Appendix B INDIVIDUALISM, HOLISM, AND COVENANTALISM And when thy herds and thy flocks multiply, and thy silver and thy gold is multiplied, and all that thou hast is multiplied. . . (Deut. 8:13).
The language of mathematics infuses Moses' discussion of Israel's blessings. This language points to objective wealth: the multiplication of valuable things. This raises a problem for economic theory. How is value measured? How is wealth measured? If value is objective, it can be measured, but modern economic theory officially places the individual's subjective valuation -- economic imputation -- at the heart of its theory of value. Yet modern economists have been obsessed with the intellectual challenge of establishing reliable indexes of wealth, prices, and corporate social utility. They have persuaded governments around the world to spend billions of dollars to collect economic data from private citizens and firms. In fact, this data collection has justified the establishment of government economic planning. Without statistics, government planners could not claim the ability to plan the economy.(1)
Humanist economic theory has been unable to resolve the dichotomy between subjective value and objective value.(2) If value is imputed subjectively by an individual, it is impossible for another individual to measure objectively this value. In fact, it is impossible for the first individual to impute cardinal numbers to his own valuation. He can only establish an ordinal ranking of values: first, second, third, etc. As Rothbard has written, "there is never any possibility of measuring increases or decreases in happiness or satisfaction. Not only is it impossible to measure or compare changes in the satisfaction of different people; it is not possible to measure changes in the happiness of any given person. In order for any measurement to be possible, there must be an eternally fixed objectively given unit with which other units may be compared. There is no such objective unit in the field of human valuation. The individual must determine subjectively for himself whether he is better or worse off as a result of any change. His preference can only be expressed in terms of simple choice, or rank. . . . There is no possible unit of happiness that can be used for purposes of comparison, and hence of addition or multiplication. Thus, values cannot be measured; values or utilities cannot be added, subtracted, or multiplied. They can only be ranked as better or worse."(3)
If this is true, then it is scientifically impossible to make interpersonal comparisons of subjective utility. This was Lionel Robbins' assertion in 1932.(4) But if he was correct, then it is impossible for economists as scientists to make policy recommendations based on the superiority of one outcome to another. Roy Harrod pointed this out in a 1938 essay.(5) Robbins then capitulated, announcing that he did accept the legitimacy of idea of economic policy-making.(6) He never reconciled his two positions.(7) So far, neither has anyone else.
This is the problem of epistemological subjectivism and policy-making. It applies to every social science, not just economics. It is more obvious in economics, however. The economics profession systematically avoids discussing it. Economists dearly love their role as policy experts. They do not want to admit to their students, let alone to the general public, that the foundations of modern economics make such a role scientifically fraudulent.
Welfare Economics, Ethics, and Subjectivism Whether we use the language of multiplication or the language of social utility, we are dealing with collectives. If we use such terminology to assert an increase in social wealth, we are aggregating individual utilities. But this procedure is illegitimate if economic value is exclusively subjective. Thus, we cannot move scientifically from the individual to the group on the basis of economic analysis. Conclusion: there is no such thing as welfare economics.
Rothbard attempted to make this move in a 1956 essay. First, he denied the existence of total utility. "We must conclude then that there is no such thing as total utility; all utilities are marginal."(8) Second, he announced: "The problem of `welfare economics' has always been to find some way to circumvent this restriction on economics, and to make ethical, and particularly political, statements directly."(9) Third, he stated that all ethical issues are imported from outside the discipline of economics.(10) Fourth, he asserted that all economic advising denies the ethical neutrality dictum.(11) Then how can an economist make any statement regarding social welfare? Only on one basis: if any change increases at least one person's utility and has not reduced any other person's utility. This is Pareto's unanimity rule.
