Montreal, September 27, 2003  /  No 129
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Dr. Edward Younkins is a Professor of Accountancy and Business Administration at Wheeling Jesuit University in West Virginia. He is the author of Capitalism and Commerce
by Edward W.Younkins
          I have written two recent essays for this journal 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). I was pleased to receive several dozen positive and enthusiastic email responses from individuals who have read one or both of these pieces. This was to be expected based on the large number of people included in Walter Block's Autobiography Archives (found at who have cited the works of both Ludwig von Mises and Ayn Rand as major influences in their lives. However, several individuals have sent me cautionary statements such as "I wish you luck with your project but I don't see how you will be able to reconcile Misesian praxeology's subjectivism with Rand's Objectivism" and "There certainly are many compatible aspects between these schools of thought but one is based on value-neutrality and the other is based on value-significance."
          The purpose of this essay is to answer such questions. To do so I will begin by summarizing the respective value theories of Carl Menger (1840-1921), Ludwig von Mises (1881-1973), and Ayn Rand (1905-1982). I will then explain how such seemingly incongruent ideas can not only be reconciled but, when brought together, lead to a stronger defense of a free society. 
Menger's Pre-Randian Theory of Objective Value 
          Menger explains that all things are subject to the law of cause and effect and that if one passes from a state of need to a state in which the need is satisfied then sufficient causes for this change must exist. Accordingly, useful things are those that can be placed in a causal connection with the satisfaction of human needs. The satisfaction of human needs is the final cause in Menger's exact theory and the driving force of all economic activity. Human needs are the beginning and the end of human activity because nothing would take place without human needs and the requirements of satisfying them. By conceptualizing the law of cause and effect, man recognizes his dependence on the external world and transforms it into the means to attain his ends. Man thereby becomes the ultimate cause as well as the ultimate end in the process of want satisfaction. 
          Menger's explanation of goods relates them back to human needs and human nature. Linking the idea of utility to biology, Menger believed that human wants were to a great extent determined by physiological needs. He saw the biological foundations of human needs as the key to integrating economics with material reality. People can comprehend the goal of much activity in terms of its relation to an organism's biological needs. Through the study of biology and physiology, Menger formulated a theory of needs to complement his theory of value. A person's biological and intellectual needs have to be met and satisfied if he is to survive and prosper. Menger thus emphasized the biological and the choices people make beyond the purely biological. 
          For Menger, the nature of the world and the scarcity of its natural resources combined with human nature and people's desires for greater satisfaction of their wants, circumscribe the fundamental nature of the economic world. Menger defined economics as the science which examines the laws of cause and effect which control the processes through which goods satisfy human needs. He meditated on the nature of human striving to satisfy wants and deduced its immediate implications. Through this process, Menger discovered that the laws of human needs are entirely sufficient to explain the basic facts regarding all the phenomena of the exchange economy. He envisioned the economy as a system driven by the valuations and choices of consumers. 
          Economic judgments that a person makes indicate the degree to which he believes an object may satisfy his needs. Menger's economic object is thus a subject-dependent entity in the sense that the manner of its existence depends upon it being perceived as economic by the agent. The economic character of a good cannot be determined in the absence of a mind judging or perceiving the significance of an object in relation to an end. 
          Whereas the judgment regarding an economic entity is subjective, its truth or untruth can be determined objectively via a realist economic ontological theory of truth involving the correspondence of facts about the object with the judgment that was made. What decides the truth in economic judgment is the correspondence between expectations and their instantiation in facts. The fulfillment of a person's expectations is based on the facts of which some are intrinsic properties of the object. Although the truth or falsity of an economic judgment can be settled objectively based on facts in the world about the object in its role as an economic good and their correspondence to the agent's expectations, it is clear that no one except the acting subject could make the verdict. 
          Menger thus demonstrates that economic subjectivism can be compatible with philosophical realism. Economic judgments depend on men's minds for their existence but not for their truth. Menger reconciles the subject-dependent character of economic phenomena with objectivity of representations regarding the nature of these phenomena. An economic object is a subjective entity because its existence is contingent upon it being viewed as economic by a subject. However, its truth can be judged objectively by the correspondence of the judgment with the facts of reality. 
          Menger emphasized and expressed the causal interplay between the subjective and objective aspects of action. In his theory of goods, or general theory of the good, there must be a belief or opinion by the agent that there is a causal connection between the object and the satisfaction of the human need under consideration. Menger thus even contends that imaginary goods may derive a goods-like character from attributes they are imagined to have or from needs merely fantasized by men. 
