Free Capitalist Network - Community Archive
Mises Community Archive
An online community for fans of Austrian economics and libertarianism, featuring forums, user blogs, and more.

Does praexology really tell us anything about economic efficiency and well-being?

rated by 0 users
Answered (Not Verified) This post has 0 verified answers | 20 Replies | 3 Followers

Top 75 Contributor
1,005 Posts
Points 19,030
fakename posted on Sun, Nov 18 2012 8:28 PM

On the one hand, praexology does tell us that man is better off free than un-free because it proves that if man want's to supply a product, and others want to buy it, then the price of that product must inevitably decline. Price declines are good so praexology does tell us that man is better off free.

On the other hand, is it true that praexology tells us that any action which is voluntary must also be efficient? If I voluntarily, for instance, try to square the circle then I will never succeed and indeed, if someone were to force me not to, I would really save myself some heartache. At best, voluntary action seems to be necessary but not sufficient for efficiency and yet, I don't see how praexology applies merely to necessary conditions and not to both sufficient and necessary conditions for efficiency.

For instance, if I sell something to someone, that is sufficient for the price to drop and it is necessary for the price to drop. If at anytime I am coerced then an inefficieny happens somewhere. However, there are many more complicated and confusing issues that crop up for me, so I would like to see what others herer think.

  • | Post Points: 50

All Replies

Top 25 Contributor
Male
4,249 Posts
Points 70,775
Suggested by Jon Irenicus

...if man want's to supply a product, and others want to buy it, then the price of that product must inevitably decline.

?

...is it true that praexology tells us that any action which is voluntary must also be efficient?

No. People make mistakes all the time. The most we can say is that any action which is voluntary is what the actor thinks  is best for him, by his scale of values. He might be mistaken, and if convinced of his mistake, change his actions. But for right now, he does what the thinks will best get him what he wants.

Third paragraph gets same "?". Prices are determined by the laws of supply and demand, among other things. The more suplliers the lower the price, all other things being equal. The more people out there who want to buy it, the higher the price. So not sure what you mean by price must inevitably decline, and what case you are talking about.

My humble blog

It's easy to refute an argument if you first misrepresent it. William Keizer

  • | Post Points: 20
Top 75 Contributor
1,005 Posts
Points 19,030

No. People make mistakes all the time. The most we can say is that any action which is voluntary is what the actor thinks  is best for him, by his scale of values. He might be mistaken, and if convinced of his mistake, change his actions. But for right now, he does what the thinks will best get him what he wants.

Third paragraph gets same "?". Prices are determined by the laws of supply and demand, among other things. The more suplliers the lower the price, all other things being equal. The more people out there who want to buy it, the higher the price. So not sure what you mean by price must inevitably decline, and what case you are talking about. /quote by Smiling Dave

 

Btw, how does one quote on these forums again?

But to the main point. I will explain myself re: my scenarios. I figured that praexology implies that one person will respond to a profit opportunity to supply something to someone. When others see these profits, they will then join in selling their supplies thereby lowering the price in general.

I thought that was a praexological law (at least as applied to economics)? Everything being equal, this is an inevitable process (I guess not?).

  • | Post Points: 35
Top 50 Contributor
Male
2,439 Posts
Points 44,650

What do you mean by efficiency?

At last those coming came and they never looked back With blinding stars in their eyes but all they saw was black...
  • | Post Points: 20
Top 25 Contributor
Male
4,249 Posts
Points 70,775

1. To quote, press on the " button in the second row of icons. It will move the cursor a few places to the right as you type, the indication that what you write will be quoted.

2. What you wrote about a profit opportunity bringing more people into a certain market and thus lowering prices is indeed so. There are the usual provisos, first that this only happens up to a point. Once profits reach a certain low point [not zero] nobody new will want to enter the field. Second, the one you mentioned, of everything being equal. For example, selling cocaine remains a high profit industry because laws making it illegal discourage entry. 

