The Review of Austrian Economics, 14:2/3, 119–143, 2001.
2001 Kluwer Academic Publishers. Manufactured in The Netherlands.
On Rationality, Ideal Types and Economics:
Alfred Sch ¨utz and the Austrian School
Department of Political Science and Public Management, University of Southern Denmark (Odense) Denmark;
and Institute for Social and Economic Research and Policy, Columbia University
Abstract. A comparison is made of the views on economic theory and method of the Austrian philosopher and
sociologist Alfred Sch¨utz (1899–1959) and those of his mentor, the Austrian economist Ludwig von Mises (1881–
1973). Sch¨utz basically agreed with the fundamental parts of the Austrian program, but he also had disagreements
with Mises on the epistemological character of the core assumptions, on the formulation and status of the rationality
principle, and on the use of ideal types in economic analysis. In several of these aspects Sch¨utz had important
points of value not only for the use of ideal types in economic modeling, but also within political science and
sociology. In the end, however, there is more which unites than separates Sch¨utz and Mises.
Action is, by deﬁnition, always rational.
Ludwig von Mises ( 1981:35)
Action is behavior based on an antecedent
project. Since every project has an “in-order-to”
or “for-the-sake-of-which” structure, it follows
that every action is rational.
Alfred Sch¨utz ( 1967:239)
The Austrian-born philosopher Alfred Sch¨utz (1899–1959), the founder of phenomenologi-
cal sociology, is often seen by sociologists as the anti-thesis of everything economistic. In-
terpretive sociologists, ethnomethodologists, anthropologists, hermeneuticist philosophers
An earlier version of the present paper was presented at the History of Economics Society Session on Sch¨utz
4 January 1999, Annual Meetings of the American Economic Association, New York and at the Colloquium an
Austrian Economics, Dept. of Economics, New York University, 6 March 2000. I am particularly grateful to Peter
Boettke, Roger Koppl, and one anonymous referee for very helpful comments and suggestions, but the paper is
the outgrowth of a larger project, for which I have received help, suggestions and encouragement from a large
number of people, including Richard Ebeling, Walter Grinder, Israel Kirzner, Leonard Liggio, Roderick Long,
Mario Rizzo, Jeremy Shearmur, and Barry Smith. I owe special thanks to Lester Embree, Bettina Bien Greaves,
J. Herbert Furth, Gottfried Haberler, Evelyn Sch¨utz Laing, Kurt Leube and Ilja Srubar, who at various occasions
provided me with invaluable help and information. Finally, I am particularly grateful to the staff of the Institute
for Humane Studies, who in 1993–94 encouraged and supported the research.