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Debating Austrian Methodology with Positivist-Empiricists

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Hard Rain Posted: Sat, Aug 20 2011 5:40 PM

 

I’ve entered into a discussion on science-related forums arguing over Austrian methodology. Naturally, the biggest challenges come from epistemology; the fact that the methodology is axiomatic and adverse to empirical testing and the hypothetico-deductive model.

I’m reading Rothbards “The Mantle of Science” to get a handle over this, but I’d appreciate some advice/resources.

Here’s an example of one of their responses:

It basically means: “controlled experiments (and extrapolation of their outcomes) is a much thornier issue in the social sciences than in, say, physics. Therefor, I’m just going to save myself the trouble and not worry about doing science at all. Instead, I’ll just pass of philosophical musings as economics – which will be easy, because I don’t have to extrapolate from fact, nor subject anything to falsification – and throw a lot of obtuse verbiage at anyone who notices, in the hopes of intimidating them into leaving me alone.”

Which isn’t to say that the difficulties with empricism in social sciences aren’t real – but they don’t seem to stop anyone else. You’ll notice that Austrian economics takes plenty of heat from serious economists of all political stripes – Milton Friedman disdains them as much as Paul Krugman does.

Austrian economics is to actual economics what Freudian psychoanalysis is to actual psychology.

Which isn’t to say that Austrian school economists haven’t figured out some useful stuff (likewise, Freudians), but when they do it is in spite of their approach and not because of it.

One upside of all their wooh-wooh approach is that it tends to make them very poor advocates (except when preaching to the choir). They end up going on obtuse rants full of bizarre terms-of-art and so on, and so end up coming off as cranks to general audiences.

"I don't believe in ghosts, sermons, or stories about money" - Rooster Cogburn, True Grit.
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yessir replied on Sat, Aug 20 2011 6:15 PM

Can't understand why you would do that but anyway. Force him to be concrete, he can argue b.s. because he has not made one concrete point. Only general b.s.

For example ask him how he "emperically" test the relation between unemployment and minimum wage. Then tear apart anything he says. Show him that it is much much much worse than a "much thornier issue in the social sciences than in, say, physics."

Then present your deductive argument. Ask him what is wrong with that argument. etc etc, point is be concrete only then errors will come out.

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Sieben replied on Sat, Aug 20 2011 6:20 PM

I can't say I disagree too much... I think the issue is better framed as the schools talking past one another.

Austrian economics is correct in that it is non-contradictory. Its insights are definitionally true. A good example is "human action", which is by definition purposeful. What about involuntary foot tapping? It's not *technically* human action. Except it has real world implications, so, you know, it's relevant to the real world and mainstream economists may want to study at it in detail.

So the basic issue is that mainstream economists want to include a bunch of non-praxeological concepts in on top of what they see as trivial/useless observations that "human action is purposeful".

Mainstream economists definitely differ in how outrageous/stupid they want to be, but I don't see any problem with using epidemiological metrics as long as you treat them like epidemiological metrics. Similarly, you can do a ton of fancy math but that doesn't mean it isn't complete garbage.

Additionally, I think you can test economic hypotheses in controlled studies. The Prisoner's dilemma has been repeatedly tested in controlled environments. Right? Or is it technically not a controlled experiment because you can't prove that test/control groups are "equal enough"? It's just a question of how reasonable you want to be. AE is technically correct that there are no objective guidelines for induction and the scientific method. But AE also remains agnostic on whether turning a doorknob will open the door. So...

I'd also say that Austrian Economists typically depart from strict AE whenever they say interesting things like "interest rates are too low". How the hell do they know? What part of AE tells you what the interest rate is? Just because there's a price control doesn't mean that the price is too low, too high, or could be just right. Strictly all it means is that there's a breakdown in economic communication. Except that's not flashy or interesting. It's a lot cooler if you pretend like it explains everyone's economic problems. I mean, maybe it does, but that's not Austrian Economics. That's inductive logic.

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I'd also say that Austrian Economists typically depart from strict AE whenever they say interesting things like "interest rates are too low". How the hell do they know? What part of AE tells you what the interest rate is?

Say someone is kicked out of school for poor academic performance. He goes home and his folks mention that his grades were too low. To which he replies, "How do you know? You did not even see my grades. You also do not know what a passing grade is my school. What tells you what my grades are?"

And the answer is, of course, that while they do not know what his grades are, nor what they should be, they do know that his grades are too low, because he got kicked out of school for low grades.

Similarly, there are well known results of too low interest rates. When they happen, you know that rates are too low, without having to know what they should be.

Just because there's a price control doesn't mean that the price is too low, too high, or could be just right.

Price controls are usually imposed at less than the market price at rate of imposition. So they are too low. One may argue that over time, given the constantly fluctuating state of the universe, that they change to being too high or just right. As with the persn kicked out of school for low grades, there is a reliable sure fire test. If a black market begins, if shortages happen, if clever ways are found to raise the price without officially raising the price, they are too low.

 

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Sieben replied on Sun, Aug 21 2011 4:56 PM

Smiling Dave:
Say someone is kicked out of school for poor academic performance. He goes home and his folks mention that his grades were too low. To which he replies, "How do you know? You did not even see my grades. You also do not know what a passing grade is my school. What tells you what my grades are?"
Inductive logic. There's nothing praxeological about the conclusion that he was kicked out because grades were too low. Particularly, there is no praxeological branch that gives us particular information on "public schooling".

But yeah you should make your example more clear. Are the parents told "Bobby was kicked out of school for having low grades"? Or were they told "Bobby was kicked out of school and wasn't turning in his assignments"? The latter is most analogous to the Federal Reserve, and only through inductive logic can you conclude that no assignments --> bad grades --> explusion, or interest rate controls --> seem kind of low --> bad economy.

Smiling Dave:

And the answer is, of course, that while they do not know what his grades are, nor what they should be, they do know that his grades are too low, because he got kicked out of school for low grades.

Similarly, there are well known results of too low interest rates. When they happen, you know that rates are too low, without having to know what they should be.

First, yeah, Austrians do typically have an estimate as to what interest rates should be. They bracket it between the status quo (too low) and infinity (too high). That may seem "reasonable", and I agree. But there's no praxeologic reason for the bracket because its based on finite numbers. It is as praxeologically incoherent as saying the interest rate should be between 14 and 15% (which you would agree is non-Austrian).

Second, you can't conclude the cause just by looking at the real world consequences. I'm sure all Austrians will agree that a particular outcome can, in theory, have multiple (or infinitely many) causes. If you're going to say that ABCT is what's really happening, the link is necessarily inductive because you're talking about the real world and hypothesizing about people's preferences/actions/etc. Can praxeology alone rule out a 0.000000001% market interest rate? Nope.

Smiling Dave:
Price controls are usually imposed at less than the market price at rate of imposition. So they are too low.
I don't disagree. But then again, I dont' disagree with strong inductive logic. It's just non-austrian.

Smiling Dave:
One may argue that over time, given the constantly fluctuating state of the universe, that they change to being too high or just right. As with the persn kicked out of school for low grades, there is a reliable sure fire test. If a black market begins, if shortages happen, if clever ways are found to raise the price without officially raising the price, they are too low.
If you get a black market, it means there's a disagreement about the legal system. It doesn't mean anything about the direction of prices. You get black markets when prices are too high AND too low.

So, to resummarize, Austrian Economists depart from praxeology all the time in order to sound interesting. I think that's just fine and dandy, but they pretend like they're standing up there doing strict a priori economics, and they're not. Even if their inductive arguments are 99.999% likely, it's still non-Austrian.

Praxeology is AE's big shiney claim to fame, so its natural they should overemphasize it. Kind of like how Christians pretend like they get everything from God and the Bible but turn around and shape their rules around modern lifestyles and opinions. It might be totally justified, but they're supplementing objectivity with empiricism, and they don't parade it because then they lose their edge.

 

 

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Sieben,

You have to distiguish between what we may call pure and applied AE. Pure AE is praxeological, and reaches its conclusions by deductive logic alone. All the statements are of if-then form. If such and such is the case, and all other things stay the same but for an introduction of a minimum wage, then there will be greater unemployment. The proof offered is deductive. That's pure AE.

Then there's the messy complicated everchanging world, where all other things are never held equal. In analyzing an historical phenomenon, and ever so much more so in trying to predict the future, we are leaving the realm of purely deductive AE. I doubt anyone pretends otherwise. And it is in this realm, which we may call applied AE, various economists attempt to use the principles they learned in pure AE to figure out what is actually going on. 

