Some would claim that economics is not scientific, even on a praxeological foundation, because even on the praxeological foundation one must assume that the acting economic agents will take advantage of profitable price discrepancies. Although that is very likely, it is not a scientific certainty that the entrepeneur tirelessly seeks risk and profitable price discrepancies. To this many economists respond, those entrepeneur's who do not do so are commonly 'weeded out', 'outcompeted' and so the market is not commonly populated with unmotivated persons in the entrepeneurial position. This is a reasonable answer to me, but it's not a 'hard' answer. It's only an 'incentive' answer. I find that much of economics is populated with such answers. For instance, for the ABCT to be true we have to assume that the entrepeneurial class behaves like an archetypal entrepeneur. While this is extremely likely, and historically confirmed it still seems to be a matter of faith. Thus praxeology is undoubtedly science in the sense that it gives us certain knowledge, but the ends chosen by actors are subjective, and so we cannot say for sure that the ends chosen by entrepeneurial persons are those that we would expect. ****
Yes there is the competition argument for a truly entrepeneurial class, but is there not also a tendency which may be illuminated praxeologically? That is: agents in a market economy are confronted with choices on how to gain income. One may sell one's labor or start one's own business. The labor option provides a greater likelihood of income consistency but also a lower quantity of income. The entrepeneurial option provides a far lesser likelihood of income consistency but a far greater quantity of income, should the enterprise come to fruition. Thus those that chose the latter path of employment are those that prefer to sacrifice security for greater income. It then follows that such persons, having decided on the latter, will act as the 'entrepeneurial ideal type'. Each day that the person does not quit from their position is a confirmation of the initial array of preferences which is a low risk-aversion and high monetary-ambition. Is this not correct? Is this thymological rather than praxeological?
****From this point, one can't credibly claim that economics is a science, however much praxeology may be. Science being something that can give us certain knowledge. It seems that economics is either not a science or a 'soft' science, based ultimately at some point on faith, on the robust likelihood that entrepeneurs behave in the way that we expect them to, as opportunists of price discrepancies.
The Anarch is to the Anarchist what the Monarch is to the Monarchist. -Ernst Jünger
I was thinking a week ago that a general glut is in theory possible if everyone decided to produce goods that are not marketable and in fact completely useless. To prevent this you need some assumption about profit maximization (or at least profit seeking), which are not axiomatic in truth but, as you said, just "extremely likely."
I may be wrong, idk.
You're focusing on a lot of things that I have been finding very interesting lately. However, I think I may be missing your main point. Can you rephrase anything, so I don't stray from the point of your topic at hand?
"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
I kind of have two points here, though they intersect each other:
One is that I think that there is a more robust case to be made for the market as functioning necessarily in a certain way, in the way that we expect it to. Aiding us in this case would be a praxeological proof of entrepeneurship, as represented by a certain array of preferences which differ largely from the popular array.
Secondly, economics as it is today is not a science. Praxeology is science because it gives us certain knowledge. But with economics we have to assume the market and assume the profit motive as both endogeneous to persons and sufficiently effective to 'move the gears' of the market. Because ends are chosen subjectively by actors we cannot in fairness assume these things to be truths but only likelihoods.
This is why a praxeological buttressing of the entrepeneur would lend credibility to the idea of economics as a science. Such a proof would enable one to say that entrepeneurs tend to respond to price signaling in the way that employment tends to respond to the price of labor. If such a proof were written, as praxeological law (because personally I have never read one and never had this concern addressed by Austrian Economists), then I believe that economics could be regarded as more than an in-depth extension of an exercise in 'common sense'.
I'm finding it hard to express this, so I hope this clears things up.
EDIT: I think this might be even more important for the economic arguments in favor of Propertarian Anarchy. Opponents of AC often point to warlordism, which AC's respond to with a very reasonable answer of the market being simultaneously decentralizing and meritocratic. Opponents then say, "Well why should that market even work? It's never happened before?" It would help to have a praxeological answer on the nature of existing entrepeneurs as individuals, however flawed, who trade safety for profits and respond to price signals.
bump
Ahh yeah I misread. I thought you were actually pointing to the "ideal type" outlook as something favorable. Which is what I have been finding interesting lately, but I'm not too sure if I am in a position to defend it.
That said I think both sides of this Austrian coin would claim that what most people call economics actually isn't.
vive la insurrection: Ahh yeah I misread. I thought you were actually pointing to the "ideal type" outlook as something favorable. Which is what I have been finding interesting lately, but I'm not too sure if I am in a position to defend it.
