Rev Austrian Econ

DOI 10.1007/s11138-017-0390-3

BWhy historians have failed to recognize Mises’s

Theory and History^

Michael Douma 1

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# Springer Science+Business Media New York 2017

Abstract Theory and History is often said to be Ludwig von Mises’ least read and

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least appreciated book. This article argues that historians in the Anglo-American world
generally did not understand the German and Austrian traditions that Mises drew on,

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and that their early reviews of the book therefore fundamentally misunderstood its
purpose. Most saw it as a political tract. Some commented on Mises’ contribution to the
debate about the autonomy of the discipline of history. Few, however, understood
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Mises’ apriorism or logical approach. To understand why Theory and History has not
been recognized for its a contribution to historical methodology, we must first under-
stand Mises’ place as an outsider in the debates on historiography in the 1950s.

Keywords Mises . Theory and history . Popper . Historiography

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JEL codes B25 . B53

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Although Ludwig von Mises’ book Theory and History has been reprinted
many times since the book’s original publication by Yale University Press in
1957, this must be ascribed not to the strength or popularity of the book, but
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rather to the success of Mises’ other works and the general revival in Austrian economics.1
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1
It was then printed in London, England in 1958 by Jonathan Cape. Yale put out a second edition in 1963. It
was also reprinted by Arlington House in New Rochelle, New York in 1969, New York’s Garland Publishers
issued it in 1984, and the Ludwig von Mises Institute put out a version in 1985, in 2007. A chinese translation
appears in 1973, and a Spanish edition came out in 1964 in Mexico, and in 1975 in Spain. This latter edition
was reprinted in 2003 and in 2010. Liberty Fund issued a version in2005, reprinted it in 2010. Martino Fine
Books published it in 2012.

* Michael Douma
michaeljdouma@gmail.com

1
Georgetown Institute for the Study of Markets and Ethics, McDonough School of Business,
Georgetown University, P.O. Box 48, Bloomery, WV 26817, USA
 M. Douma

Libertarian writers priased the book when it appeared, but then seemed to
forget it. 2 In a preface to the 1985 edition of Theory and History, Murray
Rothbard called it Bby far the most neglected^ of Mises’ books (Mises 2007,
page xii). 3 Likewise, in his 2007 biography of Mises, Jorg Guido Hulsmann
wrote that Theory and History Bremained one of [Mises’] least read and least
understood works^ (Hulsman 2007, page 950). Although citations to Theory
and History can sometimes be found in works on Austrian economists, it is
seldom discussed by those who cite it. 4 Historians, meanwhile, have shown
even less interest in the book. Mises’ name almost never appears in the leading
journal of the philosophy of history, History and Theory, or in other similar
journals. When in the rare event that the book is assigned in classroom, it is
probably more often assigned in a economics course than in a history course.5

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What accounts for the neglect of Mises’ last major work? Why have historians
in particular shown so little interest in its ideas?
To answer this question, this article place Theory and History into its historical and

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historiographical context. I argue that although some historians dismissed the book as a
political tract – an unconcinving defense of free market liberalism – ideological

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opposition was not the main reason why historians who reviewed the book misunder-
stood its ideas. The primary reason why the book never caught on was that Mises was
an outsider in contemporary Anglo-American debates in historiography. Mises refused
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to speak the same technical language of those in the field, and he failed to engage the
contemporary discussion on its own terms. Moreover, the book appeared at the wrong
time, and it was written for the wrong audience. To professional historians in the United
States, the book must have appeared to be mixture of foreign and irrelevant ideas. Some
reviewers praised Mises’ contribution to the debate about the autonomy of history, or
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even nodded in agreement with his attacks on historicism and Marxism. Few historians,
however, understood Mises’ apriorism, his insistence on praxeological laws of human
action, or his logical attacks on positivism. Few, moreover, recognized the theory of
subjective value that was the foundation of his entire argument.
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Despite this, Ludwig von Mises’ Theory and History certainly makes a number of
contributions to the philosophy of history, and I will argue, the work deserves a serious
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2
Greaves and McGree (1993) includes a list of reviews by libertarian writers on pages 169–174. Positive
reviews of the book included a short write-up in by William H. Peterson in The Wall Street Journal, and a
longer review by Otto R. Reischer in The American Scholar. William H. Peterson, B‘History and the Haze of
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Theory.^ The Wall Street Journal. 151: 18 (January 27, 1958) 10. Otto R. Reischer, The American Scholar.
27:2 (Spring 1958) 240–242).
3
The book is certainly not difficult to find. It is listed in Worldcat: in 1217 libraries, worldwide, which is not
far from the 1560 libraries which hold Mises’s best-known work, Human Action. Worldcat.org accessed
June 20, 2016.
4
Google scholar (accessed April 20, 2016), aggregates 586 citations for this book, compared over 6000
citations for Mises’s Human Action, more than 1100 for Mises’s Socialism, and over 1050 for Mises’s
Economic Calculation in the Socialist Commonwealth. But the citations to Mises’s Theory and History
seldom come from historians.
5
In the Bopen syllabus project^ (acessed April 22, 2016), Mises’s Theory and History appears 26 times (17
times under its short title, and 9 under its long title), out of 1.1 million syllabi. The book is usually assigned
alongside other works on economics, indicating that it tends to be taught in economics courses. Other works
on history are more popular. For example, Popper’s The Poverty of Historicism appears 78 times, E.H. Carr’s
What is History? appears 368 times., Collingwood’s The Idea of History, 181 times, and John Gaddis’ The
Landscape of History, 78 times, Josh Tosh’s The Pursuit of History, 112 times.
Why Historians have failed to recognize Mises’s

