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Praxeology is a framework for modeling human action. The term was coined and defined as "The science of human action" in 1890 by Alfred Espinas in the Revue Philosophique, but the most common use of the term is in connection with the work of Ludwig von Mises and the Austrian School of economics.


[edit] Explanation

Mises attempted to find the conceptual root of economics. Like other Austrian economists, he rejected the use of observation, saying that human actors are too complex to be reduced to their component parts and too self-conscious not to have their behaviour affected by the very act of observation. Observation of human action, or extrapolation from historical data, would thus always be contaminated by overlooked factors in a way that the natural sciences would not be.

To counter the subjective nature of the results of historical and statistical analysis (see Methodenstreit), Mises looked at the logical structure of human action (he entitled his magnum opus Human Action). In other words, he built on the methodological aspect of Economics, the synthetic a priori.

From praxeology, Mises derived the idea that every conscious action is intended to improve a person's satisfaction. He noted that praxeology is not concerned with the individual's definition of end satisfaction, just the way he sought that satisfaction and that individual's increase of their satisfaction by removing sources of dissatisfaction or "uneasiness".

An acting man is defined as one capable of logical thought — to be otherwise would be to make one a mere creature who simply reacts to stimuli by instinct. Similarly, an acting man must have a source of dissatisfaction which he believes can be changed, otherwise he cannot act.

Another conclusion that Mises reached was that decisions are made on an ordinal basis. That is, it is impossible to carry out more than one action at once, the conscious mind being capable of only one decision at a time — even if those decisions can be made in rapid order. Thus man will act to remove the most pressing source of dissatisfaction first and then move to the next most pressing source of dissatisfaction. Additionally, Mises dismissed the notion that subjective values could be calculated mathematically; man can not treat his values with cardinal numbers, e.g., "I prefer owning a television 2.5 times as much as owning a DVD player." This is related to how the rank transform in statistics discards absolute values and retains only an ordering.

As a person satisfies his first most important goal and after that his second most important goal, then his second most important goal is always less important than his first most important goal. Thus, the satisfaction, or utility, that he derives from every further goal attained is less than that from the preceding goal. This assumes, of course, that the goals are independent, which is not always the case--for example, acquiring the television may enable one to pursue the goal of watching a documentary on biology, which may make one decide to study biology, which opens the goal of writing a research paper, and so on.

In human society, many actions will be trading activities where one person regards a possession of another person as more desirable than one of his own possessions, and the other person has a similar higher regard for his colleague's possession than he does for his own. This assertion modifies the classical economic view about exchange, which posits that individuals exchange goods and services that they both appraise as being equal in value. This subject of praxeology is known as catallactics.

[edit] Categories

The categories of praxeology, the general, formal theory of human action, as outlined by Murray Rothbard (pp. 945-946) are as follows:[1]

  • A. The Theory of the Isolated Individual (Crusoe Economics)
  • B. The Theory of Voluntary Interpersonal Exchange (Catallactics, or the Economics of the Market)
    • 1. Barter
    • 2. With Medium of Exchange
      • a. On the Unhampered Market
      • b. Effects of Violent Intervention with the Market
      • c. Effects of Violent Abolition of the Market (Socialism)
  • C. The Theory of War--Hostile Action
  • E. Unknown

[edit] References

[edit] See also

[edit] External links

  • Preface to von Mises' book Epistemological Problems of Economics
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