There is one overwhelming objection to this rule: the existence of envy. If one person is made richer by some change in the economy, and another person resents this, the benefit to the first person may be offset by the negative feelings of the second. Rothbard in 1956 acknowledged this as a theoretical problem, but then he dismissed it. Envy is strictly internal; it does not lead to action, and only action counts. "How do we know that this hypothetical envious one loses in utility because of the exchanges of others? Consulting his verbal opinions does not suffice, for his proclaimed envy might be a joke or a literary game or a deliberate lie."(12) Conclusion: "We are led inexorably, then, to the conclusion that the processes of the free market always lead to a gain in social utility. And we can say this with absolute validity as economists, without engaging in ethical judgments."(13) So, there is an aggregate called social utility after all. We can postulate an increase in social utility whenever we can identify a voluntary exchange: two people are better off, and no one is worse off, so long as there is no such thing as envy. Rothbard imported an aggregate into his analysis, as all welfare economists must, and with welfare economics comes ethics -- the end of value-free economics.
Unfortunately for the acceptability of this thesis, Rothbard later wrote a classic essay in 1971 on the importance of envy in society, especially as the basis of socialism.(14) By moving envy from the realm of the merely hypothetical into the realm of the politically significant, Rothbard undermined his reconstruction of welfare economics. Envy does exist after all in the world of demonstrated preferences; it is a major foundation of socialism. Therefore, the economist who uses some version of Pareto's analysis -- at least two market participants are better off, while no one is worse off -- in order to prove an increase in social utility yet without invoking ethics is deluding himself. He has imported ethics into economic analysis the moment the issue of envy is introduced. He has assumed that envy is ethically illegitimate and therefore cannot legitimately be used to criticize that libertarian version of welfare economics which supposedly enables an economist to assert an increase of social utility based on the existence of voluntary exchanges. Ethics, in short, becomes determinative in "value-free" economic science. This hostility to envy as a legitimate aspect of economic analysis rests on an ethical foundation.
Kirzner on Welfare Economics
Three decades later, Israel Kirzner -- a disciple of Mises and a rabbi of Orthodox Judaism(15) -- profusely praised Rothbard's 1956 essay for its rejection of aggregates. "To attempt to aggregate utility is not merely to violate the tenets of methodological individualism and subjectivism (by treating the sensations of different individuals as being able to be added up); it is also to engage in an entirely meaningless exercise: economic analysis has nothing to say about sensations, it deals strictly with choices and their interpersonal implications."(16) Kirzner rejects the idea of "Pareto optimality" because "a Pareto-optimal move is considered to advance the well-being of society -- considered as a whole."(17) He is correct; this is exactly what Pareto optimality implies. But Rothbard's essay rested on Pareto optimality: two people being better off and no one (except the envious, who were dismissed by definition) worse off. Kirzner completely misses the fundamental point -- a highly non-individualistic point -- of Rothbard's essay: social utility is an aggregate, and this aggregate can be said to increase only because of Pareto optimality. In the essay following Kirzner's, I set forth these challenges to Rothbard:
If the economist cannot make interpersonal comparisons of subjective utility . . . as Rothbard insists, then how can he be certain that "the free market maximizes social utility"?(18) What is "social utility" in an epistemological world devoid of interpersonal aggregates?
If "in human action there are no quantitative constants,"(19) and therefore no index number is legitimate,(20) then how can we say that monetary inflation produces price inflation? What is price inflation without an index number? What is an index number without interpersonal aggregation?
If we cannot define "social utility," or price inflation, then how can we know that "money, in contrast to all other useful commodities employed in production or consumption, does not confer a social benefit when its supply increases"?(21) How can we legitimately say anything about the aggregate entity, "social benefit"?(22)
Kirzner understands that these aggregates are illegitimate from the point of view of methodological subjectivism, and he has refrained from arguing publicly for any social policy throughout his career. He has seen that, in terms of pure subjectivism in economics, to discuss the concept of social choice is "to engage in a metaphor."(23) "To choose, presupposes an integrated framework of ends and means; without such a presumed framework allocative choice is hardly a coherent notion at all."(24) Such a statement identifies Kirzner as a very precise follower of Mises and a less precise follower of Moses. Without the concept of aggregate, corporate social curses and blessings, there can be no national covenant between God and His people. Without the idea of a series of corporate covenants there could be neither Judaism or Christianity. The covenants of Israel were judicially objective. To demonstrate this objectivity, God provided objective economic blessings that were visible to anyone who looked at the evidence.
