The determinining factor of economics

[rosencrantz]

Praxeology rests 
 

...on the fundamental axiom that individual human beings act, that is, on the primordial fact that individuals engage in conscious actions toward chosen goals. This concept of action contrasts to purely reflexive, or knee-jerk, behavior, which is not directed toward goals. The praxeological method spins out by verbal deduction the logical implications of that primordial fact. In short, praxeological economics is the structure of logical implications of the fact that individuals act. This structure is built on the fundamental axiom of action, and has a few subsidiary axioms, such as that individuals vary and that human beings regard leisure as a valuable good. Any skeptic about deducing from such a simple base an entire system of economics, I refer to Mises's Human Action. Furthermore, since praxeology begins with a true axiom, A, all the propositions that can be deduced from this axiom must also be true. For if A implies B, and A is true, then B must also be true.

 

 

But does it give a valid description of human nature? Imagine two islands A and B. Both have enough ressources, a stable population and the ghost of Rothbard prevents any goverment from coming into existence. 
If you applied praxeology you would conclude that the population in those islands develops the same way because it cannot take into account that there are biological differences between groups of humans. It decidedly neglects empirical reality like differences in IQ, agency, work ethics, trust and so on.
A more realitistic view on the thought experiment is that those societies in the islands develop differently based on differences in IQ, time preference and what have you. 
If that is the case, there are two decisive factors that determine how a society will look like. The political system and the biological basis. Comparing real world examples it seems that apart from extreme examples (Communism), the biological basis is more important than the policy or the ideology of those states. There is a major difference between Detroit and Seattle though both are run by Democrats. 

[webdever]

I'm not sure what your trying to say. Praxeology can only describe what happens based on people's preferences. It fully takes into account that preferences and abilities differ between human beings and populations.

 

Of course two separate populations that are vastly different biologically will develop very differently. But praxeology can show that if both populations avoid the use of force the results of the development will be optimized to serving the preferences of each individual in those societies.

[rosencrantz]

It fully takes into account that preferences and abilities differ between human beings and populations.

 

I don't think it does. It assumes a priori that all humans are the same essentially. It has to, because it cannot know of those differences. They use an abstraction of humanity that is void of any attributes. 

[Libertus]

You got it backwards. The theory does not assume anything about the content of a person's mind. Not a thing. It's postulated that humans *act* according to their perceived needs and wants, and that's it. Just because a theory names one thing all humans have in common doesn't mean that's all they are and therefore we are all the same. The opposite is true. We can't know what someone is hoping, wishing or thinking and therefore our theory stops at one thing we do know: humans *act*.

[Mister Mister]

Mises states pretty clearly at the beginning of Human Action, that questions of motivation behind a person's action, are entirely in the realm of psychology.  Praxeology and economics rests on the fact that humans act, in order to achieve some imagined ends.  Why they desire a particular ends, or choose a particular means, is not of concern to the economist.  For example, if people believe rain dances will cause rain, and that in a drought, people will desire rain, they can predict that those people will do a rain dance when there is a drought.  Why they believe this, or if their belief is true, is not part of the study of economics.

[rosencrantz]

I get that. But if economics is a science, it's descriptive and predictive. And the picture it draws is incomplete when it doesn't take psychology / genetics into account. If you add those, you will have a much better model.

[Libertus]

You can take all sorts of factors into account in your thinking, it would then be economics plus psychology plus genetics. But that doesn't mean you improve one field of study by adding many others to it.

 

About psychology in economics. Can you read minds?