I know this was posted somewhere, but I am unable to find it. Could someone link me to the post of the premises of Austrian Economics? I can remember
Humans act
Leisure is a consumer good
Most business attempt to economically profit most of the time
4.??
My wording also may be a little off. Thanks
Empirical observations cannot falsify a priori truths
Hayek rejected praxeology, and i suggest the same to you. Unfortunately it cannot be phrased in a logically consistent fashion. Slightly off topic but the law of diminishing marginal utility is a good example:
utility being ordinal does not imply the law of dim marg utility as austrians claim, as diminishing marginal utility can only exist in the time domain (there must be different valuations done for every time something is bought and valuation schedules dont stay constant in time)
Hayek rejected praxeology…
Source?
Praxeology is not time-independent (e.g. time preference); it’s not independent from anything. It’s the methodology and science of human action.
I don’t understand what you’re trying to say here. It looks like a critique of neo-walrasian price theory, but I’m not sure.
“What are these axioms with which the economist can so confidently begin? They are the existence, the nature, and the implications of human action. Individual human beings exist. Moreover, they do not simply “move,” as do unmotivated atoms or molecules; they act, that is, they have goals and they make choices of means to attain their goals. They order their values or ends in a hierarchy according to whether they attribute greater or lesser importance to them; and they have what they believe is technological knowledge to achieve their goals. All of this action must also take place through time and in a certain space. It is on this basic and evident axiom of human action that the entire structure of praxeological economic theory is built. We do not know, and may never know with certainty, the ultimate equation that will explain all electromagnetic and gravitational phenomena; but we do know that people act to achieve goals. And this knowledge is enough to elaborate the body of economic theory.2” - MNR
"Actually, despite the “extreme a priori” label, praxeology contains one Fundamental Axiom–the axiom of action–which may be called a priori, and a few subsidiary postulates which are actually empirical. Incredible as it may seem to those versed in the positivist tradition, from this tiny handful of premises the whole of economics is deduced–and deduced as absolutely true. Setting aside the Fundamental Axiom for a moment, the empirical postulates are: (a) small in number, and (b) so broadly based as to be hardly “empirical” in the empiricist sense of the term. To put it differently, they are so generally true as to be self-evident, as to be seen by all to be obviously true once they are stated, and hence they are not in practice empirically falsifiable and therefore not “operationally meaningful.”
What are these propositions? We may consider them in decreasing order of their generality: (1) the most fundamental–variety of resources, both natural and human. From this follows directly the division of labor, the market, etc.; (2) less important, that leisure is a consumer good. These are actually the only postulates needed. Two other postulates simply introduce limiting subdivisions into the analysis. Thus, economics can deductively elaborate from the Fundamental Axiom and Postulates (1) and (2) (actually, only Postulate 1 is necessary) an analysis of Crusoe economics, of barter, and of a monetary economy. All these elaborated laws are absolutely true." - MNR
I don’t have the link.
Hoppe points out that Austrian economics is distinguished by both (a) its focus; and (b) its method:
As to the focus of Austrian economics, I would say it begins with something akin to the following, imho:
(1) humans act (i.e. seek subjectively determined ends)
(2) human ends are, in effect, limitless
(3) resources are scarce
(4) therefore, humans prioritize their various ends, and order their behavior accordingly
As to the central importance of the a priori deductive method of Austrian economics, Hoppe presents a concise and relatively brief treatment in Economic Science and the Austrian Method.
@xarthaz
Here’s the deal on Hayek, according to Hoppe (I need to rely on Hoppe here, because I’m not an expert in philosophy or method). From “Murray N. Rothbard: Economics, Science, and Liberty”:
@xarthaz
No.
Here’s the central part of Rothbard’s account of diminishing marginal utility:
Btw, this result was derived by Rothbard using praxeology.
aah, good that you posted a quote from rothbard. I will elaborate the mistake he made.
" These wants, however, must be ranked lower than the wants that the prvious horse has satisfied."
This is incorrect. This assumes comparison of wants during the different points in time, aka comparison of valuation of horse during first purchase in relation to valuation of horse during second purchase. This is impossible.The valuation of the second horse can only be done after the first one is already bought. So it happens at a later time and uses its seperate valuation schedule.
eh, I messed up and deleted my original post here while editing.
Edit: Your objection correctly stresses the fact the actor’s valuation scale will necessarily be different at the two respective points in time of acquiring the two horses. But what, exactly, do we mean by a “change in the actor’s valuation scale”?
