Praxeology and Understanding (Large Print Edition): An Analysis of the Controversy in Austrian Economics

by George Selgin

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George Selgin argues that what Mises called praxeology is ultimately rooted in a conception of economic logic that is undeniable and not subject to the claims of those who would extend the idea of "subjectivism" beyond its appropriate bounds. Contrary to the claims of hyper-subjectivists, some things can be known to be apodictically certain. This monograph was originally written in 1988, in the thick of a Methodenstreit within the Austrian School. The background here concerns the methodological claims of the so-called "radical subjectivists" who took the notion so far as to deny the very validity of universal economic laws. By asserting that the universe is "kaleidic" and that the future is "radically unknowable,": some thinkers, Selgin argues, are departing from the Misesian tradition, and have actually but inadvertently attacked the very core of economics as a science. The root of the subjectivist extension can be found in the works of Ludwig Lachmann, but they extended to the "hermeneuticians" of the 1980s. They posited a research program that could lead to nothing beneficial for the Austrian School. Selgin argues that instead of such dead ends and methodological black holes, Austrians need to embrace the scientific deductivism of the classical and Austrian Schools, and keep subjectivism within its proper place as a tool of explanation of market phenomena.

Genres: Economics, Nonfiction, Philosophy

78 pages, Paperback

First published July 28, 1990

Reviews

[Luca Marco · Rating 4 out of 5]

Análisis adecuado de la praxeología y de la utilidad para el debate sobre la tendencia al equilibrio

[Susan · Rating 5 out of 5]

I am re-reading this a year later and upping my grade. Selgin argues that "The new threat is not historicism per se, but the unorthodox views of G. L. S. Shackle and his Austrian followers. l According to Shackle, the future is unknowable and "kaleidic" (that is, dominated by patternless change). "

Selgin does a great job of arguing against this and gives a good historical and philosophical view why that idea is wrong by using the ideas of Creative-Destruction of Schumpeter and Lachman i.e. Streaming killed the Video Store just like Amazon put out of business many a brick and mortar bookstore. This is far better than Rothard's Praexology and does a good job of showing why Hume's historical imperative -- and taken up by Keynes will fail every time.

Sense data alone, on the other hand, cannot reveal to us the essential purposefulness of human
actions == tell that to every hipiie you meet and he'll snarl and call you a fool.

[عدنان العبار · Rating 4 out of 5]

I really have to reread this tough volume to digest it properly. It basically weighs in on some issue of praxeology (that also concerns the rest of human endeavours), namely: In what sense can we talk meaningfully about the future based on what is known know; how do opportunities, profits, losses of tomorrow exist within both the mind and ontologically, in the world of today; and most importantly, how can praxeology construct a language that can guide us through the future in a practical sense?

The monograph starts with introducing Lachman's and Kirzner's dispute in interpreting the mental framework and the role of the entrepreneur, and the way in which he aims to settle the dispute. Then he goes on deeper into core of the problem. It's a very tough book, and I see a lot of utility from re-reading it. And so, when I do that, I will add to this review my full analysis.

[Curtis · Rating 3 out of 5]

A short book describing a very particular set of criticisms related to Austrian economics, in particular related to the ability of praxeology (the "logic of human action," the foundational framework of the Austrian school) to predict future events. The particular question relates to the Austrian idea that the free market tends toward equilibrium. Selgin suggests that this equilibrium can be seen through the concept of equilibration, that is, the destruction of profit opportunity upon market action. "Wherever there is action, there is an imagined profit opportunity. Where there is no action, there are no such imagined opportunities; and where there are no imagined profits, there is no action—that is, viewing things in a dynamic context, there is no basis for the modification of plans.” Thus, a market action is taken because profit opportunity exists; but once that action is taken, the profit opportunity is gone: Any imagined profit related to that action is either realized or unrealizable, meaning no further profit opportunity exists. Any further profit opportunity would relate to a new market action.

This is all well and good, but I didn't actually read this book for its economic lessons, but rather for its praxeological ones. As it happens, the first third or so of the book is a good primer on praxeology as a general study, as opposed to its application in economics where has historically most often applied. I believe there may be a variety of ways that praxeology could be applied to other disciplines beyond economics (and closely related fields, like game theory), but unfortunately most of what is discussed about praxeology is couched in economic terms – distinguishing what is praxeology and what is economics from a praxeological perspective is sometimes quite difficult. In developing his argument, Selgin does a good job here of placing praxeology in context of opposing nihilistic views of historicism and positivism/empiricism.

[Douglass Gaking · Rating 2 out of 5]

This paper presents a brief overview of praxeology and arguments for and against some of the Austrian school's positions on economics that are based on praxeology. It addresses issues like determinism, entrepreneurial action, and the tendency of the market to move toward (or away from) equilibrium. It is not the clearest or the most coherent, but it covers some of the basics and cites some good sources that I am more interested in exploring.

[محمد هِج‌هاگ · Rating 3 out of 5]

اگه می‌دونستم در نهایت اینقدر سخت میشه اصلا شروعش نمی‌کردم. تا وسطا خوب توضیح میداد. یعنی اول نظرم این بود که از کتاب هوپه درباره پراگزولوژی قابل‌فهم‌تره ولی تهش جوری غیرقابل فهم بود که می‌خواستم کتاب رو کنار بذارم.

[Samrudha Surana · Rating 4 out of 5]

The book clarifies and aids a reader's understanding of economics. It adds the most value in explaining the disctinction between the concepts of equilibrium and coordination. The response to Shackle and Lachmann's radical subjectivity seems a little dissatisfying to me.

[Lukas Mason · Rating 3 out of 5]

This was very philosophically dense and not an easy read by any stretch. But, when rightly understood, praxeology is a devestating critique of dialectic materialism, the foundation of Marxism.

[Daniel Moss · Rating 3 out of 5]

Nothing entertaining about it but it's certainly informative for someone who has read "Human Action".