Theory and History

0:00I'm going to talk today on theory and history. Now, a book I'd like to recommend, perhaps surprisingly for the topic theory and history, is the book by von Mises, Theory and History, that came out in 1957. This is one of Mises' four greatest books. Friedrich Hayek thought very highly of this book. This is one book he recommended. He thought this would be a good book for people to study. Also, I think you would find helpful the second chapter of Human Action. It has some very important comments by Mises on theory and history.

0:49Now, the first thing I want to discuss is what you will no doubt remember from your previous lectures that Misesian economics is based on the notion of praxeology, a science of human action in which by deductive reasoning one arrives at certain theorems about human action, about economics. Now, once these theorems aren't established by historical reasoning, we establish these by thinking about the notion of action, what's involved in the concept of action. But once we do this, then the historian has these theorems that he can apply to various historical problems.

1:38Now in praxeology, one can't deduce historical events, one can't say just by thinking about it, deduce that Caesar crossed the Rubicon in 55 BC. That isn't a theorem of human action, but there are particular results that the praxeologist established that can be of use to the historian. For example, one you'll remember from, no doubt you've encountered from your reading in previous lectures, the socialist calculation argument. Mises contended that in a socialist society, by which he meant a society in which production was controlled by central authority, The Theory of Money and Credit

3:01to use that would give us the greatest quantity of the consumer's goods in the amounts, in the ways we most value them we would want. How would we get the consumer goods in just the way we most wanted them, but would best fulfill our wants? We wouldn't be able to do that without some means of calculating. We would have to say it would be better to produce one good rather than another good Mises said, we can't do this in the absence of an economic market. He said that only under capitalism can we have such a market. So under socialism, where you have either government ownership or control of the means of production, we couldn't have economic calculation at all.

3:52So a socialist society would inevitably collapse. Now, how can the historian use this theorem? Well, one obvious way to use this is if we take the history of Russia from 1917 with the Bolshevik Revolution because what the Bolshevik Revolution of October 1917, actually in the Western calendar, it's November 1917, but it's called the October Revolution because they were using a different calendar. The Soviet Union was a direct attempt to establish a social society, so Mises' argument is clearly relevant there.

4:44It isn't relevant in the precise way you might think at first glance. So at this glance, you might say, well, Mises argued that social society is impossible, but we had a social society in existence for quite some years, 1917 through 1989, 1990, so some people in fact said, well, doesn't this show Mises' argument is wrong, because Mises says there can't be a social society, but we had a very large social society. Mises was one of the second most powerful country in the world for a good many of those years, so if this objection is right, then what the praxeologist has established wouldn't be of use to the historian at all, it would just come up with a wrong theorem that's been refuted by history, but in fact, this wasn't what Mises was contending, Mises contended only that a worldwide socialist society wouldn't be able to calculate, The Soviets were able to take advantage of prices on the capitalist market and not all parts of the economy were socialized.

5:56So, given that the social calculation argument isn't refuted, then we still have to face the question, how can the historian use the calculation argument to try to explain, to help him explain Soviet history? Well, if we know from the calculation argument that socialism won't work, and we extend this, as Mises did, to thinking that attempts to bring about socialism will be inefficient. It isn't that everything is all right in a socialist society until we try to establish a worldwide economy and that it will collapse. What is that? Attempts to socialize lead to inefficiency. We can use this in trying to understand particular episodes in Soviet history. For example, when the Soviets first took over, they tried to establish a communist economy by abolishing money. And this didn't work at all, just as the calculation argument would lead us to expect. The goods weren't supplied to the cities at all. All the farmers refused to send in their goods to the cities and there was almost a complete collapse of the economy. So as a result, under Lenin, in 1921, their

7:20so-called new economic policy had to be introduced that allowed the market to return in agriculture into a Lesser Extended Industry. This continued until 1929. Now, then further, when the Soviet economy eventually collapsed, we can see one reason for this. Again, if the calculations argument is correct, then the Soviet economy was bound to collapse at some time or other because the inefficiencies of socialism would bring it down eventually. Mises didn't say this would happen immediately, given that it wasn't a worldwide social society, but this was bound to happen sooner or later, this case quite a bit later.