          What makes something an economic good is a combination of the views a person has about objects as economic goods and the exact laws governing the categories of economic objects. The term economic goods applies to both material objects and to intangible ends that almost always have tangible things as mediate ends. 
          Menger states that goods have no inherent or intrinsic value in themselves and that their value is not related to the amount of labor expended in producing them. He contended that the labor theory of value held by Adam Smith and other classical economists was wrong. Menger observed that the so-called "objective" approach of adding up various costs, the most important being labor, was vague and produced contradictions. The classical labor or cost-value theory was called "objective" because it was based on the costs that went into making the object. In actual fact, it was a theory of intrinsic or inherent value. A keen observer of reality, Menger, who worked as a commodities analyst and reporter, recognized that prices often had no relation to the labor added to particular goods. He noted that the price of a finished product might bear no resemblance to the costs of production because the two represent market conditions at very different periods of time. He also saw that a price could be seen as objective only in the sense that it was an objective magnitude of a numerical value that can mutually be agreed upon. 
          Menger explains that value is a judgment made by economizing individuals regarding the importance of particular goods for maintaining their lives and well-being. A person assigns value to a good based on the end it enables him to achieve. Applying the concept of intentionality to economic value, Menger stressed that only individuals value and act. His value theory incorporates an analysis of natural human behavior. His theory focuses on individual action itself, rather than on the social phenomena that develop out of individual action. A value must require action in order to be reached. Value in every case is a function of valuing acts of an individual given his own particular context. Individual judgments are acts of preference or evaluation. 
          Menger seems to want to find a basis for economic value in biology. He explains that economic goods have value because of their ability to fulfill human needs and wants. Like Aristotle, he views goods as the means of life, well-being, and need satisfaction. Self-interested behavior (i.e., attaining goods) is economic behavior and is good behavior. The value of a good is a necessary consequence of the knowledge that the maintenance of one's life and well-being depends upon the control and use of that particular good. Value derives only to the extent that a product satisfies a human need or want. Menger recognizes that value originates in a relationship between man and his survival requirements. Value arises out of a relationship between human beings and what they require for their survival and well-being. Human beings must value because they have needs as living, conditional entities. These needs are not arbitrary. They are real needs the satisfaction of which forms the basis of valuation. 
          The value of goods emerges from their relation to our needs and is not inherent in the goods themselves. Nor is value merely in a man's mind independent of reality. While most accounts reduce value to either some intrinsic property of things or to the mind, Menger demonstrates that value results from an interplay between a man's conceptual consciousness, human needs, and the physical ability of goods to meet those needs. Value is not in man alone nor inherent in the goods themselves. Value is a necessary consequence of economic activity. Goods are the objects of a person's economizing and valuation. 
          Value must be in a man's mind but also based in reality. While Menger recognizes that value does not exist outside the consciousness of a human being, he also does not disregard the realm of external reality. For value to exist, consciousness must recognize a connection between means and an end in reality. A value must be to a particular valuer in his unique and specific context and for an end to which the value is a means. A person's life is seen by Menger as the ultimate end of valuation and action. Life requires action and is an end in itself—an end which is not a means to any further end. Men must act to reach values in order to survive. 
          What a man needs depends on the facts of his nature and on the facts of things in reality. Menger recognized that there are facts of economic reality. Values are not subjective, arbitrary, nor intrinsic but are objective when a person's wants correspond to the objective state of affairs. Menger understood that the process of want satisfaction is not entirely cognitive and internal to the human mind, but dependent on the external world and upon the law of cause and effect. For value to exist, there must be a connection in reality grasped by consciousness with respect to means and ends which support a particular man's life. Knowledge in the form of a means-end relationship grasped by reason is a precondition for value. The evaluation of facts is necessary for the creation of value. In this sense, values can be said to be "products" of the mind. In addition, values can only be said to be "subjective" from the perspective that the evaluation of a causal connection with the satisfaction of an end is performed by an individual subject's consciousness. Subjective conditions of satisfaction are elements in the very causal series that includes objective states of reality. 
