I don't have any reason to doubt Larry's statement
that Mises introduced the term "methodological
individualism" to economics. If that is true, then he
deserves some credit in history of thought texts.
I would add that Mises did much more. The reason he
was willing to entitle his books _Epistemological
Foundations of Economics_, _The Ultimate Foundation of
Economics_ and _Human Action_ is that he believed that
he had discovered a new science: praxeology.
Economics, he said, is a branch of praxeology. That
is, the study of market interaction is a branch of the
study of action in general. He believed that
praxeology is the logical unfolding of the
implications of the concept of action, which is known
a priori. For example, human actors possess the
property of perceived means and ends and they make
choices. We know that a priori. By "logical unfolding"
I mean that one tries to identify the essence (or
properties) of action and then uses logic to determine
the implications of the a priori assumption that
individuals possess these properties.
Economics is first an application of praxeology to the
special conditions of the market economy. One asks: On
the basis of what we know about action, what patterns
can we identify among those people who possess the
properties of action under the conditions of (1) money
being used as an intermediary means in the effort to
meet ends, (2) private property rights, and (3) free
enterprise.
Second it is specifically concerned with evaluating
arguments for or against market interaction. By
evaluating arguments, and not policies themselves, it
applies criteria of logical consistency and relevance.
It asks whether the means that are proposed will
achieve the ends that the proposer wants to achieve.
The only relevant values are those of the proposer of
an intervention or a non-intervention (and of course
the choice of the evaluator regarding which arguments
to evaluate and, beyond that, his choice to do
economics instead of car washing). In this sense, the
science of economics is value free.
The question raised by a number of contributors to
this discussion of methodological individualism is
whether it makes sense to define and study action
without being concerned with history, evolution, the
physiology of the brain, culture, etc. The best
defense of the proposition that it does make sense is
in part 1 of Human Action. _The Ultimate Foundations
of Economic Science_ is an easier read. But the two
are not equivalent. This is also likely to be the best
epistemological defense of neoclassical economics. An
excellent book by a philosopher on Mises's defense of
praxeology is:
Cubeddu, Raimondo.(1993) The Philosophy of the
Austrian School. New York: Routledge.
Pat Gunning
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