8:13but so again you see how the historian is applying the calculus is acquainted with praxeology is applying the calculation argument now the historian who is acquainted with praxeology isn't it isn't always a matter of just taking the theorem and applying it there are also difficulties that might come about for For example, a historian might try to say, well, why was it in the period World War II, how were the Soviets able to have such a very strong army that was able to defeat the German army, which was one of the best in the world?

9:00The Soviet economic production, contrary to most people's belief, was much in military, in armaments, was much greater than the German people think it was the other way around. But there was a very good book on this, Bert and Klein, Germany's economic preparations through war, shows that the German armaments down to the 1930s were much less than people thought they were. The Soviets had a very strong economy, so people who want to use praxeology would have to explain what seems to be a counter-instance to the view that socialism is inefficient. The Socialist Historian who doesn't accept Mises' argument would then explain events in a different way, for example, he would say that the Soviet economy encountered difficulties at first, not because Socialism was efficient, they might say, well, it doesn't follow that if an economy is inefficient, it's going to be unable to produce anything at all, just that the total allocation of goods won't be efficient, not absolutely every good. Then, you see, a historian who is not, say, a Socialist historian who doesn't accept Mises' argument would then explain events in a different way.

10:11Socialism is an inefficient system and can't work, but because of, say, external obstacles, the Russian Civil War of 1920 and 21, where forces backed by Britain and France invaded Russia, trying to restore, to overthrow the Bolshevik regime and restore the previous government. And then there was also war with Poland in 1920, so people who are socialist historians are not sympathetic to praxeology, would explain the events in a quite different way. So you see, here's one example of how a praxeologist, knowing praxeology, can help the historian in trying to explain particular historical events.

11:06Now another example is the Industrial Revolution, the great development of capitalism starting in England beginning in the 18th century. Professor Reiko mentioned this I think in his initial lecture. Many historians contend that E. P. Thompson, Making the English Working Class, a very influential The book came out, I think, in the 1960s, but he contended that the Industrial Revolution, the onset of capitalism, worsened the condition of the working classes. Of course, there's a famous contention of Friedrich Engels in his book, The Condition of the Working Classes in England, 1844, and later Karl Marx in Das Kapital in 1867.

11:57They said capitalism has really made conditions very terrible for the workers. It's not a very good system for the workers at all. People have to work in factories under very bad conditions. They work 16-hour days, and women and children have to work in factories. So capitalism is terrible. Now, it isn't a theorem of praxeology that conditions for workers and Social Cooperation in the market is the most productive system, we would find it unlikely that the onset of capitalism has worsened conditions, it wouldn't be impossible that in particular cases this has happened, but we wouldn't expect that the market system is the most productive system.

12:44I find it unlikely that the onset of capitalism has worsened conditions. It wouldn't be impossible that in particular cases this has happened, but we wouldn't expect it. So the historian informed by praxeology would tend to view the evidence not in the way that Marx and his many followers have done, but in a way that is more sympathetic to capitalism. And we find, in fact, that the historians influenced by praxeology have done just that. One very good example is Mises himself. Mises has a very interesting discussion of the Industrial Revolution in human action.

13:31It's, I think, on pages, just a few pages, I think, pages, in the Scholar's Edition, pages 611 through 619, I think. So what Mises contends is that at this period in the world there was a massive population expansion so that the previous, the pre-capitalism was completely unable to cope with this population expansion. So if it hadn't been for capitalism, the new people wouldn't have been able to survive at all. So conditions were bad for workers, not because of capitalism, but on the contrary of capitalism, it was what enabled the people to survive. And he goes on to argue further that even not taking into account the population increase, the condition of the lower classes was very bad or even worse than under labouring conditions under capitalism in the preceding period. So you see Here again, the person who knows praxeology is looking at the historical evidence in a rather different way from the historian who isn't acquainted with praxeology.

