I was once a participant in an Austrian Economics study group that met monthly in Lakewood, Colorado. We met on the second Wednesday of each month. The group was founded by Ken Riggs, and it operated under the auspices of the Foundation for Economic Education. When I first created this page (December, 2002), our group was reading the Austrian classic, Human Action, by Ludwig von Mises, which is easily accessible on the internet.
I prepared these notes for the benefit of our study group. Here's a synopsis of the Introduction and chapters 1 and 2. These notes may prove helpful as you digest the introductory material in von Mises' masterpiece. I'm interested in hearing from you -- please send me e-mail if you think this page can be improved.

Read the introduction via www.mises.org Introduction to Economic Science

Economics is the youngest science. First enunciated clearly in the 18th century, it replaced earlier systems of political philosophy, but was plagued by the "paradox of value" The subjectivist economics of the Austrian School solved that problem, and today we may speak with confidence of praxeology, the science of human action.

The early economists had barely published their findings when the attacks on this new science began. Some of those attacks stemmed from simple misunderstanding, and others from ulterior political motives. Whether clothed in the garb of polylogism, historicism, or irrationalism, all the attackers shared one common trait: ignorance of the epistemological foundations of economics and praxeology. To refute these critics, then, we must have a firm grasp on the epistemological basis of economic theory.

Economic theory has also been criticized by those who think its methods are inappropriate, or that it has failed to produce perfect social conditions. While these critics generally praise the technological advances of the past two hundred years, they fail to realize that those advances would not have occurred if not for the economic theories that inspired 19th-century liberalism. Economic science itself can never create heaven on earth. But it is an indispensable tool, for it teaches men how we must act if we wish to attain the ends we seek.

Read chapter one via www.mises.org Chapter One -- Acting Man

Human action is purposeful behavior. As such, it always involves both ends and means. Each conscious act involves a choice. And every choice inevitably involves both a taking and a renunciation. In the very act of choosing one thing, acting man implicitly rejects some other less desirable object.

Action always responds to some felt uneasiness. The contented man does not act. And whenever man does act, it is in pursuit of some goal. Since praxeology studies action as such, it does not concern itself with questions about man's ultimate goals. The questions addressed by eudaemonism, epicureanism, hedonism, and utilitarianism are not its concern.

Human action is an irreducible fact of our existence. Science aims always to explain as much as possible from a few general statements, but in the final analysis, every branch of science must accept certain facts as ultimately given. Action is such a fact. Because the fundamental statements of positivism, monism, and panphysicalism are both meaningless and useless for scientific research into the phenomenon of human action, praxeology must accept some form of methodological dualism. In other words, we will seek teleological explanations of economic processes; we must distinguish mental from physical phenomena.

Action is by definition always rational in the sense that the human who acts knows what he wants and believes the means he has chosen will achieve that end. The opposite of rational behavior is not irrational behavior; it is unconscious behavior. A conscious act must always be rational because it involves the evaluation of ends and the choice of means.

Just as ends and means are embedded in the concept of action, so too are cause and effect logically prior to ends and means. Whether causality is an ultimate datum of physical reality or not, the category cause and effect is an a priori fact in the sphere of human action. Whenever man acts in response to some felt uneasiness, he does so because he thinks the means he has chosen will cause the effect he desires.

The mechanicalist philosophers of natural science scoff at teleology and claim that the entire universe operates on the basis of impersonal forces. Yet even they must tacitly and implicitly acknowledge the reality of teleological forces as they interact with other men. Similarly, the behaviorists attempt to avoid teleological hypotheses by speaking of instinct; but that is simply a disguise for the categories of human action. The praxeological categories are unavoidable in any meaningful discussion of the real world of men and the societal structures their actions have created.

Many people are unfamiliar with the idea of categorical thinking -- how it works, and what it entails. One cannot comprehend von Mises' economic theories without a thorough understanding of categorical thought. Here is an exercise that amplifies and illustrates this notion.

Read chapter two via www.mises.org Chapter Two -- The Epistemological Problems

Broadly speaking, all the sciences of human action may be characterized as either historical or praxeological. The historical sciences, including anthropology, psychology, and sociology, focus attention on things that real people have actually done in the past. Praxeology focuses on the unalterable and unvarying logical structure of all human action. History itself gives us no insight into the essential praxeological categories. Indeed, it is praxeology that provides the tools we must have to interpret human history in a meaningful way.

