 All right, ladies and gentlemen, I think we'll get started now. I'm going to be talking about theory and history, and I'd like to recommend a book which I think is very good on theory and history, namely the book by Von Mises called Theory and History. It's quite appropriate for a lecture on this subject. I remember in 1969, Hayek told me how much he admired the theory and history. Of the four major books that Mises wrote, Theory and Money and Credit in 1912, Socialism in 1922, Human Action in 1949, and Theory and History in 1957, probably Theory and History is the least read of the books, but it's also the easiest one to read. So I would suggest if you find Mises a bit difficult, at least in his major works, Theory and History might be a good one to look at first. Incidentally, for those of you who are planning to take the oral exam, the question what are Mises for most important major works has sometimes been asked on the final, so it might be good to take note of that. Now, in considering history, there are two different means. We can talk about the theory or philosophy of history. This can designate two different sorts of inquiry that correspond to two meanings of the word history or concept history. By history, we can mean the events that have happened at a particular time in the past. For example, we can talk about the history of the Roman Republic or the history of the US Civil War and so on. So we're referring to particular events that have happened, but we can also use the word history to mean the writing of history. So we could talk about the history of writing, historians who've written on the fall of the Roman Republic or the causes of the US Civil War. So we'd have this distinction then between the events and writing about the events, both could be called history. Sometimes the writing about the events is called historiography rather than history. We could have a history of historical writing, the history of the history of history. That was actually a book under that history. Historical writing was a book by the historian sociologist Harry Omer Barnes. Had a book with just that title. He's a quite controversial figure. He and Murray Rothbard were very good friends if you'll permit me a digression. It's all right for an old man like me. During the 1960, just before 1964 presidential election, I was in high school and I called up Harry Omer Barnes who was at that time fairly old and I asked him who he favored in the 64 election. He said, as my old friend Henry Menken once said, I think I'll sit this one out. But as I say, there are these two meanings of history, the actual events that have transpired at a particular time and writing about them. In corresponding to that, we can distinguish two meanings of philosophy of history. One would be the view that the events, all the events in the history of the world fall into a pattern. There's some sort of explanation for all the events or some sort of general pattern for all the events in history. So there's a story of world history. History has a meaning. Hegel was the most famous writer to hold this view in lectures on the philosophy of history. And then there's another meaning of philosophy of history where we'd be studying the problems and nature of historical inquiry. So we'd be concerned with the second meaning of history, of the writing of history. We'd say what is involved when the historian is writing history? What are some of the philosophical problems involved? What are some of the issues the historian has to deal with? And most of this lecture will be devoted to philosophy of history in this sense in what the historian is, the problems facing the historian rather than the problems of the philosophy of history in the other sense, namely a general pattern. Although depending on how much time this takes, we could get to this other meaning also. Now, one way in which the historian where we can apply theory to history where is, which would be particularly concerned to us in this course, is the application of praxeology to history. So praxeology is, you'll remember from earlier lectures, is a science of human action. So in praxeology, we're not concerned with particular events, say we have in praxeology, we have the statement that each person chooses his most highly valued preference. That doesn't tell us what the person's preferences are. We know that's general truth, but even though praxeology doesn't tell us about particular events, we can apply praxeology or use praxeology to help us explain particular events. For example, suppose a historian is trying to explain America's Great Depression, as Murray Rothbard did in his book of that title, which came out in 1963. So in Rothbard, both in his explanation in his selection of facts to explain, he's influenced by part of praxeology, namely the Austrian business cycle theory. So what he stresses is the policy of the Fed in the 1920s, which he considers expansionary. And as, because he's guided by Austrian theory, he looks for things that other historians who were not guided by Austrian theory would omit. For example, prices in the 1920s were not going up very much, but Rothbard, since he holds the view that depression is generated by an expansionary credit boom, will asks what would prices have been had the Fed not pursued this expansionary policy? And this is a question that someone with a different theory would probably not raise. So we can see how Rothbard, in