Praxeology: The Austrian Method

Presented by Hans-Hermann Hoppe at Mises University on July 27, 2009 at the Ludwig von Mises Institute in Auburn, Alabama.

Praxeology is the deductive study of human action based on the action-axiom. The most common use of the term is in connection with the Austrian School of economics. The term was coined by Austrian school economist Ludwig von Mises.

Von Mises writes that action axiom is the basis of all praxeology, and it is the basic proposition that all specimens of the species homo sapiens, the homo agens, purposefully utilize means over a period of time in order to achieve desired ends. In his magnum opus Human Action, Von Mises defined “action” in the sense of the action axiom by elucidating:

Human action is purposeful behavior. Or we may say: Action is will put into operation and transformed into an agency, is aiming at ends and goals, is the ego’s meaningful response to stimuli and to the conditions of its environment, is a person’s conscious adjustment to the state of the universe that determines his life. Such paraphrases may clarify the definition given and prevent possible misinterpretations. But the definition itself is adequate and does not need complement of commentary.

Von Mises argues 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”. In his theory, an acting man is defined as one capable of voluntary and conscious behaviour—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.

Von Mises writes that economics, the study of human choice under conditions of scarcity, can be treated as a specialization of praxeology, the study of all human action. Like other members of the Austrian School, von Mises rejected the standard scientific approach of relying upon empirical observation in the study of economics, and instead, favored the use of logical analysis, a logic which is influenced by Immanuel Kant’s analytic–synthetic distinction. Von Mises writes that the empirical methods used in the natural sciences cannot be applied to the social sciences because the principle of induction does not apply. In essence, he believed that a theory constructed to predict how humans will act (what ends they will seek) in a “complex” situation could not arise from studying how they acted in “simple” situations. Furthermore, there are limits to how much can be learned from even a “simple situation”. As a criticism to empirical studies seeking to find justification in the economic action of individuals, von Mises proposed that only the human actor knows the ends toward which he acts.

Hans-Hermann Hoppe is a prominent Austrian school economist and libertarian anarcho-capitalist philosopher. He is a Professor Emeritus of economics at the University of Nevada, Las Vegas. Hoppe is the author of several widely discussed books and his work has been translated to 22 languages. In 1986, he moved from Germany to the United States, to study under Murray Rothbard.