Appendix B: On Means and Ends

It is often charged that any theory grounded on a logical separation of means and ends is unrealistic because the two are often amalgamated or fused into one. Yet if man acts purposively, he therefore drives toward ends, and whatever route he takes, he must, ipso facto, employ means to achieve them. The distinction between means and ends is a necessary logical distinction rooted in all human—indeed, all purposive—action. It is difficult to see the sense in any denial of this primordial truth. The only sense to the charge concerns those cases where certain objects, or rather certain routes of action, become ends in themselves as well as means to other ends. This, of course, can often happen. There is no difficulty, however, in incorporating them into an analysis, as has been done above. Thus, a man may work at a certain job not only for the pay, but also because he enjoys the work or the location. Moreover, any desire for money is a desire for a means to other ends. The critics of praxeology confuse the necessary and eternal separation of ends and means as categories with their frequent coincidence in a particular concrete resource or course of action.

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[PUBLISHER'S NOTE: Page numbers cited in parentheses within the text refer to the present edition.]

¹For further reading on this topic, the best source is the epochal work of Ludwig von Mises, Human Action (New Haven, Conn.: Yale University Press, 1949), pp. 1–143, and passim.

²Cf. ibid., p. 11; F.A. Hayek, “The Facts of the Social Sciences,” in Individualism and Economic Order (Chicago: University of Chicago Press, 1948), pp. 57–76; Hayek, The Counter-Revolution of Science (Glencoe, Ill.: The Free Press, 1952), pp. 25–35; and Edith T. Penrose, “Biological Analogies in the Theory of the Firm,” American Economic Review, December, 1952, pp. 804–19, especially 818–19.

³Cf. Aristotle, Ethica Nicomachea, Bk. I, especially ch. vii.

⁴This chapter consists solely of a development of the logical implications of the existence of human action. Future chapters—the further parts of the structure—are developed with the help of a very small number of subsidiary assumptions. Cf. Appendix below and Murray N. Rothbard, “Praxeology: Reply to Mr. Schuller,” American Economic Review, December, 1951, pp. 943–46; and “In Defense of ‘Extreme Apriorism,’” Southern Economic Journal, January, 1957, pp. 314–20.

⁵There is no need to enter here into the difficult problem of animal behavior, from the lower organisms to the higher primates, which might be considered as on a borderline between purely reflexive and motivated behavior. At any rate, men can understand (as distinguished from merely observe) such behavior only in so far as they can impute to the animals motives that they can understand.

⁶To say that only individuals act is not to deny that they are influenced in their desires and actions by the acts of other individuals, who might be fellow members of various societies or groups. We do not at all assume, as some critics of economics have charged, that individuals are “atoms” isolated from one another.

⁷Cf. Hayek, Counter-Revolution of Science, p. 34. Also cf. Mises, Human Action, p. 42.

⁸Cf. Talcott Parsons, The Structure of Social Action (Glencoe, Ill.: The Free Press, 1949), pp. 44 ff.

⁹Some writers have unfoundedly believed that praxeology and economics assume that all action is cool, calculating, and deliberate.

¹⁰The common distinction between “economic goods” and “free goods” (such as air) is erroneous. As explained above, air is not a means, but a general condition of human welfare, and is not the object of action.

¹¹The term “land” is likely to be misleading in this connection because it is not used in the popular sense of the word. It includes such natural resources as water, oil, and minerals.

¹²We shall not deal at this point with the complications involved in the original learning of any recipe by the actor, which is the object of human action.

¹³Cf. Carl Menger, Principles of Economics (Glencoe, Ill.: The Free Press, 1950), pp. 51–67.

¹⁴For each actor, then, the period of production is equivalent to his waiting time—the time that he must expect to wait for his end after the commencement of his action.

¹⁵Time preference may be called the preference for present satisfaction over future satisfaction or present good over future good, provided it is remembered that it is the same satisfaction (or “good”) that is being compared over the periods of time. Thus, a common type of objection to the assertion of universal time preference is that, in the wintertime, a man will prefer the delivery of ice the next summer (future) to delivery of ice in the present. This, however, confuses the concept “good” with the material properties of a thing, whereas it actually refers to subjective satisfactions. Since ice-in-the-summer provides different (and greater) satisfactions than ice-in-the-winter, they are not the same, but different goods. In this case, it is different satisfactions that are being compared, despite the fact that the physical property of the thing may be the same.

¹⁶It has become the custom to designate consumer goods with a longer duration of serviceableness as durable goods, and those of shorter duration as nondurable goods. Obviously, however, there are innumerable degrees of durability, and such a separation can only be unscientific and arbitrary.

¹⁷Accordingly, the numbers by which ends are ranked on value scales are ordinal, not cardinal, numbers. Ordinal numbers are only ranked; they cannot be subject to the processes of measurement. Thus, in the above example, all we can say is that going to a concert is valued more than playing bridge, and either of these is valued more than watching the game. We cannot say that going to a concert is valued “twice as much” as watching the game; the numbers two and four cannot be subject to processes of addition, multiplication, etc.