Applied AE is admitedly an art, not a science, and like all art, all's fair in trying to get the right result. Inductive reasoning, educated guesswork, native intelligence, suspicion of govt, generations of economic wisdom soaked in with mother's milk if you were lucky enough to get some, and who knows what else, all are part of what goes into deciding what are the essential features to focus on, and how to apply pure AE to them.

Some are much better at it than others. And when they somehow reach their conclusions, Ramanujan style, they have to find someone, usually themselves, who will play the role of G.H. Hardy and give convincing, though of necessity not praxeological, reasons for what they predict.

This is no way detracts from the shininess of AE. Consider two men, both lost in a dangerous jungle, who have to find their safely way out of there by a mixture of thinking and guesswork. One has a compass whose North needle points North [the Austrian], and another has a compass whose North needle points East. They both know a true fact , that their destination is north of the woods. Who is the shiny one?

 

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Sieben replied on Sun, Aug 21 2011 5:40 PM

Well I'm glad we agree that there is zero praxeological (read: Austrian) content or guidance to the sort of inductive flashy statements our famous Austrians make. It's just whatever we can all agree is a "reasonable" treatment of the evidence.

The point is that this is the point on which Austrians and the Mainstream are supposed to diverge. In actual fact, the Austrians engage in the same sort of mainstream positivism, except they might make fewer egregious overstatements.

Conversely, the "unique" Austrian arguments can all be run from a mainstream perspective if you change the vocabulary a little. If you talk like a neoclassical, you can analyze the fed in terms of "price controls on future money", or something. I'm sure we both agree that mainstream eco is equipped to (at least consequentially) talk about price controls.

So to me, the uniqueness of Austrianism is mostly in its culture, values, and attitude. I happen to think these attributes are the most important factors in any endeavor, so this is not pejorative. I just wish Austrians openly recognized these as the source of their strengths rather than appealing to some magic praxeological mojo that gives them better answers.
 

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Conza88 replied on Sun, Aug 21 2011 6:27 PM

Read Hoppe's book on Austrian Economics and Method.

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Neodoxy replied on Wed, Aug 24 2011 2:41 PM

Read theory and history by Mises.

Because of the variability of human action we cannot make human law without praxeology. We also cannot interpret human action without an understanding of praxeology.

The reason why the hard sciences work with empirical evidence is because of the fact that they have the same properties and so when put in the same conditions will act in the same ways. The same is not true for men because men are inherently different due to past experience and physiological construction (inherent intelligence, height of senses ETC.), and furthermore the same situation will never occur twice.

With this being said I think that when praxeologically and logically interpreted history and empirical evidence can give us general tendencies, but these are tendencies when in certain situations and nothing more, they are in no way laws.

 

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Conversely, the "unique" Austrian arguments can all be run from a mainstream perspective if you change the vocabulary a little. If you talk like a neoclassical, you can analyze the fed in terms of "price controls on future money", or something. I'm sure we both agree that mainstream eco is equipped to (at least consequentially) talk about price controls.

Some parts of mainstream economics are indeed not mistaken. But their big picture assumptions are very mistaken, as mistaken as saying night is day.

And it leads them to predict night will be day.

Well I'm glad we agree that there is zero praxeological (read: Austrian) content or guidance to the sort of inductive flashy statements our famous Austrians make. It's just whatever we can all agree is a "reasonable" treatment of the evidence.

I found some Walter Block about this. He agrees, too. [emphasis mine]

...allow me a few methodological, philosophical words. Austrian economists, qua Austrian economists, or praxeologists, do not predict. Period. In what sense, then, am I putting together this list of Austrians who have predicted the housing bubble? It is in the sense that they predicted this phenomenon not as formal economists, or praxeologists, but, rather, in their role as thymologists, or economic historians; see on this here. A metaphor that may clarify this distinction is that between a musician playing scales, and then rendering the music of Mozart. In a basic sense, the two are very different. Yet, surely, facility with the former renders the latter ability more sophisticated and knowledgeable. So is it with praxeology and thymology. Knowledge of the former offers no guarantee of the latter; but, it surely helps. Praxeology is the science of (Austrian) economics. It gives us apodictically certain laws, or basic axioms, or synthetic a priori truths that need not be, indeed, cannot be, tested; they can only be (empirically) illustrated. For example, here are a few axioms provided by perhaps the world’s presently active leading praxeologist, Hans Hoppe:

etc etc

 

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Sieben replied on Thu, Aug 25 2011 9:36 AM

Smiling Dave:

Some parts of mainstream economics are indeed not mistaken. But their big picture assumptions are very mistaken, as mistaken as saying night is day.

And it leads them to predict night will be day.

What parts are mistaken? They don't know that human action is defined as purposeful? How do you explain the mainstream economists who do not predict night as day?

Smiling Dave:
It is in the sense that they predicted this phenomenon not as formal economists, or praxeologists, but, rather, in their role as thymologists, or economic historians;
I mean... its a prediction about the future, not the past. I'm glad Block says it has nothing to do with economics, but then what is it? What governs it? Nothing? Just our intuitions and feelings about what sorts of inductive arguments are "good enough"?

If there's nothing wrong with "historical prediction", then why not go balls to the walls with it like many mainstream economists do? Is the Austrian gripe really just "Well, they're not doing praxeology so they really shouldn't call themselves economists according to our definition of economics (which they don't do because they have their own definition)."

Smiling Dave:
A metaphor that may clarify this distinction is that between a musician playing scales, and then rendering the music of Mozart. In a basic sense, the two are very different. Yet, surely, facility with the former renders the latter ability more sophisticated and knowledgeable. So is it with praxeology and thymology. Knowledge of the former offers no guarantee of the latter; but, it surely helps.
Except there's an objectively correct way to do both of those things. There is no objectively correct way to do thymology. I'd even argue that praxeology isn't the most important aspect of thymology, since having real world knowledge (example - knowing that there is a federal reserve and what its policies are) is more important than knowing that human action is DEFINED as purposeful action.

Praxeology might even be irrelevant. Someone who failed to apply praxeological glasses to the federal reserve and viewed it as a mechanical natural disaster could concievably make some pretty accurate predictions.

 

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Autolykos replied on Thu, Aug 25 2011 9:50 AM

Given the title of the OP, could we not say that praxeology is the methodology of Austrian-School economics? That is to say, Austrian-School economics uses a different methodology (i.e. praxeology) from that of "mainstream economics", and the latter uses the same methodology as that of the "hard" sciences.

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Neodoxy replied on Thu, Aug 25 2011 10:42 AM

Autolykos:

Given the title of the OP, could we not say that praxeology is the methodology of Austrian-School economics? That is to say, Austrian-School economics uses a different methodology (i.e. praxeology) from that of "mainstream economics", and the latter uses the same methodology as that of the "hard" sciences.

 

Yes..... That's kind of the point really....

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What parts are mistaken?

Keynes: Denial of Say's Law, and all that follows from it. In particular this corrolary of Say's Law:

The same principle leads to the conclusion, that the encouragement of mere consumption is no benefit to commerce; for the difficulty lies in supplying the means, not in stimulating the desire of consumption; and we have seen that production alone, furnishes those means. Thus, it is the aim of good government to stimulate production, of bad government to encourage consumption.

Keynsians turn night into day by saying it is the aim of good govt to increase consumption etc. We see the wreckage from this before our eyes, high unemployment etc.

Chicago: Monetary cranks. Assume that changes in the money supply can bring prosperity. We see the disastrous effects of this in high inflation we are having and will have.

Marx: Labor Theory of Value. Leads to class warfare, and many deaths, when all so called classes in reality help each other.

Socialists: Assume non existence of calculation problem. Has led to mass starvation in many countries.

Praxeology teaches the error of all of the above from first principles.

I'm glad Block says it has nothing to do with economics, but then what is it? What governs it? Nothing? Just our intuitions and feelings about what sorts of inductive arguments are "good enough"?

I agree that Block's definition of it being "economic history" is a little awkward. I imagine he is stretching the word history to mean future history as well, so that thymology is the attempt to apply AE to the real world, whether in understanding past events or predicting the future.

And yes, I think you nailed it. It's an art form. The difference is that an Austrian is trying to create music [=correct predictions] from a working Stradivarius violin [=solid theoretical principles to guide him somewhat] ,

 

and the mainstream from  this:

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TANSTAAFL replied on Thu, Aug 25 2011 12:58 PM

There was either an article or a video clip that was featured on this site not long ago (within the last six weeks) that was Hoppe on this exact topic. I only vaguely remember it, maybe someone remembers it better and can link it for the OP.