And because he loved thy fathers, therefore he chose their seed after them, and brought thee out in his sight with his mighty power out of Egypt; To drive out nations from before thee greater and mightier than thou art, to bring thee in, to give thee their land for an inheritance, as it is this day. Know therefore this day, and consider it in thine heart, that the LORD he is God in heaven above, and upon the earth beneath: there is none else (Deut. 4:37-39).
And it shall be, when the LORD thy God shall have brought thee into the land which he sware unto thy fathers, to Abraham, to Isaac, and to Jacob, to give thee great and goodly cities, which thou buildedst not, And houses full of all good things, which thou filledst not, and wells digged, which thou diggedst not, vineyards and olive trees, which thou plantedst not; when thou shalt have eaten and be full (Deut. 6:10-11).
The LORD shall establish thee an holy people unto himself, as he hath sworn unto thee, if thou shalt keep the commandments of the LORD thy God, and walk in his ways. And all people of the earth shall see that thou art called by the name of the LORD; and they shall be afraid of thee. And the LORD shall make thee plenteous in goods, in the fruit of thy body, and in the fruit of thy cattle, and in the fruit of thy ground, in the land which the LORD sware unto thy fathers to give thee. The LORD shall open unto thee his good treasure, the heaven to give the rain unto thy land in his season, and to bless all the work of thine hand: and thou shalt lend unto many nations, and thou shalt not borrow (Deut. 28:9-12).
But the consistent methodological subjectivist refuses to see with his own eyes. He will not acknowledge the scientific relevance of either corporate blessings or corporate cursings. This was Israel's problem in Isaiah's day. "Also I heard the voice of the Lord, saying, Whom shall I send, and who will go for us? Then said I, Here am I; send me. And he said, Go, and tell this people, Hear ye indeed, but understand not; and see ye indeed, but perceive not. Make the heart of this people fat, and make their ears heavy, and shut their eyes; lest they see with their eyes, and hear with their ears, and understand with their heart, and convert, and be healed. Then said I, Lord, how long? And he answered, Until the cities be wasted without inhabitant, and the houses without man, and the land be utterly desolate, And the LORD have removed men far away, and there be a great forsaking in the midst of the land" (Isa. 6:8-12). Such blindness is judicial blindness. God blinds men so that they cannot see with their own eyes. Judicial blindness is a mark of His covenantal curse. Men interpret what they see in terms of what they believe, and what covenant-breakers believe is that God does not bring corporate, objective, measurable, covenantal sanctions in history.
Kirzner rejects classical economics in the name of subjectivism. He therefore rejects biblical economics in the name of subjectivism. For methodological subjectivism, there is no such thing as national wealth, economically speaking, for there is no collective. If nation A is devastated by a plague, leaving behind only one alcoholic survivor who now owns the contents of every liquor store in the nation, while nation B has not suffered such a plague, there is no way for a subjectivist economist to say which nation is now better off. The alcoholic is clearly a happy man. Who is to say scientifically that the collective joy of nation B, which avoided the plague, is greater than the collective joy of nation A, i.e., the drunk who is feeling no pain? There is no such thing as collective joy, says the methodological subjectivist. In Kirzner's words, "economic analysis has nothing to say about sensations." Contrast this with Moses' economic analysis: "And thou say in thine heart, My power and the might of mine hand hath gotten me this wealth. But thou shalt remember the LORD thy God: for it is he that giveth thee power to get wealth, that he may establish his covenant which he sware unto thy fathers, as it is this day" (Deut. 8:17-18). Moses spoke this to the assembled nation, not to a private individual.
