How to deduce from praxeology

Economics Economics Questions
1

I know this has already been discussed, it was even here roughly a week ago. But I CANNOT find the thread; I’ve used the search engine and scrolled back through previous discussion/question pages. That is why I am bringing this up again. Sorry.

I think a user in that thread put it best, that it’s a shame Mises didn’t explicitly state how to deduce from the action axiom.

Can someone provide some examples how?

Another user mentioned reading “An Intro to Econ Reasoning” by Gordon, but that book did the same thing as Mises: stated what praxeology is, stated deduction is used to formulate theories from it, and just jumped right into those theories. It didn’t present how A went from B to C, just A to C.

2

https://forum.freecapitalists.org/t/logical-deductions-from-the-action-axiom/19486

3

IM:

Here is an example where Mises sketches a formal or categorial conception of action:

“Action is an attempt to subsitute a more satisfactory state of affairs for a less satisfactory one. We call such a willfully induced alteration an exchange. A less desirable condition is bartered for a more desirable. What gratifies less is abandoned in order to attain something that pleases more. That which is abandoned is called the price paid for the attainment of the end sought. The value of the price paid is called costs…”

“The difference between the value of the price paid…and that of the goal attained is called gain or profit or net yield…”

(HA, 3rd rev. ed. p.97)

Here Mises briefly sketches his vision of the categorial form of action. The primary categories as he teaches are the less satisfactory state and the more satisfactory state. (The present state the actor is dissatisfied with, and the state he aims to replace it with.) Then he begins to define other categories of action such as price, cost, profit, etc.

If you look at how Mises defines these latter notions (price, cost, profit, etc.) you will notice that they all refer to some aspect of the more primary categories: the state abandoned and the state aimed for.

“That which is abandoned is called the price paid…”

“The value of the price (i.e., the value of that which is abandoned) is called cost…”

“The difference between the value of the price paid (i.e., the difference between the value of that which is abandoned)…and that of the goal attained is called gain or profit…”

Thus, at least to some extent, you can see what Mises means by deducing from the category of action.

The category of action as Mises conceives it is the attempt to replace a current state of affairs with a different state of affairs.

The ‘deductions’ or theoretical insights, all arise from this fundamental ‘category of action’ (the fundamental notion or conception of the attempt to replace a dissatisfactory state of affairs with a satisfactory state of affairs).

Mises holds that all the theorems of praxeology (and thus of economics or catallactics) are already implied in this fundamental ‘category.’

You can see what he means, since he defines all three of the secondary notions of price, cost, and profit, in terms of the fundamental notions of “state abandoned” and “state attained”.

Thus, when he writes:

“Aprioristic reasoning is purely conceptual and deductive. It cannot produce anything else but tautologies and analytic judgments. All its implications are logically derived from the premisis and were already contained in them.” (p.38)

We can see his meaning. He means that all the theorems of praxeology (and thus of economics and catallactics) are aspects or combinations of aspects of the fundamental notion of the attempt to replace a dissatisfactory state of affairs with a satisfactory state of affairs.

“In an a prioristic science, we start with a general supposition—action is taken to substitute one state of affairs for another. This theory—meaningless to many—leads to other ideas that become more and more understandable and less abstract.”

(The Free Market and its Enemies, p.16)

“The scope of praxeology is the explication of the category of human action. All that is needed for the deduction of all praxeological theorems is knowledge of the essence of human action.” (HA, 3rd rev. p.64)

4

Adam,

Unrelated question.

What are the major categories of praxeology? Economics and…? Psychology? History? I figure that “sociology” wouldn’t be a category, since sociology seems like a mixture of different categories (and predominately economics) – in fact, praxeology should replace sociology? (I know during Mises’ early design of praxeology the two words may have been used interchangeably; I think I agree with this.)

5

Hi Jonathan

Do you mean to ask what are the major or recognizable subdivisions of praxeology?

I would list them as:

  1. The realm of mental action. (literary psychology)

David Gordon: "If for example, I think of a chair, my mental action is not a picture of the chair found in my mind…Thinking is an action, a mental “doing,” as it were. Brentano’s term for mental action was intentionality… (“The Philosophical Origins of Austrian Economics”)

“Any conscious behavior counts as action—an action is anything that you do on purpose.” (An Introduction to Economic Reasoning)

  1. The realm of political action. (interpersonal action, or what may be called moral or ethical action—actions taken toward other actors)

de Soto: “This approach…fits in perfectly with the broad praxeological conception of economics developed by Mises, who considered that the goal of our science was to build a general theory of human action in all its varieties and contexts (including, therefore, political actions).” (“Ludwig von Mises’ Human Action as a Textbook of Economics”)

  1. The realm of catallactic actions. (traditional economics)

Mises: “Economics is mainly concerned with the analysis of the determination of money prices of goods and services exchanged on the market…Not logical or epistemological rigor, but considerations of expediency and traditional convention make us declare that the field of catallactics or of economics in the narrower sense is the analysis of the market phenomena. This is tantamount to the statement: Catallactics is the analysis of those actions which are conducted on the basis of monetary calculation.” (HA, 3rd rev. p.234)

  1. The realm of what might be called “simple” or “physical” action. This would roughly cover purposive interactions between an actor and nature, such as moving an object from one location to another.

In this view then, literary psychology is or becomes the study of mental actions, politics, ethics, and morals becomes the study of interpersonal actions, economics is the study of catallactic actions, and physics is or becomes the study of physical actions.

The common thread is that all these realms are considered from the point of view of the category of action. They are all considered from the point of view of an actor utilizing means and aiming at ends.

In this view, as I understand it, history then is not praxeology, but a discipline concerned with the contentual, non-universal aspect of action.

“Praxeology is not concerned with the changing content of acting, but with its pure form and its categorial structure. The study of the accidental and environmental features of human action is the task of history.” (HA, 3rd rev. p.47)

To the extent the aim of sociology is not strict or exact laws, but rather empirical or historical laws, then sociology is not praxeology.

Here is how Menger characterizes the difference:

“The realistic-empirical orientation of theoretical research, as we saw, offers us in all realms of the world of phenomena results which are formally imperfect, however important and valuable they may be for human knowledge and practical life. They are theories which give us only a deficient understanding of the phenomena, only an uncertain prediction of them, and by no means an assured control of them. From the very beginning, too, the human mind has followed another orientation of theoretical research beside the one discussed above. It is different from the latter both in its aims and in its approaches to cognition.”

"The aim of this orientation, which in the future we will call the exact one, an aim which research pursues in the same way in all realms of the world of phenomena, is the determination of strict laws of phenomena, of regularities in the succession of phenomena which do not present themselves to us as absolute, but which in respect to the approaches to cognition by which we attain to them simply bear within themselves the guarantee of absoluteness. It is the determination of laws of phenomena which are called “laws of nature,” but more correctly should be designated by the expression “exact laws.” (Investigation into the Method of the Social Sciences, book 1, chapter 4)