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Autolykos replied on Fri, Aug 26 2011 7:18 AM

Neodoxy:
Yes..... That's kind of the point really....

I agree with you, but I don't think that Sieben does. He seems to be arguing that, when Austrian-School economists e.g. claimed that there was a "housing bubble", they were necessarily and implicitly using the exact same methodology as "mainstream economists".

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Neodoxy replied on Fri, Aug 26 2011 8:47 AM

Autolykos:

I agree with you, but I don't think that Sieben does. He seems to be arguing that, when Austrian-School economists e.g. claimed that there was a "housing bubble", they were necessarily and implicitly using the exact same methodology as "mainstream economists".

I can't figure out what Sieben is saying, it's incredibly hard to just come in on debates. But anyway, no one here should just start understanding that praxeology is the Austrian method and that it's incredibly different from mainstream empiricism

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Sieben replied on Fri, Aug 26 2011 9:08 AM

Smiling Dave:
Keynes: Denial of Say's Law, and all that follows from it. In particular this corrolary of Say's Law:
Not all mainstream economists deny Say's law. And Say was not an Austrian.

Smiling Dave:
Keynsians turn night into day by saying it is the aim of good govt to increase consumption etc. We see the wreckage from this before our eyes, high unemployment etc.

Chicago: Monetary cranks. Assume that changes in the money supply can bring prosperity. We see the disastrous effects of this in high inflation we are having and will have.

Marx: Labor Theory of Value. Leads to class warfare, and many deaths, when all so called classes in reality help each other.

Socialists: Assume non existence of calculation problem. Has led to mass starvation in many countries.

Again, not all mainstream economists buy into all of these.

Smiling Dave:
Praxeology teaches the error of all of the above from first principles.
Can you give an example of a conclusion that ONLY an Austrian employing praxeology can reach?

Smiling Dave:
And yes, I think you nailed it. It's an art form. The difference is that an Austrian is trying to create music [=correct predictions] from a working Stradivarius violin [=solid theoretical principles to guide him somewhat] ,
But again, there's an objectively correct way to play a certain song. There is no objectively correct way to predict the future. So from a theoretical standpoint, it might not matter if your underlying theory is "good".

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Sieben replied on Fri, Aug 26 2011 9:09 AM

Autolykos:
He seems to be arguing that, when Austrian-School economists e.g. claimed that there was a "housing bubble", they were necessarily and implicitly using the exact same methodology as "mainstream economists".
Close. I'm saying that Austrian economists supplement with the same methodology as mainstream economists, and that without this supplementation, they cannot make predictions.

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Which methodology is that?

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Sieben replied on Fri, Aug 26 2011 9:24 AM

The methodology that there's no method to. Thymology. Its just whatever we can agree is sufficient inductive evidence.

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Autolykos replied on Fri, Aug 26 2011 9:35 AM

Sieben:
Close. I'm saying that Austrian economists supplement with the same methodology as mainstream economists, and that without this supplementation, they cannot make predictions.

Are you referring to inductive reasoning in general? If so, then I think where I disagree with you is in the notion that induction can't be legitimately used with praxeology.

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Sieben replied on Fri, Aug 26 2011 9:37 AM

I think it can be used with praxeology. But praxeology is not induction, and has no guidance for inductive questions. Its just "whatever".

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1. I didn't claim every type of economist makes the mistakes of the others. But I think, and correct me if I'm wrong, that all non Austrains fall into one of those groups. Thus, given an economist, find which group he is in, and you'll see his mistake.

2. Say doesn't have to be an Austrian, he merely has to be right, [as point 3 will explain]. And AE concludes that he is, while Keynesians assume he is wrong. Which is their mistake.

3. Can you give an example of a conclusion that ONLY an Austrian employing praxeology can reach?

Since praxeology is just correct reasoning from self evident first principles, you are asking if there is a conclusion that can only be reached by that method. So you are asking "Say Theorem X can be  arrived at from first principles using deductive reasoning. Can it also be arrived at using faulty reasoning and incorrect assumptions?" Elementary logic teaches that false assumptions and faulty reasoning can arrive at all correct propositions.

The crucial difference is that they arrive at a lot of incorrect stuff too, which AE avoids.

4. There is no objectively correct way to predict the future, but there is an objectively incorrect way. If you start from false assumptions and use them as a basis for your predictions, you may be right by sheer luck, but you increase mightily the odds of your being wrong.

An example: You are lost in the woods. You have a true compass, and know you have to go roughly north. That is a better situation to make predictions [I will get home if I head this way] than if you think your compass that actually points south is pointing north.

Another example: You are trying to predict when something will happen. You think it will happen right after two events occur, each of which takes two years. You believe that two plus two equals one, so you predict it will happen in one year. You see the problem. 

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Autolykos replied on Fri, Aug 26 2011 9:44 AM

Sieben:
I think it can be used with praxeology. But praxeology is not induction, and has no guidance for inductive questions. Its just "whatever".

I'm not sure what you mean by "whatever". Otherwise, while I agree that praxeology is not induction, I disagree that it has no guidance for inductive questions. Praxeology here serves as a model of (human) reality that inferences and predictions can be tested against.

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Neodoxy replied on Fri, Aug 26 2011 9:45 AM

Sieben:

 Close. I'm saying that Austrian economists supplement with the same methodology as mainstream economists, and that without this supplementation, they cannot make predictions.

 

If this isn't redundant to what has already been stated, why do you think that? It seems to me that praxeology can and is always used by Austrians to make predictions.

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I think Walter Block laid it all out very clearly, as did my distinction between pure and applied AE.

I am getting the impression that you assume the mainstream just uses the usual methods every intelligent person has at his disposal trying to live his life. Inductive reasoning, educated guesses. But, sadly, they use much more than that. They make all kinds of mistaken theoretical assumptions, as listed above.

In addition, some of them try and back their wild assertions with flawed methodology. Allow me to elaborate on this for a moment.

A physicist assumes that certain equations describe reality. The layman thinks that all the equations he uses are 100% correct. But when you delve into it, they tell you quite unashamedly that all their equations are simplifications of reality, and ignore factors they assume to be insignificant. For example, to make calculations easy, they will say "sin x can be approximated by x for small values of x, so let's do that." Or "friction in this instance is so small we can ignore it." One of my physics teachers said "Physics is the art of knowing what to ignore."

Many mainstream economists live their lives and make their predictions based on equations. They admit that the equations are, as in physics, simplifications of reality, but assert that, as in physics, what they ignore can be safely ignored without arriving at mad conclusions. Sadly, they often ignore what cannot be ignored.

A  famous example is Mv=Py, assuming v, P, and y variables independent of M.

 

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Sieben replied on Fri, Aug 26 2011 12:22 PM

Smiling Dave:
1. I didn't claim every type of economist makes the mistakes of the others. But I think, and correct me if I'm wrong, that all non Austrains fall into one of those groups. Thus, given an economist, find which group he is in, and you'll see his mistake.
In practice, it may be difficult to find mainstream economists who do not fall to these fallacies. But in principle, there is no reason why a non-austrian cannot avoid all these mistakes. There are perfectly reasonable non-praxeological objections to everything you listed. Simply consider that treating individuals and markets mechanically like physical processes and natural systems would lead to similar results.

Smiling Dave:
2. Say doesn't have to be an Austrian, he merely has to be right, [as point 3 will explain]. And AE concludes that he is, while Keynesians assume he is wrong. Which is their mistake.
Sure. But the point is that we don't need praxeology to say yay or nay to Say. Maybe praxeology is sufficient, but not necessary.

Smiling Dave:
Since praxeology is just correct reasoning from self evident first principles, you are asking if there is a conclusion that can only be reached by that method. So you are asking "Say Theorem X can be  arrived at from first principles using deductive reasoning. Can it also be arrived at using faulty reasoning and incorrect assumptions?" Elementary logic teaches that false assumptions and faulty reasoning can arrive at all correct propositions.
I deny that elementary logic teaches that false assumptions and faulty reasoning stop you from arriving at correct propositions. Whether someone with incorrect methodology can obtain the right answer is an inductive matter. At best, being apoditically correct makes your propositions deductively certain. But Austrianism has by no means a monopoly on the truth, much less practical application.

In fact, it might even be the case that "incorrect" or fungible theoretical methodologies consistently yield better results. As an analogy, consider numerical approximations to equations where analytical solutions are impossible. They're "incorrect" but they're 99.99% accurate, which is better than the answer you will never get trying to solve unsolvable equations.