Moses was raising the question that fascinated Adam Smith: the origin of the wealth of nations. Kirzner dismisses this whole question as epistemologically misguided. "During the period of classical economics it was, of course, taken for granted that a society was economically successful strictly insofar as it succeeded in achieving increased wealth. Adam Smith's Inquiry into the Nature and Causes of the Wealth of Nations expressed this approach to the economics of welfare simply and typically. It was taken for granted that a given percentage increase in a nation's physical wealth (with wealth often seen as consisting of bushels of "corn") meant a similar percentage increase in the nation's well-being. From this perspective a physical measure of a nation's wealth provides an index of that nation's economic success, regardless of its distribution. A bushel of wheat is a bushel of wheat. Clearly this notion of welfare offends the principles of methodological individualism and subjectivism; it was swept away by the marginalist (subjectivist) revolution of the late nineteenth century."(25) But Smith's perception of objective national wealth was closer to the covenantal wisdom of the Bible than radical subjectivism is.(26) By stripping all traces of objective value theory out of economics, radical subjectivism produces an intellectual world of sustained incoherence. A handful of academic economists have trained themselves to dismiss the visibly obvious as epistemologically irrelevant.(27)
Dualism: Objective vs. Subjective Economics I am not speaking here of Kant's dualism between the realm of man's mind and the realm of physical causation.(28) Mises, as a good Kantian, acknowledged the legitimacy of this dualism.(29) I am speaking here of the dualism between aggregative, objective value theory and individualistic, subjective value theory.
The epistemological problem with all forms of welfare economics and all forms of economic policy-making is the problem of reconciling aggregative values or preferences, whose existence is denied by extreme economic individualists, yet also invoked by them at some point, and subjective values, which are dismissed as morally peripheral by methodological holists, but which are also invoked by them at some point. This topic is avoided like the plague within the economics profession, since there has never been a widely shared humanistic solution to this dualism.
The methodological individualist moves epistemologically toward complete indeterminacy. The momentary subjective states of the individual are said to lose contact with the external world and even with his own past subjective states.(30) This epistemological chaos has been defended by Ludwig Lachmann: kaleidic perceptualism. He invokes as his image of society the kaleidoscope,(31) that delightful toy which uses mirrors to produce ever-changing, unrepeatable, visually fascinating, and autonomously meaningless patterns out of shifting objects. For Lachmann, as for Kirzner, it becomes impossible to speak of national economic growth or per capita economic growth.(32) Yet Mises argued to the contrary: "Saving, capital accumulation, is the agency that has transformed step by step the awkward search for food on the part of savage cave dwellers into modern ways of industry."(33) For the radical subjectivist, it is illogical to argue that an increase of per capita capital leads to greater per capita wealth. Per capita capital is "a wholly artificial construct," writes Kirzner.(34) Yet Mises argued: "There is but one means available to improve the material conditions of mankind: to accelerate the growth of capital accumulated as against the growth in population. The greater the amount of capital invested per head of the worker, the more and the better goods can be produced and consumed."(35) Mises' original radical subjectivism has run aground on the shoals of a far more radical subjectivism. The result of pure subjectivism is the end of meaning, not just for economics but for human thought in general.
In contrast, the methodological holist moves toward central planning. The concept of social goods and social evils implies a single planning mind and a single standard of good and evil. This is what alienates the individualists. They want to preserve human freedom; the holist wants to improve the human condition systematically, meaning through central planning and coercion. The individualist does not trust the State; the holist does not trust the free market. The individualist rejects State compulsion; the holist rejects social and even personal indeterminacy, which radical subjectivists such as Lachmann preach with fervor. The individualist wants the consumer to be sovereign; the holist wants the voter or bureaucrat to be sovereign. The individualist defends the autonomy of individual plans; the holist defends the sovereignty of the State's plan.