look today. In an introduction to the recent (and indeed first) German translation of
Theory and History, Rolf W. Puster finds that the book does not introduce many new
ideas but rather carries forward and clarifies some of Mises earlier thoughts in a new
synthesis (Puster 2015). I think this is to a large extent true. In fact, in many ways
Mises’ Epistemological Problems is the famed Austrian economist’s deeper treatment
of the nature of history, more technical and learned. But bringing together his ideas into
a synthesis of economics and history, Mises in Theory and History made significant
contributions to the philosophy of history. The first contribution, the core of his
thought, was the most misunderstood. Mises presented subjective valuation of individ-
ual action as the core engine of history change, and thereby set individual thought as the
true subject of history. All history is about subjective values and the choices people

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makes. Mises used gave an aprioristic logical foundation for believing that only the
individual acts in history. He stressed individual subjective valuation as the core engine
of history change. Ideas (and not material conditions), he said, were the true subject
matter of history. Final causes of historical events were not to be found outside of

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human judgements. He argued, then, that the proper method of historical study was to
understand the motivations of individuals. On these grounds, he criticized speculative

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history for seeking ultimate patterns in the empirical evidence of the past. And finally,
he called historians to apply the laws of human action in interpreting history. In sum,
Mises reasoned that each person has their own set of values, that they act on these, that
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only individuals acts, that individual action is limited by logical economic laws, that the
study of history then was not akin to the study of inanimate matter, and that because
people make unique choices, no theory of history could ever predict the course of
history. Individually, each of these ideas had been stated before. No scholar, however,
had explicitly linked them in a logical system as Mises had.
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In Amerircan circles at mid-century, writings on the philosophy of history came

mostly from professional philosophers who were primarily concerned with epistemo-
logical questions about the nature of historical facts. They were also increasingly
concerned with the role that narratives play in structuring or even pre-furing these facts
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(Walsh 1951; Gardiner 1959; Gallie 1964). Few professional historians in the United
States had training in philosophy, let alone German idealist philosophy, and when they
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wrote about the nature of history, they were more interested in practical guides to
research which explained the historical craft as it was practiced. Works like Allan
Nevins’, The Gateway to History (1937), Herbert J Muller’s, The Uses of the Past,
(1957), E.H. Carr’s What is History? (1961) and Marc Bloch’s The Historian’s Craft
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(first English edition 1963, original 1953) were popular books on history methods
written in a language historians could understand. The 1950s and 1960s was a golden
age for these kinds of works, and when Mises’ Theory and History appeared, the
market for books on the philosophy of history was swamped with more readable
competitors (Hexter 1961).
Philosophy and history had always been closely paired in Germany, but American
historians were skeptical of philosophical discussions of history. History, they felt,
required only common sense, not theory. For their approach to the past, American
historians in the 1940s and 1950s were looking to fill a gap left by the departure of
progressive luminaries like Frederick Jackson Turner, Charles Beard, and Vernon
Parrington, whose materialist economic interpretations of American history had come
under considerable attack. American historians in this period continued to see history as
 M. Douma

a branch of the social sciences, and as a useful tool for public policy. In the American
sense, however, to call history Bscientific^ was to say that it was accurate, precise, and
rigorous. It did not always mean that history sought after laws of behavior, or that it had
its own methods separate from the social sciences. Felix Gilbert said of his fellow
American historians of the period that BThey see history as a scholarly activity that has
many uses and therefore many fields. But they do not see history as an independent and
unified way of understanding the world^ (Gilbert 1965, page 381). Mises’ Theory and
History failed to convince historians because it did not engage contemporary argu-
ments, nor use concrete examples from historical methods. It was too philosophical, too
foreign, too liberal, and too broad.
In fact, Mises’ Theory and History should be see as a response to the concerns of the

