Aristotelian-Thomistic realist philosophy may be the strongest foundation for disciplines such as praxeology. As David Gordon notes in his book The Philosophical Origins of Austrian Economics, the Austrian School and realist philosophy seem made for each other. The Austrian School defends methodological individualism, a view of individual human action that Aristotle had already articulated in the Nicomachean Ethics. In the Posterior Analytics, Aristotle also defended the second key feature of the Austrian School: the deduction of scientific knowledge from a self-evident axiom. In this sense, Michel Accad argues:
We can identify distinctly Aristotelian principles in the economic thought of the Austrian school. First is causal realism. The Austrians—if not explicitly, at least implicitly—seem to agree with Aristotle that there is a mind-independent reality, an extramental world accessible via the senses and intelligible to the human mind. For the Austrians, as for Aristotle, cause and effect relationships are real and discoverable through the proper use of reason. Like Aristotle, the Austrians trust in the general reliability of sense knowledge and in the conformity of reason to reality. Because of this, they have been able to elaborate an economic science in systematic fashion, starting from first principles.
Second, having no qualms about interpreting human action as teleological, the Austrian school has separated itself from the mainstream of modern philosophy and science and has been criticized for being a throwback to Scholasticism. It is easy to see why: Mises’s idea that humans act in order “to satisfy a felt uneasiness” brings to mind the Scholastic dictum that every agent acts for an end and, more generally, Aristotle’s notion that humans are self-perfecting beings actualizing their active potencies. Teleological realism is a critically important Aristotelian principle and also a foundational concept in Austrian economics.
The first paragraph addresses the methodological status of the Austrian School. Gordon explains that Mises adopts Kantian terminology: the propositions of the Austrian School are synthetic a priori truths, which means one cannot rule out the possibility that determinism might one day turn out to be true. This is arguably an unnecessary concession by Mises stemming from his starting point in Kant. Murray Rothbard rejects Mises’s idea that action is prior to all experience, because there are “laws of logical structure” that the human mind imposes on the chaotic structure of reality—that is, methodological dualism. Accad argues that:
For Aristotle, however, such a methodological separation would seem unnecessary and counterproductive, as it uproots man from his greater cosmological context: a natural world which is also pervaded with teleology and governed by fundamental principles that also apply to human action. (p. 295)
Rothbard argues that these laws are “laws of reality” that the mind grasps by investigating the facts of the real world. Therefore, both the fundamental axiom and the subsidiary ones are derived from experience and are empirical—but not in the post-Humean sense. The axioms of praxeology are radically empirical and self-evident, and thus they do not require the criterion of falsifiability. The only evidence they need is that they do not violate the laws of logic. Modern empiricism is irrelevant here, since to “prove” means to make evident what was not evident before; but if a truth is self-evident, attempting to prove it is pointless.
The second paragraph concerns teleology. The Austrian School is teleological because it understands human action as goal-oriented behavior. Economics does not study mere mechanical reactions, but rather the way individuals seek to satisfy their needs. Carl Menger illustrates this teleology in his theory of capital: higher-order goods have no value in themselves, but only insofar as they contribute to the production of consumer goods. Capital is not a mere collection of things, but an ordered structure shaped by entrepreneurial plans, through which resources are combined for the purpose of achieving a higher end. Production, therefore, is a directed process in which means acquire meaning only in relation to the end they seek to achieve.
One of the positivist critiques of Austrian economics is that statements such as “an actor always chooses his most highly valued end” are tautological. According to this objection, if “most highly valued” simply means “what the actor chooses,” then the statement provides no new knowledge about reality and merely restates the same idea in different words. Accad, however, refutes this critique from a realist perspective. He points out that the charge of tautology would only hold if the goodness or value of a good were purely subjective—that is, if it did not exist in extra-mental reality and depended exclusively on the actor’s decision. Against this view, he argues that value is not merely subjective but is grounded in the things themselves, even though each actor perceives and ranks them according to his particular situation.
To end with, praxeology, therefore, is not an empty tautology, but a discipline that describes the relationship between the actor’s knowledge and the objective structure of the world, allowing for the development of a theoretical system based on deductive principles without reliance on the positivist statistical method.
