Praxeology

Praxeology is the “science of human action.” Although this term was coined in 1890, it came into widespread use by modern Austrian economists following the publication of Ludwig von Mises’s seminal treatise on economics, Human Action.

Misesian praxeology, which is concerned with the formal relationship between means and ends in human action, is a comprehensive discipline that subsumes not only economics, but all the social sciences. Despite general agreement about the subject matter of economics, Mises contended that we could not draw a clear line between economic actions and other types of goal-​directed behavior. Because “choosing determines all human decisions,” we must base our analysis of economic activity on a “general theory of choice and preference.”

Mises thus rejects the classical conception of “economic man” as unduly narrow. Economics is concerned with the logical implications of human action—specifically, the necessity of choosing among scarce means in pursuit of our goals. But this necessity describes all human actions, not merely those that are ordinarily classified as “economic.” Thus, there is nothing unique about economic choices that fundamentally set them apart from other kinds of choices. Mises concludes:

We can better appreciate this effort to ground economics in a universal science of human action if we view praxeology from a historical perspective. There is a sense in which Misesian praxeology was a definitive, if delayed, solution to the 19th-​century Methodenstreit between Austrian economists, principally Carl Menger, and the Prussian Historical School. Proponents of historicism, according to Mises, “tried to deny the value and usefulness of economic theory. Historicism aimed at replacing it by economic history.”

Despite his dislike of historicism, Mises shared its repudiation of positivism, which “recommended the substitution of an illusory social science which should adopt the logical structure and pattern of Newtonian mechanics.” Mises insisted that economics must take into account value judgments, purposes, choices, and other subjective aspects of human action. Therefore, he joined his historicist adversaries in rejecting the “unity of science” that positivism sought to achieve by gutting the human sciences of everything that is distinctively human. Instead, he advocated a “methodological dualism” that posits “two separate realms: the external world of physical, chemical, and physiological phenomena and the internal world of thought, feeling, valuation, and purposeful action.”

Mises was profoundly influenced by the historicist theory of Verstehen, especially the version that Max Weber integrated into this theory of ideal types. Verstehen, which can be understood as a type of empathy, is the distinctive methodology of the historical disciplines. It is the mental tool that enables the historian to understand the subjective meaning of singular historical actions and the motives of individual human beings.

This partial alliance with historicism left Mises with a potentially serious problem. If, as many historicists claimed, Verstehen was the appropriate method for dealing with the subjective aspects of human action, then it should be used not only in history, but in every human science, including economics. But this methodological shift would transform economics into what the philosopher Wilhelm Windelbandt called an “idiographic” science (i.e., a discipline that is limited to the study of unique particulars from which no general explanations can be developed). If Mises accepted Verstehen as the primary method of economic reasoning, then economics would be compelled to abandon the quest for universal laws of the sort found in the “nomothetic” sciences. This abandonment is what Mises meant when he said that historicism sought to replace economic theory with economic history.

Thus, Mises faced the problem of charting a course between the Scylla of historicism and the Charybdis of positivism. Historicism offered a subjectivist methodology that was unable to formulate universal laws, whereas positivism offered to bestow on economics the status of a universal, nomothetic science, but only at the cost of robbing economics of its subjectivist orientation. Mises found a solution to this problem in praxeology, a nomothetic science that arrives at general principles by abstracting the universal form of human action from its material content. As Mises puts it, “Praxeology is not concerned with the changing content of action, but with its pure form a categorical structure. The study of the accidental and environmental features of human action is the task of history.”

Closely related to Mises’s formalism of praxeology is his claim that economic science begins with a priori categories, forms, and concepts, after which it arrives at theorems and conclusions by purely deductive reasoning, without the need to appeal to experiential data. “Human knowledge is conditioned by the structure of the human mind.” Working within this Kantian paradigm, Mises says of praxeology: “Its statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori.… They are both logically and temporally antecedent to the comprehension of [empirical] facts.” Moreover, “no experience, however rich, could disclose [praxeological theorems] to a being who did not know a priori what human action is. The only way to a cognition of these theorems is logical analysis of our inherent knowledge of the category of action.”

A priorism is unquestionably the most controversial aspect of praxeology. Although Mises emphatically disagreed with the contention that a priori reasoning is unable to generate factual knowledge, so deeply ingrained is this belief that many economists, convinced that an a priori method would completely strip their discipline of all empirical relevance and authority, tend to rule praxeology out of court without giving it the consideration it deserves. Even some avid defenders of praxeology have expressed their disagreement with its Misesian foundations. For example, Murray Rothbard has argued that praxeology can dispense with a priorism without suffering any detrimental effects. Praxeological reasoning is equally secure when based on Aristotelian empiricism. This epistemological theory explains how, through a process of abstraction, we can mentally separate the “essence” of human action from our observations of particular actions and thereby isolate a pure conception of action for the purpose of analysis. After this process of abstraction, if the Aristotelian follows the deductive method proposed by Mises, he will arrive at the same conclusions, and he will be able to justify those conclusions with the same degree of certitude.

Further Readings

Kant, Immanuel. Critique of Pure Reason. New York: Dover, 2003. Mises, Ludwig von. Epistemological Problems of Economics. George Reisman, trans. Princeton, NJ: Van Nostrand, 1960. ———. Human Action: A Treatise on Economics. Indianapolis, IN: Liberty Fund, 2007. Rothbard, Murray. “Praxeology: A Reply to Mr. Schuller.” American Economic Review (December 1951): 943–946. ———. “Praxeology and the Method of Economics.” Phenomenology and the Social Sciences. vol. 2. M. Natanson, ed. Evanston, IL: Northwestern University Press, 1973. 311. White, Lawrence H. The Methodology of the Austrian School Economists. Auburn, AL: Ludwig von Mises Institute, 1988.