Sunday, October 22, 2006

The Science of Human Action

Praxeology is the science of human action. The term was first coined in 1890 by Alfred Espinas in the Revue Philosophique, but the most common use of the term is in connection with the work of the Austrian economist Ludwig von Mises and his adherents.

Mises attempted to find the conceptual root of economics. Like other Austrian and classical economists, he rejected the use of observation, saying that human actors are too complex to be reduced to their component parts and too self-conscious not to have their behaviour affected by the very act of observation. Observation of human action, or extrapolation from historical data, would thus always be contaminated by overlooked factors in the way that the natural sciences would not be.

To counter the subjective nature of the results of historical and statistical analysis (see Methodenstreit), Mises proposes that we look at the logical structure of human action (he entitled his magnum opus Human Action).

From praxeology Mises derived the idea that every conscious action is intended to improve a person's satisfaction. He was careful to stress that praxeology is not concerned with the individual's definition of end satisfaction, just the way he sought that satisfaction. The way in which a person will increase his satisfaction is by removing a source of dissatisfaction. As the future is uncertain so every action is speculative.

An acting man is defined as one capable of logical thought — to be otherwise would be to make one a mere creature who simply reacts to stimuli by instinct. Similarly an acting man must have a source of dissatisfaction which he believes capable of removing, otherwise he cannot act.

Another conclusion that Mises reached was that decisions are made on an ordinal basis. That is, it is impossible to carry out more than one action at once, the conscious mind being only capable of one decision at a time — even if those decisions can be made in rapid order. Thus man will act to remove the most pressing source of dissatisfaction first and then move to the next most pressing source of dissatisfaction.

As a person satisfies his first most important goal and after that his second most important goal then his second most important goal is always less important than his first most important goal. Thus, for every further goal reached, his satisfaction, or utility, is lessened from the preceding goal. This is the rule of diminishing marginal utility.

In human society many actions will be trading activities where one person regards a possession of another person as more desirable than one of his own possessions, and the other person has a similar higher regard for his colleague's possession than he does for his own. This subject of praxeology is known as catallactics, and is the more commonly accepted realm of economics.

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