The Genius of Mises’s Action Axiom
The action axiom is the starting point of Mises’s economic method (praxeology). But it is far more than a place to start. It solves a seemingly intractable problem.
When Ludwig von Mises concretized economic thinking as praxeology, he himself held that it was merely a clarification of the pioneering theoretical work of Carl Menger. Menger in turn based his work on traditional logical economic reasoning. Mises himself did not anticipate the uproar that praxeology caused. It occurred chiefly among mainstream economists but also in the Austrian camp. As an example, Hayek was not fully on board.
Mises postulates that economic thinking starts with human action; we act purposefully rather than react instinctively. When humans act, we act with goals in mind. We attempt to achieve something. This something is not motivated chiefly by fight-or-flight instincts. Human action is often directed at achieving something which previously did not exist but that we have imagined to be achievable and of value to us.
Human action as purposeful behavior is the fundamental assumption of Misesian praxeology, and this has come to be known as the action axiom. From this axiom we can deduce a multitude of economic truths which together constitute a body of economic theory. The proposition is completely deductive, where the point of departure in itself is a true statement from which logical reasoning can establish other true statements. The method as such is neither noteworthy nor provocative. It is simply the same type of reasoning that economists and philosophers have used throughout the ages.
But the action axiom seems to rub people the wrong way. Why should economic thinking have to lift off from human action? Some claim that this is not necessary, or that the action axiom is a “choice” and an expression of Mises’s personal preferences. Others claim that it is lacking. But the criticism is wide of the mark. By identifying human action as a fundamental axiom Mises solves a multitude of problems which we would otherwise have had to contend with. Action is the missing link between value—a subjective experience—and the objective world, which is measurable.
Article from Mises Wire