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Source link: http://archive.mises.org/5489/the-nature-of-economic-analysis/

The Nature of Economic Analysis

August 19, 2006 by

I’ve been Hoppe-ing my brains out lately. Take this cool, pithy statement about the nature of economic analysis:

Essentially, economic analysis consists of: (1) an understanding of the categories of action and an understanding of the meaning of a change in values, costs, technological knowledge, etc.; (2) a description of a situation in which these categories assume concrete meaning, where definite people are identified as actors with definite objects specified as their means of action, with definite goals identified as values and definite things specified as costs; and (3) a deduction of the consequences that result from the performance of some specified action in this situation, or of the consequences that result for an actor if this situation is changed in a specified way. And this deduction must yield a priori-valid conclusions, provided there is no flaw in the very process of deduction and the situation and the change introduced into it being given, and a priori–valid conclusions about reality if the situation and situation-change, as described, can themselves be identified as real, because then their validity would ultimately go back to the indisputable validity of the categories of action.

A Theory of Socialism and Capitalism, p. 118-19.This formulation highlights the distinction between the method appropriate to economic science and that applicable to the study of causal phenomenon (natural science).

Moreover, in view of this, what other fields of praxeology could there be that are not covered by this broad conception of economics? This type of economic analysis does not study only “cooperation,” and it of course does include the study of “conflict”–economics concerns the consequences of human action and social interaction both under a free market and on the hampered market. Wouldn’t a study of “war,” say, have to be a subset of economics itself?

{ 5 comments }

adam knott August 20, 2006 at 8:43 pm

Yes, agreed that economic analysis, and also the wider analysis of human action generally, consists of #1 and #2. The deduction of the categories of human action, and a description of how the deductive scheme applies to real, concrete situations.

The deductive scheme in Misean praxeology is a scheme akin to mathematics or formal logic. It is a “concept scheme”, itself having no material, concrete existence. (e.g. the mathmatical concept of “line”)

Then, the conceptual scheme used to depict and describe real objects and events, is essentially different than that scheme. This latter, is a conceptual scheme used to describe objects in spatio-temporal reality. (such as a human body)

Then the question eventually becomes, what is the “relationship between” the two separate conceptual schemes?

Current libertarian epistemology (or perhaps ontology?)is still trying to “combine” the two schemes in an unsatisfactory way, by trying to conceive that the deductive scheme somehow imparts necessity to the objects or events themselves.(for example, trying to tie the human body to a deductive scheme of scarcity)

Potential problem: The concept of scarcity, is likely itself a material concept, and not a concept of the purely deductive scheme of human action. (scarcity “exists” in the real world of tangible objects, but does not “exist” in a formal-logical scheme [a "mathematical scheme" as it were] of human action.)

So the problem remains in libertarian social science: the proper relationship of the deductive-logical scheme of human action, to, the real objects and events of observed reality.

The problem is likely not solved by applying the concept of scarcity to the human body (as an example), since both are probably concepts used to describe tangible reality. What needs solving, is the relation of the deductive scheme of human action, to the material scheme, of which “scarcity” and “body” are a part.

Paul Edwards August 20, 2006 at 10:25 pm

Adam,

I didn’t understand the thrust of your post. Are you saying the science of praxeology isn’t all Mises cracked it up to be?

Is praxeology not the axiomatic-deductive science capable of producing true a priori synthetic statements that the Austrians love so much?

adam knott August 21, 2006 at 12:22 am

Hi Paul.

No. I was referring specifically to the type of example used, which was not an example from Mises.

I believe praxeology is all Mises thought it is.

But I believe the deductive-axiomatic method is frequently misunderstood today.

Adam

teniola August 18, 2008 at 8:21 am

cool and humble

teniola August 18, 2008 at 8:22 am

cool and humble

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