Smiling Dave:
The crucial difference is that they arrive at a lot of incorrect stuff too, which AE avoids.
I don't deny that Austrians tend to have a better track record. But this says nothing about praxeology's intrinsic superiority. It could easily be that ANYTHING that denies mainstream dogma yields superior results. If I disbelieve sticky wages because of flying unicorns (totally arbitrary), then I will avoid the problem. It doesn't mean flying unicorns is a good or useful economic theory (in itself).

But you didn't say explicitly - do you concede that Austrianism has no unique (applicable) truths? Is your only claim that AE is error-free?

Smiling Dave:
4. There is no objectively correct way to predict the future, but there is an objectively incorrect way. If you start from false assumptions and use them as a basis for your predictions, you may be right by sheer luck, but you increase mightily the odds of your being wrong.
Exactly. You have to give an inductive defense of praxeology. That's the best you (or anyone) can do.

Smiling Dave:
Another example: You are trying to predict when something will happen. You think it will happen right after two events occur, each of which takes two years. You believe that two plus two equals one, so you predict it will happen in one year. You see the problem.
Your errors could also cancel out. Ex: you make one math mistake and then you make another which reverses it. Your theoretical errors might also not matter if you have a calculator or just rely on your fingers. So you see there are all sorts of perfectly reasonable ways to get around without relying on being apodictically correct in your head. There is no rule of the universe that says "only people who know THE TRUTH TM can regularly make correct predictions".

Smiling Dave:
I am getting the impression that you assume the mainstream just uses the usual methods every intelligent person has at his disposal trying to live his life. Inductive reasoning, educated guesses. But, sadly, they use much more than that. They make all kinds of mistaken theoretical assumptions, as listed above.
Sure. I mean I'm not a fan of most economists. I think what they do is borderline trolling. But that doesn't mean I default to Austrianism.

Smiling Dave:

In addition, some of them try and back their wild assertions with flawed methodology. Allow me to elaborate on this for a moment.

A physicist assumes that certain equations describe reality. The layman thinks that all the equations he uses are 100% correct. But when you delve into it, they tell you quite unashamedly that all their equations are simplifications of reality, and ignore factors they assume to be insignificant. For example, to make calculations easy, they will say "sin x can be approximated by x for small values of x, so let's do that." Or "friction in this instance is so small we can ignore it." One of my physics teachers said "Physics is the art of knowing what to ignore."

Many mainstream economists live their lives and make their predictions based on equations. They admit that the equations are, as in physics, simplifications of reality, but assert that, as in physics, what they ignore can be safely ignored without arriving at mad conclusions. Sadly, they often ignore what cannot be ignored.

A  famous example is Mv=Py, assuming v, P, and y variables independent of M.

What you describe is engineering. Real physics deals with things that follow from thermodynamic laws, figuring out if gravitrons exist (binary yes/no), kind of thing.

But yeah sure people can misapply and mislead using equations.

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Sieben replied on Fri, Aug 26 2011 12:29 PM

Autolykos:
I'm not sure what you mean by "whatever". Otherwise, while I agree that praxeology is not induction, I disagree that it has no guidance for inductive questions. Praxeology here serves as a model of (human) reality that inferences and predictions can be tested against.
By "whatever" I mean... "whatever"! 95% confidence intervals! Why not? Sounds good. Sounds acceptable. Controlled studies with n=3000 split evenly between control groups and test groups doubleblind equaly air conditioned! Sounds good.

But what guidance does praxeology have? To tell us that humans act purposefully? So what if I ignore that? What if I say "people eat 2500 calories a day, on average" and don't bother about why? Dunno, they just do it. They're black boxes. Or they do it because chemical processes potantiate hunger potentiates eating. At what point do I need AE to study and predict the economics of food consumption? What erroneous conclusions do I risk making (other than failing to realize that THEY HAVE A PURPOSE DAMNIT!!!).

Neodoxy:
If this isn't redundant to what has already been stated, why do you think that? It seems to me that praxeology can and is always used by Austrians to make predictions.
Is it? As far as I know, you can't even derive "markets" or "trade" from praxeology.

I mean, Austrians say they make predictions using praxeology. I disagree. I think they use praxeologic vocabulary. I think they phrase things in ways that do not violate praxeology. But this does not mean they actively EMPLOY it to make predictions.

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Neodoxy replied on Fri, Aug 26 2011 1:01 PM

Sieben:

 

Neodoxy:
If this isn't redundant to what has already been stated, why do you think that? It seems to me that praxeology can and is always used by Austrians to make predictions.
Is it? As far as I know, you can't even derive "markets" or "trade" from praxeology.

I mean, Austrians say they make predictions using praxeology. I disagree. I think they use praxeologic vocabulary. I think they phrase things in ways that do not violate praxeology. But this does not mean they actively EMPLOY it to make predictions.

 
You can derive markets and trade from praxeology.
Here's a little informal proof
Assumptions: men perform purposeful behavior blah blah blah you know what I'm going to say, and property rights are enforced
1. Man desires something
2. If man believes that he can obtain this thing through exchange and he believes that exchange is more beneficial than force then he will attempt to exchange for the object so long as he benefits what he has to exchange more than what he surrenders.
3. If sellers have no favoritism to buyers then they will attempt to sell at a higher price
4. Step 3 but with buyers and reversed
5. So long as fluctuations do not happen radically enough fast enough then a general price will emerge for the good in question at such a point where no buyers want to buy any more and no owners wish to sell anymore, if this were not the case then exchange at new prices would continue
6. In future sellers will produce in such a way as to maximize their profit all else equal and will produce insofar as they appreciate expected profits over what they must surrender to obtain them.
This is a praxeological proof that markets can emerge. I would like to point out that this does not mean that markets MUST emerge. Steps 1 and 2 are essential.
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Sieben replied on Fri, Aug 26 2011 2:32 PM

Neodoxy:
Assumptions: men perform purposeful behavior blah blah blah you know what I'm going to say, and property rights are enforced
I didn't know property rights were praxeological. Praxeology doesn't apply to dictators and slaves?

Neodoxy:
1. Man desires something
Does he? I don't mean to be obtuse, but from an a priori perspective this is non sequitur.

Neodoxy:
2. If man believes that he can obtain this thing through exchange and he believes that exchange is more beneficial than force then he will attempt to exchange for the object so long as he benefits what he has to exchange more than what he surrenders.
If. If. If...

Neodoxy:
This is a praxeological proof that markets can emerge. I would like to point out that this does not mean that markets MUST emerge. Steps 1 and 2 are essential.
Why is this praxeology? Where is it essential that human beings act purposefully? Even inanimate objects can act and react according to mechanical laws.

 

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Lewis S. replied on Fri, Aug 26 2011 2:50 PM

Mr. Positivist writes in your debate, "“controlled experiments (and extrapolation of their outcomes) is a much thornier issue in the social sciences than in, say, physics."

These people never cease to amaze me. It's not "thornier" issue, it's an entirely different ballgame. But never mind that, they say, science is pure empiricism. Repeat and rinse. (Btw, don't let him get away with saying social sciences - point out that we are talking, more specifically, about the human decision-making process and the formation of ideas in the human mind.)

One person I argued with actually slammed Mises because - now get this - empericism could conceivably predict and describe all human ideas, behavior, and choices. We're not too far away, he claimed. I nearly passed out.  Gazillions upon gazillions of variables sorted out and run through a supercomputer that looks like something like the Wayback machine, I'm guessing. And then it spits out a piece of paper predicting I will say "sh*t" when I lose my keys and pay $10 for a cab.

Some people hold onto a point until they make themselves look silly. It's like Wile E. Coyote clutching the shredded umbrella during a fall.

Of course, this guy walked himself into this corner because he realized that he would have to take the position to hold fast to his argument. My guess is, in your debate, your opponents will cleverly avoid getting backed into this, but ultimately, unless they admit it's possible, methodological dualism stands as the better choice.

 

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Neodoxy replied on Sat, Aug 27 2011 3:32 PM

Sieben:

 I didn't know property rights were praxeological. Praxeology doesn't apply to dictators and slaves?

 

No they're not and it does, I meant that the necessary praxeological assumptions are assumed as well as the fact that property rights are enforced, this is a specific case of praxeology, although praxeology still applies in societies in which property righs are not enforced, however a precurssor to markets is some sort of property right enforcement, either mental or physical.

Sieben:
Does he? I don't mean to be obtuse, but from an a priori perspective this is non sequitur.

 

From a praxeological perspective the characteristic of man is that he desires things, if this were not so then he would stop being man and stop acting altogether. You're right that there's no reason physiologically that man HAS to value something, this should have gone in the assumption set.