this case, was guided by the Austrian business cycle theory by this part of praxeology. And we could compare this with, say, the book by Milton Friedman and Anna Schwartz on what's called a Monetary History of the United States, which came out in the same year as Rothbard's book 1963. In their view, the depression was not caused by an expansionary Fed policy in the 1920s. They have the view that the depression came about because the Fed unwisely contracted the money supply just around the time the depression struck in October 1929. So because they're guided by a different theory, they're looking for other facts and the way they explain the fact is guided by a completely different account. So of course, I think the Austrian view is the correct one. It isn't my purpose here to go into the merits and demerits of Rothbard and Friedman, except to say, of course, that Rothbard's entirely right and Friedman wrong. Rather, I just wanna make the point that the historian, in this case, economic historian, is guided by the theory that he holds. We can see another example of this in the brief, but very illuminating remarks that Mises makes in human action on the fall of the Roman Empire. I think in the scholar's edition, this is around page 762, he deals with this very briefly. And as you know, there are all sorts of theories on the fall of the Roman Empire, for example, that of Edward Gibbon, who blamed the rise of Christianity for weakening the Roman Empire, remember his famous sense, they themselves decreed their fall. And then there were other theories, there was one that led poisoning theory of the fall, the Roman Empire, that claimed that they were led that had gotten into the drinking supplies of the people in Rome, and this had a bad effect on their mental capacity, so that, and that was actually a theory of a sociologist, S. Colm Gilfillin, was a quite interesting person. I met him years ago, he was wrote on sociology of invention, but the theory that Mises gives a brief account, again, where he shows he's applying economic theory to help explain the fall, the Roman Empire, he says that because of economic regulations, such as price controls that had been imposed, trade became much less than it had been in previous times, and the economy tended to break up into several separate estates, a lot of fundias, and they became isolated from the rest of, from the commerce, and in this way, the Empire was weakened, it was much, so this permitted the overthrow of the Empire by the various barbarian tribes, so here Mises was relying on the work of the great Russian historian, Michael Rostovtsev, who came to the US, he was against the Bolshevik government, he came to the US and he taught in America, but he had a great book, the Social and Economic History of the Roman Empire, and he gives this account, so once again, we see the importance of theory in trying to understand history, and I'll give one other illustration, although I didn't put it on the slides, is that say, one's trying to account for the standard of living after the Industrial Revolution, say, in England after 1760, there's a group of Marxist historians or left-wing historians will say that they will stress conditions in factories at the time of the Industrial Revolution were extremely bad, there was a lot of child labor, people had to work extremely long hours under very harsh conditions, but Mises asked a question, again, he's relying on his knowledge of economic theory, what would have happened without the Industrial Revolution? He points out there was a great increase in population in Britain in the 18th century, so if there had not been an Industrial Revolution, the increased population couldn't have been supported at all, people would have just died out in the actual conditions in the Industrial Revolution, even though they're bad by contemporary standards are quite an improvement for a great number of people at the time, so here again we see that because of his knowledge of economic theory, Mises is able to ask the counterfactual question, what would have happened in the absence of the Industrial Revolution and historians who don't have that knowledge would probably not ask that question. One book incidentally I would recommend if you're interested in the Industrial Revolution standard of life is a book edited by Hayek that came out in 1954 called Capitalism and the Historians, this has essays by T.S. Ashton who was one of the great British economic historians. I think Bertrand de Juvenel has an essay and W.H. Hutt has two very important essays, that's a very good book on this topic. I wanna mention another instance in which one's knowledge of economic theory affects historical interpretation. This I mentioned briefly in my lecture earlier this morning for any of those of you who are unfortunate enough to be at that lecture will recall this. According to the Marxists, fascism is really a stage within capitalism. The Marxist view say we find this in the book of 1933 by the British Communist Party writer R.Pom Dutt. He was actually, he was from India but he spent most of his life in England called Fascism in Social Revolution. What he says is that because of the capitalism find from Marxist theory faces economic collapse, there's depressions and there's some question, how are the capitalists going to maintain power? So the way they do that according to Dutt and other communist theorists of the time was to get, was to