PraxeologyWhat is it?How do we use it?Why does it matter?

My Assistant

Prackseeologii… what?Praxeology is the a priori methodology of Austrian economics. It starts from the statement, humans act, known as the ‘action axiom’ and verbally deduces its claims. The practice of praxeology is truly what separates Austrians from public-choicers, Keynesians and historicists. Economics is a subset of praxeology concerned with how humans trade. Praxeological truth stands independent of temporal and spacial constraints.

So why even talk about this?

Epistemology and methodology are the foundations of knowledge. Nevertheless, both subjects are rarely taught.

The Austrian school is more radical for its methodology than its politics.

Understanding why economists are always wrong.

Before the fact After the fact

Geometry Physics

Future & Past The moment

True or Untrue Falsifiable

Deduction Observation

a priori a posteriori Vs.

The area of any circle is equal to a right-angled triangle in which one of the sides about the right angle is equal to the radius, and the other to the circumference, of the circle.

-Archimedes

Energy equals mass times the speed of light squared.

-Albert Einstein

Putting It Together

PraxeologicalA person expects to receive more than he gives in a voluntary exchange or he would never undergo the exchange.

EmpiricalWe must create an indifference curve to determine the value of the exchange or question the person afterwards.

Guess whoIt is a great fault of symbolic pseudo-mathematical methods of formalizing a system of economic analysis, that they expressly assume strict independence between the factors involved and

lose all their cogency and authority if this hypothesis is disallowed: whereas, in ordinary discourse, where we are not blindly manipulating but know all the time what we are doing and what the words mean, we can keep "at the back of our heads" the necessary reserves and qualifications and the adjustments which we have to make later on, in a way in which we cannot keep complicated partial differentials "at the back" of several pages of algebra which assume that they all vanish. Too large a proportion of recent "mathematical" economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols.

Don’t be too hard on yourself

Only recently (since about the 1950’s) has economics adopted a positivist position. We tend to think of sciences steadily progressing but this is not the case. Economics has regressed the more it has aped the ‘hard’ sciences. Recently there has been a rediscovery of sensible economic methodology from the young and even amongst non-Austrians like Holcomb.

Further ReadingThe Methodology of Austrian

Economics Murray N. RothbardEconomic Science and The

Austrian Method Hans Hoppe