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German historical professsion of the 1920s and 1930s, but written unfortunately in
English, for an audience with other concerns. English and American historians were
well aware that nineteenth century Germany was the birthplace of scientific history.
They also knew that the exacting methods and attitudes of German historians like

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Leopold von Ranke shaped in no small way the contours of the American historical
profession. But Mises drew more on the German idealist tradition which ran through

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Humboldt to Droysen and Rickert. This tradition had much less influence in the United
States and in England (Sorenson 1955). Mises and his countrymen Hayek and Popper
entered this discussion with a knowledge of the philosophy of history as it was studied
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in the German-speaking world. This German historiography developed earlier and was
in many ways more advanced than it was in the English-speaking world. German
historians were also certainly more concerned with questions of theory and of the
relationship between academic disciplines.
It is certainly true that Mises’ dogmatic liberalism served as an impediment for the
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success of his book. By the 1950s, Mises was well-known as a historian, but as the
economics profession moved towards mathematical models and fiscal interventionism,
Mises appeared to many as a relic of a past age. Those who are familiar with his
personality will not be surprised to learn that he refused to temper his views. Mises
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launched an assault on his opponent’s ideas, and he was no stranger to the ad hominem.
For this reason, many reviewers thought it was politically motivated, and that it argued
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from its conclusions. For example, University of Arkansas Economics Professor, Louis
Dow, in a review of just over 300 words, called the book the Blatest statement of
extreme American neo-conservative economic reasoning^ (Dow 1958, page 330). Asa
Briggs, a history professor at Leeds University, writing for The Economic Journal,
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noted that Mises too frequently used the ad hominem, that in the book he treated others
Bbrusquely^, that he made too many sweeping generalizations. Briggs thought it was
essentially a political book, a unconvincing defense of market economies (Briggs
1959). A New Zealand-born economist working for the International Monetary Fund,
Allan G.B. Fisher, saw it the same way. Fisher thought it was primarily an attack on
socialism and a defense of an Buncompromising 100 percent individualist theory of
economics.^ Fisher felt Mises simply attacked other authors indiscriminately and gave
little argument of his own (Fisher 1958). These critics had a difficult time seeing the
ideas behind Mises’ invectives.
Ideological knee-jerk opposition to Mises’ views could lead to mean-spirited and
uninformed reviews of his work. Matthew A. Fitzsimons, a professor of history at
Notre Dame University was an old type of historian, a generalist who felt qualified to
Why Historians have failed to recognize Mises’s

contribute his over-wrought and condescending prose on a variety of topics

(Fitzsimmons 1958). Fitzsimmons thought Mises’ Theory and History was
Bexceedingly single-minded and obsessed.^ He managed to call Mises a Bhedgehog^
three times in the course of his review. Mises, he says, is a man who Bknows only one
thing.^ Like the reviewers Dow, Briggs, and Fisher, Fitzsimons understood the book to
be a political defense of economic liberalism. And like most critiques of theories of
individual liberty, Fitzsimmons found Mises to have an atomistoc view of society. The
Btone^, he wrote, Bis eigtheenth centry.^ Fitszimmons granted Mises credit for being an
early and steadfast opponent of Nazism, but he magined that Mises was a dull
utilitarian social Darwinian who saw tyranny lurking around every government
that regulated a national economy. He wrote concerning Mises: BHe can explain

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everything, and he is not wholly wrong. But he is spectularly irrelevant to the
needs of men who want to live through the next decade.^ What is incredible is
that Fitzsimons, while perhaps understanding 50% of the book, felt compelled
to write four pages declaring his hatred for it.

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Politically moderate historians who read Theory and History also struggled to focus
on Mises’ philosophy of history, instead of his libertarianism. John M. Norris from the

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University of British Columbia compared Mises’ Theory and History to Philip Bagby’s
Culture and History: Prolegomena to the Comparative Study of Civilization (Bagby
1958). According to Norris, Bagby aimed to established a scientific terminology for
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history that would allow the discipline to become a science. Norris felt that Mises’
stress on the individual was an important counter to such attempts at Bsociological
holism.^ But he also felt that where Mises was best, − in his attacks on positivism and
historicism - he was not original. Norris interpreted the book’s principal purpose as an
elaboration of Mises’ earlier attempt to defend a market economy, but he felt that
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Mises’ Bpassionate hatred of all forms of collectivism has led him into some remarkable
lapses of logic, t aste, and historical accuracy.^ Yet, Norris’s ability to identify these
three features of the book: (1) the stress on individual action, (2) the discussion of
history as a science and its relation to scientific laws, and (3) its defense of the free
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market, demonstrates Norris’s competence as a reviewer (Norris 1959).