Sieben:
If. If. If...

 

Yes, there are a lot of "ifs" involved but that does not mean that they are not necessary to the proof and are not true. Tell me, how many people do you know who all of our assumptions thusfar do not apply? Chances are none of them, which only affirms that praxeology can really tell us something about the real world.

 

Sieben:
Why is this praxeology?

 

Because it's a logical proof arising from the basic axiom that man acts to fulfill his own self interest...

 

Sieben:
Where is it essential that human beings act purposefully?

 

If man did not act purposefully then this would not follow, it could run as "man desires something. Man places lemon on head", the minute that we know men do not act with purpose then we can't say what they will do, if people act at all then they would simply to random and incoherent things. If, however, man acts with purpose, then he will attempt to fulfill his wants, and if he knows that one way to do this is through exchange then he will indeed exchange if he believes is suits him.

 

Sieben:
Even inanimate objects can act and react according to mechanical laws.

 

Yes but not praxeological laws because rocks don't act purposefully, they follow chemical and physical laws, but not praxeological ones. Rocks don't desire or think (we think) and can't act (we know) and so they do not form markets.

Sieben, I really believe that if you have not already that just reading the first 50 pages or so of human action might really clear up a lot of your confusion about praxeology.

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We are empiricists...radical ones at that.  Scientific method =/= empiricism.

In a way, many of us could even be accused of...gasp...scientism.  We just acknowledge things from a more inter-subjective German continental point of view rather than British empiricism.

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Sieben replied on Sun, Aug 28 2011 10:44 AM

Neodoxy:
No they're not and it does, I meant that the necessary praxeological assumptions are assumed as well as the fact that property rights are enforced, this is a specific case of praxeology, although praxeology still applies in societies in which property righs are not enforced, however a precurssor to markets is some sort of property right enforcement, either mental or physical.
So what? You said you could derive markets from praxeology and now you're not. And everything purposeful is a special case of praxeology. This does not mean your explanation of it DEPENDS on praxeology.

Neodoxy:
From a praxeological perspective the characteristic of man is that he desires things, if this were not so then he would stop being man and stop acting altogether. You're right that there's no reason physiologically that man HAS to value something, this should have gone in the assumption set.
Empirically there is no way to prove that a specific ocurrance is an "action", because you're not sure if an agent is acting purposefully.

Neodoxy:
Yes, there are a lot of "ifs" involved but that does not mean that they are not necessary to the proof and are not true. Tell me, how many people do you know who all of our assumptions thusfar do not apply? Chances are none of them, which only affirms that praxeology can really tell us something about the real world.
I'm not saying they're implausible. I'm saying your extra assumptions and "ifs" are non-praxeological. Human beings act.... and IF XYZ and IF ABC then trade.

Neodoxy:
Because it's a logical proof arising from the basic axiom that man acts to fulfill his own self interest...
It does not arise from that alone. It also depends on real world physics. Praxeology cannot tell us that division of labor is useful. Praxeology cannot tell us that men are within trading distance of one another. Praxeology cannot tell us that the goods men desire are tradable. Etc etc. It is only when you staple countless "ifs" into your "proof" that you can get anywhere, and the proof itself isn't praxeological just because you maintain that people are acting purposefully.

Neodoxy:
If man did not act purposefully then this would not follow, it could run as "man desires something. Man places lemon on head", the minute that we know men do not act with purpose then we can't say what they will do, if people act at all then they would simply to random and incoherent things. If, however, man acts with purpose, then he will attempt to fulfill his wants, and if he knows that one way to do this is through exchange then he will indeed exchange if he believes is suits him.
False dichotomy. Without praxeology we do not think actions ocurr randomly. Projectile motion is non-praxeologic and non-random. It is enough to say that "Man desires" and therefore "Man seeks". Nevermind if these are purposeful decisions. A robot can be programmed to "act" in the physical sense. It is not inaccurate to assume that men are robots.

Neodoxy:
Yes but not praxeological laws because rocks don't act purposefully, they follow chemical and physical laws, but not praxeological ones. Rocks don't desire or think (we think) and can't act (we know) and so they do not form markets.
My point is that we don't need praxeology to describe the real world. Do you really think that we cannot describe man without knowing that he "acts purposefully", unless he doesn't, in which case it does not count as action? Automotive concepts like "instinct" are equally explanatory. There is also a significant non-praxeological component to humans and economies, but I guess they don't count because they're not praxeologic.

This is all also really ad hoc. You can never know in advance whether someone's actions are purposeful. At best, after the fact, you say "AHA they had a purpose in doing that!". It is strictly definitional. It does not enhance your predictive power.

Neodoxy:
Sieben, I really believe that if you have not already that just reading the first 50 pages or so of human action might really clear up a lot of your confusion about praxeology.
Human action is purposeful. Got it. Don't really feel like reading 50 pages on it, especially when this conversation is beyond the scope of mere definitions.

 

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Neodoxy replied on Sun, Aug 28 2011 12:56 PM

Sieben:

 So what? You said you could derive markets from praxeology and now you're not. And everything purposeful is a special case of praxeology. This does not mean your explanation of it DEPENDS on praxeology.

 

Sieben I think I finally understand where you err, and it's that you don't understand the way that praxeology is used. To my knowledge no one ever claimed that they could derive any concrete proofs of the actions of men a priori, applied praxeology is the only type that can tell us anything about the actual world. The method of economics or any other science which hopes to learn anything from praxeology must not be to just to stop at the assumption of human action, they must apply it to certain situations.

For instance Mises spends a good deal of time establishing the theoretical construction of a pure market economy, one model of economic organization and, as Mises would put it, a "praxeological category"



Sieben:
Empirically there is no way to prove that a specific ocurrance is an "action", because you're not sure if an agent is acting purposefully.

 

True, but this doesn't matter because of the fact that we all prettymuch know that the amount of stuff that people actually do instinctually is tiny. If you believe that the vast majority of people are acting from instinct with most of their relevant actions then you first have to answer the question "why would they act that way if they were acting instinctually?". It is a possibility, but I consider it about as likely as the possibility that there are no people at all

 

Sieben:
I'm not saying they're implausible. I'm saying your extra assumptions and "ifs" are non-praxeological. Human beings act.... and IF XYZ and IF ABC then trade.

 

The only way that praxeology can be applied is if real world conditions are inserted, otherwise you're right it would be absolutely useless.

 

Sieben:
It does not arise from that alone. It also depends on real world physics. Praxeology cannot tell us that division of labor is useful. Praxeology cannot tell us that men are within trading distance of one another. Praxeology cannot tell us that the goods men desire are tradable. Etc etc. It is only when you staple countless "ifs" into your "proof" that you can get anywhere, and the proof itself isn't praxeological just because you maintain that people are acting purposefully.

 

Yes it is, see the Mises quote below. Real world conditions have to be added to the proof, and as for how men actually act part of it depends upon real world conditions, but how men actually act depends upon what they think happened. So for instance if, in a market economy, a person thought that something was tradeable and valued a proposed exchange then he would attempt to trade the thing.

 

Sieben:
False dichotomy. Without praxeology we do not think actions ocurr randomly. Projectile motion is non-praxeologic and non-random. It is enough to say that "Man desires" and therefore "Man seeks". Nevermind if these are purposeful decisions. A robot can be programmed to "act" in the physical sense. It is not inaccurate to assume that men are robots.

 

Yes but projectile motion is not action in the praxeological sense, it cannot lead men to actually do anything rational except insofar as it leads to rational action through the formation of the human psyche. If you say "man desires" and therefore "man seeks" then this will mean nothing unless you intend for it to lead to praxeology. For instance "man desires cake" "man seeks cake". This can only be done then if man has an actual way to seek cake and if he has a concept of utility and  disutility then he will act to maximize his own utility in relation to his search for cake. If this is not the case and he has no sense of utility then we cannot even concieve of this individual's actions.

Robots can be made to act in the physical sense but we are not talking about the physical sense, until real AI is achieved then robots will simply follow physical laws, however when they can think and act thent they will follow praxeological laws. Indeed, in some ways the more advanced AI's already do.

 

Sieben:
My point is that we don't need praxeology to describe the real world. Do you really think that we cannot describe man without knowing that he "acts purposefully", unless he doesn't, in which case it does not count as action?

 

Yes, we very clearly do. You cannot explain what people are doing or what they will do or even have done without a conception of praxeology. I bought cake because I wanted the cake more than the money I spent on it. If I value money as valuable then as price goes up the more reluctant I will be to spend my money on the cake because it will mean more and more sacrifice of what I find valuable. How in the world are you going to describe this in any other way?