     « Menger seems to want to find a basis for economic value in biology. He explains that economic goods have value because of their ability to fulfill human needs and wants. Like Aristotle, he views goods as the means of life, well-being, and need satisfaction. »
          In a larger sense, values as depicted by Menger are not subjective (i.e., arbitrary) nor inherent but are objective. Unfortunately, because the label, objective value theory, had already been attached to the labor theory of value, Menger's new value theory was eventually accorded the mistaken label of subjective value theory. Menger's theory explains the inextricable ontological connection between the realm of cognition and the sphere of objective causal processes that results from valuation and economizing. Value is a judgment made by economizing individuals regarding the importance of things for maintaining their lives and advancing their well-being. A person's judgment of value can be said to have been objectively made when it derives from knowledge based on the facts of the reality and on reasoning in accordance with the laws of logic.  
          Menger equates self-interested or selfish behavior with economic behavior. He says that it is proper for an individual to attain economic advantages or gains for himself. The satisfaction of one's needs constitutes economic activity. It follows that to act uneconomically means acting against one's own self-interest. 
          He explains that a person values most highly what he needs most highly and that value is the importance a person assigns to objects of the external world with respect to his well-being. According to Menger, value is the importance that individual goods or quantities of goods have for us because we are conscious of our dependence on the command of them for the satisfaction of our needs. The value of all goods can be seen as the imputation of the importance of satisfying our needs to economic goods. In the end, it is man's life that is the standard of economic value. 
Mises Reconstructs Menger's Value Theory 
          Mises was critical of Menger's value theory. He thought that Menger used unclear language to describe value theory and that he carried over ideas from classical liberalism's theory of objective value. According to Mises, Menger makes statements that are incompatible with the basic principles he advanced. He said that Menger was inconsistent in elaborating his ideas and contended that he did not pursue subjectivism consistently enough. Mises therefore set out to correct or rehabilitate Menger's theory of value.  
          Remember that Menger's value theory eventually was labeled subjective value theory because the description of objective value theory was already assigned to the classical liberals' labor theory of value. Mises was convinced that Menger actually meant Misesian subjectivism despite the fact that Menger described his "subjectivism" as more of an objective value approach. Menger understood that values can be subjective, but that men should rationally seek objective life-affirming values. He explained that real wants correspond with the objective state of affairs. Menger distinguished between real and imaginary wants depending upon whether or not a person correctly understands a good's objective ability to satisfy a want. Individuals can be wrong about their judgment of value. Menger's emphasis on objective values is consistent with philosophical realism and with a correspondence theory of truth.  
          Menger does trace market exchange back to a person's subjective valuations of various economic goods and observes that scales of value are subjective and variable from person to person and subject to change over time. There are certainly subjectivist features in Menger's economic analysis which are founded on his methodological individualism. Methodological individualism implies that people differ and have a variety of goals, purposes, and tastes. Subjectivism is therefore inherent in a principled and consistent understanding of methodological individualism. 
          Menger explains that objective value originates in a relationship between a man's consciousness (i.e., reason) and his survival requirements. To have an objective value a man's mind must grasp the relationship between the facts of existence and his life. He points out very clearly that a person can be mistaken with respect to their judgments of economic value. Consciousness can be wrong regarding what a man's authentic needs really are, the actual relative importance of his needs, and the products or services that truly seem to meet his needs. Menger also states that it is only the evaluating subject who can make the determination that his judgment was wrong. 
          Some of Menger's propositions and concepts are incompatible with Mises' brand of subjectivism. Mises did not believe that Menger really meant what he asserted about objective wants corresponding to an objective state of affairs. In other words, Mises thinks Menger actually meant values that are purely subjective. Mises is an absolute subjectivist who contends that all values emanate from the consciousness of the valuer.  
          Mises uses the term "value" in a completely nonnormative, nonphilosophical manner. He insists that economic theory does not incorporate any idea of a correct preferential ordering among goods and services. His subjectivism emphasizes the private personal character of preferences, costs, and benefits. Mises' praxeology does not pass judgment on action. It simply explains market phenomena on the basis of a given action and not on the basis of right action. For Mises, to state that an object has value is merely to state that it is the goal of a personally chosen course of action. The Misesian sense of value is purely formal and indicates nothing about whether or not an end (i.e., a value) is in fact valuable. Values are embedded deeply in personal, subjective acts of valuation and depend upon the personal assessment and reaction of an individual to the choices available. 
          For Mises, an economist deals with subjective factors in the form of the meanings of events and objects for individuals. Economic events are thus the outcomes of valuations. Misesian economic science is therefore free from the value judgments of an economist who must take the value judgments found in the marketplace as his given data. An economist, in his role as economist, does not approve of or denounce individuals' ends. He does nothing more than ask if the means chosen are appropriate for their purposes. Men act and choose according to their hierarchy of values. The foundation upon which the hierarchy is based is irrelevant to Misesian praxeological economics. 