14:52Since we expect capitalism to be beneficial, we tend to be very skeptical of evidence that Capitalism has lowered the standard of life of the working classes will instead try to explain this apparent evidence to that effect in a different way. I should say in addition to the Mises, there's a book edited by F. A. Hayek called Capitalism and the Historians, which I think came out in 1954. It has a number of essays critical of the view, the Marxist view of the Industrial Revolution, the condition of the working classes under capitalism.

15:38Now, a final illustration I want to give of the use of the praxeology of the story is in the interpretation of the Great Depression in the United States beginning in October 1929. and I want to take here the, contrast two books, the one, the book, the Austrian book by Murray Rothbard called America's Great Depression, which came out in 1963, which is, Rothbard, of course, was one of the main Austrian economists of the 20th century and his view is the praxeological one, giving the Austrian theory of the business cycle, using that to explain The Great Depression. To contrast this with the book by Milton Friedman and Anna Schwartz, which also came out in 1963, called A New Monetary History of the United States, a much more influential book than Rothbard's book, in my view unfortunately, but both of these books have very different accounts of the depression.

16:52You remember from your studies of Austrian theory, according to the Austrian view, if there's an expansion of bank credit by the government, this lowers the monetary rate of interest, the money rate of interest, how much interest you have, say, a businessman would have to pay if he borrows money from a bank to invest, lowers it below the so-called natural rate of interest, which is determined by people's time preference, how much people prefer to receive, how much people prefer the present over the future, What the premium is people will have to pay, what premium will have to be offered to people if they're to accept money in the future rather than the present.

17:51So according to the Austrian theory, if the interest rate becomes lower, the money interest rate becomes lower than the natural rate, And then people who want to invest in higher orders of production, goods that are used to produce other goods further down the line, as it were, sort of heavy industries, other goods that are in, you remember the stage of the production, I'm not going to draw that because I can't draw, but you remember how the system works, I hope, so people will People then invest much more in these higher stages because the money is available to them. But after the monetary expansion has gone on and when it stops, then it will be revealed that all these investments weren't justified by the natural rate of interest.

18:52People will then revert to their natural rate of interest and they won't be saving as much. So the new businesses that have been invested won't be able to survive, they won't have sufficient funds, people will shift to spending on consumer industries from investing, from spending on the goods of higher orders, and there will be a collapse of these goods of higher orders. And this in the Austrian view is the depression, it's the liquidation of the cycle, the part, and the expansion caused by bank credit. So in the Austrian view, which Rothbard holds, there's the depression in 29 with the necessary liquidation of a boom of the 1920s.

19:43So to support this, since Rothbard is writing in terms of the Austrian view of the business This is the theory he accepts. He tries to establish in the 1920s that there was a period of bank credit expansion, and he stresses, say, that the Federal Reserve policy under Governor Benjamin Strong, who was the governor of the bank in New York, was trying to inflate the currency in order to, in some sense, One of his motives was to help out the Bank of England run by his friend, the governor of the Bank of England, Montague Norman.

20:30So in Rothbard's view, his view of the depression, he wants to show there was a monetary expansion in the 1920s. And then he goes and says, well, because of this, this drove the rate of interest below the natural rate. This accounts for the collapse in 1929. Milton Friedman doesn't hold to the Austrian theory at all. In his view, really, he explains the depression by a collapse in the quantity of money. So in 1929, he says, there was just a sudden collapse in the quantity of money, the Federal Reserve system failed to respond to this collapse in the quantity of money.

21:18and this led to the not to the turn what would be a normal business downturn into a severe depression. So you see that how there's a direct contrast here from the Austrian view which is that the depression came about because of a monetary expansion with this view of Friedman. Now it was a collapse in the quantity of money that caused depression. In Rothbard's view, even though he Friedman, who doesn't accept the Austrian theory, has a completely contrasting account of how the depression works with the one found in Rothbard's book.

