The Free Radical
Nov. 2003/Jan. 2004

Reconciling Austrian and Objectivist Value Theories  
by Dr. Edward Younkins  
Professor of Accountancy and Business Administration at Wheeling Jesuit University in West Virginia and author of Capitalism and Commerce. 

I have recently written several essays for Le Québécois Libre in which I have suggested the feasibility and desirability of combining doctrines from Austrian Economics and Objectivism in our efforts to develop the strongest possible conceptual and moral case for a free market society.(1) This paper provides a summarized excerpt of the last of these essays which presented an argument for reconciling Misesian praxeologyís subjectivism and value-neutrality with Objectivismís value-significance. This involves an analysis of the value theories of the Austrians, Carl Menger  
(1840-1921) and Ludwig von Mises (1881-1973), and of the founder of Objectivism, Ayn Rand (1905-1982). 
Comparing the Value Theories of Menger, Mises, and Rand 
The preeminent theory within Austrian value theory is the Misesian subjectivist school. Mises maintained that it is by means of its subjectivism that praxeological economics develops into objective science. The praxeologist takes individual values as given and assumes that individuals have different motivations and prefer different things. The same economic phenomena means different things to different people. In fact, buying and selling takes place because people value things differently. The importance of goods is derived from the importance of the values they are intended to achieve. When a person values an object, this simply means that he imputes enough importance to it to be willing to start a chain of causation to change or maintain it, thus making it a thing of value. Misesian economics does not study what is in an object, as does the natural scientist, but rather, studies what is in the subject. 
On the other hand, Menger and Rand agree that the ultimate standard of value is the life of the valuer.(2) Human beings have needs and wants embedded in their nature. Both Menger and Rand begin with the ultimate value of human life and determine the values that a man needs. Their respective objective approaches to value hold that value is only meaningful in relationship to some valuing consciousness. A value must be a value to an existing human being. The difference between the ideas of Menger and Rand on value is that Menger was exclusively concerned with economic value whereas Rand was interested in values of all types. For Rand, all human values are moral values that are essential to the ethical standard of human nature in general and the particular human life of who the agent is.  
Although Menger speaks of economic value while Rand is concerned with moral value, their ideas are essentially the same. Both view human life as the ultimate value. Their shared biocentric concept of value contends that every value serves biological needs. Value thus has its roots in the conditional nature of life. Life can perish. Objective values support manís life and originate in a relationship between a man and his survival requirements. 
Menger was concerned with the many values the pursuit of which is mainly an economic matter. Because anything that satisfies a human need is a value, that which satisfies a manís material needs for food, shelter, healthcare, wealth, production, and so forth, is deemed to be an economic value. People require a certain degree of prosperity with respect to their needs, desires, and wants. 
Rand explains that the idea of value enters the world with the phenomenon of life and that the nature of values depends on the type of life in question. Good and bad are objective relational features of living beings. It follows that the human good is connected to human nature which involves life, the source of value, and free will, the element of responsibility. Of course, a human being can choose to pursue or reject life. Moral judgment is concerned with what is volitional. Moral principles are useful only to beings with conceptual consciences who can choose their actions. 
From Ayn Randís perspective, every human value is a moral value (including economic value) that is important to the ethical standard of manís life qua man. Rand viewed virtually every human choice as a moral choice involving moral values. 
Both Rand and Menger espouse a kind of contextually Ė relational objectivism in their theories of value. Value is seen as a relational quality dependent on the subject, the object, and the context or situation involved. The subject, object, and the situation that combine them are the antecedents of value. 
Values come into existence with the emergence of life. Only living things have values. Values are linked to life and moral values are linked to human life. The ultimate value is life itself. Whereas all living things pursue values, it is only human beings that hold this ultimate value by choice. The idea of human value presupposes a valuer with a conceptual consciousness. In addition to a valuer for whom a thing is a value, other prerequisites of human value are an end to which the value is a means and manís life as an end in itself (i.e., a final end that is not a means to a further end). Lifeís conditionality (i.e., the alternative of life or death) makes action necessary to achieve values. 
If a person chooses to live, this choice implies that he will attempt to obtain the means or fulfill the requirements and needs of his life. A need is a condition whose presence improves a personís ability to survive or flourish or whose absence hinders that ability. Needs arise from a manís nature and thus have a natural foundation. It is natural to satisfy oneís needs. In fact, a personís needs can be viewed as the bridge between the natural sciences (especially biology) and the human sciences. Whatever satisfied a need can be deemed to be a value. Value depends on manís needs. 
The act of valuing is one of discovering what maintains, advances, and enhances the life of the individual. Objective values support a manís life and objective disvalues jeopardize it. We can say that values are objective when particular objects and actions are good to a specific person and for the purpose of reaching a particular goal. Objective value emanates from a relationship between a manís conceptual consciousness and existence. Of course, it is possible for a person to value objects that are not actually valuable according to the standard of life. This is because a man is fallible or may choose not to use his capacity to be rational and self-interested. Menger has correctly stated that values correspond to an objective state of affairs when men value what they objectively require to sustain themselves. Value is an objective relationship between a man and an aspect of reality. This relationship is not arbitrary. 
