What About this Logic of Action?

Sunday, May 22, 2005
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Do you believe that neoclassical economics is still around, and that it still has an ardent fan base? One thing I discovered at Walsh College is that students hate economics because of neoclassical mathematical economics that treat all humans as brainless automatons. Then they are exposed to Austrian economics, and they say, “I really like this because I can understand it.” YeeHa! God bless logic.

Now this:

q=f(p) and dq/dp = f’ (p) < or = to -0-. (quantitative)

The higher the price of a good, the lower the demand. (praxeological)

They both say the same thing, with the first being a convoluted mathematical statement just begging for a graph, and the second one being an economic law.

The methodology of Austrian economics is fundamentally different from that which has been developed by divergent schools of economic thought. Other schools, such as the neoclassicals, either don’t concern themselves with methodology, or, they tend toward endorsement of a positivist or empirically-driven methodological means to support economic theorems.

The Austrians are set apart from the others in that they embrace praxeology, or the science of human action, as a conceptual root of economics. Praxeology was first used, as a term, by Alfred Espinas in his 1890 Revue Philisophique. However, the expression nowadays is mainly identified with Austrian economist Ludwig von Mises, and especially his groundbreaking tome Human Action.

Mises denied that observation was necessary in order to deduce economic law and/or truths, and thought human actors to be far too complex to be reduced to automatons whose behavior could be explained via mathematical equations.

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