But it is also important to recognize that Theory and History did not flounder
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because of ideological opposition alone, and that various parts of his book met more
success than others. American historians could find little use for Mises’ views on
subjective value. They recognized and largely agreed with his views about the partic-
ular and the individual in history. American historians also generally applauded Mises’
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attacks on historicism and Marxism, even if they felt these arguments been better stated
before and elsewhere. Mises’ discussion of methodological dualism spurred some
conversation, but was never absorbed into the American discourse on the topic. Finally,
historians had trouble understanding what Mises meant by economic thinking and
praxeology. Altogether, Mises produced a coherent view of history, but for a variety of
reasons each of his main arguments, on their own, failed to win a lasting audience.

1 Subjective value and methological individualism

Mises appears to be the very first to ground a theory of history in subjective value. The
fact that human beings have subjective values, he argued, is not contingent, but is
 M. Douma

universal and axiomatic. This fact is the cornerstone of his theory, and the justification
for his claim that history is concerned with individual choices.
This point was almost completely overlooked in reviews of the book, and historians
to this day have had essentially nothing to say about subjective value theory. Of all the
historians who reviewed or mentioned Theory and History, only Louis Hacker’s review
in of the book in the New York Times mentions Mises’ views on subjective value.
Hacker was an economic historian who began his career as a progressive under the
tutelage of Charles Beard, moved into Marxism, and ultimately developed a conserva-
tive appreciation of capitalism (Zeman 1998) Unfortunately, Hacker’s treament Mises
on subjective value was brief and superficial (Hacker 1957).
Mises’ stress on subjective value must have seemed strange for an American
audience reared on empiricism and epistemology. For them, the term Bsubjectivity^

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referred to the subjectivitiy of facts, not of values. Most historians recognize that an
understanding of history begins with an epistemological question: Bhow can we know
the truth about the past?^ Historians believe is is their duty to draw the contours of what

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is knowable, and explain the methods by which we can gain objective knowledge of the
past. In this view, history is a critical discipline of sorting through empirical evidence to

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find patterns and meaning. In the empiricist tradition, the only relevant knowledge of
the past comes from sensory experience. Mises rejected this kind of historicism and
argued that some knowledge of the logic of human action could be located outside of
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history.
But since the professionalization of history in the late nineteenth century, and the
rejection of speculative history, most historians have rejected attempts to locate histor-
ical knowledge outside of empirical observation. Divine providence, a Hegelian spirit,
or other forces driving histoy forward lie outside of the evidence. Instead, it is objective
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treatment of the evidence, which, according to Peter Novick, Bhas been the quality
which the profession has prized and praised above all others^ (Novick 1988). Although
historians recognized that pure objectivity is not reachable, it may at least be considered
a goal of scientific inquiry.
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There is of course no way to survey the views of all American historians of the
period, but their writings about their own discipline demonstrate a few common
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perspectives that might indicate how they would have understood Mises’ views on
subjective values and the individual.
First, we can recognize a sort of anti-philosophical ecumenicism, in which historians
refused to consider or take a position on theoretical issues. About this, W.B. Gallie
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wrote in 1964 that historians Bshow an almost pathological disincliation to commit

themselves to any general statements about their work, its aims, subject-matter and
methods…^ They wish that Bno approaches or avenues, no styles or methods even, are
excluded in advance or a priori^ (Gallie 1964, page 53.). Since Mises was defending a
particular and narrowed form of historical inquiry, some readers might have rejected his
views on subjective value as overly rigid.
The stress on Bcommon sense^ at the expense of philosophy may have played a
significant role in turning historians away from Mises. In his book Understanding
History (1950) the historian Louis Gottschalk described the historical method as simply
the method of learning from the past, of arranging facts chronologically and consider-
ing the importance of tempoarlity in one’s analysis. For Gottschalk, Bphilosophy^ was
something that people had. For example, each historian, he wrote, has a philosophy
Why Historians have failed to recognize Mises’s

which shapes the way they approach the evidence. Gottschalk didn’t define philosophy
as a process or argumentation with the intention of seeking the truth (Gottschalk 1969).
History, in this view, was a form of empirical social science. While historians could
cooperate with social scientists, historians were ultimately resonsible for checking the
generalizations of social science. In essence, the difference between the two disciplines
was that social scientists made general abstractions, and historians cared about partic-
ular phenomena for their own sake.
As Gottschalk’s work demonstrates, historians did not propose a theory of subjective
value to defend the importance of the individual and the particular in history. Take, for
example, the Univeristy of Kansas history professor, James Malin, who had a visceral
reaction against any kind of artificial construct of social science. For Malin, the individual
historical person was unique and particular, and could not be Bmeasured or analyzed by

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application of a formula^ (Malin 1954, page 2.). This might, on the surface, be thought
similar to Mises’ views about methodological individualism. Although Mises believed the
individual was the only historical actor, he did not deny the use of all social scientific

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constructs. Malin also believed strongly in the indpendent existence of an objective past. He
despised any form of relativism and any attempt to make history useful for the present.