22:06I want to turn now to a more general topic, which is, as I've given so far, just on how Rothbard's book, so we see here one more instance of how knowing praxeology will affect the practice of the historian. Now, I want to turn now to a more general topic, which I've given so far, just on how the historian can use praxeology in helping him to explain various Historical Benefits, but I now want to raise a more general question. What is the nature of historical explanation? In here, Mises' view was, again, to some extent, based on praxeology, although certainly it isn't part of praxeology, but it is to some extent based on praxeology.

23:06The historian can't deduce particular events from praxeology, but what he can do is explain particular human actions based on his knowledge of how people act in given circumstances. He thought, in addition to theoretical knowledge that we get from the science of human action, we have an ordinary, everyday knowledge of how human motives work in particular cases. He called this, he coined the name, actually took this, see if I can write on this, it's too technological for me.

24:02He proposed the name thymology for kind of a discipline that would enable us to understand human modes. Actually, he took this from the philosopher, George Santayana, who didn't use the term in a very favorable way for Santayana. What Mises suggests is that we could have a common-sense psychology that would enable us to understand how particular actors in history had made decisions.

24:49Let me give you an example of what he meant. What he said was, in trying to reconstruct how a particular actor had made a certain decision, suppose we take a concrete problem, suppose we say, after the onset of World War II, after the Munich Conference, which was September 29th and 30th, 1938, Remember where Hitler had taken over the Sudetenland, which was the German part of Czechoslovakia, after agreement with Britain, France and Italy.

25:35After that, there had been a change in British foreign policy. British foreign policy, down to the time the Munich Congress had appeased Hitler. The Theory of Money and Credit

26:15What a historian can do is he'd say, imagine say that you were in control of British foreign policy and you imagine that you know certain facts, for example, Hitler has taken over, just taken over the rest of Czechoslovakia and you have various information on what his Previous steps had been, say, the takeover of Austria in March 1938, Munich settlement in September. What would you then, given, say, that you were aiming to promote British interests, what policy might you adopt?

27:01So what you're trying to do, according to this view of historical explanation, You're trying to imagine yourself in the position of the decision maker, say, imagine you had certain motives, certain desires, and certain theories of how people act, certain views of how people act. What would you have done in that instance? So then, say, you come up with an answer to that, and then you see how, you imagine, say, supposing you were in control of British foreign policy, what would you have done? And then you say, how does what you come up with then correspond to what the people actually did? In fact, we see that in the actual British foreign policy, the Foreign Secretary, Lord Halifax, tend to take control over British foreign policy from the Prime Minister, Neville Chamberlain.

27:56He adopted a much stronger policy of resistance to Hitler than previously in the case he issued the guarantee against a German attack to the Polish government that eventually led to war when the Germans invaded September 1st, 1939, Britain and France declared war the next couple of days on September 3rd, so you see what you would be doing here is saying you're trying to figure out how did the particular actors respond to the situation, so you imagine yourself The Theory of Money and Credit

29:33view of historical explanation, Mises was extending and further developing the ideas of a number of 19th century and early 20th century writers, philosophers who had similar ideas. I want to mention two in particular, what happened here, this is not what, everything was going, was working up till now.

30:20Can someone give me a hand here? Oh, thanks.

30:35This is, well, I'll have to go on with it. Is a consumption tax preferable to an income tax? Well, I haven't the slightest idea, I'm sorry. Well, all right, so, oh good, he's here. Yeah, my stuff isn't coming. Oh, oh, I would do that. Ah, ah, thanks very much. Thanks.

31:19Okay.

31:43Okay, these are two philosophers who were, also they're both philosophers, both of them were historians and philosophers, but they influenced Mises and were especially important in that Mises had very similar ideas in his notion of Brichet and of this type of historical The Theory of Money and Credit In this example I gave, someone was trying to explain why Lord Halifax had promoted a more aggressive response to Germany.