 

Sieben:
Automotive concepts like "instinct" are equally explanatory.

 

How can instinct explain to us why economies form? And how can it explain how people act when most action in our day is not instinctual, or at least most people believe so, I don't know whether or not you believe that you're actually making concious decisions. Also, Mises also deals with this idea of instinctual ideas about man and the economy in Human Action

 

Sieben:
There is also a significant non-praxeological component to humans and economies, but I guess they don't count because they're not praxeologic.

Like what? And not necessarily, for instance real laws of nature have a very large impact upon how human action proceeds especially as far as man percieve it to do so.


Sieben:
This is all also really ad hoc. You can never know in advance whether someone's actions are purposeful. At best, after the fact, you say "AHA they had a purpose in doing that!". It is strictly definitional. It does not enhance your predictive power.

 

Basically the same prediction as above, and you can certainly estimate that the vast majority of things people do today which have any real significance are purposeful. If  you do not agree with this then it is an entirely different issue.

 

Sieben:
Human action is purposeful. Got it. Don't really feel like reading 50 pages on it, especially when this conversation is beyond the scope of mere definitions.

Sieben, I'm sorry but you don't understand how praxeology is actually utilized. This is what I hate, that somehow people can hang around these forums for years and not glean much about what exactly Mises said or meant.

This is a quote by Mises in the section titled "The procedure of economics" in Human Action. I'm sorry about the spacing it's what PDF does

Ludwig Von Mises:
But the end of science is to know reality. It is not mental gymnastics or
a logical pastime. Therefore praxeology restricts its inquiries to the study of
acting under those conditions and presuppositions which are given in reality.
It studies acting under unrealized and unrealizable conditions only from two
points of view. It deals with states of affairs which, although not real in the
present and past world, could possibly become real at some future date. And it
examines unreal and unrealizable conditions if such an inquiry is needed for a
satisfactory grasp of what is going on under the conditions present in reality.
However, this reference to experience does not impair the aprioristic
character of praxeology and economics. Experience merely directs our
curiosity toward certain problems and diverts it from other problems. It tells
us what we should explore, but it does not tell us how we could proceed in
our search for knowledge. Moreover, it is not experience but thinking alone
which teaches us that, and in what instances, it is necessary to investigate
unrealizable hypothetical conditions in order to conceive what is going on
in the real world.
The disutility of labor is not of a categorial and aprioristic character. We
can without contradiction think of a world in which labor does not cause
uneasiness, and we can depict the state of affairs prevailing in such a world.23
But the real world is conditioned by the disutility of labor. Only theorems
based on the assumption that labor is a source of uneasiness are applicable
for the comprehension of what is going on in this world.
Experience teaches that there is disutility of labor. But it does not teach
it directly. There is no phenomenon that introduces itself as disutility of
labor. There are only data of experience which are interpreted, on the ground
of aprioristic knowledge, to mean that men consider leisure—i.e., the
absence of labor—other things being equal, as a more desirable condition
than the expenditure of labor. We see that men renounce advantages which
they could get by working more—that is, that they are ready to make sacrifices
for the attainment of leisure. We infer from this fact that leisure is valued as a
good and that labor is regarded as a burden. But for previous praxeological
insight, we would never be in a position to reach this conclusion.
A theory of indirect exchange and all further theories built upon it —as
the theory of circulation credit—are applicable only to the interpretation of
events within a world in which indirect exchange is practiced. In a world of

barter trade only it would be mere intellectual play. It is unlikely that the
economists of such a world, if economic science could have emerged at all
in it, would have given any thought to the problems of indirect exchange,
money, and all the rest. In our actual world, however, such studies are an
essential part of economic theory.

No one EVER claimed that you could really use praxeology without real world conditions or theoretical models, AKA "ifs" and assumptions.

 

 

 

 

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I just came acroos this papaer today, this may help you out:

http://mises.org/Community/forums/t/26028.aspx

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Sieben replied on Mon, Aug 29 2011 7:22 PM

Neodoxy:
Sieben I think I finally understand where you err, and it's that you don't understand the way that praxeology is used. To my knowledge no one ever claimed that they could derive any concrete proofs of the actions of men a priori, applied praxeology is the only type that can tell us anything about the actual world.

Sieben:
As far as I know, you can't even derive "markets" or "trade" from praxeology.

I mean, Austrians say they make predictions using praxeology. I disagree. I think they use praxeologic vocabulary. I think they phrase things in ways that do not violate praxeology. But this does not mean they actively EMPLOY it to make predictions.
I'm not in error. I knew the right answer all along. You either misunderstood or are shifting your goalposts back so you can look like you achieved your goal.

Neodoxy:
True, but this doesn't matter because of the fact that we all prettymuch know that the amount of stuff that people actually do instinctually is tiny. If you believe that the vast majority of people are acting from instinct with most of their relevant actions then you first have to answer the question "why would they act that way if they were acting instinctually?". It is a possibility, but I consider it about as likely as the possibility that there are no people at all
What does something have to be to count as "instinct"? I'm inclined to say that a large portion of behaviour is uhh... not 100% conscious. I mean, I bought cocoa puffs today. If I had been asked to fill out a psychological survey explaining myself, I would have written "Fuck yeah cocoa puffs". What I'm actually going to do is eat them over the course of the week. But I didn't plan it like that. Just... "Fuck yeah cocoa puffs".

Neodoxy:
The only way that praxeology can be applied is if real world conditions are inserted, otherwise you're right it would be absolutely useless.
Which is why Austrianism doesn't get superpowers just because it has praxeology. In fact, mainstream economists, or theorists who are not aware that they are studying humans, can arive at equally predictive economic models.

Neodoxy:
Yes it is, see the Mises quote below. Real world conditions have to be added to the proof, and as for how men actually act part of it depends upon real world conditions, but how men actually act depends upon what they think happened. So for instance if, in a market economy, a person thought that something was tradeable and valued a proposed exchange then he would attempt to trade the thing.
Well we both agree that the proof is totally dependent upon, and is totally animated by, our introduced non-praxeological variables. Are you maintaining that just because you vocalize inert praxeological phrases that the proof is praxeological?

Neodoxy:
Yes but projectile motion is not action in the praxeological sense, it cannot lead men to actually do anything rational except insofar as it leads to rational action through the formation of the human psyche. If you say "man desires" and therefore "man seeks" then this will mean nothing unless you intend for it to lead to praxeology. For instance "man desires cake" "man seeks cake". This can only be done then if man has an actual way to seek cake and if he has a concept of utility and  disutility then he will act to maximize his own utility in relation to his search for cake. If this is not the case and he has no sense of utility then we cannot even concieve of this individual's actions.
I know projectile motion is not an action, but it still exists. Similarly human bodies can undertake "non-actions" that are meaningful in the real world.

And yes it is enough to say that "man desires cake" or "man appears to seek cake". Robots can be programmed to "seek cake". Projectiles can be said to "seek the ground". It's just a bad metaphor for a derivative. All the stipulations you add on, like the necessity of a way to seek cake and utility/disutility are non-praxeologic. As for utility? Well, that's not unique to praxeology. In fact, mainstream economists take utility too far.

Neodoxy:
Robots can be made to act in the physical sense but we are not talking about the physical sense, until real AI is achieved then robots will simply follow physical laws, however when they can think and act thent they will follow praxeological laws. Indeed, in some ways the more advanced AI's already do.
The point is that a robot programmed to "act" would be non-praxeological, but you could still describe its "actions", even though praxeology would maintain that THOSE AREN'T ACTIONS DAMNIT!!! I say... so what.

Neodoxy:
Yes, we very clearly do. You cannot explain what people are doing or what they will do or even have done without a conception of praxeology. I bought cake because I wanted the cake more than the money I spent on it. If I value money as valuable then as price goes up the more reluctant I will be to spend my money on the cake because it will mean more and more sacrifice of what I find valuable. How in the world are you going to describe this in any other way?
Simply by observing your cake purchase, I know nothing. I don't know if you acted consciously or robotically. I don't see any reason to impose an ad hoc value judgment on the action - "oh yeah you valued X more than Y what a great economist I am". So what if you DID value X > Y? Hmmm.

Neodoxy:
How can instinct explain to us why economies form? And how can it explain how people act when most action in our day is not instinctual, or at least most people believe so, I don't know whether or not you believe that you're actually making concious decisions. Also, Mises also deals with this idea of instinctual ideas about man and the economy in Human Action
Because economies just depend on division of labor and trade. In many ways the flow of goods and services is like the flow of oil in reservoirs. Sure the real economy is more complex, and maybe it has a purpose, but so what? It is sufficient that economies EXIST.