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History-as-actuality, he thought, existed outside of the mind of the historian, and was
valuable for its own sake. Mises’ view here was more similar to that of the English historian
R.G. Collingwood. For Mises, history was about reconstructing ideas from the past. History
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had no value for its own sake, but was only valued insofar as it satisfied the subjective
desires of individuals.

2 Methodological individualism and methdological dualism

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It was possible, Mises thought, that in the future we could find a way to understand
human actions as purely the results of mechanical forces. But, for the time being, we
had no way of doing so reliably, and so we had to treat history as a study of personal
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motivations and ideas. This methodological individualism, Brooted in deficient human

knowledge,^ was the true method of historical study, and unlike the sciences, it could
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only yield tentative knowledge (Hulsman 2007, page 953). This was an ontological
question: did history concern itself with groups, nations, and institutions, or was the
individual the only acting subject to study.
Methodological individualism was known in American and English philosophical
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circles, but there is little evidence that it was a common topic among American
historians (Liebel 1964; Wehler 1972). 6 Mises drew on a German idealist tradition
where methodological individualism had made an important stand, featring in the
distinction between the methods of history and the methods of the natural sciences.
This methodological dualism had been developed in the late nineteenth century in
Germany, particularly with the neo-Kantian philosophers, Wilhelm Windelband and
Heinrich Rickert, whom Mises introduced to the American historical community From
Windelband, Mises inherited the idea that if actions are caused, they are not free.
Choices, not causes, he believed, were the true subject of history. Windelband and

6
A summary of the philosophical argument on methdological individualism up to that date can be found in
Gellner 1959.
 M. Douma

Rickert also established an important distinction between nomethic science (which

seeks universal laws) and idiographic types (which seeks particular examples of the
expressions of values). The German and Austrian historical schools shared this view
that history was the subjective analysis of human action.
But Mises expanded on the distinction between the study of the physical world, and
the study of study of human values, emotions, and ideas, what the Germans called the
geisteswissenschaften (human sciences). From Wilhelm Dilthey, he inherited that idea
that the human sciences were concerned with rethinking or understanding the unique
events that could not follow laws of behavior. The proper method of history was not to
explain the actions of physical objects but to understand the mental world of choices.
Data alone won’t explain why someone did something; we must sympathize with their

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motives as humans. A computer might be taught to do science, to run experiements and
seek relationships. Only a human, with understanding of emotions and feelings, could
write history that explains why others acted the way they did. Historical imagination is
the ability to see an event through someone else’s eyes.

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Again, in the United States, methodological dualism was not a common understand-
ing of the disciplines, and American historians might have been unfamiliar with the

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distinction. The idea of a division between the natural sciences and the human sciences,
however, goes back to Humboldt and is seen in Droysen, and is a feature of German
idealist philosophers. (Leibel 1964) Humboldt and Droysen along with historicists like
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Wilhelm Dilthey were recognizable names among German historians at mid-century,
but were poorly known in the United States. Hans Meyerhoff noted in 1959, for
example, that BMost of the standard works on the European tradition of historicism
are not available in English^ (Meyerhoff 1959, page 346). These German thinkers were
cited frequently in the twentieth century in the Historische Zeitschrift but they were
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almost never referenced in History and Theory or other English-language history

journals (Anderle 1964).
At least one reviewer recognized Mises’ contribution here. This was a history
professor at The Johns Hopkins University, the medievalist and economic historian,
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Frederic C. Lane, who reviewed the book in combination with Karl Popper’s The
Poverty of Historicism. Lane commented on both Mises’ methodological dualism, and
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his rebuttal of historicist and Marxist philosophies of history. He noted the many
similarities between Mises and Popper: their attacks on historicism (of the kind that
believes we can find patterns in history and accurately predict future outcomes), and
their attacks on Marxism. Lane recognized that at the core of Mises’ ideas of history
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was his belief that human action can only be explained by ideas, that historical study,
then, is not akin to the natural sciences because humans do not follow causal laws.
Might the regularities of the past, Lane wondered, cease to occur as human culture,
qualities, and aims changed? If so, then social engineering would be a difficult exercise
indeed (Lane 1959).
But the German historical audience was certainly better equipped to follow Mises on
methodological dualism. A German reviewer of Theory and History showed some
understanding of the methodological issues Mises was addressing. This reviewer, a
twenty-nine year old graduate student, Gerhard Kade called it a BVerteidigung eines
Autonomieanspruch der Geisteswisschaften, besonders im Sinne einer
Gegenüberstellung und methdologischen Differenzierung von Natur- und
Sozialwissenschaften^ (A defense of a claim to autonomy of the human sciences,
Why Historians have failed to recognize Mises’s