Specifically, to say that the actor’s value scale has changed means that “horse services” are valued higher today than two months ago, for example. This is due to the fact that the specific end that the actor seeks to achieve using “horse services”, has risen in priority in the actor’s preference rankings, as the actor responds to changes in real-world circumstances over time.
Regardless of this relative change, however, horse services are still horse services. That is to say, the nature of horse services—the plowing of a field, the pulling of a cart, a ride into town—remain unchanged. And, again, we assume that the horses are individual units of the same good (i.e. provide the same quality and quantify of horse services per unit of horse).
In my opinion, the necessary and sufficient facts are (1) the demand for horse services; and (2) the interchangeability of the services of the first horse and the second horse. The length of time in between horse aquisitions, and changes in the relative position of importance that horse services occupy on the actor’s value scale are irrelelevant.
In short, though relative change occurs, absolute change does not (indeed cannot, otherwise the actor would have no demand for the first horse, much less the second). And therefore Rothbard’s analysis holds, imho.
Not necessarily. People can buy two horses at once instead of one at a time.
“The aquisition of the second horse, to be sure, happens subsequent to the aquisition of the first horse. But the two horses are individual units of the same good: the valuation of the actor proceeds from this fact. Prior to aquisition, the services of the two horses are valued, one against the other, and ranked accordingly. Similarly, subsequent to aquisition, the services of the two horses are valued, so that each morning (as it were) and the first horse is put to work toward achieving the actor’s most valued end; and the second horse is put to work toward achieving the next most valued end.”
The services of the two horses are not valued prior to purchase. Only the thing that is being purchased is being valued in relation to the money paid.
And if you buy two horses at once, it says nothing about their relative valuation in comparison to each other
Your objection correctly stresses the fact the actor’s valuation scale will necessarily be different at the two respective points in time of acquiring the two horses. But what, exactly, do we mean by a “change in the actor’s valuation scale”?
Specifically, to say that the actor’s value scale has changed means that “horse services” are valued higher today than two months ago, for example. This is due to the fact that the specific end that the actor seeks to achieve using “horse services”, has risen in priority in the actor’s preference rankings, as the actor responds to changes in real-world circumstances over time.
Regardless of this relative change, however, horse services are still horse services. That is to say, the nature of horse services—the plowing of a field, the pulling of a cart, a ride into town—remain unchanged. And, again, we assume that the horses are individual units of the same good (i.e. provide the same quality and quantity of horse services per horse).
In my opinion, the necessary and sufficient facts are (1) the actor’s demand for horse services; and (2) the interchangeability of the services of the first horse and the second horse. The length of time in between horse aquisitions, and changes in the relative position of importance that horse services occupy on the actor’s value scale are irrelelevant.
In short, though relative change occurs, absolute change does not (indeed cannot, otherwise the actor would have no demand for the first horse, much less the second). And therefore Rothbard’s analysis holds, imho.
I’m not sure what you mean here. Are you referring to the services of horse one vs. horse two? Seems to me that horse services (in the general sense) are being purchased, and these horse services are being valued in relation to the money paid.
The horses are individual units of a homogenous good. As such, their value is transitive, one for the other, but not the same. The central point is that the actor will always put the first horse to work at the most important horse task, and the second horse to work at the next most important horse task. The actor always has a ranking of which horse tasks are most important (even if these tasks change in relative importance). Say that in period one, the actor feels that plowing fields is the most important horse task, and riding to town is second. Now, suppose the actor changes his/her mind in period two, so that riding to town is the more important. Regardless of the order of importance, if one horse is lame during both periods, the actor will put the one healthy horse to work on the most important horse task: plowing fields in period one, and riding to town in period two.
I would say these two posts cover my view of Rothbard’s argument, so you’ve got plenty of material to take exception with if you’re still not convinced. If not, please point out where you disagree and/or explicate more fully your view. I’m not understanding the essential disagreement you have, other than my estimation that you are not fully considering the implications of the horses as being separate, substitutable units of a homogenous good [i.e. that changes in either (a) the actor’s value scale; and/or (b) the actor’s stock of horses are powerless to change the fact that, at any given point in time, the first units of all horse services at the actor’s disposal will always be applied to the satisfaction of the actor’s most pressing ends, and additional units of horse services to less pressing ends—so that, indeed, additional units of horse services yield a lower utility than the first units].