The Epistemological Case for Capitalism
In In the early 1950s, writes Guido Hulsmann in his biography of Mises, Mises's NYU seminar dealt increasingly with epistemological questions. The epistemology of economics was not just an idle pastime for ivory-tower intellectuals; it was of direct practical relevance. How does economic theory relate to reality? Most economists believed -- and still believe today -- that their propositions concern only hypothetical conditions never actually given in real life. To Mises, this point of view was paradoxical.
"It is strange that some schools seem to approve of this opinion and nonetheless quietly proceed to draw their curves and to formulate their equations. They do not bother about the meaning of their reasoning and about its reference to the world of real life and action." He himself felt it was a necessity to explain the epistemology of economic science and devoted chapters two and three of Human Action (a total of 62 pages) to these issues. FULL ARTICLE
Comments (2)
Great article.
One minor point. Regarding the two passages:
1. Scientific endeavors within the constraints of methodological individualism and methodological dualism entail the development of the disciplines called "praxeology" and "history."
2. Of the two disciplines, economics had the most momentous practical implications.
These passages taken together leave the impression that praxeology and economics are synonymous for Mises, but this is not accurate. Praxeology is a discipline that studies all human goal directed behavior, not only economic or "catallactic" behavior (action expressible in terms of monetary calculation or exchange ratios).
When someone acts to help or harm another person (an action and goal directed activity), this ethical type behavior is usually not expressible in terms of monetary calculation or exchange ratios, and thus is not "economic" action in the narrower sense. But it is action just the same. Praxeology studies such action, even though it is not economic action.
Praxeology, as Mises wrote time and time again, is a discipline whose hitherto best elaborated branch was and is economics. But economics and praxeology are not identical.
Published: February 16, 2008 10:48 AM
I never did understand why Mises insisted on defining economics as a subset of praxeology. Even if certain actions cannot be aided by monetary calculation they are still economic in the sense that the means they employ are scarce in relation to potential ends.
Published: February 16, 2008 12:52 PM