particularly in terms of confrontation and methdologischen differentiation of natural

and social sciences.) But Kade neither cared for this epistemological position nor the
defense of the market economy that flowed from it. Mises, according to Kade, had
made large claims but did not adequately defend them (Kade 1960).7
Heinz Lubasz, writing for History and Theory in 1963 properly identified Mises
(along with Hayek) as a primary contributor to the idea that historical study was
concerned with Bmental and value-laden phenomenon.^ Lubasz, an Austrian-born
Jew came to England as a child but remained bilingual. A Marxist and a scholar of
Marx, Lubasz was more familiar with the German historical and philosophical tradition
than most.
Lubasz likened the idealist position to a kind of dangerous intuitionism that could
not produce verifiable statements. He thought subjective history was guess-work. BIt

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ought to be rejected by all who genuinely value the pursuit of truth,^ he wrote. But in
article, Lubasz’ presents a rather poor argument. He appears to say something to the
effect of the following:

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& Premise 1: We desire historical knowledge that is scientifically certain.
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scientific certainty.
Conclusion: We must reject the view of the idealists.
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Premise 2: The idealists claim that historical knowledge cannot be known with
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Lubasz’s conclusion, of course, does not follow from his premises. Just because we
want scientifically certain historical knowledge – causal explanations – does not
necessarily mean that we can arrive at it. In fact, Mises is quite clear in Theory and
History that scientifically certain historical knowledge would be preferable, if we could
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have access to it (Lubasz 1963). In an article following Lubasz in the same issue,
Samuel H. Beer argues that a belief in attainable scientific certain in history should not
lead one to reject the method of imaginative re-enactment and understanding (Beer
1963). Mises’ Theory and History was never again cited in the journal Theory and
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History after Lubasz. Popper, meanwhile, has been cited regularly in History and
Theory and in the Journal of the Philosophy of History. Those who continue to cite
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the book are primarily interested in what Mises has to say about the distinctions
between disciplines, not with his views on history per se. This might be judged one
of his more recognized contributions (Pollard 1965; Schaff 1976; Udehn 2001).
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2.1 Attacks on historicism and Marxism

The German Historical School argued that human behavior could be induced from
evidence, that data could lead to general categories of cause and effect useful for
making predictions. Mises denied that data from the past could reliably predict future
patterns. Instead, he proposed logical categories, independent of historical events, such
as the law of decreasing marginal utility, as universal truths derived deductively from
the axiom that human beings act. These laws do not determine actions but circumscribe

7
Kade went on to become a professor of statistics and econometrics at the Technische Universistat Damstadt.
He was a well-known Marxist and collaborator with the East German security forces, the Stasi. Richter 2009,
419.
 M. Douma

or limit the possible kinds of cause and effect we can reasonably seek (Selgin 1988)
Theories of history, Mises taught, can never explain everything about history because
events are unique. There is no direction in history, no laws of historical development,
and no way of accurately predicting the future.
From this basis, Mises argued that the historicists were wrong to seek empirical
patterns in history, or to think that each age had it own logic that determined economic
cause and effect.
In his book Epistemological Problems (1933), Mises had already made similar
argument against historicism and polylogism. He wrote BNever has even an attempt
been made to state concretely in what respects the logical structure of reason could have
changed in the course of ages.^ Likewise, Mises criticized the Marxist view of history

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for proposing inevitability of stages, for believing that individual act as members of
classes, and for its reliance on material instead of ideas as the driver of history.
One might imagine that Mises’ criticisms of Marx would be useful for liberal
historians confronting their Marxists peers. But the truth is, in the 1950s and 1960s,

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Marxism had not yet become a popular powerful force in American historiography, and
few American historians bothered to defend or attack it. Robert R. Locke, writing as