The individualist proclaims faith in the rationality of the market and its ability to improve the human condition. He then denies the epistemological legitimacy of any objective unit of measurement that would allow an outside observer to assess such improvement. In contrast, the holist proclaims faith in the rationality of the State and its ability to improve the human condition. He then denies the appropriateness of any unit of measurement that points to the failure of central planning to deliver the goods. Denying the relevance of socialism's objective failure, he proclaims his faith in intangible socialist goods that provide dignity and meaning in socialism's world of stagnant or declining economic output. Both the individualist and the holist seek justification in a hypothetical realm of the spirit -- Kant's noumenal realm -- which lies outside the domain of objective measurement, i.e., Kant's phenomenal realm. In search of meaning, members of both schools of economic thought flee to the zone of man's indeterminate subjective freedom: Kant's noumenal realm. The holist seeks justification for his views in terms of the collective "quality of life," which cannot be scientifically measured. The individualist seeks justification for his views in terms of the individually perceived productivity of the entrepreneurial flash of insight, which cannot be measured, taught, or even described scientifically.(36)
Resolution: Methodological Covenantalism The methodological covenantalist finds the solution to these inherent and permanent dualisms in the concept of a sovereign, omniscient God. God has a plan. He matches ends and means. He issues a decree for history, and this decree will be fulfilled. "And all the inhabitants of the earth are reputed as nothing: and he doeth according to his will in the army of heaven, and among the inhabitants of the earth: and none can stay his hand, or say unto him, What doest thou?" (Dan. 4:35). The presupposition of a sovereign God replaces the presupposition of sovereign man.
To the extent that men think God's thought after Him, they adopt God's standards -- His hierarchy of legitimate ends -- with respect to their lives. God enables people to coordinate their plans through human action because His decree and plan are above theirs. "A man's heart deviseth his way: but the LORD directeth his steps" (Prov. 16:9). "The king's heart is in the hand of the LORD, as the rivers of water: he turneth it whithersoever he will" (Prov. 21:1). In Joseph's words to his brothers, who had sold him into slavery, "But as for you, ye thought evil against me; but God meant it unto good, to bring to pass, as it is this day, to save much people alive" (Gen. 50:20). God's Bible-revealed law-order provides the framework of productive coordination, in economics as in other areas of life. His sanctions in history provide both the incentives and disincentives that confirm His covenant law.
The methodological individualist does not begin with the presupposition of an omniscient God. Such a God would thwart the individualist's autonomy. Neither does the methodological holist begin with God; he begins with some substitute source of planning and accurate information, most commonly the State. The idea of cosmic personalism is foreign to humanistic economics.(37) Economics since the late seventeenth century has been self-consciously agnostic,(38) i.e., militantly atheistic with a thin veneer of humility for academic propriety's sake. The result is epistemological chaos, which is concealed from public view, even from the occasionally inquisitive eyes of graduate students, by a kind of embarrassed silence. Should anyone enquire about this epistemological dualism, he will be assured that such matters are irrelevant to what economists do. And what do economists do? Economics. Then what is economics? Whatever economists do.(39)
Conclusion The Bible's objective language of national wealth undermines methodological individualism. But rarely do methodological individualists pursue their position to its logical conclusion. The language of statistical averages and price indexes is common to most methodological individualists.
Because biblical cosmic personalism is true, there can be a resolution to the philosophical problem of the seeming contradiction between subjective and objective knowledge. In economics, this contradiction is seen most clearly in the debates over objective and subjective value. The Bible's objective value theory is grounded in the objective Person of God -- His declarations, standards, and evaluations. God's subjective declaration of value to His objective creation -- "it is good" -- and His objective declarations of blessings and cursings in history indicate that subjectivism and objectivism are correlative. They are grounded in the objective character of God's subjective declarations. The mind of man is capable of making objective evaluations of external conditions because his mind reflects God's mind. He is made in God's image. His evaluations become progressively accurate as they approach God's evaluations as a limit. He thinks God's thought after Him.