support a dictator who will ruthlessly suppress proletarian revolution and keep the capitalist class in power. So in the view of this view, which we can also find in a more sophisticated form in the famous book, Behamoth by Franz Neumann on the Nazi economy. So in this view, Hitler was really a tool of the German monopoly capitalist. They thought that, well, we've got to make sure we stay in power so we have to suppress the left wing, the proletarian parties, especially the communist party, and make sure even if it requires getting rid of civil liberties, the price is worth paying to maintain capitalism in power. But Mises rejects that view as you can imagine, entirely rejects it. He says, no, in the Nazi economy, this was not at all dominated by the capitalist. In fact, in the Nazi economy, the government was in complete control because the government, even though private property was preserved in name, the government was telling the owners and the corporate executives what prices to set, what wages to pay. So the private owners were really converted into government bureaucrats who simply had to carry out orders. And he says that this is a form of socialism, so it's not a form of capitalism at all. It isn't that the Nazis were in the, were tools of the capitalist, it was rather the capitalist were required to do what the Nazis told them. So it's a form of socialism, not of capitalism. Now, what I've given so far instances in which the historian can use economic theory in order to guide him in interpreting the past, in understanding what happened or in picking out which facts to stress or how to understand what's happening. But Mises stresses that the historian is not only, should be take account, not only of praxeology, but of the existing state of science. So the historian's explanations should correspond to current scientific knowledge. And he gives what I think at any rate is a rather amusing example, although in past years when I've given this example, the audience doesn't tend to think it's so amusing, but after all, I'm giving the lecture, so it doesn't matter. Well, what Mises said is, say we have a historian who's trying to explain witchcraft, say in Europe in the 16th century later, there were outbreaks of a witchcraft hysteria in which various nations were having campaigns to arrest alleged witches, and many of them were tortured and killed. So Mises says, well, if historians trying to explain this, he won't say what was happening was that these women who were accused of being witches were really in communion with the devil and that the people who suppressed them were just acting defensively to guard against this. Apparently he said, well, the historian today wouldn't say that because we no longer believe in that view, it's scientifically outmoded, we don't accept that. And what I, at any rate, thought was funny was that one of the leading 20th century historians witchcraft was a man called Montague Summers, he was a British writer. He claimed to be an Anglican priest, but there's actually some doubt whether he was one. So he held just the theory that Mises said no 20th century historian would hold and he actually did hold that. But I think Mises wouldn't be phased by that, he would just say that the Summers was taking the wrong view of that and even if he did, he shouldn't have held that view. Now, when I gave examples that how the historian can use praxeology to help explain particular events, but one limit to using praxeology is that the historian cannot deduce particular facts from praxeology. We have praxeology, I mentioned before, gives a general knowledge of facts that says we always choose our most highly valued preferences, but it doesn't tell you what at particular times people will choose or won't choose. For example, in Austrian business cycle theory, we'll say, the Austrian business cycle theory, we know if bank credit expands and takes place and the money rate of interest will falls below the natural rate of interest, which is largely determined by the rate of time preference, then there will be malinvestment will take place, but we can't deduce from praxeology that such an expansion will take place. We have a conditional statement. If there is expansion, such and such is likely to happen, but this doesn't tell us that the expansion will take place. That's something that we could only determine by empirical investigation. So here, remember in my first lecture, I would mention that Mises was a very strong believer in a priori truth. He thought that there were certain propositions, certain judgments we could make just that we know would be true just by thinking about them. And his opponents, some of his opponents, the logical posives that no, there aren't a priori statements that actually give you knowledge about the world. A priori true statements are all tautologies that are just explaining how people have chosen to use words. So although Mises and the logical posives were sharply at odds, here he agreed. He said he didn't think that you could deduce particular events in history. So he said, if you wanna know what's happened, you can't tell that just by thinking about it there. You have to engage in actual investigation of what happened, but in doing that praxeology will help you understand what's happened. We now could raise this problem. Supposing it certainly seems right that praxeology doesn't enable you to deduce particular events. We can't