The processes of the Austrian School utilizes a unique methodology compared to other economic schools of thought. At the core of the Austrian School is praxeology, which guides human behavior and the logistics of Austrian economics. Within this article, an introduction to praxeology and the Austrian method will be demonstrated, in which it will become clear that the Austrian method is the only viable method for approaching economics.
Praxeology can be defined simply as the study of human action, and human action is purposeful behaviour [as defined by Mises on page 11 of Human Action]. From this premise we can deduce various claims regarding human action. Human’s act purposefully to achieve their high valued end, which is one major part of praxeology and the foundation of economic science. One thing about human action we must understand is why humans act. It is an undeniable truth that humans are not fully satisfied beings- and will never be fully satisfied beings. This is where human action comes into play; humans act to substitute a more satisfactory state of affairs compared to a less satisfactory state of affairs. The individual imagines which scenario or action will bring them better conditions and they will act towards the one which gives them a better scenario and overall satisfaction. The universal incentive which impels a man to act is simply a state of some level of uneasiness. Someone who is perfectly content with his current state of affairs would have no incentive to change things. He wouldn’t have wishes or desires; he would be perfectly happy. He would not act as a result of this. The final goal of human action is always the satisfaction of an acting man’s desire. There is no metric or standard of lesser or greater satisfaction, other than the individuals own interpretation of the value they received from said action. No one other than the individual can say what brings the most value to them, no one but the individual can say what makes them more or less happy depending on different situations and no one can judge the subjective value that comes from an action or any form of good. The key point of economics is the concept of scarcity, without scarcity there would be no economy. Man applies scarce means to achieve their ends, the means of an action must always be scarce otherwise there would be no need to act. It all falls under the concept of time. Time is scarce, time needs to be economized to fulfill individual subjective values in an economy, time being scarce is where choices come from. Everyone in their lifetimes have at one point or another have been presented with a choice between two things. Sometimes you have probably asked yourself why I can't just have everything and get both options. The problem here is time, time is scarce, man cannot act towards all of their ends; they rank their ends subjectively and act to the one they value the highest. An individual cannot achieve all their ends as they are limited by time. For example, it’s Friday night and I have 3 different things I can do. The first is to go out with a lot of people and have a crazy night, the second is going to a sports game and the third is simply staying in. If time wasn’t scarce then we wouldn’t have to pick as we would have unlimited time and ability to do all 3 at the same time but we have to pick which one we value most, from this we draw the overall concept and formulation of scarcity. Scarcity is simply determined by human action also. Something is scarce if people have to act to obtain their desires. So that is how we get resources as since we have to act to acquire resources we need to apply scarce means to do that. Which arrives at scarcity of resources, if I cannot get something in the immediate without acting it is scarce. An example of a non-scarce resource would be air, as air is a general resource and is naturally produced. This means we don’t need to act to get air- we simply just breathe. It is possible it might become scarce in the future although as it stands air is not scarce and does not need to be economized while every other resource which is scarce needs to be economized and produced by man.
Praxeology is based on individual actions, as only individuals can act. A collective cannot act, nor can a group of people. So as a result since only individuals can act we need to center any type of human action study on the individual. So this now goes into why praxeology is the only viable method of economics. The method of economics has to be individualistic, as only individuals can act we need to base the study of economics on individuals. When it comes to overall economics, all of economics is simply human action, everything that occurs in an economy is simply man acting. Every transaction, production and distribution of resources are simply human actions. We act to produce goods, we act to make transactions and we act to distribute resources. This means we need to base our economic method on human action. Human action is unquantifiable, there is no unit of measurement to use to quantify it. Even if there was we cannot look at every individual and see their own every action and put it into a mathematical equation, it is simply too much information making it largely impossible. This is the reason why mathematical economics is often distorted and leads to negative economic effects. Now that it has been established that all of economics is human action and human action is unquantifiable it leads us to say that praxeology is the only proper method. We use human action to base economics off of it and from that we can make various descriptive claims on how the economy operates. Then from those descriptive claims we can make claims on what is the best form of economy.
As depicted, the fundamentals of human action range from scarcity to the actuality of our actions. These concepts further demonstrate the practicality of praxeology as the only viable method for economics.
My name is Aleksandar popovic I am 16 years and an anarcho-capitalist. I am from Toronto, Canada and enjoy economics and diving deep into local, federal, and international economic policy. I love baseball and any politically related topics.