“Methodological disputes in Austrian economics” sounds like a hair-spliting field of inquiry, but in fact they are anything but pedantic. At the core of the question is not just what most people consider the field of economics, but the core philosophy of the human sciences. Austrian economics is the social science paradigm which most nearly approximates a contemporary continuation of ancient “anthropology” such as is found in the De Anima and Politics of Aristotle. That is to say, it does not start from “society” as a behavioral aggregate, but from definitional assuptions about “Man”…that is to say, the essentially human.
What most people consider “economics” the Austrian school designates by the term catallactics, that is, the study of market exchange. However most Austrians have refused to be satisfied with a science of the market which hangs in mid-air, appart from a general theory of what human beings are and why they do what they do. A number of theories enveloping and supporting the principles upon which exchange operates have been proposed by Austrian methodologists.
The most famous of these overarching methodologies is the “praxiology” of Ludwig von Mises. This rests on the principle that human action, as opposed to animal instinct, is based on rational choice. Choice, once made, becomes demonstrated choice, and a hierarchy of values can be deduced from this which, once a single commodity has been selected out as a general intermediary of exchange, becomes a monetized economy.
This schematic works superbly well for monetary theory and other subfields which are related to ordinal value ranking. However there are other dimentions to human, and indeed economic behavior, which are not explained so well. These involve the discovery process, entreprenureship, and so forth. In order to isolate the field of rational choice from other, less rational, elements of human thought and behavior, Mises erected a categorical distinction between praxiology and psychology, terming the latter “thymology” and relegating it to the humanities.
Some thinkers associated with the Austrian school have felt that this effort to create a circumscribed deductive science of praxiology at the expense of stigmatizing other approaches to human behavior as merely “interpretive” is overly exclusionary. They have sought to break out of the category “science”…either in the positivist conotation given to it by mainstream neoclassical economics, or the deductive-rational science of praxiology favored by the Misesians.
The most notable of these non-praxiological Austrians are the hermenuticists centered at George Mason University, notably the late Don Lavoie, his associates and students. I myself had the privilege of studying under Don for a while during the 1980s, before leaving the economics profession and going on to other concerns. Recently I have picked up the thread of my studies in Austrian methodology, aided by a perspective that I didn’t have in those early years. I will be commenting on that in future posts.
