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Ludwig Von Mises

When people are engaged in acting purposefully (this is, trying to attain a goal) they act rationally in a subjective manner and this is confusing and deserving of an explanation. It is pretty obvious that when a person is trying to achieve a goal, this person is trying to do so in a conscious manner. We have seen this in the previous lessons. This much is a given. However, the manner in which a person chooses to act to try to achieve said goal is not guaranteed to be correct (it may be in error). Furthermore, there is no guarantee that this person will achieve the goal. This much is also a given.

Yet, throughout this process the person believes and it is convinced that the way in which is acting makes sense. This is so because it is obvious to said person that acting in a way in which makes no sense will not be conducing to achieve the goal. Let's say that Romeo wants to smoke but has no cigarettes. So Romeo decides that in order to achieve his goal (smoke) he must purchase cigarettes. It would not make any sense to Romeo to try to smoke and stay at home not getting cigarettes. In other words, for Romeo going out and buying cigarettes is a rational act.

Martina, Romeo's girlfriend does not smoke. She believes that smoking is a bad idea. Martina would never want to smoke and hence she would never go out to purchase cigarettes in order to smoke. So, for Joana not buying cigarettes is rational.

And here is where things get complicated.

From Romeo's point of view, not going out to purchase cigarettes is irrational because it is not conducive to smoking (his goal). For Martina, going out and buying cigarettes is irrational because is a waste of time and money since it does not help her to achieve her goal (not smoking).

What this is telling us is that a specific action can be rational and irrational at the same time. This is so because the rationality or irrationality of each action is directly linked to the goal it is being sought. But every goal from every person in the world is personal. Goals may be the same but the decision to seek said goal is personal. Many people smoke, but Romeo's decision to smoke now is his personal decision. Sure, Trini, Sherma and Karim also want to smoke now, but their decisions are not related to Romeo's decision in any manner whatsoever. They are all personal decisions.

Martina cannot substitute her values with Romeo's values. As such, she cannot develop the exact same rationale that Romeo did and therefore she cannot reach the same decision that Romeo took (to smoke). Therefore, again, for Martina, Romeo's decision is irrational. The reverse is also true.

Although it is true that Martina may understand Romeo's motives at some rational level (i.e. logical level) this does not mean that she would have taken the same decision. There is a large difference between understanding and acting.

This reasoning also applies to the means of achieving a goal and the outcome. For example, Romeo may have chosen to wait at home in the hopes a friend (with cigarettes) may visit. Since it is 3 AM in the morning, this is highly unlikely and therefore it may seem irrational to other people. Yet, Romeo did choose to stay for some reason (for example a friend told him that he may stop by his home) and this reason is rational for Romeo.

Alternatively, Romeo may have decided to go out and buy cigarettes. In order to do so he walks into a supermarket. Unfortunately, the supermarket does not sell cigarettes. Romeo cannot smoke. The outcome is a failure but the decision Romeo took to go to a supermarket was rational to Romeo when he took it (for example, he may have believed that said supermarket sells cigarettes).

Praxeology concerns itself only with acting. Understanding the underlying motives of an action falls within the realm of Psychology, not Praxeology.

In this sense, acting purposely is always subjectively rational. However, it is not objectively rational because we cannot put ourselves in the exact position of any person making a decision and as such we cannot understand the mechanisms leading to the decision. In the same manner, it is not objectively irrational. From a praxeological point of view to state that something is objectively rational or irrational makes no sense.

Praxeology concerns itself with acting, but it also concerns itself with the means that were chosen to achieve a goal through acting. More specifically, it studies whether or not the means were adequate or fit to achieve the stated goal. But the means are not the motives. The means of an action are always visible because by definition acting means interacting with the physical world, which is something observable. Motives, on the other hand, are not since they remain locked in our minds.

In this sense, Praxeology is objective because we can all see the same actions performed by people. We may interpret them differently, but the actions themselves are objective. If Romeo goes out and buys cigarettes, then this means that Romeo went out and bought cigarettes. It does not mean that Romeo when out and bought pizza. The fact that Romeo bought cigarettes is visible to all and unquestionable. These are facts and as such they are observable by all people.

But what about morality or ethics? Praxeology does take them into consideration because a person acting on moral or ethical grounds still believes is acting rationally. The source of the subjective rationality is entirely irrelevant, what matters is how this person acts.

What about people with mental illness? Wouldn't they behave irrationally? No. From a subjective and personal point of view those people act rationally. What happens is that other people observing their actions may consider them irrational, but that is nothing more than a subjective judgement call, which is irrelevant to Praxeology. The question that Praxeology asks is this: were the actions taken by these ill people fit for purpose, however unusual that purpose may have been?

What about the many experiments that Behavioural Economics run demonstrating that humans act against or are indifferent to their own goals? How can this be considered subjectively rational? There are three possible explanations here, all consistent with Praxeology.

  1. Behavioural Economics got the goals wrong. Simple mistake. Measuring goals is not an easy task.
  2. Behavioural Economics got the goals right. Unfortunately, people selected the incorrect action (to act against or be indifferent) to achieve said goals.
  3. As goals are subjective, people acted in pursuit of them despite what the external observer thought. For example John may state that he wants to go out to buy pizza but in reality he is too tired to do so and he ends up staying at home. Apparently, John acted against his goal but this is not the case since his real goal was to stay at home and rest.

Note: please see the Glossary if you are unfamiliar with certain words.

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