          Mises' reiniterpretation of Menger's value theory added to the confusion caused by its mislabeling as a theory of subjective value. Max Weber added to the misunderstanding when he began replacing the often-used phrase "Menger's theory of subjective value" with his formulation of "Menger's subjective theory of value" thus switching the subjectivity from an individual's values to the province of the perspective of a given historian, sociologist, or scientist. 
          Despite the differences between Menger and Mises, they certainly agreed that the best available political system is found in a free society that permits all of its members to attempt to attain their subjective ends or values. The satisfaction of individuals' ends, values, and needs can best be accomplished via a system of market cooperation. 
          Misesian praxeology studies only purposeful chosen human actions without regard to the action's motives or causes which are the objects of study of psychology. Mises' position is that we must treat human beings as free and rational actors because we do know how or if action is determined. Mises says that although human thought and action are affected by a person's facticity (i.e., his physiological inheritances and past experiences), we do not know how or to what extent his thought and actions are influenced by these factors. He states that all human actions involve choice and that the principles of choice are valid for every human action without consideration of underlying goals, motives, or causes. Each human being has internal purposes, ends or goals that he attempts to attain and ideas about how to attain them. Valuation reflects the internal scale of preferences of the acting person. Separate individuals value the same things in different ways and valuations change for the same individual with changing conditions and over time. Every human activity is engaged in under the motivating power of human values. 
          Mises explains that every person is a constant valuer who attempts to improve his position, uses means in his attempts to attain his ends, estimates his costs, and chooses his course of action which ultimately results in either a success or a failure. Every human action can therefore be viewed as a purposeful attempt to substitute a more satisfactory state for a less satisfactory one. The existence of an unsatisfactory state presupposes scarcity and the choice between different alternatives. The aim, goal, or end of any action is relief from a felt uneasiness. Put another way, humans act purposefully to increase their happiness. The sought after end of every action is the exchange of a better state of affairs for the current state. 
          Misesian economics recognizes that ends are subjective. Therefore, human action is the ultimate given and cannot be reduced to further causes. All action must be viewed as rational from the point of view of economics because it cannot be analyzed further. For Mises, to be rational is to engage in purposeful behavior. Mises explains that value is the perceived usefulness of a good or service for the attainment of an end. Economic values are subjective existing within the minds of acting individuals. Values express a ranking or ordering of alternatives. These values cannot be measured or calculated, but each man has a scale of values through which he ranks every possible alternative ordinally. 
Rand's Biocentric Theory of Value 
          Objectivism's ethical system rests upon the claim to have derived the "ought" from the "is." The defense of this claim starts by inquiring about the facts of existence and man's nature that result in value—that which one acts to gain and/or keep. The concept of value presupposes an entity capable of acting to attain a goal in the face of an alternative. Where no alternative exists, no goals and therefore no values are possible. The one basic alternative in the world is existence vs. non-existence. Since the existence of inanimate matter is unconditional, it is only a living organism that faces the constant alternative of life or death. Inanimate matter may change forms, but it cannot go out of existence. When a living organism dies, however, its basic physical elements remain, but its life ceases to exist. Life, the process of self-sustaining and self-generated action, makes the concept of "value" meaningful. An organism's life is its standard of value. Whatever furthers its life is good and that which threatens it is evil. 
          The nature of a living entity determines what it ought to do. All living entities, with the exception of man, are determined by their nature to undertake automatically the actions necessary to sustain their survival. Man, like an animal or a plant, must act in order to live and must gain the values that his life requires. Man's distinctive nature, however, is that he has no automatic means of survival. Man does not function by automatic sensory or chemical reactions. Thinking, the process of abstraction and conceptualization, is necessary for man's survival. Thinking, man's basic virtue, is exercised by choice—man is a being of volitional consciousness. Reason, the faculty that perceives, identifies, and integrates the material provided by the senses, does not work automatically. Man is free to think or not to think. The tool of thought is logic—the act of non-contradictory identification. 
          According to Rand, man has no innate knowledge and, therefore, must determine through thought the goals, actions, and values upon which his life depends. He must discover what will further his own unique and precious individual human life and what will harm it. Refusal to recognize and act according to the facts of reality will result in his destruction. The Randian view is that the senses enable man to perceive reality, that knowledge can only be gained through the senses, and that the senses are able to provide objectively valid knowledge of reality. 