32:51He was really reconstructing Halifax's thoughts, so he was really having the same thought as Halifax had done if he were correct in his explanation. It wouldn't of course be the same act of thought. The historian isn't Halifax himself. The Great Italian philosopher, Benedetto Croce, said in a similar vein, that if he's right, the content of his thought is exactly the same as Halifax. If his explanation is the correct one, he's successfully reconstructed the thought. Mises thought very highly of Collingwood. He said that really Collingwood is the only one of these writers who's fully understood praxeology. The great Italian philosopher Benedetto Croce said in a similar vein, all history is contemporary history.

33:42By this he didn't have the absurd view that, say, the events of the Middle Ages are taking place now. What he meant was that when the historian succeeds in rethinking the thoughts of the action of the past, The Theory of Money and Credit

34:30Contributions, Croce had done some early work in economics but then went on to other subjects. All right, so as I say, this is the view that Mises held of historical explanation, that's one that emphasizes notion of intuitive understanding. Now this view has to be contrasted with another Interview, which was held by the logical positivists. There is a famous article published by Carl Hempel in 1942, which is called The Problem of General Laws in History, and he said what the historian does is just like the physical What he's trying to do is to explain a particular event by showing how it follows from a general law.

35:33What we do in any scientific explanation, we have a general law that says if we have such and such initial conditions,

36:17in Philosophy of Science Circles is deductive, nomological, familiar, the DN model. If you hear people talk about the DN model of explanation, this is what it's referring to. You explain something by showing how it fits under a general law. So you see, this is a completely different account from the Christian view that I mentioned that Mises held, because in Mises' view, You don't come up with general laws, you just have a kind of intuitive understanding of what particularly people are going to do based on your own, based on various, the motives or beliefs and beliefs you impute to the persons you're trying to understand.

37:09Now the people, the positivists objected to Frischte and they said, well, this isn't a This isn't a very scientific approach at all, this is just, Mises is talking about intuitive understanding, this really doesn't get you anywhere, this might be all right as a way to come up with a hypothesis, but this isn't really scientific because what you have to do to come up with a valid explanation is you can get a hypothesis in any intuitive way you want, but you have to then formulate it as a general law. and then test it, see whether the historical documents support the conjecture law explanation that you postulated.

37:55Now, I think Mises' reply to this, I think, would be twofold. One is there aren't any such general laws available. There just aren't any general laws of a kind that Hempel assumed existed. The Theory of Money and Credit

38:43satisfied with the territorial gains it had already gotten but would then go on to more further demands on the rest that would threaten British interests. So then you can test, you can certainly test this by saying how does it, this is verified by the British invasion of Poland, I mean the British declaration of war against Germany and the German invasion of Poland, but to view this as a verification, you still have to apply Brechtian to that. You have to understand what are the motives behind that. So you can't, if Mises is right, escape from the notion of Brechtian. There isn't some kind of specially The scientific process that enables you to get out of the intuitive psychology that Mises has postulated, is used in his own account of historical explanation.

39:48So now, what I've done so far is, what I've discussed so far, the application of praxeology to History and Mises, Frischte and the way he's explained history have been problems in the philosophy of history in the sense that they've been concerned with historical explanation how the history, sorry, we could call this, if you wanted to be fancy, the epistemology of history, how the history explains various phenomena, what's involved in explanation. There is another sense of philosophy of history, which is very different. In this sense, philosophy of history refers to a kind of speculative scheme that's an account of not what the historian is doing in explaining facts, but is an account of is there a pattern in history as a whole.

40:49is that we have, of course, histories of particular countries, history of the United States, history of Russia, have history of particular sciences or all sorts of particular history, but is there a pattern to histories, all of history, something that will explain the whole thing? And most historians today would say no, there isn't, but there are a few philosophers of history who thought there was such a pattern, and I want to mention two of these, Karl Marx and Oswald Spengler.

41:47Question, we have to ask, why was Mises in theory and history concerned with these philosophies? Well, what Mises was always interested in, as I'm sure you've gathered by now, is supporting Supporting and Defending Capitalism, and these philosophies, if they were correct, would in some sense threaten capitalism. They would show, if they were in very different ways, that capitalism was a system that would be applied only to particular periods in history and would be superseded by some other form of social organization.