Many philosophers (e.g., John Locke) have denied the existence of a priori knowledge. They point to Darwin's theory and say that logic and reason are merely the result of an evolutionary, and hence mechanical, process -- that all our knowledge is derived from experience. But they cannot deny that human logic has a structure. That a priori structure shapes their theories and their thought. Ethnological and anthropological investigations consistently confirm the universality of the basic categorial structure of the human mind. Human action is, always and everywhere, the interference of an intentional being with external processes. We cannot investigate action as such by ignoring this fact. For the praxeologist, methodological apriorism is unavoidable.

When driven to acknowledge the existence of a priori knowledge, the empiricists next assert that a priori knowledge is purely analytic, or tautological, and that it adds nothing to our understanding of the real world. But physical theories always consist of analytic as well as synthetic elements. And all attempts to force the category of action into the conceptual framework of natural history are vain, for action itself is congeneric with human reason. Because our minds are human and action is innate in us, we can never understand it by viewing it from outside ourselves. We must elucidate human action and its consequences from the inside out.

Proceeding on the basis of methodological apriorism, we see at once that praxeology must also adopt the principle of methodological individualism. While the "action" of every collective can in principle be understood as the combined effects of the actions of individuals, the converse is not true. Moreover, the practice of treating collective wholes as if they were unified intentional beings causes more than mere muddled thinking. It is also positively dangerous, as we may easily see by considering the natural progression from the pluralis logicus to the pluralis gloriosus, and thence to the pluralis imperialis.

Because praxeology proceeds on the basis of deductive logic, we must also adopt the principle of methodological singularism. Every long range action may be conceived as an entire sequence of individual or singular actions. And because each atomistic action is goal-directed and logically related to both its predecessor and its successor in the sequence, our deductive procedure cannot fail if we follow the links patiently. Praxeological theory is not spun from whole cloth. It is carefully woven -- one thread, or action, at a time.

Each act of human choice, though essentially free, is limited nevertheless, both by the physical circumstances of the actor, and by the range of possibilities his mind can imagine. His heritage, and the society in which he lives, both operate to restrict the range of available choices. Praxeology is not directly concerned with the actual limitations on a particular act of choice. The study of those accouterments of completed actions is the task of history.

Historical studies begin by analyzing the available physical artifacts and scrutinizing the writings from days gone by. In this initial stage the historian makes use of all the tools provided by logic, mathematics, praxeology, and the empirical sciences. With these tools he is able to uncover a mass of facts. But his task is not yet complete. Before he can weave a lucid historical account from his raw material, he must bring his own understanding to bear on the facts he has uncovered. He must relate these facts to one another, and to the motivations and aims of the men whose past actions he has studied. In other words, the study of history is always the interpretation of history.

Though history and praxeology are closely related, they use two entirely different cognitive procedures. Praxeology uses conception and categorial thinking, while history employs the understanding and ideal types. The procedure of praxeology leads to knowledge that is valid for all men, because the truths it uncovers are apodictic and general. The historical procedure, by contrast, deals always with particular facts, and not general principles. Its conclusions are always debatable.

The ideal type used by the historian can never be precisely defined. It is a term, like soldier, or emperor, or thief, which conveys a generalized picture of a particular kind of historical figure, or event, or institution. As indispensable as they may be, the historian must choose his ideal types with care, for they can lead to grave misunderstandings when faultily constructed. For example, the grotesque figure of homo oeconomicus, never intended as an ideal type, has been used to belittle the achievements of the classical economists.

We are now in a position to comprehend the peculiar procedure of economic inquiry. The economist combines his praxeological knowledge of the category of human action with more detailed assumptions about particular circumstances to derive theorems that are apodictically certain in any real situation in which those circumstances prevail. The economist therefore combines deductive logic about human action with inductive logic about the real world. For example, we may observe that almost everyone prefers leisure to labor. Combining this empirical fact with our praxeological understanding of action, we are led to formulate the principle of the disutility of labor, which is generally valid.

Philosophers and theologians throughout history have vainly attempted to delimit the Absolute in terms of the praxeological categories. They were chasing a chimera. The categories of human thought are necessarily conditioned by the circumstances of human existence. They are not valid outside that realm. We cannot understand God or the Absolute in purely logical terms. But we can, and we must, pursue the science of human action logically and rationally.