          For man to survive, he must discern the principles of action necessary to direct him in his relationships with other men and with nature. Man's need for these principles is his need for a code of morality. Men are essentially independent beings with free wills; therefore, it is up to each individual to choose his code of values using the standard that is required for the life of a human being. If life as a man is one's purpose, he has the right to live as a rational being. To live, man must think, act, and create the values his life requires. 
          Rand explains that moral values are not subjective constructs nor intrinsic features of morality, but rather are objective. The good is neither an attribute of things in themselves nor of a person's emotional state, but is an evaluation made of the facts of reality by man's consciousness according to a rational standard of value. When one attributes moral value to something he must address the questions of "to whom" and "for what." If something is a value, it must have a positive relationship to the end of a particular individual's life. Value is a function of the interaction between what is deemed valuable and the person to whom it is valuable. Value is neither totally internal nor completely external but is a function of a specific connection between external objects and an individual's ends. 
          Rand states that values reflect facts as evaluated by persons with respect to the goal of living. Whether or not a given object is a value depends upon its relationship to the end of a person's life. Life's conditionality is the basis of moral value. The thing in question must have certain attributes in order to further an individual's life, and the individual must seek his life, for that object to be valuable. The objectivity of value derives from the fact that particular kinds of action tend to promote human life. A specific object's value is a function of the factual relation between the object and a particular person's life. The valid attribution of value reflects a factual relationship. 
          The requirements of a man's survival are determined by reality and the good is an aspect of reality that has a positive relationship to a man's life. An object's value thus depends on what the object is and on the way in which it affects a particular person. It follows that a variety of different things can be objectively valuable to different persons. 
          Rand's theory of objective value is both functional (i.e., directed toward certain ends) and naturalistic. It is naturalistic because values stem from certain facts about the nature of human life. A man's consciousness and elements of the external world must connect in order to judge particular things as valuable. 
          Of course, from another perspective, it is individuals who are objective (or are not objective) with respect to their judgments regarding value. A value's objectivity also reflects the reality that values are the conclusions of a person's volitional consciousness and that individuals can be mistaken in their judgments and choices. An authentic value must derive both from a life-affirming relationship to a human being and must exist in a correct connection to his consciousness. 
          Without self-value, no other values are possible. Self-value has to be earned by thinking. Morality, a practical, selfish necessity, requires the use of man's rational faculty and the freedom to act on his judgments. A code of values accepted by rational choice is a code of morality—choice is the foundation of virtue. Happiness is the state of consciousness that results from the achievement of one's values. 
Comparing and Reconciling Mengerian, Misesian, and Randian Value Theories 
          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. 
     « Life's conditionality is the basis of moral value. The thing in question must have certain attributes in order to further an individual's life, and the individual must seek his life, for that object to be valuable. The objectivity of value derives from the fact that particular kinds of action tend to promote human life. »
          On the other hand, Menger and Rand agree that the ultimate standard of value is the life of the valuer. 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 differences 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 man's 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 man's 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 Rand's perspective, every human value is a moral value (including economic value) that is important to the ethical standard of man's 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 - 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 man's life as an end in itself (i.e., a final end that is not a means to a further end). Life's 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 person's ability to survive or flourish or whose absence hinders that ability. Needs arise from a man's nature and thus have a natural foundation. It is natural to satisfy one's needs. In fact, a person's needs can be viewed as the bridge between the natural sciences (especially biology) and the human sciences. Whatever satisfies a need can be deemed to be a value. Value depends on man's needs. 
          The act of valuing is one of discovering what maintains, advances, and enhances the life of the individual. Objective values support a man's 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 man's 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. 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. 
          A person properly starts with the specific needs of human life, examines his own capacities, and then determines what values are proper for him. Next, in order to achieve values, a person needs to gain and use conceptual knowledge. Action is required to reach one's values. However, before one acts in his efforts to gain a value, he should use his reason to identify pertinent causal factors and means-ends relationships. A human being freely chooses to initiate his own actions. He is the fundamental cause of his own behavior. 
          Some objective values are universal and stem from common human potentialities and characteristics. There are also values that are objective but not universal. Objective values depend on both an individual's humanity and his individuality. A person's individuality is consistent with realism and with an all-embracing consistent explanation of existence. Since individualism is a fundamental feature of the human species, each person is able to employ his unique attributes, talents, and situations in his efforts to do well at living his own individual life. Each person needs to consider his needs, capacities, the nature of the world, and opportunities it offers for human action. 