There is corporate wealth. Men can subjectively perceive objective differences between rich and poor nations, rich and poor corporations, and rich and poor governments. I can remember being challenged verbally by Mises in 1971 to defend my statement that we can make objectively meaningful comparisons between subjectively perceived human conditions. I said, "It is better to be rich and healthy than it is to be poor and sick." He said, "Yes, that's so." This was not a great philosophical exchange, but it got to the point. That point was not noumenal.
Footnotes:
1. Murray N. Rothbard, "The Politics of Political Economists: Comment," Quarterly Journal of Economics, 74 (Nov. 1960). Rothbard, "Fact-finding is a proper function of government," Clichés of Politics, edited by Mark Spangler (Irvington, New York: Foundation for Economic Education, 1994). The essay was first published in The Freeman in June, 1961: "Statistics: Achilles' Heel of Government." Cf. Gary North, Sanctions and Dominion: An Economic Commentary on Numbers (Tyler, Texas: Institute for Christian Economics, 1996), ch. 2, section on "Statistics and Government Planning."
2. Gary North, The Dominion Covenant: Genesis (2nd ed.; Tyler, Texas: Institute for Christian Economics, 1987), ch. 4. Cf. North, Tools of Dominion: The Case Laws of Exodus (Tyler, Texas: Institute for Christian Economics, 1990), pp. 1093-1100.
3. Murray N. Rothbard, Man, Economy, and State: A Treatise on Economic Principles (Princeton, New Jersey: Van Nostrand, 1962), pp. 15-16.
4. Lionel Robbins, An Essay on the Nature and Significance of Economic Science (2nd ed.; New York: St. Martins, 1935), p. 140.
5. R. F. Harrod, "Scope and Method of Economics," Economic Journal, XVLIII (1938), pp. 396-97.
6. Lionel Robbins, "Interpersonal Comparisons of Utility: A Comment," ibid. (1938), p. 637-39.
7. North, Dominion Covenant, pp. 46-50.
8. 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, New Jersey: Van Nostrand, 1956), p. 234.
9. Ibid., p. 244.
10. Ibid., p. 247.
11. Ibid., p. 248.
12. Ibid., p. 250.
13. Idem.
14. Rothbard, "Freedom, Inequality and the Division of Labor," Modern Age (Summer 1971); reprinted in Kenneth Templeton (ed.), The Politicalization of Society (Indianapolis, Indiana: LibertyPress, 1978), pp. 83-126. The essay was also reprinted as a monograph by the Mises Institute, Auburn, Alabama.
15. Economist Aaron Levine refers to Kirzner as "Rabbi Dr. Israel Kirzner, Talmudist extraordinaire. . . ." Levine, Free Enterprise and Jewish Law: Aspects of Jewish Business Ethics (New York: KTAV, 1980), p. xi.
16. Israel M. Kirzner, "Welfare Economics: A Modern Austrian Perspective," in Walter Block and Llewellyn H. Rockwell, Jr. (eds.), Man, Economy, and Liberty: Essays in Honor of Murray N. Rothbard (Auburn, Alabama: Mises Institute, 1988), p. 79.
17. Idem.
18. Rothbard, Power and Market: Government and the Economy (Menlo Park, California: Institute for Humane Studies, 1970), p. 13.
19. Rothbard, Man, Economy, and State, p. 739.
20. Ibid., p. 740.
21. Rothbard, "The Case for a 100% Gold Dollar," in Leland B. Yeager (ed.), In Search of a Monetary Constitution (Cambridge, Massachusetts: Harvard University Press, 1962), p. 121.