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late as 1975, seemed to be introducing Marxist history to American historians, who he
said Bstill have much to learn about themselves and their craft from entering into debate
with Marxists. The plain fact is that we, through our pragmatism, are very weak in
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theoretical matters^ (Locke 1975, page 170).
In 1960, Leonard Krieger had also appealed to the pragmatism of American
historians as an obstacle to Marxist history. BPerhaps historians can still make their
reputations by proclaiming themselves against determinism and the primacy of eco-
nomic man – in short, against sin – but I doubt it. Substantively, then, Marx provides
ED

little sustence for historians today. We proceed on the assumption of historical discon-
tinuity, plurality of causation, and merely formal absolutes when we admit any at all^
(Krieger 1960, page 356–357). In other words, the pragmatism of American historians
would neither admit Marxist theory or any other absolutes of cause and effect.
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From this view, it becomes clearer why historians reviewing the book generally had
little trouble with Mises’ views here. Dow made a relevant point, probably in line with
what many historians of the time would have thought about the book: BOne may well
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agree with Mises’ desire to reject philosophies of history as appropriate guides to social
thought and action without accepting his proposals^(Dow 1958, page 330). Louis
Hacker, meanwhile, praised Mises for his Banalysis and rejection of Marxian dialectical
R

materialism is searching, profound and conclusive^ (Hacker 1957, page 13). Cornelius
Eller in a periodical called America, wrote that "No economist educated in American
colleges and universities could have written this book .... the European commonly links
economics with philosophy, theology and history, as Austrian-trained von Mises does
so deftly in this book ...His exposition and critique of dialectical materialism are
perhaps the best this reviewer has ever seen. Anyone who is searching for a clear
explanation and criticism of Marxism need look no farther. The same comment applies
to the author's treatment of historicism^ (Eller 1959, page 732).
Although some praised Mises for his attacks on historicism, and the work was
sometimes mentioned in the same breath as Karl Popper’s The Poverty of Historicism,
it never approached anywhere near Popper’s appeal. (Kaufman 1961). Mises missed a
real opportunity by failing to address directly the ideas of Karl Popper in his book. He
Why Historians have failed to recognize Mises’s

certainly must have been familiar with Popper’s writings on history, which first
appeared in the journal Economica in 1944 and 1945 (Cohen 1952). By the 1950s,
Popper was also a major figure in the debate over Bcovering laws^ or empirically
demonstrable laws of human behavior that some claimed were valid across the social
sciences and in historical study. Popper’s invention, of course, was to argue that one
could never demonstrate the existence of these laws empirically, as the positivists
argued, but only move towards them through a method of falsification. English and
American historians cited Popper frequently. They appreciated his attacks on histori-
cism and sympathized with his method. Popper beat Mises to the punch, and accom-
plished what Mises did not: he convinced historians to abandon positivism. Yet,
perhaps Popper’s falsificationism, still rooted in the empirical method and induction,

FS
was more easily adopted by historians familiar with such methods. Mises’ discussion of
apriorism, deductivism, praxeology, and subjective value may have seemed strange to
their ears.

O
2.2 Economic principles

O
First, Mises worked to separate history from economics, and demonstrate that these
were two separate forms of knowledge. But his final major contribution in Theory and
History was to propose how the two subjects could be fruitfully combined. Perhaps
PR
with the German historical audience on his mind, Mises addressed how historicists had
denied economic relationships. Many of his ideas here had already been express in his
Epistemological Problems in 1933 and were then more timely. At that time, Mises had
already argued against the ability to find fixed historical relationships subject to
numerical calculation, he had defended the method of Bverstehen^ and the necessity
ED

of theory in history. On the later point, he argued, BHistory cannot be imagined without
theory. The naïve belief that, unprejudiced by any theory, one can derive history
directly from the sources is quite untenable….We cannot think without making use
of the category of causality^ (Mises 1933, page 107).
IS

In opposition to the German historical school, Mises wanted to demonstrate that

economic truths were universal and not contingent. The fact that human beings act, that
EV

they had different values, that when they exchange goods voluntarily they expressed
these values and both benefitted, these, he said, were always and everywhere true.
Mises argued then that historians should draw on economic theory, and economics, like
the natural sciences, provided knowledge of laws for historians to use. Most historians
R

saw little relevance for this. Many did not understand the a priori nature of Mises’
praxeological laws, and they dismissed economic laws as merely hypothetical knowl-
edge. Historians also misunderstood Mises’ utilitarianism as the measurement of crude
pleasure. They argued that Mises turned everything into a story of rational causation.
But the historians misunderstood the meaning of rationality – as a means to ends
relationship – a process. Mises’ view of economics as an a prioristic, deductive science
was in direct opposition to the dominance of empiricism in American economic circles.
Historians reflecting on the book appear unaware of the difference between inductive
and deductive economic theory.
Reviewers particularly misunderstood Mises’ use of the term Bvalue-free^ or wert-
freiheit. Louis Dow, for example criticized Mises’ attempts at establishing a wertfrei
utilitarianism for a liberalism which he (Dow) claimed uses Binterpersonal
 M. Douma