Neodoxy:
Like what? And not necessarily, for instance real laws of nature have a very large impact upon how human action proceeds especially as far as man percieve it to do so.
Well, there's instinct, however you want to define that. Then there's also hurricaines and stuff. And there's the natural scarcity of resources, and the engineering constraints put on how those resources can be combined, etc. A lot more goes into markets than conscious human action (which is PURPOSEFUL I TELL YOU!)

Neodoxy:
No one EVER claimed that you could really use praxeology without real world conditions or theoretical models, AKA "ifs" and assumptions.
Well you did claim you could derive markets from praxeology, but now you're backing up and claiming that you need to include a bunch of other stuff about the real world to do it. I'm going one step further and claiming that without praxeology, you just kind of view the world mechanically, which isn't necessarily less accurate, unless you think not asserting that action is purposeful is somehow an error.

 

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Neodoxy replied on Wed, Aug 31 2011 11:10 AM

Sieben:

 I'm not in error. I knew the right answer all along. You either misunderstood or are shifting your goalposts back so you can look like you achieved your goal.

 

What you quoted doesn't deal in any way with the second thing you quoted. The fact is that Austrians do use praxeology to construct proofs and I showed you how below as well as including a fairly thorough passage from a half century document which is still the authority on Austrian economics so it's not like this is new stuff. My entire goal here is to show that praxeology is used by Austrians to derive their beliefs, this should not be a hard thing to agree upon.

 

Sieben:
What does something have to be to count as "instinct"? I'm inclined to say that a large portion of behaviour is uhh... not 100% conscious. I mean, I bought cocoa puffs today. If I had been asked to fill out a psychological survey explaining myself, I would have written "Fuck yeah cocoa puffs". What I'm actually going to do is eat them over the course of the week. But I didn't plan it like that. Just... "Fuck yeah cocoa puffs".

 

Once again a misunderstanding of praxeology, it doesn't say that you conciously planned or wanted something a long time ahead of time, there need not be any more than one instant of planning and you need not even fully realize that you're doing whatever, indeed I would argue most people live their lives in this dulled state, but the fact is that on some level you wanted coco puffs and so you got out a bowl filled it with coco puffs and milk and ate it. You don't have to plan a long time ahead of time, you don't have to have fully consider it, but it was a rational action with your values and view of the world at that instant. No one ever claimed otherwise.

 

Sieben:
Which is why Austrianism doesn't get superpowers just because it has praxeology. In fact, mainstream economists, or theorists who are not aware that they are studying humans, can arive at equally predictive economic models.

 

Yes but what I like to call "half praxeology" plays a huge role in this. Adam Smith never heard of praxeology, it had not been invented yet, most economists too put little or no credence in praxeology or at least the Austrian method, but every economist worth his salt has to at least understand on some level the fact that men work in their own self interest or to incentives. This is not the same as a fully developed praxeological perspective but it is somewhat similar and embodying some of its predictive power. If you take an economist who ignores any sort of concious human action and one who uses a praxeological method the latter will do infinitely better, but if you take one who has a basic model of human choice and utility and one who uses the praxeological method, sometimes they will come to the same conclusions, other times slightly different ones or totally different ones. The difference is that the praxeological method will always be more correct if employed properly.

 

Sieben:
Well we both agree that the proof is totally dependent upon, and is totally animated by, our introduced non-praxeological variables. Are you maintaining that just because you vocalize inert praxeological phrases that the proof is praxeological?

 

Yes, it employs the praxeological and economic methods that are outlined in Mises' work and that of any self respecting Austrian who has written on the subject.

 

Sieben:
I know projectile motion is not an action, but it still exists. Similarly human bodies can undertake "non-actions" that are meaningful in the real world.

 

No one claimed that they didn't, those things are beyond the scope of praxeology, but the fact is that unless they have some huge impact then nothing will change. If the brain were to erase all of a man's memories every 15 minutes then most praxeological proofs would be absolutely f***ed, but if a man has a slight subconscious twitch in his left eye then the proof will almost certainly be unaffected. No one said that motion doesn't exist because its praxeological, just that it is beyond the scope of praxeology.

 

Sieben:
And yes it is enough to say that "man desires cake" or "man appears to seek cake". Robots can be programmed to "seek cake". Projectiles can be said to "seek the ground". It's just a bad metaphor for a derivative. All the stipulations you add on, like the necessity of a way to seek cake and utility/disutility are non-praxeologic. As for utility? Well, that's not unique to praxeology. In fact, mainstream economists take utility too far.

 

Utility and disutility are praxeological, as is a mental model for how to seek cake, before one goes to seek cake is. If a robot goes to seek cake and it has an advanced AI system that allows it to think in different ways and built a complex view of the universe, then it will follow praxeological laws. If it seeks cake then it will do this in relation to its own utility, for the robot utility is infinite in relation to finding cake, it will attempt to do this in the most efficient and fast way it knows possible at that instant, unless there are built in commands like "do not drive through Mrs. Smith's flowers" or "do not make much noise". If the robot has no conception of its universe and no thought per se, and it just drives around looking for cake without any idea of "cake is made by bakers, therefore cake will likely be in a bakery" then it will simply drive around until it finds cake, this is beyond praxeology, but unless you claim that people work like this when all evidence is to the contrary, then it does not affect our outcomes.

Utility is not unique to praxeology but so what? You're right in that the way mainstream economists use utility is totally fallacious, in praxeology utility is a totally internal human phenomenon that affects man's decision making, not something that can actually be measured

 

Sieben:
The point is that a robot programmed to "act" would be non-praxeological, but you could still describe its "actions", even though praxeology would maintain that THOSE AREN'T ACTIONS DAMNIT!!! I say... so what.

 

Those aren't praxeological actions, this does not mean that they are not "actions" in a different sense of the word. No one ever claimed that this could not happen, just like how Austrians use the word "rational" in totally a totally different way than most people, economists included, do.

 

Sieben:
Simply by observing your cake purchase, I know nothing. I don't know if you acted consciously or robotically. I don't see any reason to impose an ad hoc value judgment on the action - "oh yeah you valued X more than Y what a great economist I am". So what if you DID value X > Y? Hmmm.

 

Perfectly true, just one thing Sieben NO ONE IS CLAIMING THAT PEOPLE ACT LIKE ROBOTS. If you disagree then please lay out a case for this. If you're saying that somehow a man's instinct commands him into a transaction, like monkeys do in the jungle all the time, please lay out a case for this too. No one has ever claimed that instinct can somehow do things like get people to make transactions, if this is not the case, and we know men act rationally, then they must have valued X more than Y, there is no other way that this could have been brought about.

 

Sieben:
Because economies just depend on division of labor and trade. In many ways the flow of goods and services is like the flow of oil in reservoirs. Sure the real economy is more complex, and maybe it has a purpose, but so what? It is sufficient that economies EXIST.

 

Sufficient to do what? And one cannot understand WHY the economy works in this form, and therefore what is really even going on, without an understanding of human action and value.

 

Neodoxy:
Like what? And not necessarily, for instance real laws of nature have a very large impact upon how human action proceeds especially as far as man percieve it to do so.

Sieben:
Well, there's instinct, however you want to define that. Then there's also hurricanes and stuff. And there's the natural scarcity of resources, and the engineering constraints put on how those resources can be combined, etc. A lot more goes into markets than conscious human action (which is PURPOSEFUL I TELL YOU!)

 

In what you quoted I even agreed that natural laws and real conditions effect the economy, of course they do, man acts in response to his external environment, and how praxeology actually turns out depends upon real physical laws which you can see quite clearly in the Mises quote above. I have already addressed instinct above as well.

 

Sieben:
Well you did claim you could derive markets from praxeology, but now you're backing up and claiming that you need to include a bunch of other stuff about the real world to do it. I'm going one step further and claiming that without praxeology, you just kind of view the world mechanically, which isn't necessarily less accurate, unless you think not asserting that action is purposeful is somehow an error.

 

I thought that it was implied when I said I could do that that I was allowed to insert real world conditions, if I am not allowed to do that, then you are right, praxeology cannot derive anything about real world actions or anything economically. It's similar to having a scanner and saying "this scanner could tell us about the levels of X Y and Z in a substance" but then not being able to actually use it on anything. We know it can tell us things if we use it, but we have to actually apply it. A mechanical view of the world is fine if you use praxeology, otherwise you cannot determine what in the world people would actually do except insofar as you translated rational human action into mechanical jargon. For instance, there is an increase in scarcity and a decrease in all around good available, how is it that your mechanical view would explain what would happen after the fact without reference to actual human action and rationality? Would their instincts somehow bring them to raise prices?

