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The Ludwig von Mises Institute

Advancing Austrian Economics, Liberty, and Peace

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Economic Science and the Austrian Method
Hans-Herman Hoppe



As have most great and innovative economists, Ludwig von Mises intensively and repeatedly analyzed the problem of the logical status of economic propositions, i.e., how we come to know them and how we validate them. Indeed, Mises ranks foremost among those who hold that such a concern is indispensable in order to achieve systematic progress in economics. For any misconception regarding the answer to such fundamental questions of one's intellectual enterprise would naturally have to lead to intellectual disaster, i.e., to false economic doctrines. Accordingly, three of Mises's books are devoted entirely to clarifying the logical foundations of economics: His early Epistemological Problems of Economics, published in German in 1933; his Theory and History , of 1957; and his Ultimate Foundations of Economic Science of 1962, Mises's last book, appearing when he was already well past his eightieth birthday. And his works in the field of economics proper also invariably display the importance which Mises attached to the analysis of epistemological problems. Most characteristically, Human Action , his masterpiece, deals in its first hundred-odd pages exclusively with such problems, and the other nearly 800 pages of the book are permeated with epistemological considerations.

Quite in line with the tradition of Mises, then, the foundations of economics are also the subject of this chapter. I have set myself a twofold goal. First, I want to explain the solution which Mises advances regarding the problem of the ultimate foundation of economic science, i.e., his idea of a pure theory of action, or praxeology, as he himself terms it. And secondly, I want to demonstrate why Mises's solution is much more than just an incontestable insight into the nature of economics and economic propositions.

It provides an insight that also enables us to understand the foundation on which epistemology ultimately rests. In fact, as the title of the chapter suggests, I want to show that it is praxeology which must be regarded as the very foundation of epistemology, and hence that Mises, aside from his great achievements as an economist, also contributed pathbreaking insights regarding the justification of the entire enterprise of rationalist philosophy. [40]

This essay is from Hans-Hermann Hoppe, The Economics and Ethics of Private Property (Kluwer Academic Publishers in 1993), pp. 141-64 and it is reprinted here with permission of Kluwer Academic Publishers.

[40] 40 See on the following also my Kritik der kausalwissenschaftlichen Sozialforschung. Untersuchungen zur Grundlegung von Soziologic und ?konomie; idem, "Is Research Based on Causal Scientific Principles Possible in the Social Sciences?," chapter 7); idem, "In Defense of Extreme Rationalism," [in .PDF] Review of Austrian Economics 3 (1988)

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