42:44So Mises was very much concerned to show what was wrong with these systems in order so he could pursue his primary goal of defending the free market. So I wanted in the time remaining just to go over what his criticisms were of the two philosophies. The section on Marxism is probably the more important of the two because Marx has been and much more influential figure than Spengler, although Spengler had quite a vogue for a while, especially in the 1920s and 30s, and he was an important theorist of fascism, although his own political views are somewhat hard to pin down.

43:31Now, according to the Marxist view of history, as Mises explained it, Marx was here following, in his account of Marx, he was here following an interpretation by the 19th century Russian Marxist Plekhanov, might as well put him down also, as long as I'm putting down a name, The technological interpretation of Marx, and I think it is a very convincing interpretation, the British philosopher G. A. Cohen in his book, Karl Marx's Theory of History, defends, which is the best defense of Marx, and I know also adopts this interpretation. According to this view, what was basic to Marx, Marx's view of history, was a constant There's a constant tendency in history for technology to develop, Marx called this the forces of production, which basically, technology and society, there's a constant tendency throughout history for technology to get more and more advanced.

44:39say, we have, we start off in the Stone Age and now we go on to the Industrial Revolution and things just keep getting more and more developed in history, so as the force of production develop, for each, at each stage in the development of forces of production, there's a particular Social System, the relations of production that is best suited to develop the forces of production. So the relations of production, the social system, has as its function the highest possible development of the forces of production at that time. So that in the ancient world, slavery was the way that would would develop the force of production the best in the Middle Ages.

45:39The feudal system would best develop the force of production. At the time, Marx was writing, it was capitalism that would best develop the force of production. He thought there would be a final stage in which socialism would develop the force of production the best, and then after this, this would just continue indefinitely. That was the final system, that was it. So you see why Mises wouldn't like this view, because if it's right, capitalism is going to be superseded by socialism. So Mises developed some, I think, very effective criticisms of the Marxist view.

46:26He said, first of all, why does Marx, Marx says that there's a constant tendency for the forces of production to develop in history, but he seems to take this as if it's just something that happens automatically, whereas we know that, in fact, the force of production will develop only if particular people want them to develop, only, remember, if one of the basic principles and Praxeology, only individuals act so that we can't just take development of force and production as if it's some kind of force operating independently of human action.

47:12It's individuals who are acting in history, so the whole basis of the Marxist system, some kind of autonomous development of force and production, collapses if Mises is right. We have a further problem with the system. Again, we can get this directly from Mises' reasoning in the praxeological approach. We know that capitalism, the free market, is always the most efficient method of social production. It isn't the case that, say at previous times, slavery was best fitted to develop a force of production. and later time feudalism only at a particular period would capitalism be the best system.

47:58It's capitalism is always the best system to develop the forces of production. Incidentally, one could, if Marx was right that capitalism is the, at least for the present, is the way best developed forces of production, we could get a kind of a Marxist argument for capitalism, Which would be, you can take what Marxist said, that capitalism best develops force of reduction, at least for the present, and you combine that with the socialist calculation argument, that socialism, far from being a more productive system, would lead to complete collapse, and then you would get a Marxist argument for capitalism, which would say that only under capitalism, in the indefinite future, can the force of reduction The Theory of Money and Credit

49:19have it because it would be the one that would develop the force of production to the greatest possible extent. Now, a third criticism that Mises made of Marx was one that he said was guilty of what for him was one of the supreme sins.

49:49Oh good, it worked. Polylogism. Mises liked somewhat unusual words, even if he didn't The Theory of Money and Credit

50:43The Proletarian logic, which was completely different from bourgeois logic. So, Mises was very much opposed to this. You remember in praxeology we have certain categories of human action that apply to all human beings. It isn't just the case that some people from certain social classes use means to achieve ends. It's everyone in action uses means to achieve ends. Praxeology applies universally, so this goes very much against this notion that Marx had. So, polylogism then is a fundamental failing of Marxism according to Mises. Now, polylogism is also, here it becomes an even more important point, the principle criticism that Mises gives of the system of Oswald Spengler.

