Economic Science and the Austrian Method_3

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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
Economic Science and the Austrian Method(2) a description ofa world in which the categories ofactionassume concrete meaning, where definite people are identifiedas actors with definite objects specified as their meansof action, with some definite goals identified as values anddefinite things specified as costs. Such description could beone ofa Robinson Crusoe world, or a world with more thanone actor in which interpersonal relationships are possible;of a world of barter exchange or of money and exchangesthat make use ofmoney as a common medium ofexchange;of a world of only land, labor, and time as factors ofproduction, or a world with capital products; of a worldwith perfectly divisible or indivisible, specific or unspecificfactors of production; or of a world with diverse socialinstitutions, treating diverse actions as aggression andthreatening them with physical punishment, etc; and(3) a logical deduction of the consequences which resultfrom the performance of some specified action within thisworld, or of the consequences which result for a specificactor if this situation is changed in a specified wa~Provided there is no flaw in the process of deduction,the conclusions that such reasoning yield must be valid apriori because their validity would ultimately go back tonothing but the indisputable axiom of action. If the situarionand the changes introduced into it are fictional orassumptional (a Robinson Crusoe world, or a world with onlyindivisible or only completely specific factors ofproduction),then the conclusions are, ofcourse, a priori true only ofsucha "possible world." If, on the other hand, the situation andchanges can be identified as real, perceived and conceptualizedas such by real actors, then the conclusions are apriori true propositions about the world as it really is. 1919See also Hoppe, Kritik der kausalwissenschaftlichen Sozialforschung, chapter3.26 • The Ludwig von Mises Institute
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INDEXAlbert, H., 10Andreski, St., 5
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ABOUT THE AUTHORHans..Hermann Hoppe
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