          Values are objective when they are based on the facts that are relevant to a person as an individual. A person's moral responsibility, from the perspective of ethical naturalism, is to make the fullest possible development of himself as an individual rational being in the context of the world in which he lives. What a person is, together with what the world is, reveals how he should live his life. A person who chooses to live should use reason to satisfy his needs, choose what goals to pursue, and determine what actions will achieve them. 
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 Menger's 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 individual's 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 economist's 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 man's behavior lacks moral content. Because a human being is not compartmentalized, economic values and moral values coexist in a man's 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 men's 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 person's subjective and ultimate ends. 
          Advocating or endorsing the idea of "man's survival qua man" 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 man's 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. 
          Knowledge of the consequences of alternative social arrangements is necessary and useful in deciding from among different social structures. The choice of the best model of political economy is a value-laden endeavor that is underpinned by the value-free logic of praxeological economics. Given the nature of a human being, it is only he who can decide, and has the right to decide, upon the relative importance of different values and whether or not to act upon them. Since a person has free will, he can choose to cause physical changes to occur without any prior physical causes. Values are metaphysically freely chosen and acted upon when there is an absence of coercion. Man's distinctiveness from other living species is his ability to originate an act of his consciousness. This process of thought is originated volitionally. Freedom is the degree of independence of an individual's plans from the plans of others. Freedom can be assessed by examining the autonomy a man would have under various social arrangements. Praxeological analysis reveals that a free market society results in the optimum amount of freedom, social cooperation, and social coordination. 
          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. 
Recommended Reading
Binswanger, Harry. "Life-Based Teleology and the Foundations of Ethics." The Monist (January, 1992).
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Buchanan, James. "The General Implications of Subjectivism in Economics," What Should Economists Do? Indianapolis, IN: Liberty Press, 1979, pp. 81-92.
Eaton, Howard O. The Austrian Philosophy of Value. Norman: University of Oklahoma Press, 1930.
Epicurus. "Principal Doctrines," The Epicurus Reader. Indianapolis, Hackett, 1994.
Gunning, Patrick J. "Ludwig von Mises' Transformation of the Austrian Theory of Value and Cost," History of Economics Review, Winter-Summer 1997, No. 26.
Johnsson, Richard C.B. "Austrian Subjectivism vs. Objectivism," The Free Radical. March-April and May-June, 2003.
Laird, John. The Idea of Value. New York: Augustine M. Kelley, 1969.
Lennox, James G. "Health as an Objective Value," Journal of Medicine and Philosophy. Vol. 20, 1995.
Machan, Tibor R. Capitalism and Individualism. New York: St. Martin's Press, 1990.
Menger, Carl, Principles of Economics. New York: New York University Press. [1871] 1981.
Mises, Ludwig von. Epistemological Problems of Economics. Princeton: Van Nostrand, 1960.
----Human Action. New Haven, Conn.: Yale University Press, 1949.
Murphey, Murray G., and Ivan Berg (eds). Values and Value Theory in Twentieth Century America. Philadelphia: Temple University Press, 1988.
Peikoff, Leonard. Objectivism: The Philosophy of Ayn Rand. New York: Dutton, 1991.
Perry, Ralph Barton. General Theory of Value. New York: Longmans and Green, 1926.
Railton, Peter. "Facts and Values," Philosophical Topics. Fall, 1986.
Rand, Ayn. "Causality versus Duty," Philosophy: Who Needs It. New York: Bobbs-Merrill, 1982.
----, "The Objectivist Ethics," The Virtue of Selfishness. New York: The New American Library: 1964.
Rothbard, Murray N. "Value Implications of Economic Theory," The American Economist, vol. 17. Spring, 1973.
Schmidtz, David. Rational Choice and Moral Agency. Princeton, NJ: Princeton University Press, 1995.
Shearmur, Jeremy. "Subjectivism, Explanation, and the Austrian Tradition," Austrian Economics: Tensions and New Directions. Bruce Caldwell and Stephan Boehm (eds.). Boston: Kluwer Academic Publishers, 1992.
Smith, Tara. Viable Values. Lanham, MD: Rowman and Littlefield, 2000.
Tabarrok, Alexander. "Subjective Value Theory: A Reformulation," Austrian Economics Newsletter, Fall 1990.
Zúñiga, Gloria L. "Truth in Economic Subjectivism," Journal of Markets and Morality. October, 1998.
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