The relationship between economics and praxeology

Whatever one thinks about the radical Austrian school hardly anyone would deny that it is highly logical and deductive. It is also highly ambitious by insisting that pure formal economics derived from the human action axiom forms the basis of all human action. In this sense, the radical Austrians represent economic “imperialism" in science or even “super imperialism”. However, confusion is often generated by that fact that the word economics can be used in two ways.

On the one hand economics can be defined very generally so as to include all economic aspects of action starting from action axiom and thus including both formal and applied economics. The special term of praxeology is then not even necessary. On the other hand, the word economics is often used to refer only to the applied economics of the practical world and the detailed study of the formal categories of the axiom action is left to praxeology.

For radical Austrians, the term praxeology seems especially useful and advisable because it makes the foundational nature of action axiom clearer. After all, action axiom is not only the starting point of economics but all other sciences too.

Applied, i.e. practical economics starts by applying praxeological categories and laws to Robinson Crusoe economics. It then continues into catallactics and finally into practical economic theories such as capital theory, monetary theory, etc. Thus, to avoid misunderstanding it would be useful to speak about formal versus applied economics or rather praxeology versus economics. This is also what Ludwig von Mises did by emphasising that economics is only a part of praxeology. Mises made this clear when he gave a lauding review of Murray Rothbard’s economics treatise Man, Economy and the State.

an epochal contribution to the general science of human action, praxeology, and its practically most important and up-to-now best elaborated part, economics.⁹

1Realist philosophers in the Aristotelian tradition try to avoid this conclusion by emphasising that thought and action follow from the empirical basis of the nature of man and the world. Famously, the populist arch-Aristotelian Ayn Rand drew the conclusion that Kant opened with his apriorism the solipsists gates of relativism. From this Rand famously concluded that Kant was the most evil man in history. [Source?]

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2 Ludwig von Mises. The Ultimate Foundation of Economic Science, pp. 35, 36, 42 as quoted in Hans-Hermann Hoppe. Economic Science and The Austrian Method. 2007. Ludwig von Mises Institute. p. 65, note 53.

3 https://www.lewrockwell.com/2014/03/no_author/hoppe-is-hot/

4 Geurt Marco de Wit. On The Misesian Epistemology. (Hallinnon Tutkimus; The Special Issue of the Austrian Theory. vol. 4, 1991, pp. 300-305.)

5 Hans-Hermann Hoppe. Economic Science and The Austrian Method. 2007. Ludwig von Mises Institute. p. 65.

6 Ibid. p. 71.

7 Ibid. p. 66.

8 Ibid. p. 78-79.

9 Ludwig von Mises, The New Individualist Review (Autumn, 1962): p. 41.