51:39Spengler was famous for his book, which came out right after World War I, called The Decline of the West. And what Spengler contended is that there are various civilizations, cultures, that he distinguished seven of these. We're now in what he called the Faustian culture. And he said, each of these cultures, he's rejecting methodological individualism, he said it isn't only individuals act, it's an entire culture acts as a single entity, just like a plant. A culture just grows like a plant. Say, it starts off in the springtime and then it'll achieve its highest point in what he calls summertime.

52:34Then it'll fall into decay in the autumn and winter. He thought that although we have these separate cultures, each one goes through precisely the same stages as all the others. So, what he was extremely good at, he would draw very imaginative parallels between the cultures at various stages. And he thought, though, that each culture, again, this is the polylogist part, thought in a completely different way. Say, Greek mathematics was completely different from Faustian Western mathematics. He thought the Greeks didn't have the idea of infinity. This was a concept that they couldn't have understood.

53:24So he then, applying this to contemporary civilization, he thought that capitalism wouldn't last. It would be replaced by some form of nationalistic socialism. and although he himself in his, one of his last books called The Hour of Decision was rather critical of Hitler, he was also critical of the industrial system, he was very much an opponent of capitalism, so Mises criticizes him just principally on the grounds that he's endorsing polylogism, he says all the people in these cultures think in completely different Mises says, no, that's not right. Everyone has the same logic. Mises says, well, if there are these other logic, let's have them formally specified so we can see what they are.

54:22And he also criticizes Spengler for methodological holism. Spengler thinks that these cultures are acting as if they're organic units. isn't just individuals who act, it's the whole culture that is, in his view, quite literally an organism. The culture is like a plant, and Mises, of course, very much repudiates that. So I think I bring this talk to a much needed end, so I think we have a couple minutes left for any questions, comments, objections. I'm not familiar necessarily with the monetarist view of the depression, but I am familiar with the Mondelian view of the depression.

55:10And so I'm wondering how do the Austrians view that, which is the idea that since all of the European nations went off the gold standard during World War I, from 1914 to 1924, the United States was the only country in the world on the gold standard. And the reason that the European nations did this was so that they could engage in deficit finance to pay for the war, which caused a considerable inflation over that 10 years. And then in 1924, when they started going back to it, they went back to it at an undervalued price of gold. They went back to the original price of gold. Now, to me, that seems like that would have a significant economic effect, deflationary effect, and explain a lot of the things that we see in the Depression. Is the Austrian view completely tied to Austrian business cycle theory and the credit expansion?

55:58or is, I mean, does it take into account this, you know, this deflation by the monetary policy? Well, I think Rothbard does have a paper on that subject. I think I'd have to look that up again, but I think what he contends is that he tries to fit this in with his own account of the 20s. What he says is that the Federal Reserve system to some extent inflated the U.S. currency In order to support the deflationary policy of the British, in order to help them preserve the value of the pound they wanted, they inflated the American currency, because otherwise the British policy would have collapsed. So he sees the policies you're referring to as not in disagreement with his explanation Justice, one reason accounting for what he views as the U.S. expansion during that period.

56:59Kevin? So I understand what the difference is between some of the Austrians in New York Nation and a lot of the Austrians here is that I think the praxeology or the praxeological method is a kind of human. Basically, it's merely a mode of interpretation. And I'd be interested to understand, because I think this applies to historical interpretation too, so some people will say that, you know, to overstay him, praxeological categories is always sort of subjective, merely a mode of interpretation. And I wonder what you would say about that, or if somebody said, you know, I think what those people are doing, they're confusing historical explanation with the actual science of praxeology, that praxeology claims if it's right, if it's correct, that it's not just a way of looking at things, but I mean this is a necessary category of action.

58:06Rothbard has some paper on that. I wrote one years ago with the rather perhaps question-begging title Hermeneutics vs. Austrian Economics and I have a copy. I guess we're out of time now. Thanks very much.