Teleology & Economics: An Introduction

Economics is a science which studies purposeful behavior.

In search of an economic method, our intuitions would lead us first to the method of empiricism. This method is the same base that underlies the branches of the natural sciences (biology, chemistry, geology, etc). The mantra of empiricism is truth established through observation. Using our senses, we can observe the outside world and determine truths about it from what we see. While there are some complications involved, such as the occasional unreliability of our senses, empiricism has a good track record in many of the fields in which it is applied. Given that economics does try to understand the outside world, it seems like empiricism is a logical choice for an economic method.

From all appearances, it looks like we just apply empirical methods to studying the reaction of consumers as we did with kicking rocks, and then we will be able to formulate truths about human behavior that are relevant for economics. However, there is a very important difference in the behavior of rocks and the behavior of humans. Whenever the rock is kicked by the shoe, the rock does not think to itself, “Here comes the shoe! Better make sure I am steady and firm!” As a matter of fact, the rock doesn’t have any thoughts at all. It does not desire to have the qualities that it has - those qualities are simply inert aspects of its being. What it means to be a rock is to have the qualities of solidness and durableness. Human beings, on the other hand, are quite different. Human beings have desires and motivations. They act purposefully - not just react to the world around them. Thus, the qualities they express in their actions are a reflection of their desires, wishes, and aspirations. To understand their actions, then, we must understand the motivations behind those actions.

What implications does Praxeology have for understanding economics? First, it means that economics proceeds not from going out into the world and observing it, but in logical deduction to discern economic truths. There are aspects of the outside world that we can “plug in” to our economic analysis to ensure that our conclusions are relevant for the world we are living in (such as the assumption that businesses will pursue profit), but these are only additions to our theory and not theory per se.

https://austrianeconomics.substack.com/p/teleology-and-economics-an-introduction

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