comparability of cardinal utility^ (Dow 1958, page 330). Of course, Mises never
defended cardinal utility, but only ordinal utility, not measurable utility but only ranking
of utility.
Rothbard explained apparent paradox that many encountered when trying to recon-
cile Mises’ advocacy for the free market with his stance on value-neutrality.:
BEconomic science ... establishes existential laws, of the type: if A, then B. Mises
demonstrates that this science asserts that laissez-faire policy leads to peace and higher
standards of living for all, while statism leads to conflict and lower living standards.
Then, Mises, as a citizen, chooses laissez-faire liberalism because he is interested in
achieving these ends" (Rothbard 1957).

FS
3 Conclusion

There are many practical reasons why the von Mises’ Theory and History did not catch

O
on: it’s prose was demanding, it was strongly ideological, it was heavy on German
theory. But to better answer the question of its neglect, it is important to understand the

O
development of the philosophy of history, and to see Mises’ Theory and History within
its proper context in 1950s historiography. The book fell outside of the British and
American historiographical traditions. It was primarily an attack on other schools of
PR
history, and focused most heavily on rebutting Marxism and certain kinds of histori-
cism. Yet, other authors, including Karl Popper, had done so to greater appeal. Mises’
actual positive views on history were lost in this maze. Mises’ commentary on the
division of the natural and social sciences had been more fully developed by other,
earlier commentators, and his support of the autonomy of the historical method
ED

introduced no new inspiration to that school of thought. Readers untrained in German

theory and unfamiliar with the apriorism, subjectivism, and deductive method of the
Austrian school would have been unable to see Mises’ point. Some American histo-
rians would have appreciated his defense of the individual, but not necessarily for the
IS

reasons Mises hoped.

It is certainly unfortunate that this book was not better understood or more widely
EV

read and applied. Mises’ contribution to the philosophy of history is unique.

Mises suggests that other have misunderstood the proper relationship between
history and theory. History is not shaped by laws derived from empirical observation,
but there are praxeological laws that structure how humans act. History is the record of
R

the free actions of humans, given environmental constraints. Like the British historian
R.G. Collingwood, Mises believes the stuff of history is ideas. Materialist explanations
of history neglect the role of human action. To write history is to understand the
thoughts, the choices of other people.
Many reviewers saw it as a political tract. Others focused on his distinction between
history and the methods of the natural and social sciences. Many liked his attacks on
historicism and Marxism, and on speculative history, some noting that these were the
best criticism of those doctrines to yet appear. Few noted his apriorism. Most analytic
philosophy of history of the time was concerned with questions of objectivity, of
epistemology, and whether we could know something at all.
No one has yet considered Mises within the historiography of the philosophyof
history. His Theory and History is an ignored book, even among Austrian economists.
Why Historians have failed to recognize Mises’s

These economists are incredibly well versed in theory, and they see Mises final book as
just a continuation of his previous works. I think that there are a few avenues to explore
in developing further a Misesian theory of history. In the first place, Mises gives a
strong argument for the difference between material factors and human choices in
history. In recent discussions of Deirde McCloskey’s idea that rhetoric and ideas were
essentially in the allowing for the development early capitalism, detractors have asked
BWell, what determines ideas?^ As a counter to such deterministic questions, Mises
provides an interesting answer: Ideas are not determined. How we think is of course
influenced by the environment, but the fact that we do think, that we do have ideas is
primary. If we say factors are responsible for events, and not people’s decision, or that
factors cause people’s decisions, we cannot hold people responsible. Historians are like

FS
lawyers in the courtroom, presenting evidence to the judge. They might show all kinds
of evidence that caused a person to commit a crime, but it is ultimately the person who
is responsible for the action. Mises might also give us reason to be skeptical of
dominant interpretations and calls for a single dominant narratives. Meaning must be

O
given to the facts, since facts alone have no meaning. History cannot a a single
meaning, but must have a plethora of meanings, at least one for each person. His views

O
on subjectivity of facts can in some ways be squared with German historicists or with
contemporary postmodernists who presently dominated the philosophy of history
journals.
PR
Mises also gives us a different kind of focus on liberty in history. Mises’ version of
liberty is not the liberty of the state or of politics, nor is it a kind of Hegelian liberty that
acts on the stage of history through the rational unfolding of an ultimate plan (Croce
1955; Hayek 1952; Popper 1957). For Mises, liberty is inescapably the subject matter
of history. We literally cannot choose not to write about liberty when we write history.
ED

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