David Friedman's Criticism of Austrian Economics

Unbounded
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I found an Austrian Economics critique by economist David D Friedman (advocate of anarcho-capitalism and son of Milton). I couldn’t find the date this was written but it’d be 2022 or later. The critique focuses on Rothbard not Mises.

There are fewer critiques than I’d like about things I like, such as Popper, Rand, Goldratt or Mises. There are also just fewer critiques of most stuff than I think there should be. So I was happy to find this even if it’s more for Rothbard and even though it’s from a thinker who I already know important criticisms of.

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From the second paragraph:

Rothbard starts with an axiom from Ludwig von Mises: Human action is purposive behavior, the first sentence of chapter 1 of his Human Action. I start by defining economics as that way of understanding behavior that starts from the assumption that individuals have objectives and tend to choose the correct way to achieve them, the third paragraph of Chapter 1 of my Price Theory. The wording is different, the essential idea the same.

Is the essential idea the same? I’ll let others analyze.

@lmd @eternity you may want to try this. Up to you. Anyone else can feel free to try it too.

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I’m gonna break down this quote:

Rothbard’s position(I’m gonna call this #1):

  • Human action is purposive behavior(Rothbard’s wording)
    • axiom from Ludwig von Mises
    • Rothbard starts with
    • the first sentence of chapter 1 of his Human Action.

Break down of this quote:

Friedman’s position(or #2):

  • that way of understanding behavior (Friedman’s wording)
    • that starts from the assumption(Friedman’s wording)
      • that individuals have objectives and tend to choose the correct way to achieve them(Friedman’s wording)
    • I start by defining economics as
    • the third paragraph of Chapter 1 of my Price Theory .

#1’s wording is different than #2’s wording. Do they have the same essential idea? Idk.

What is the essential idea of #1? Idk. What even is an essential idea? Is that the main idea of the sentence?

What is the essential idea of #2?

Are the essential ideas the same?

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Idk what essential means or essential idea, but Friedman points out that Rothbard’s wording and his wording are different. I think that means the essential idea is not stated plainly.

Intuitively, I think essential means the most basic features of something that without those features we’re talking about something different. I think an example is if if you only have icing and no cake batter then you cant bake a cake. The cake batter is essential to baking a cake.

Imma look up the meaning of essential:

What oxford languages says:

Screenshot_20250404-153942_Chrome
Screenshot_20250404-153942_Chrome543×794 163 KB

Essential in this quote:

is an adjective so im only gonna look at the first 4 choices in the pic.

We’re not talking about diseases or amino acids so those last two defs dont fit.

That leaves the first two defs.

The first one says “absolutely necessary; extremely important.” If this defnition fits for essential idea, then that means the essential idea is really important it cant be left out. What is it important for?? So sentences make sense? So we know what the writer is talking about? Idk

The second def says “fundamental or central to the nature of something or someone.” I think this definition means the essential idea that Friedman is talking about is ‘fundamental or central to the nature of something’ else. To what tho? Btw idk what fundamental or central really mean so i put them in single parentheses.

I should probably look up the meaning of idea or essential idea for more hints. Also maybe look at another dictionary

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the essential idea basically means the main point while not worrying about all the details.

Friedman’s claiming that the wordings are different, and some details are different, but the main points are the same.

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Ok ill try to say the essential ideas of each of the wordings:

Rothbard’s:

Humans act with purpose.

Small brainstorm of other variations:

Human action has purpose.
Behavior with purpose comes from humans
Behavior with purpose is what humans do.
There’s purpose in human action.

Why say purposive behavior? Is purpose related to behavior? Why say behavior and action in the same sentence? Do they not mean the same thing?

Friedman’s:

Individuals achieve their objectives.

Small brainstorm:
Individuals have objectives they achieve.
Objectives are achieved by people.
People’s objectives are chosen to succeed.
People choose the right way to achieve their objectives.
People want to achieve their objectives.

Why talk about how people achieve their objectives? Like, how successful they are? Does “tend” refer to the frequency of people choosing? Or does it refer to a trait of people? Why say it in the format of people have x and do something with x? Sounds like a logical statement like if a is b and b is c then a is c.

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So are those the same or different?

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They’re different. One talks about what people try to do and the other says that they’re successful at what they try to do. Just cuz someone acts with purpose doesn’t mean they’ll achieve that purpose. They could fail instead

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So what can you conclude about Friedman’s text?

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Friedman made an error comparing the essential ideas of his and Rothbard’s wording. Him saying this:

is an error. I think anything in the paper that builds on the essential idea claim is wrong too. He’ll be making more errors cuz of that

He probably doesnt know the essential ideas of his or Rothbard’s wording. He might have the wrong idea of what an essential idea is.

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yes

FYI I don’t think that’s it. I think his vocabulary is fine but he’s confused or sloppy about logic. I suspect, if he joined the discussion, he wouldn’t concede yet. He’d try to defend his text against your criticism and would bring up the “tend to” phrase. But whatever the “tend to” part means, Mises and Rothbard didn’t say that.

