Quarterly Journal of Austrian Economics
Economic Science and Neoclassicism
Volume 2, No. 4 (Winter 1999)
Caplan arrives at the startling conclusion that the Austrian approach, despite the efforts, is less realistic than the neoclassical approach that flourished in the age of benign neglect for realism. A discussion of these views is highly useful given the growing interest in economic realism. In this article, we will show that Caplan fails to identify the important differences between Austrian and neoclassical economics. Caplan's errors seem all to be rooted in his failure to grasp that Austrian economics is a theory of action (praxeology) rather than some kind of applied psychology. We will therefore briefly characterize the praxeological approach toward the explanation of human behavior and then discuss Caplan's main tenets in some detail.