22. Gary North, "Why Murray Rothbard Will Never Win the Nobel Prize!" in Man, Economy, and Liberty, p. 105.
23. Kirzner, "Welfare Economics," p. 80.
24. Ibid., p. 81.
25. Kirzner, "Welfare Economics," p. 78.
26. The phrase "radical subjectivism" is Ludwig Lachmann's. He claimed in 1982 that radical subjectivism "inspired the Austrian revival of the 1970s. . . ." Ludwig M. Lachmann, "Ludwig von Mises and the Extension of Subjectivism," in Israel M. Kirzner (ed.), Method, Process, and Austrian Economics: Essays in Honor of Ludwig von Mises (Lexington, Massachusetts: Lexington Books, 1982), p. 37. Lachmann was being simultaneously too modest and too arrogant. It was his lectures in defense of radical subjectivism at the 1974 South Royalton, Vermont, conference (which I attended) that split the Austrian movement into the Rothbardian and Lachmanian camps. Radical subjectivism was surely an aspect of the revival of Austrian economics, for it split the movement into two irreconcilable factions. Radical subjectivism was hardly basis of Austrianism's revival. Lachmann also invoked the work of "Shackle, the master subjectivist" (p. 38). But Shackle was never an Austrian School economist. Lachmann pretended otherwise. See Lachmann, "From Mises to Shackle: An Essay on Austrian Economics and the Kaleidic Society," Journal of Economic Literature, XIV (March 1976). In the history of economic thought, G. L. S. Shackle is the most consistent defender of Kant's noumenalism as an economic methodology. I regard Kirzner's theory of entrepreneurship as Lachmanian.
27. In short, says the economist, "Your facts cannot be sustained by economic theory."
28. Richard Kroner, Kant's Weltanschauung (University of Chicago Press, [1914] 1956).
29. Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution (New Haven, Connecticut: Yale University Press, 1957), p. 1.
30. Lachmann writes: "The human mind can, it is true, transcend the present moment in imagination and memory, but the moment-in-being remains nevertheless always self-contained and solitary. . . . It follows that it is impossible to compare human actions undertaken at different moments in time." Ludwig M. Lachmann, Capital, Expectations, and the Market Process (Kansas City, Kansas: Sheed Andrews and McMeel, 1977), p. 83.
31. Ludwig Lachmann, "An Austrian Stocktaking: Unsettled Questions and Tentative Answers," in Louis Spadaro (ed.), New Directions in Austrian Economics (Kansas City, Kansas: Sheed Andrews and McMeel, 1978), p. 7. This book might well have been titled Kaleidic Developments in Austrian Economics, or perhaps The Epistemological Breakdown of Austrian Economics.
32. Ludwig Lachmann, Capital and Its Structure (Kansas City, Kansas: Sheed Andrews and McMeel, 1977), p. 37.
33. Ludwig von Mises, The Anti-Capitalist Mentality (Princeton, New Jersey: Van Nostrand, 1956), p. 39.
34. Israel M. Kirzner, An Essay on Capital (New York: Augustus Kelly, 1966), p. 120.
35. Mises, Anti-Capitalist Mentality, p. 5.
36. Kirzner's entrepreneurial "ah, ha," alertness, or hunch is the premier example of this flight to the noumenal in search of explanations. He calls entrepreneurial alertness "the instant of an entrepreneurial leap of faith. . . ." Kirzner, Perception, Opportunity, and Profit: Studies in the Theory of Entrepreneurship (University of Chicago Press, 1979), p. 163. This moment of discovery is beyond the constraints of logical cause and effect. "Once the entrepreneurial element in human action is perceived, one can no longer interpret the decision as merely calculative -- capable in principle of being yielded by mechanical manipulation of the `data' or already completely implied in these data." Kirzner, Competition and Entrepreneurship (University of Chicago Press, 1973), p. 35. He speaks of the entrepreneur's "propensity to sense what prices are realistically available to him" (p. 40). The essence of this sense is that it is beyond calculation, i.e., beyond Kant's phenomenal realm.
37. Gary North, The Dominion Covenant: Genesis (2nd ed.; Tyler, Texas: Institute for Christian Economics, 1987), ch. 1.
38. William Letwin, The Origins of Scientific Economics (Cambridge, Massachusetts: M.I.T. Press, 1963).
39. These definitions were offered, respectively, by Jacob Viner and Frank Knight. See James Buchanan, What Should Economists Do? (Indianapolis, Indiana: LibertyPress, 1979), p. 18.
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