Mises Wire

Home | Wire | The Nature of Economic Analysis

The Nature of Economic Analysis

I've been Hoppe-ing my brains out lately. Take this cool, pithy statement about the nature of economic analysis:

Essentially, economic analysis consists of: (1) an understanding of the categories of action and an understanding of the meaning of a change in values, costs, technological knowledge, etc.; (2) a description of a situation in which these categories assume concrete meaning, where definite people are identified as actors with definite objects specified as their means of action, with definite goals identified as values and definite things specified as costs; and (3) a deduction of the consequences that result from the performance of some specified action in this situation, or of the consequences that result for an actor if this situation is changed in a specified way. And this deduction must yield a priori-valid conclusions, provided there is no flaw in the very process of deduction and the situation and the change introduced into it being given, and a priori--valid conclusions about reality if the situation and situation-change, as described, can themselves be identified as real, because then their validity would ultimately go back to the indisputable validity of the categories of action.

A Theory of Socialism and Capitalism, p. 118-19.This formulation highlights the distinction between the method appropriate to economic science and that applicable to the study of causal phenomenon (natural science).

Moreover, in view of this, what other fields of praxeology could there be that are not covered by this broad conception of economics? This type of economic analysis does not study only "cooperation," and it of course does include the study of "conflict"--economics concerns the consequences of human action and social interaction both under a free market and on the hampered market. Wouldn't a study of "war," say, have to be a subset of economics itself?


Stephan Kinsella

Stephan Kinsella is an attorney in Houston, director of the Center for the Study of Innovative Freedom, and editor of Libertarian Papers.

Shield icon wire