So in short, yes, viewing a strictly human phenomenon without reference to how humans act is an error. It would be like referencing the actions of a machine without reference to physics and with reference to rational action.

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Sieben replied on Thu, Sep 1 2011 3:31 PM

neodoxy:
What you quoted doesn't deal in any way with the second thing you quoted. The fact is that Austrians do use praxeology to construct proofs and I showed you how below as well as including a fairly thorough passage from a half century document which is still the authority on Austrian economics so it's not like this is new stuff. My entire goal here is to show that praxeology is used by Austrians to derive their beliefs, this should not be a hard thing to agree upon.
Yes it does. You think that just because Austrians use praxeological vocabulary it means they are using it to derive things. But in your example, you just stapled a bunch of hypothetical non praxeological stipulations to a few praxeological definitions, didn't employ them (hint: if human beings act "purposefully", then there should be a step where "human beings acting" is substituted for "purposeful" in a non-trivial way), and then claimed that the "proof" was praxeological even though it can be derived without praxeology if you grant your hypothetical points.

Once again a misunderstanding of praxeology, it doesn't say that you conciously planned or wanted something a long time ahead of time, there need not be any more than one instant of planning and you need not even fully realize that you're doing whatever, indeed I would argue most people live their lives in this dulled state, but the fact is that on some level you wanted coco puffs and so you got out a bowl filled it with coco puffs and milk and ate it. You don't have to plan a long time ahead of time, you don't have to have fully consider it, but it was a rational action with your values and view of the world at that instant. No one ever claimed otherwise.
Straw man. I never made the point that extended contemplation was necessary. I just said "fuck yeah, cocoa puffs". If you are going to psychoanalyse me (lol) and say that "oh well you must have wanted cocoa puffs because you bought them", then you are engaging in circular logic. You are wholesale ruling out the possibility that I am not acting in any praxeological sense. Why are you allowed to automatically make this leap? How do you know I'm not a robot? Is it because you "assume I am not a robot"? You may as well just say "Assume praxeology". See where the circularity comes in?

Cocoa puffs. Fuck yeah. End analysis.

Yes but what I like to call "half praxeology" plays a huge role in this. Adam Smith never heard of praxeology, it had not been invented yet, most economists too put little or no credence in praxeology or at least the Austrian method, but every economist worth his salt has to at least understand on some level the fact that men work in their own self interest or to incentives. This is not the same as a fully developed praxeological perspective but it is somewhat similar and embodying some of its predictive power. If you take an economist who ignores any sort of concious human action and one who uses a praxeological method the latter will do infinitely better, but if you take one who has a basic model of human choice and utility and one who uses the praxeological method, sometimes they will come to the same conclusions, other times slightly different ones or totally different ones. The difference is that the praxeological method will always be more correct if employed properly.

Actually economists have used it the assumption that people act in their own self interest as a first approximation. They do not believe it to always be true. In fact, rather than using this to arrive at circular conclusions such as saying in ad hoc "action X must have been in his self interest", economists try to figure out what is in people's self interest (higher incomes, more leisure time, etc) and then figure out how people are meeting those goals and speculating that they will adopt different methods under changing price and technology levels. 

So no, it isn't like praxeology. In fact "incentives" are analogous to physical forces. Balls fall to the ground. Humans try to get what they want. It does not depend on people being (or not being) robots.

Yes, it employs the praxeological and economic methods that are outlined in Mises' work and that of any self respecting Austrian who has written on the subject.
Appeal to authority. The entire proof is animated by non-praxeological stipulations. In fact it does not even depend on praxeology. That's why I say you can't derive markets from praxeology.

No one claimed that they didn't, those things are beyond the scope of praxeology, but the fact is that unless they have some huge impact then nothing will change. If the brain were to erase all of a man's memories every 15 minutes then most praxeological proofs would be absolutely f***ed, but if a man has a slight subconscious twitch in his left eye then the proof will almost certainly be unaffected. No one said that motion doesn't exist because its praxeological, just that it is beyond the scope of praxeology.
Exactly. Virtually EVERYTHING is beyond praxeology. Even markets. Because markets depend on way, way, way, more than just identifying that if you define someone as a man, and if you define a particular thing he does as an action, and if you define actions as purposeful, then he is a man acting purposefully. So what? Good job praxeology. You are apodictically "correct".

Utility and disutility are praxeological, as is a mental model for how to seek cake, before one goes to seek cake is. If a robot goes to seek cake and it has an advanced AI system that allows it to think in different ways and built a complex view of the universe, then it will follow praxeological laws. If it seeks cake then it will do this in relation to its own utility, for the robot utility is infinite in relation to finding cake, it will attempt to do this in the most efficient and fast way it knows possible at that instant, unless there are built in commands like "do not drive through Mrs. Smith's flowers" or "do not make much noise". If the robot has no conception of its universe and no thought per se, and it just drives around looking for cake without any idea of "cake is made by bakers, therefore cake will likely be in a bakery" then it will simply drive around until it finds cake, this is beyond praxeology, but unless you claim that people work like this when all evidence is to the contrary, then it does not affect our outcomes.
But if the robot's AI is not sufficiently complex, whatever that would take, then the robot does not follow praxeological laws but nontheless seeks cake. In fact, if you don't know a robot's AI, and you see a Robot seeking cake, what can you say? Nothing. From hypothesis you do not know if it is "acting" in the praxeological sense. But you can still analyze the Robot's behaviour "economically". And so we see how praxeology is a third wheel.

Those aren't praxeological actions, this does not mean that they are not "actions" in a different sense of the word. No one ever claimed that this could not happen, just like how Austrians use the word "rational" in totally a totally different way than most people, economists included, do.
The reductio is that the exact same "economy" participated in by Robots vs Humans would be modeled the same in the mainstream view, but would somehow be different under the Austrian view. If it is different, it is not meaningfully different.

Perfectly true, just one thing Sieben NO ONE IS CLAIMING THAT PEOPLE ACT LIKE ROBOTS. If you disagree then please lay out a case for this.
Chemistry.

If you're saying that somehow a man's instinct commands him into a transaction, like monkeys do in the jungle all the time, please lay out a case for this too. No one has ever claimed that instinct can somehow do things like get people to make transactions,
Really?

if this is not the case, and we know men act rationally, then they must have valued X more than Y, there is no other way that this could have been brought about.
If. If. If. If I'm right and you're wrong, then you're wrong and I'm right. Do you see how useless it is to use hypotheticals like this? How it isn't a "proof"? How it isn't meaningful?

Sufficient to do what? And one cannot understand WHY the economy works in this form, and therefore what is really even going on, without an understanding of human action and value.
Sufficient to model them. Sufficient to know why all the physical stuff happens, down to the individual level. What possibly dimension could be missed by assuming that people are robots? AAAH ITS NOT PURPOSEFUL AAAAA

In what you quoted I even agreed that natural laws and real conditions effect the economy, of course they do, man acts in response to his external environment, and how praxeology actually turns out depends upon real physical laws which you can see quite clearly in the Mises quote above. I have already addressed instinct above as well.
No. You've conceded that they exist and make up the bulk of modern economics, but you haven't shown that just by introducing a definition (human action = purposeful) you can change anything.

I thought that it was implied when I said I could do that that I was allowed to insert real world conditions
Yeah sure. But if you DEPEND SOLELY ON THEM then the proof isn't praxeologic anymore. For example, if I say that I can derive modern economies from some trivial definition like "pinapples are yellow fruit (damnit!)", and I say P1) Pinapples are yellow fruit P2-10) Real World Stuff that does not depend on P1, therefore, Markets, then I'm not deriving markets from pinapples.

A mechanical view of the world is fine if you use praxeology, otherwise you cannot determine what in the world people would actually do except insofar as you translated rational human action into mechanical jargon. For instance, there is an increase in scarcity and a decrease in all around good available, how is it that your mechanical view would explain what would happen after the fact without reference to actual human action and rationality? Would their instincts somehow bring them to raise prices?
The same thing that happens if you change a charged particle's gravitational field. It moves in accordance with how the field is changed.

And praxeology cannot even tell you that increasing prices has any consequences, because technically, changing a good's price changes the good itself and also depends on like... tons and tons of other stuff. Its all psychological. Praxeology is not mojo and the only way you're going to wiggle out of this is to introduce a whole bunch of non-praxeological assumptions and then pretend like you were being praxeological. Zzzzzzzz

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