Notes on: Praxeology and the Method of Austrian Economists

Here's a talk by Dr. Walter Block, originally posted on Sep 12, 2014:

Praxeology is an element of Austrian Economics, which is itself a libertarian interpretation of the free market. It is the notion that economics is a branch of logic. This is different from other studies of economics that treat it as a human construct that can be manipulated.

If economics is a branch of logic, then manipulating it is futile. Sure, you can manipulate the inputs and distort the outputs, like anything else. But doing so does not change the core structure.

Many people approach economics like weather prediction. We don't consider weather prediction to be a branch of logic, in and of itself. Maybe it uses logical (scientific) disciplines like fluid and thermal dynamics. But we stop short in referring to weather prediction itself as logic.

If we approach economics as a logical discipline, we don't have to make predictions and test them in the real world to see if the hypothesis holds up. Instead, we only need thought experiments because we're dealing with pure logic. This is because of the assertion that there are things in economics that are inherently untestable. Almost like a black box.

As an one example, fundamental to Austrian Economics, consider this axiom:

Whenever the quantity of money is increased, while the demand for money is held unchanged, the purchasing power of they money will fall.

This is parallel to Praxeology, in that human action is involved in the definition. Human action bares this out and is inseparable from it. This is the fundamental reason people get hung up on the concept of unchecked inflation. And it's why many cryptocurrencies focus on their inflation rate.

In a sense, Praxeology is just another name for Austrian Economics. But Dr. Block points out that there are two schools of Austrian Economics, if you can believe it. One that acknowledges Praxeology and one that deemphasizes it.

What is Praxeology? In a nut-shell, it's the study of human action.