Objective value involves a connection between conceptual human consciousness (i.e., reason) and the facts of reality. A specific thingís value is a function of the relationship which it has to a given personís life. Whether or not the relevant relationship exists is a matter of fact. A true objective value must exist in a life-affirming relationship to a man and it must obtain in a proper relationship to his consciousness. 
Subjective Value and Value Freedom Are Compatible 
With Objective Value and Value Relevance 
As we have seen, there is an important dissemblance within Austrian value theory between Menger and Mises. However, it is possible for Mengerís more objective-value-oriented theory to coexist and complement Mises pure subjectivism which is based on the inscrutability of individual values and preferences. Although Menger agreed with Mises that an individualís chosen values are personal and therefore subjective and unknowable to the economist, he also contended that a person ought to be rationally pursuing his objective life-affirming values. Menger thus can be viewed as a key link-pin thinker between Misesian praxeology and Objectivist ethics. 
According to Mises, economics is a value-free science of means, rather than of ends, that describes but does not prescribe. However, although the world of praxeological economics, as a science, may be value-free, the human world is not value-free. Economics is the science of human action and human actions are inextricably connected with values and ethics. It follows that praxeological economics needs to be situated within the context of a normative framework. Praxeological economics does not conflict with a normative perspective on human life. Economics needs to be connected with a discipline that is concerned with ends such as the end of human flourishing. Praxeological economics can stay value-free if it is recognized that it is morally proper for people to take part in market and other voluntary transactions. Such a value-free science must be combined with an appropriate end. 
Economics, for Mises, is a value-free tool for objective and critical appraisal. Economic science differentiates between the objective, interpersonally valid conclusions of economic praxeology and the personal value judgments of the economist. Critical appraisal can be objective, value-free, and untainted by bias. It is important for economic science to be value-free and not be distorted by the value judgments or personal preferences of the economist. The credibility of economic science depends upon an impartial and dispassionate concern for truth. Value-freedom is a methodological device designed to separate and isolate an economistís scientific work from the personal preferences of the given economic researcher. His goal is to maintain neutrality and objectivity with respect to the subjective values of others. 
Misesian economics focuses on the descriptive aspects of human action by offering reasoning about means and ends. The province of praxeological economics is the logical analysis of the success or failure of selected means to attain ends. Means only have value because, and to the degree that, their ends are valued. 
The reasons why an individual values what he values and the determination of whether or not his choices and actions are morally good or bad are certainly significant concerns but they are not the realm of the praxeological economist. The content of moral or ultimate ends is not the domain of the economist qua economist. There is another level of values that defines value in terms of right preferences. This more objectivist sphere of value defines value in terms of what an individual ought to prefer. 
Simply because Mises expounds a value-free science of economics, it does not mean that he believes that a manís behavior lacks moral content. Because a human being is not compartmentalized, economic values and moral values coexist in a manís consciousness, frequently affect one another, and oftentimes overlap. Sooner or later, some moral values must be referred to before the propositions of praxeological economics can be used in menís concrete situations and in service of their ultimate ends. It follows that theories of the moral good are compatible with Austrian economics because they exist on a different plane. 
Knowledge gained from praxeological economics is both value-free (i.e., value neutral) and value-relevant. Value-free knowledge supplied by economic science is value-relevant when it supplies information for rational discussions, deliberations, and determinations of the morally good. Economics is reconnected with philosophy, especially the branches of metaphysics and ethics, when the discussion is shifted to another sphere. It is fair to say that economic science exists because men have concluded that the objective knowledge provided by praxeological economics is valuable for the pursuit of both a personís subjective and ultimate ends. 
Advocating or endorsing the idea of ďmanís survival qua manĒ or of a good or flourishing life involves value judgments. To make value judgments, one must accept the existence of a comprehensive natural order and the existence of fundamental absolute principles in the universe. This acceptance in no way conflicts with the Misesian concept of subjective economic value. Natural laws are discovered, are not arbitrary relationships, but instead are relationships that are already true. A manís human nature, including his attributes of individuality, reason, and free will, is the ultimate source of moral reasoning. Value is meaningless outside the context of man. 
Praxeological economics and the philosophy of human flourishing are complementary and compatible disciplines. Economics teaches us that social cooperation through the private property system and division of labor enables most individuals to prosper and to pursue their flourishing and happiness. In turn, the worldview of human flourishing informs men how to act. In making their life-affirming ethical and value-based judgments, men can refer to and employ the data of economic science.  
1. See ĒDeveloping a Paradigm for a Free Society: The Contributions of Mises, Menger, and Rand,Ē Le Québécois Libre, no 124; ďWhat An Austrian-Objectivist Paradigm for a Free Society Might Look LikeĒ, Le Québécois Libre, no 126; and ďAustrian Economics Can be Compatible With Objectivist Ethics," Le Québécois Libre, no 129>>
2. See Richard C.B. Johnssonís two part article, ďAustrian Subjectivism vs. ObjectivismĒ that appeared in issues 55 and 56 of The Free Radical.   >>
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