The evolving concept of rationality in the work of Ludwig von Mises

Ludwig von Mises is best known for his development of a science of human action, praxeology, closely associated with his axiomatic approach to rationality. This article argues that we can find a more historical and institutional account of rationality in his early work including in his seminal article on the (im)possibility of economic calculation under socialism. This earlier notion considered rationality to be an outgrowth of the development of capitalist institutions and (economic) accounting methods, and the increasing social dominance of what Max Weber called 'instrumental rationality.' 

We contextualize this view in light of the early stages of the socialist calculation debate to demonstrate that proposed solutions by scholars such as Otto Neurath and Karl Polanyi were based on a related understanding of (calculative) rationality. We subsequently trace and contextualize how Mises early formulation of rationality gradually transformed into the praxeological formulation that is now primarily remembered. We argue that this evolution impacted his epistemology, his view of the relationship between theory and history, and what he believed to be the rational capacities of an individual. 

We also demonstrate that elements of the earlier view continued to play a role in his understanding of the impossibility of socialism and his capital theory. Hayek famously critiqued Mises supposed rationalism, but we suggest that Mises' early view of rationality as historically and institutionally contingent, is compatible with Hayek's later approach.

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