My humble blog

It's easy to refute an argument if you first misrepresent it. William Keizer

  • | Post Points: 5
Top 50 Contributor
Male
1,687 Posts
Points 22,990
Answered (Not Verified) Bogart replied on Mon, Nov 19 2012 5:25 PM
Suggested by Jon Irenicus

I think you are mixing up actions and trades.  The simple definition of action is the consciencious use of means to achieve ends.  Praxeology places no restrictions or valuations on what those ends are except that the person attempting to achieve them understands that he is attempting to do so.  It does not value the means either.  So there is no way to describe action as being efficient or inefficient as that would be to place valuations on the action. 

Praxeology does maintain that you can place valuations on the interractions between people from logic.  That is if two people are engaging in a trade voluntarily (No third party is using force to make one of the parties behave in a way different than their preferences) then that trade is defined to be efficient.  That is there is no other interaction for the two parties that satisfies their preferences better than the current trade as neither party would have engaged in that particular trade had they perceived themselves better off engaging in a different trade or no trade at all.

  • | Post Points: 20
Top 150 Contributor
664 Posts
Points 13,095

You have to be careful not to equivocate on the word "voluntary." Praxeology is unconcerned with why people make the choices they do. From the perspective of praxeology, which concerns itself only with what people do and not what is done to them, whether an action was coerced or not doesn't matter.

"The limits of my language mean the limits of my world." ~ Ludwig Wittgenstein
  • | Post Points: 20
Top 50 Contributor
Male
2,439 Posts
Points 44,650

^

I think that you are incorrect. Praxeology does focus upon why people do what they do and the implications of this fact, even though it looks at they why in a very cursory, but essential manner. Praxeology tells us that people do what they do because they value the outcome which they believe their actions are working towards. This is what praxeology tells us, and from here it advances. What it does not tell us is why individuals ultimately value what they value, nor believe what they believe, the two things which determine what an individual will do.

I believe that what you are really saying is simply that from a praxeological standpoint it's impossible for an individual to perform an involuntary action, since even if you are being threatened then you still have to decide to do something, even if the only reason is because you are being threatened. I think that you need to make this clear, since praxeology emerges from telling us why people do what they do, and classically one of its most central theorems is that exchange, when uncoerced, must benefit both parties within the transaction. While a coerced exchange will benefit both parties, if it was truly coercion then one party would have preffered no coercion and no exchange.

EDIT

Also, from this perspective praxeology is all about what people do, voluntarily, but this does not exclude coercion since coercion cannot force an involuntary action. You do indeed need to be careful with the word voluntary

At last those coming came and they never looked back With blinding stars in their eyes but all they saw was black...
  • | Post Points: 20
Top 150 Contributor
664 Posts
Points 13,095

Praxeology does focus upon why people do what they do and the implications of this fact, even though it looks at they why in a very cursory, but essential manner. Praxeology tells us that people do what they do because they value the outcome which they believe their actions are working towards. This is what praxeology tells us, and from here it advances. What it does not tell us is why individuals ultimately value what they value, nor believe what they believe, the two things which determine what an individual will do.

Yes, that's what I mean. It groups all of the reasons for why we do things into one, all-embracing category. It's unconcerned with the difference of reasons.

I think that you need to make this clear, since praxeology emerges from telling us why people do what they do, and classically one of its most central theorems is that exchange, when uncoerced, must benefit both parties within the transaction. While a coerced exchange will benefit both parties, if it was truly coercion then one party would have preffered no coercion and no exchange.

But can praxeology really consider one party's preference for what the other does in an interaction? What if I prefer to pay $5 for something but the merchant will only sell it to me for $10 (at which I buy it)? How can praxeology distinguish this from coercion without sneaking in some sort of normative view of right? Or what if I prefer not to go into work tomorrow but I'm afraid that my employer will fire me if I don't? Does praxeology file that under the coercion category?

"The limits of my language mean the limits of my world." ~ Ludwig Wittgenstein
  • | Post Points: 65
Top 50 Contributor
2,679 Posts
Points 45,110
gotlucky replied on Mon, Nov 19 2012 11:14 PM

Yes, that's what I mean. It groups all of the reasons for why we do things into one, all-embracing category. It's unconcerned with the difference of reasons.