say deduce praxeologically that Britain declared war on Germany on September 3rd, 1939. But does it follow that because praxe we can't deduce particular events from praxeology that there are no laws of history? Would seem like there was a step missing there because maybe there are other laws of history other than praxeological laws. Maybe as we've given it so far, we have praxeology on one hand and then the facts, but maybe there's some other kind of laws and we can use those to help us say that particular events have happened. So those kind of laws wouldn't be a priori laws. They would be inductive generalizations. And Mises rejected that. He said, if there are laws that apply to history, the only relevant ones are praxeological laws. There aren't other kinds of laws that might apply to history. And he said the reason for that is that there are no constants in human action that are quantitative. So there would be nothing equivalent to historical law of gravitation. In the law of gravitation, it's empirical in that we have to investigate what the gravitational constant is. But there's nothing like that in history. There aren't inductive generalizations. And what the historian is faced with is people, historical actors who are freely deciding what to do. He calls human free choice an ultimate given which means the historian or anyone else can't go beyond the free choice and ask what determined the choice. We just have to accept choices and then try to account for them. But we can't have a causal theory explaining these choices. Now, if there are no general laws that account for individual facts, this of course raises the problem. How can the historian try to explain these individual facts? There's if we don't have any laws, historical laws, can we do anything more than register facts or make a chronicle of these facts? And Mises said, yes, because there's something else. There's another way to explain events other than by appeal to historical laws. And this is what he calls specific understanding. Very often we'll use the German word for stay and for this way of explaining events. And what is involved in this is instead of trying to explain an event by subsuming it under general law, we try to grasp the law in its particularity. We try to grasp the individuality of the event by a kind of sympathetic understanding of it. So we're not trying to put it under any general law, we're grasping it in its individuality. Now that sounds like a difficult task. How do we do that? And what the way he suggests we proceed is that say we have a certain action, someone has done something, we would ask what judgments and beliefs about the world combined with what desires someone might have would explain that person's action. So we're imputing some set of beliefs and desires to someone would say something like, well, if I had these beliefs about the world and desires, I would do such and such and we'd try to come up with a set of beliefs and desires that would account for what the historical actor has done. And in doing that, we're making judgments about of relevance of various factors that might have affected someone's judgment, we're saying what particular items, things that have happened might have influenced that actor, what that would help account for the beliefs and desires that led to the action he took. For example, a supposing historian is trying to explain Abraham Lincoln's policy in March 1861 after he took office and Lincoln was faced by various states and the Southern states had seceded from the Union and then there was a question should Fort Sumter, which was the Union for American Fort, which was helped collect the tariffs into the Port of Charleston, had been blockaded by the Confederate Navy. So Lincoln had the question, should he try to break the blockage or he send reinforcements? So if a historian is trying to explain Lincoln's policies, what he would do would be attribute certain beliefs to him, for example, and desires, for example, that Lincoln didn't accept the session he wanted to keep the Union in being and he thought that if he sent troops to relieve the Fort and they were fired on, he had the belief that there'd be an out swelling of popular support for putting down the Southern rebellion against the Union. So if you impute those beliefs and desires to Lincoln, then you can understand how he arrived at Lincoln the policy he did. So this is an example of what means is meant by specific understanding of Riste and we're saying, if the Acts 8 imagine that I'm Lincoln, if I had these beliefs and desires, I would have sent the troops to relieve Fort Sumter. So if you find that explanation plausible, that would be a case where this method of specific understanding works. Now, one mistake that people make about specific understanding of Riste and it doesn't imply if a historian is trying to understand the beliefs and desires of historical Acts, trying as it were to get into the mind of historical Acts, it doesn't imply that you sympathize with the historical Acts or that because you're trying to figure out what would account for what he did that you yourself come to identify with that person. Surprisingly, the great philosopher, American philosopher Saul Kripke, who was perhaps the leading philosopher in the world today in opinion of many people, seems to have made this mistake. He said, he was commenting on a book by the historian David Irving called Hitler's War in which