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I asked Gemini 2.5 Pro (experimental) about the passage. I’ve found it better than the other AIs. It didn’t let me use formatting like italics so I asked like this:

Economist David Friedman wrote:

Rothbard starts with an axiom from Ludwig von Mises: “Human action is purposive behavior”, the first sentence of chapter 1 of his Human Action. I start by defining economics as “that way of understanding behavior that starts from the assumption that individuals have objectives and tend to choose the correct way to achieve them”, the third paragraph of Chapter 1 of my Price Theory. The wording is different, the essential idea the same.

Is Friedman correct that the essential idea is the same?

Gemini:

Let’s break down the two statements:

  1. Mises (via Rothbard): “Human action is purposive behavior.”
  • This is the foundational axiom of Mises’s praxeology (the logic of action).
  • It means humans act consciously towards chosen goals or ends. They have purposes they aim to achieve. It distinguishes action from mere reflex or involuntary bodily functions.
  1. Friedman: Economics is “that way of understanding behavior that starts from the assumption that individuals have objectives and tend to choose the correct way to achieve them.”
  • “Individuals have objectives”: This directly mirrors Mises’s “purposive.” Both state that actions are goal-oriented.
  • “Tend to choose the correct way to achieve them”: This adds a layer. It explicitly introduces the concept of rationality or means-ends efficiency. Individuals not only have goals but generally try to select the means they believe are most effective for reaching those goals. The phrase “tend to” acknowledges that people aren’t always perfectly rational or possess complete information, but that rational, goal-oriented behavior is the central tendency economics studies.

Is the essential idea the same?

  • Yes, in a fundamental sense: Both statements ground economics in the idea that human behavior is driven by goals/purposes/objectives. This shared focus on intentional, goal-directed action is indeed the core similarity Friedman highlights. Without purpose, there’s no economic calculation or choice to analyze in either framework.
  • No, there’s a nuance: Friedman’s definition explicitly incorporates the assumption of rationality (choosing the “correct way,” i.e., efficient means) into the initial definition. Mises’s axiom, as stated, focuses purely on the existence of purpose. While Mises certainly develops the implications of purposive action throughout Human Action, demonstrating that action implies choosing means to achieve ends (which is rationality in the praxeological sense), his starting axiom is slightly simpler and more fundamental. Friedman bundles the purposeand the tendency towards rational execution together in his definition.

Conclusion:

David Friedman is largely correct that the foundational element – the idea that humans act purposefully towards objectives – is shared and essential in both his and Mises’s starting points. However, his own definition explicitly includes the assumption of rational choice (“tend to choose the correct way”) from the outset, whereas Mises’s axiomfocuses solely on the existence of purpose, with rationality being an immediate implication explored subsequently rather than part of the axiom itself.

So, while deeply related and sharing the same core insight about goal-directed behavior, Friedman’s definition is slightly more elaborate in its initial formulation by explicitly including the rationality assumption.

I think that’s a pretty good answer! I do think it’s too generous about saying Friedman was mostly right despite him adding a significant additional claim to his version.

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Okay, I think these are the two ideas the author is talking about:

  • Human action is purposive behavior (Mises’ idea)
  • Individuals have objectives and tend to choose the correct way to achieve them (David Friedman’s idea)

D. Friedman says of these two ideas that “the essential idea the same.”

Behaviour being purposive means simply that it aims at some end. But it being purposive doesn’t imply anything about whether that behaviour will in fact achieve that end or not, i.e, whether it’s correct or not, nor whether it’ll tend to be. I think Mises would have disagreed that individuals tend to choose the correct behaviour for their purposes. Mises criticised lots of ideas as failing to achieve their goals.

I think Mises’ idea means that all human action is goal directed and can explained in terms of goals/purposes.

D. Friedman’s idea doesn’t have such implications about how human action is explained. His idea is just that humans have objectives (which is compatible with some or most human action being non-purposive) and that they tend to choose correct ways to achieve those objectives (which isn’t implied by Mises’ idea and doesn’t imply Mises’ idea so it’s not the same idea.)

I don’t know if D. Friedman is misquoting Mises, but the actual first sentence of chapter 1 (from both my kindle version and physical version) of Human Action is (bold added):

Human action is purposeful behaviour.

So when D. Friedman says (bold added):

Rothbard starts with an axiom from Ludwig von Mises: Human action is purposive behavior, the first sentence of chapter 1 of his Human Action.

It seems misquote adjacent because he seems to go beyond paraphrasing when he identifies what he wrote as the first sentence of chapter 1 of Human Action, which is false.

Something that complicates this is that the book was initially released in German, not English, so there may be a English translated version that has the first sentence of chapter 1 using the word purposive?

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So to be clear:

No I don’t think so.

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Yeah I’m impressed. I agree it’s too generous to Friedman too.

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Yes.

Great point! I hadn’t noticed that. Gemini and Dface missed it too. I saw the first error, re whether their actions are correct, and didn’t try to do a detailed analysis.

Great catch! I wasn’t very suspicious of the quotes but you were right to check. (I read them as quotes despite using italics instead of quote marks.)