¹⁸An example of suffering a loss as a result of an erroneous action would be going to the concert and finding that it was not at all enjoyable. The actor then realizes that he would have been much happier continuing to watch the game or playing bridge.

¹⁹A large part of this book is occupied with the problem of how this process of value imputation can be accomplished in a modern, complex economy.

²⁰This is the solution of a problem that plagued writers in the economic field for many years: the source of the value of goods.

²¹Cf. Ludwig von Mises, The Theory of Money and Credit (New Haven: Yale University Press, 1953), p. 46.

²²Also cf. T.N. Carver, The Distribution of Wealth (New York: Macmillan & Co., 1904), pp. 4–12. See below for a further discussion of the influences on man's valuation of specific units resulting from the size of the available stock.

²³This would not be true only if the “good” were not a means, but a general condition of human welfare, in which case one less unit of supply would make no difference for human action. But in that case it would not be a good, subject to the economizing of human action.

²⁴On the whole subject of marginal utility, see Eugen von Böhm-Bawerk, The Positive Theory of Capital (New York: G.E. Stechert, 1930), pp. 138–65, especially pp. 146–55.

²⁵For algebraic proof, see George J. Stigler, The Theory of Price (New York: Macmillan & Co., 1946), pp. 44–45.

²⁶For further reading on this subject, see Böhm-Bawerk, Positive Theory of Capital, pp. 170–88; and Hayek, Counter-Revolution of Science, pp. 32–33.

²⁷This is the first proposition in this chapter that has not been deduced from the axiom of action. It is a subsidiary assumption, based on empirical observation of actual human behavior. It is not deducible from human action because its contrary is conceivable, although not generally existing. On the other hand, the assumptions above of quantitative relations of cause and effect were logically implicit in the action axiom, since knowledge of definite cause-and-effect relations is necessary to any decision to act.

²⁸Cf. Mises, Human Action, p. 131.

²⁹Ibid., p. 132.

³⁰Leisure is the amount of time not spent in labor, and play may be considered as one of the forms that leisure may take in yielding satisfaction. On labor and play, cf. Frank A. Fetter, Economic Principles (New York: The Century Co., 1915), pp. 171–77, 191, 197–206.

³¹Cf. L. Albert Hahn, Common Sense Economics (New York: Abelard-Schuman, 1956), pp. 1 ff.

³²In this sense, the stick might be called a “labor-saving device,” although the terminology is misleading. It is “labor-saving” only to the extent that the actor chooses to take the increased productivity in the form of leisure.

³³It is necessary to emphasize that independent acts of saving are necessary for replacement of goods, since many writers (e.g., J.B. Clark, Frank H. Knight) tend to assume that, once produced, capital, in some mystical way, reproduces itself without further need for acts of saving.

³⁴Cf. Frederic Benham, Economics (New York: Pitman Publishing, 1941), p. 162.

³⁵Böhm-Bawerk, Positive Theory of Capital, pp. 95–96. Also see Mises, Human Action, pp. 480–90, and pp. 476–514.

³⁶This uncertainty is a subjective feeling (“hunch” or estimate) and cannot be measured in any way. The efforts of many popular writers to apply mathematical “probability theory” to the uncertainty of future historical events are completely vain. Cf. Mises, Human Action, pp. 105–18.

³⁷That such a range of investment decisions enabling him to achieve greater future output must always be open to him is a fundamental truth derived from the assumption of human action. If they were not open to him, it would mean that man could not (or rather, believed that he could not) act to improve his lot, and therefore there would be no possibility of action. Since we cannot even conceive of human existence without action, it follows that “investment opportunities” are always available.

³⁸On the “unused capacity” bogey, see Benham, Economics, pp. 147–49.

³⁹Cf. Böhm-Bawerk, Positive Theory of Capital, pp. 238–44.

⁴⁰Plain saving is not to be confused with an earlier example, when Crusoe saved stocks of consumers’ goods to be consumed while devoting his labor to the production of capital.

⁴¹See note 15 above.

⁴²The period of production will be equal to the time difference between the act of saving and the act of future consumption, as in all other cases of investment.

⁴³See page 19 above.

⁴⁴Cf. G.J. Schuller, “Rejoinder,” American Economic Review, March, 1951, p. 188. For a reply, see Murray N. Rothbard, “Toward a Reconstruction of Utility and Welfare Economics” in Mary Sennholz, ed. On Freedom and Free Enterprise: Essays in Honor of Ludwig von Mises (Princeton, N.J.: D. Van Nostrand, 1956), p. 227. Also see Boris Ischboldin, “A Critique of Econometrics,” Review of Social Economy, September, 1960, pp. 110–27; and Vladimir Niksa, “The Role of Quantitative Thinking in Modern Economic Theory,” Review of Social Economy, September, 1959, pp. 151–73.

⁴⁵Cf. René Poirier, “Sur Logique” in André Lalande, Vocabulaire technique et critique de la philosophie (Paris: Presses Universitaires de France, 1951), pp. 574–75.