entirely neutral with regard to them, and it refrains from passing any value judgments. The only standard which it applies is whether or not the means chosen are fit for the attainment of the ends aimed at. . . . At the same time it is in this subjectivism that the objectivity of our science lies.”—Ed.]
[10. ][Mises developed more fully his conception of the methods of the social sciences in comparison to the methods of the natural sciences, and his theory of the logical character of human action; see the following works by Mises: “The Logical Character of the Science of Human Action,” (1937) in Richard M. Ebeling, ed., Selected Writings of Ludwig von Mises, vol. 2, Between the Two World Wars: Monetary Disorder, Intervention, Socialism, and the Great Depression (Indianapolis: Liberty Fund, 2002), pp. 341-47; “Social Sciences and Natural Sciences,” (1942) in Richard M. Ebeling, ed., Money, Method, and the Market Process: Essays by Ludwig von Mises (Norwell, Mass.: Kluwer Academic Press, 1990), pp. 3-15; Human Action, pp. 1-142; Theory and History: An Interpretation of Social and Economic Evolution (Indianapolis: Liberty Fund,  2005); The Ultimate Foundation of Economic Science: An Essay on Method (Indianapolis: Liberty Fund,  2006).—Ed.]
[1. ][Mayer Rachmiel Mises (1801-91) was the great-grandfather of Ludwig von Mises. In June 1881 he prepared this short curriculum vitae to submit to the office of the Austrian emperor, Francis Joseph, as part of the legal process for ennoblement and the bestowing of the honorific and hereditary title of “Edler von.” He was ennobled on April 30, 1881, with the ennoblement document issued on July 13, 1881. Ludwig von Mises is not mentioned at the end of the document among Mayer Rachmiel Mises’s great-grandchildren because Ludwig was not born until September.—Ed.]
[2. ][The “restricted area” referred to that part of Lemberg, the capital of the Austrian province of Galicia, which was reserved as a residence and place of business for non-Jews. For a brief history of the Jews of Austria and Vienna in the second half of the nineteenth and the first half of the twentieth centuries, and in the context of Ludwig von Mises’s life and work, including his own critique of anti-Semitism, see Richard M. Ebeling, “Ludwig von Mises and the Vienna of His Time,” in Political Economy, Public Policy, and Monetary Economics: Ludwig von Mises and the Austrian Tradition (London: Routledge, 2010), pp. 36-56.—Ed.]
[3. ][Franz Stadion, Graf von Warthausen (1806-53), was a prominent Austrian statesman who served as Austrian governor of the Littoral (the capital of which was the Adriatic port city of Trieste) during 1841-46, and governor of Galicia (1847-48), during which time he freed the peasants from compulsory labor duties; he also served as Austrian minister of education. He was a supporter of constitutional government within Austria and other liberal reforms.—Ed.]
[4. ][Many who had been part of the failed revolution of 1848 in Austria, including the uprising in Hungary and the rebellion of Poles in Russia and Austria, had left the Austrian Empire. Some began to return shortly afterward to resettle in their own homelands, found it difficult to reintegrate into their communities, and departed to live abroad once again.—Ed.]
[5. ][A “privatier” is a financially independent individual, either through former business success or inheritance or marriage.—Ed.]
[6. ][Arthur Mises (1854-1903) was Ludwig von Mises’s father.—Ed.]