Irving had tried to explain the World War II from Hitler's point of view. So Kripke said, there's a danger if you apply this method that you'll become sympathetic to the subject just as Irving is quite sympathetic to Hitler. But even though that's true, I think it's probably true in this instance, it's not involved in the method. The method doesn't imply, for a stand, doesn't imply sympathy for the historical actor. In this connection, when we're trying to explain the value judgments, the historical actors, hold this doesn't imply either that we ourselves as historians either approve or disapprove of those value judgments. If you say that someone had certain value judgments and use that to try to explain what they did, that's a descriptive statement. It's not a value judgment of your own. It's saying that they had certain value judgments. Now, another mistake that people make is they say, well, supposing the historian is trying to account for the historical actors by considering his beliefs and desires and the way I've tried to explain, doesn't that imply taking what the historical actor thought or believed at face value? But this isn't true at all. We can, the historian in doing that can compare the beliefs that someone had with the facts at the time as best he can determine them. So it doesn't, when you're trying to understand the actress point of view, it doesn't at all imply that you're limited to that point of view. And there is a particular I wanted to call attention to an important essay by Mises called The Treatment of Irrationality in the Social Sciences where Mises considers a very famous book on yet by the great German medievalist Ernst Cantorovitz, who later taught at Berkeley after he went into exile after Hitler took over in 1933. So Cantorovitz in his book, according to Mises, tended to accept at face value the symbolism of the Holy Roman Empire. And Mises thought that had been a mistake. So you see, here's a case where we see kind of a counter instance to this objection. Well, if you're relying on Frishtayin, then you're limited to the values and beliefs of the historical actor. Here Mises was saying Cantorovitz, who was one of the greatest German medievalists was had fallen into error just because he put too much weight on the symbolism of the Holy Roman Empire. I should say that the book by Cantorovitz on the Emperor Frederick II was a very controversial one. It was a best seller in Germany. And one of the admirers of the book was Hitler. He thought very highly of that book, but Cantorovitz, of course, later didn't stop Cantorovitz from leaving Germany, even though Hitler liked his book. Now, in his account of method of Frishtayin, Mises was influenced by the English historian R.G. Collingwood, who was also in addition to being a historian and philosopher, who was a historian of Roman Britain and a philosopher who was also a leading archeologist. So what Collingwood said was the historian should recollect the facts of the past actors and Collingwood went further and Mises said, if you do this successfully, the historian himself, you yourself are having the identical thoughts of the historian, you yourself are having the same thoughts as the historian did. By same, he didn't just mean that you're having, we could imagine something like we say, each of us is having the same thought like each of us is thinking, I wish this lecture would end, so you're having the same thought, but he meant same in a stronger sense. It's the identical thought, not numerically identical. So it isn't that they're separate acts of thought of the historian and the actor that happen to have the same content. He thought if you were successful in historical understanding, we're having the identical thought of the past historical actor. And there were other writers who wrote about this special way that the historian gets knowledge and this, these include Bill Helm Vindalban, Bill Helm Diltai, Heinrich Ricker and Benedetto Croce. I should mention also probably Giovanni Gentile was another one who was very influential. He was especially influential on Collingwood. Now, the last thing I'll cover is the positivist response to this. And what the positivists say is, well, this method of Ristean may be an interesting way to generate hypotheses. Say you can imagine your Lincoln and trying to figure out why he would decide to reinforce the true Ford Summit in March 1861. But all you can do, that doesn't tell you anything. That's just unless you can come up with general laws that can be tested is completely unscientific. All you've done is come up with a way of generating a hypothesis. And in response to that, Mises and those sympathetic to Ristean would say, this is all that we have. We can't come up with anything else. And there aren't any general laws of history. So it's either this or nothing. If you're the most famous statement of this view, the positivist view, general laws in history was in an article by Carl Hempel that came out in 1942 called the Function of General Laws in History. And you can see, I think if you read this article, he simply sets up a model of explanation, but he doesn't really argue that that's the correct way of understanding explanation. He just says, well, here's what explanation is. Take it or leave it. And Mises preferred to leave it because he didn't think there were such historical law. Well, I think we're about out of time now. So thanks very much. Thank you.