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Praxeology
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Praxeology is the distinctive deductive method used in Austrian economics and the science of human action, as understood by the Austrian School.
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The Promise of <em>Human Action</em>
Jan 23, 2024Tap to summarize[This speech was delivered at the Mises Institute on the 50th anniversary of the publication of Human Action in 1999. This year, May 16-18, join Dr. Joseph T. Salerno, Dr. Thomas J. DiLorenzo, Dr. Jörg Guido Hülsmann, Dr. Mark Thornton, and more for a conference in honor of the 75th anniversary of Human Action at our campus in Auburn. Space is limited. Register here.] In a 1949 memo circulated within Yale University Press, the publicity department expressed astonishment at the rapid sales of Ludwig von Mises's Human Action. How could such a dense tome, expensive by the standards of the day, written by an economist without a prestigious teaching position or any notable reputation at all in the United States, published against the advice of many on Yale's academic advisory board, sell so quickly that a second and third printing would be necessary in only a matter of months? Imagine how shocked these same people would be to find that the first edition, reissued 50 years later as the Scholar's Edition of Human Action, would sell so quickly again. How can we account for the continuing interest in this book? It is unquestionably the single most important scientific treatise on human affairs to appear in this century. But given the state of the social sciences, and the timelessness of Mises's approach to economics, I believe it will have an even greater impact on the next century. Indeed, it is increasingly clear that this is a book for the ages. Human Action appeared in the midst of ideological and political turmoil. The world war had only recently ended, and the United States was attempting to reshape the politics of Europe with a new experiment in global foreign aid. The Cold War was just beginning. Virtually overnight, Russia went from ally to enemy — a shocking transition considering that nothing much had changed in Russia. It had been a prison camp since 1918 and its largest imperial advances in Europe had taken place with the full complicity of FDR. But in order to sustain wartime economic planning in the United States, and all the spending that entailed, it became necessary for the United States to find another foreign foe. By 1949, the United States began to fight socialism abroad by imposing it at home. Indeed, on this day 50 years ago, the old idea of the liberal society was gone, seemingly forever. It was a relic of a distant age, and certainly not a model for a modern industrial society. The future was clear: the world would move toward government planning in all aspects of life and away from the anarchy of markets. As for the economic profession, the Keynesian School had not yet reached its height, but that was soon to come. Socialist theory enthralled the profession to the extent that Mises and Hayek were thought to have lost the debate over whether socialism was economically possible. Labor unions had been deliv...
Transcribe →The Real Meaning of Inflation and Deflation
Jan 2, 2024Tap to summarize[Excerpted from Chapter 17 of Human Action.] The services money renders are conditioned by the height of its purchasing power. Nobody wants to have in his cash holding a definite number of pieces of money or a definite weight of money; he wants to keep a cash holding of a definite amount of purchasing power. As the operation of the market tends to determine the final state of money's purchasing power at a height at which the supply of and the demand for money coincide, there can never be an excess or a deficiency of money. Each individual and all individuals together always enjoy fully the advantages which they can derive from indirect exchange and the use of money, no matter whether the total quantity of money is great or small. Changes in money's purchasing power generate changes in the disposition of wealth among the various members of society. From the point of view of people eager to be enriched by such changes, the supply of money may be called insufficient or excessive, and the appetite for such gains may result in policies designed to bring about cash-induced alterations in purchasing power. However, the services which money renders can be neither improved nor impaired by changing the supply of money. There may appear an excess or a deficiency of money in an individual's cash holding. But such a condition can be remedied by increasing or decreasing consumption or investment. (Of course, one must not fall prey to the popular confusion between the demand for money for cash holding and the appetite for more wealth.) The quantity of money available in the whole economy is always sufficient to secure for everybody all that money does and can do. From the point of view of this insight one may call wasteful all expenditures incurred for increasing the quantity of money. The fact that things which could render some other useful services are employed as money and thus withheld from these other employments appears as a superfluous curtailment of limited opportunities for want satisfaction. It was this idea that led Adam Smith and Ricardo to the opinion that it was very beneficial to reduce the cost of producing money by resorting to the use of paper printed currency. However, things appear in a different light to the students of monetary history. If one looks at the catastrophic consequences of the great paper-money inflations, one must admit that the expensiveness of gold production is the minor evil. It would be futile to retort that these catastrophes were brought about by the improper use which the governments made of the powers that credit money and fiat money placed in their hands and that wiser governments would have adopted sounder policies. As money can never be neutral and stable in purchasing power, a government's plans concerning the determination of the quantity of money can never be impartial and fair to all members of society. Whatever a government does in the pursui...
Transcribe →Reason versus Emotion in Economics: A Praxeological Response
Nov 12, 2023Tap to summarizeThe field of behavior economics downplays the role of purposeful praxeology in economics. Austrian economics does not make that error. Original Article: Reason versus Emotion in Economics: A Praxeological Response
Transcribe →Why Must Supply Precede Demand? Understanding Economic Foundations
Oct 28, 2023Tap to summarizePopular economic thinking holds that consumer spending is the most important driver of the economy. Actually, demand can’t exist without something first being supplied. Original Article: Why Must Supply Precede Demand? Understanding Economic Foundations
Transcribe →Economics and the Real World
Oct 21, 2023Tap to summarizeMuch of modern neoclassical economic theory depends upon assumptions that do not reflect real world conditions. Austrian economists, however, know that realistic assumptions matter. Original Article: Economics and the Real World
Transcribe →Mises versus Hayek on the Future of Civilization
Oct 2, 2023Tap to summarizeWhile F.A. Hayek is known for his term “spontaneous order,” Mises saw institutional development as coming from growth in human understanding of things. Original Article: Mises versus Hayek on the Future of Civilization
Transcribe →Economic Calculation Is Nonbinary
Aug 31, 2023Tap to summarizeEconomic calculation is not an either-or proposition. Even in so-called market economies like that of the USA, there is plenty of government intervention that distorts market processes. Original Article: "Economic Calculation Is Nonbinary"
Transcribe →The Simplicity and Significance of Mutual Economic Exchange
Aug 24, 2023Tap to summarizeThe simplest action of economics—beneficially mutual voluntary exchange—is also its most profound. People serve each other while improving their own lot in life. Original Article: "The Simplicity and Significance of Mutual Economic Exchange"
Transcribe →Praxeology
Jul 24, 2023Tap to summarizePraxeology is the method of economics. Download the slides from this lecture at Mises.org/MU23_PPT_05. Recorded at the Mises Institute in Auburn, Alabama, on 24 July 2023.
Transcribe →Understanding the Difference between Praxeology and Psychology
Apr 6, 2023Tap to summarizeSome economists have tried to apply psychology to economic analysis, but psychology is not what drives economic activity. Original Article: "Understanding the Difference between Praxeology and Psychology" This Audio Mises Wire is generously sponsored by Christopher Condon.
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