Economic Science and the Austrian Method_3

Hans-Hennann Hoppenever be falsified by any contingent experience, for disputingor falsifying anything would already have presupposedtheir very existence. As a matter offact, a situation in whichthese categories of action would cease to have a real existencecould itself never be observed, for making an observation,too, is an action.Mises's great insight was that economic reasoning hasits foundation in just this understanding ofaction; and thatthe status of economics as a sort of applied logic derivesfrom the status of the action-axiom as an a priori-truesynthetic proposition. The laws of exchange, the law ofdiminishing marginal utilit~ the Ricardian law ofassociation,the law of price controls, and the quantity theory ofmoney-all the examples of economic propositions whichI have mentioned-can be logically derived from this axiom.And this is why it strikes one as ridiculous to think ofsuch propositions as being ofthe same epistemological typeas those of the natural sciences. To think that they are, andaccordingly to require testing for their validation, is likesupposing that we had to engage in some fact-findingprocess without knowing the possible outcome in order toestablish the fact that one is indeed an actor. In a word:It is absurd.Praxeology says that all economic propositions whichclaim to be true must be shown to be deducible by meansof formal logic from the incontestably true material knowledgeregarding the meaning of action.Specificall~all economic reasoning consists of the following:(1) an understanding of the categories of action and themeaning of a change occurring in such things as values,preferences, knowledge, means, costs, etc;The Ludwig von Mises Institute • 25