These notes are from the lecture Epistemological Problems of Economics, given at the Mises University. Any errors are mine, feel free to point them out so that I can correct them. This lecture was given by Prof. Gordon. *Note: This lecture was posted out of order.
Basic Features of Praxeology
- By Action Axiom alone, can develop body of economics. Seems counter-intuitive, as not much seems to follow.
- Methodological Individualism / Singularism — start with actions by individuals, because it is people — individuals — who act. What follows from individuals acting?
- Characteristics of action — what follows from it?
- From such, can understand:
- All actions involve means to obtain ends.
- All actions necessitate forfeiting alternative actions.
- All actions must be done through the passage of time
- All actions involve means to obtain ends.
- These things can be known apart from experience, a priori , but don’t have to be known that way.
- Characteristics of action — what follows from it?
- Just by thinking about.
- Action Axiom — man acts, using certain means to obtain certain ends, so as to ease any unrest felt.
Deductive, but not Formal Reasoning
- Not formal logic, where symbols are used in “mathematical reasoning”.
- Praxeological reasoning does not work this way, but is always expressed in normal language; we always have to reason and understand, thus know what is going on at every step.
- Praxeological advantage — always has to be understood.
Additional Assumptions
- Don’t have to investigate a priori axioms, but they are always valid given their specified circumstances.
- Praxeology is a priori, but not all economics can be derived from it.
- Postulate 1: Variety of resources, human and natural.
- Postulate 2: Labor has disutility.
- Postulate 3: In a monetary economy, there is indirect exchange.
- Postulate 4: Firms aim at maxmizing their money-profits (least important).
- Are these postulates really a priori? Consider them as conditionals that apply in most circumstances. Stated as conditionals, they are a priori.
- Rothbard considers them basic laws of nature.
Praxeology: Descriptive or Revisionary?
- Is Mises’ work revolutionary?
- Mises didn’t think so, but thought his work was descriptive of reality, and in line with what was already thought by other economists.
- Mises thought he was just describing, in methodological fashion, how economics was done.
- At least some part of the profession still follows his method; however, since then, economists have drifted away.
- Today, Mises is revisionary.
Historical Criticism of Praxeology
- Historical school is German.
- Laws of standard economics are just true for a particular historical period; true for one period, not for another.
- Praxeology is wrong to think that you can get universal laws of economics.
- More extreme: People of different cultures and different times have different logics (polylogicism).
- What was Mises’ response? Mises said he’s not unviersalizing particular ends, but is interested in the logical structure of action:
- No-one came up with an “alternate logic”.
- Attempts to come up with alternate logic would be counte-productive and impossible, because the mind needs certain categories of logic to think.
- Mises also though that polylogicists had alternatve motives, namely socialism.
- Not universalizing ends, but the logic of action.
- No-one came up with an “alternate logic”.
Logical Positivist Attack on Praxeology
- Vienna Circle — important group of philosophers after the 1930s, though they weren’t taken seriously at the time.
- Any true empirical statement is one that is excluding particular realities.
- Can think of a certain situation where said statements are not true.
- What of statements claimed to be necessarily true?
- Positivists argue that praxeological statements are just hypothethical statements, and are not always true.
- A priori statements are just tautologies — that is, just definitions, or parts of definitions — and don’t actually give us any information about the empirical world.
- Since economics is about the empirical world, it thus can’t be completely a priori.
- Positivists argue that praxeological statements are just hypothethical statements, and are not always true.
- Is this criticism correct? No. Mises doesn’t think he’s defining the most highly valued ends, as what we choose, but rather he is stating that we choose our most highly valued alternative.
- How, then, does Mises know we chose our mist highly valued ends? By definition.
{ 1 comment }
How can the study of observed human action/inaction not always be true? Possibly it is the failure of observation and interpretation, by positivists, that ascribe the hypothetical to praxeology. Please forgive my naivete, I’m a hobbyist not an economist.
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