Did you check Friedman’s book to compare? I’m now suspicious of the other quote too.

I thought Mises wrote Human Action in English himself and it wasn’t translated (though it was partially based on an earlier book, also by Mises, that was in German). Do you have information that I don’t?

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Turns out I misquoted Mises too (spelling mistake). Mises spelled it ‘behavior’ not ‘behaviour’. That means I typed out the quote instead of copy/pasting it. That’s unnecessary when I have a digital copy. I’ll definitely keep an eye out for that.

Another thing. Since it’s the first sentence of a chapter, the first word is all capitalised. I de-capitalised it. Would de-capitalising the word mean misquoting?

Here is what Mises wrote copy/pasted from my kindle version:

HUMAN action is purposeful behavior.

Yeah I read them as quotes too, but realised it was kind of ambiguous as to whether he was just paraphrasing and using italics to emphasise the phrase.

I didn’t, so I did!

So Friedman said:

I start by defining economics as that way of understanding behavior that starts from the assumption that individuals have objectives and tend to choose the correct way to achieve them, the third paragraph of Chapter 1 of my Price Theory.

And the third paragraph of Chapter 1 of D. Friedman’s Price Theory (bold added):

Economics is that way of understanding behavior that starts from the assumption that people have objectives and tend to choose the correct way to achieve them.

He misquoted himself when he used the word ‘individuals’ and not ‘people’.

I also checked Rothbard’s book. Rothbard says in the first paragraph of Chapter 1 of Man, Economy, and State:

Human action is defined simply as purposeful behavior.

I think this is a different idea to Mises’ idea. But Rothbard doesn’t seem to indicate or imply that he is quoting Mises, so I don’t think he is misquoting Mises. He uses the word ‘purposeful’ like Mises does and not ‘purposive’.

There is a reference to Mises in a footnote to the title of Chapter 1, The Fundamentals of Human Action, which says:

For further reading on this topic, the best source is the epochal work of Ludwig von Mises, Human Action (New Haven, Conn.: Yale University Press, 1949), pp. 1–143, and passim.

But I don’t think this amounts to an implication that Rothbard is quoting Mises.

So I don’t think Rothbard misquoted Mises. But is Friedman misquoting Rothbard? Does Friedman imply that Rothbard said “Human action is purposive behavior”, like Friedman implies that Mises said it? This I’m not sure on. I can read them as quotes in italics, but I can also read it as being like: Rothbard starts with the idea from Mises that X (in which X is a paraphrase of the idea of Mises). But I think Friedman would be misquoting Mises when he identifies X as a certain sentence in Mises’ book.

Wait but if it’s a quote because of what he says about it being a Mises sentence, then it’s a quote for what he says about Rothbard right? It can’t be a quote for one guy and a paraphrase for the other, right?

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Regarding misquoting, I don’t like it but there’s some ambiguity so I probably wouldn’t make a big deal out of it.

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I haven’t read anything others have said here.

Human action is purposive behavior ,

And

that way of understanding behavior that starts from the assumption that individuals have objectives

Are essentially the same idea. I think Mises is using “purposive” as synonym for “objective/goal directed.” Looking at the sentence after in Human Action confirms that:

Or we may say: Action is will put into operation and transformed into an agency, is aiming at ends and goals,

Mises’ statement is concise, Friedman’s statement is roundabout, but says the same thing. Technically Friedman doesn’t say the behavior of individuals are directed at the objectives, he just says that they have objectives, but that’s what I think he means.

But then Friedman adds another idea:

and tend to choose the correct way to achieve them,

The Mises quote didn’t discuss this. So the ideas can’t be essentially the same.

I skimmed some of Human Action to see what Mises said about this:

An action unsuited to the end sought falls short of expectation. It is contrary to purpose, but it is rational, i.e., the outcome of a reasonable—although faulty—deliberation and an attempt—although an ineffectual attempt—to attain a definite goal. The doctors who a hundred years ago employed certain methods for the treatment of cancer which our contemporary doctors reject were—from the point of view of present-day pathology—badly instructed and therefore inefficient. But they did not act irrationally; they did their best. It is probable that in a hundred years more doctors will have more efficient methods at hand for the treatment of this disease. They will be more efficient but not more rational than our physicians.

I didn’t find him saying anything about the tendency of correctness of their methods. To me it seemed Mises was mostly saying how humans use some sort of reasoning process to achieve their goals, whether or not they were good processes.

Another example of Mises talking about bad thinking still being reasoning:

It is the merit of psychoanalysis that it has demonstrated that even the behavior of neurotics and psychopaths is meaningful, that they too act and aim at ends, although we who consider ourselves normal and sane call the reasoning determining their choice of ends nonsensical and the means they choose for the attainment of these ends contrary to purpose.

I couldn’t find anything either way regarding Rothbard.

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Mises basically seems to think the doctors who ruined a fellow doctor’s life for telling them to wash their hands were rational but inefficient. Even if this is defensible with some specific word definitions, I still think it’s a problematic way to present things.