So what? That's just not the focus of praxeology, just as biology isn't about explaining force and energy.

But can praxeology really consider one party's preference for what the other does in an interaction? What if I prefer to pay $5 for something but the merchant will only sell it to me for $10 (at which I buy it)? How can praxeology distinguish this from coercion without sneaking in some sort of normative view of right? Or what if I prefer not to go into work tomorrow but I'm afraid that my employer will fire me if I don't? Does praxeology file that under the coercion category?

Praxeology is about human action. Economics, or catallactics, is a subset of praxeology which focuses on voluntary exchanges. Your employer firing you is not a coercive exchange. Praxeology does not distinguish firing you from mugging you. People distinguish those activities when they choose to study economics.

 

  • | Post Points: 20
Top 75 Contributor
1,389 Posts
Points 21,840
Moderator

Well the economic sphere is anti-psyhologism (i.e. afraid of employer).  And it is also not concerned with legal custom, ethics or whatever (coercion, rights, etc)...neither is physics for that matter.

That stated there is thymology.  I think, and Mises seems to agree that a Freudian interpretation of such things would be in line with a more "Austrian outlook" on things.

As far as reducing things to "just one category", if that's the case, than all that may just be a law of intelligibility may be forced to do such a thing - but that's neither here or there.

"As in a kaleidoscope, the constellation of forces operating in the system as a whole is ever changing." - Ludwig Lachmann

"When A Man Dies A World Goes Out of Existence"  - GLS Shackle

  • | Post Points: 5
Top 10 Contributor
Male
5,255 Posts
Points 80,815
ForumsAdministrator
Moderator
SystemAdministrator

What if I prefer to pay $5 for something but the merchant will only sell it to me for $10 (at which I buy it)?

I am sure you'd prefer to pay $0 for it.

Freedom of markets is positively correlated with the degree of evolution in any society...

  • | Post Points: 5
Top 75 Contributor
1,005 Posts
Points 19,030

What do you mean by efficiency?

 I would say that efficiency is the ability to get a maximum possible amount of output by some minimum possible amount of input.

In economics I would say that if one can make lots of profit with only a few costs, then this business is efficient.

In society, I suppose that it would be the least possible amount of money costs incured by one person in order for some other person to get the maximum possible benefit.

In psychological terms, I suppose that it would be the least possible mental effort expended to learn or operate, for the greatest degree of mental activity or knowledge.

 

Those are my definitions

  • | Post Points: 5
Top 75 Contributor
1,005 Posts
Points 19,030

But can praxeology really consider one party's preference for what the other does in an interaction? What if I prefer to pay $5 for something but the merchant will only sell it to me for $10 (at which I buy it)? How can praxeology distinguish this from coercion without sneaking in some sort of normative view of right? Or what if I prefer not to go into work tomorrow but I'm afraid that my employer will fire me if I don't? Does praxeology file that under the coercion category?

I think that praexology could tangentially consider moral subjects. For instance, in so much as envy is an act of the mind, praexology can tell you things about it but perhaps not "of" it. Likewise you could say that not getting a thing for $5, although not your highest preference, is nonetheless your lowest preference given your circumstance. Indeed given the circumstance, it is hard to understand if one even considers eggs at $5 or $0 a possible product. And as we know from the problem of the bushels of eggs, if one changes the definition of a product, then one's valuation naturally changes too.

  • | Post Points: 5
Top 75 Contributor
1,005 Posts
Points 19,030

I think you are mixing up actions and trades.  The simple definition of action is the consciencious use of means to achieve ends.  Praxeology places no restrictions or valuations on what those ends are except that the person attempting to achieve them understands that he is attempting to do so.  It does not value the means either.  So there is no way to describe action as being efficient or inefficient as that would be to place valuations on the action.

So you are saying that the praexologist is evaluating trades from the standards and norms of logic but not from ethics?

If that is the case though, then why is the praexological treatment of economics always used as a normative argument against the state?

  • | Post Points: 20
Page 1 of 2 (21 items) 1 2 Next > | RSS