Well I'm saying that there's a case for praxeologically substantiating a position of 'ideal types' within economics. In the state that it is, I believe, as a pedagogical tool rather than a source of certain knowledge, I think that there might be more to be done to cement the link between economics and praxeology. The profit motive 'makes sense', but it is nonetheless an assumption about the ends of market actors, and thus not a source of certain knowledge. There is nothing which can tell us beforehand the ends of market actors but one might form a praxeological law that entrepeneurs do respond to price signals, or perhaps more accurately, that the condition of being an entrepeneur necessarily implies that ones plans will positively be influenced by market information.
The difference 'spatially' between these two concepts of 'profit motive' and praxeological entrepeneurship is very small, but conceptually/categorically large. The difference between the "tendency for entrepeneurs to tend to respond to price signals" and the "law that entrepeneurs tend to respond to price signals" is a categorical one, between common sense and certain knowledge. Some might call it a trivial point but it interests me.
Isn't this where expectations and institutions come into play?
I mean there is an "imperative to act" and an imperative on"who is doing the contextualizing / calculating"- that is all the "certainty" that is needed. These are the "exact laws", and what makes the entreprenuer so important right?
The means, ends, and plans are in the mind. Furthermore, it's very important tostress very few plans are carried out "exactly as planed" - in fact it may be impossible to do so - this is why the unintended consequences, feedback, and the nature of this process is important.
I also think here it could be stressed that in the short run is where markets and coordination can get really really wacky - which would only be compounded further by really really big "abnormal" events, which are impossible to predict or expect with any honest rational - and yet such events must be seen as just as important as "normal" everyday life.
Maybe I should qualify this a bit further. The only reason I said that employment tends to respond to the price of labor is because of the multitude of simultaneous factors in the market. We know that, ceterus paribus, the price of labor absolutely determines the volume of employment. And that is the sense in which I mean a praxeological proof would lend to what I perceive to be the "profit-motive problem", which does not lend certain knowledge.
Could you give more to bite on? As for expectations, I'm not sure that that relates to my point, but maybe institutions do, because I don't understand how you're using the word.
But are they exact laws? That's exactly my point of contention. To say it's that the profit motive is a law of economics and bar further investigation/deduction, is to make a fundamental assumption beforehand about the ends of actors? Who wrote them into exactness? I'd only heard that the profit motive, or synonymous phrases, were the engine of the economy.
All this is true, but I think only your first sentence in this paragraph is touching on what I'm saying, which is why I have a niggling problem with economics right now. It seems to me that the Misesian Praxeological concepts have not been methodologically cemented/bridged to Macroeconomics. Praxeology reveals helpful helpful knowledge but to have an entrepeneurial tendency written as praxeological law would make economics "true", and not just the work of floating geniuses.
Again I'm not sure how this relates but you have my ear.
P.S. Besides Marginal Utility and Time Preference, what are the really important contributions? It seems like praxeology, as in deductions based solely on the action axiom, has less content than most Austrians say it does. They call it the Methodology of Austrian Economics, but is it really? It seems to me that the methodology of Austrian Economics is 'ceterus paribus' mental scenario's in the context of a market, augmented with the assistance of certain praxeological truths.
Some random thoughts:
It seems to me that in order to have catallactic agents, at least on the ERE, ends that are best satisfied through the means of interpersonal exchange must exist. If man necessarily has ends that can be best satisfied (in the context of the ERE) through trade, he will trade with others, since they also have ends that are best satisfied through trade. This then means the existence of a tendency towards this on the actual economy, which - since it lacks perfect information - also includes the entrepreneurs absent on the ERE. The question then is: does the axiom 'man acts' imply that man necessarily has ends that can be best satisfied through interpersonal exchange?
Mises says (Human Action, p. 253): "Living and acting man by necessity combines various functions. He is never merely a consumer. He is in addition either an entrepreneur, landowner, capitalist, or worker, or a person supported by the intake earned by such people."
Does this then mean that Mises thought that market satisfied ends necessarily followed from the action axiom?
Interesting. Man could accomplish ends without interpersonal exchange but seeing as he values the present greater than he values the future, he will take a shorter path to his ends and thus engage in exchange. One might from time-preference be able to make a case for the a priori emergence of a division of labor, as long as people are permitted to pursue their ends freely. Man certainly pursues ends through interpersonal exchange. If I understood Hoppe's essay and the nature of a priorism as he described it, then this is an a priori truth. The market as we understand it is simply the outgrowth of a particular property scheme generally accepted by society. It's possible to envision a society of interpersonal exchange under a different property scheme, so I'm not sure if 'the market' as we understand it is a necessary outgrowth, but I think that you're on to something.