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  • Writer's pictureSam Wilks

The principles of praxeology and why they are important for understanding basic economics

Praxeology is a branch of economics developed by Ludwig von Mises, Friedrich Hayek, and other notable economists. It is based on the fundamental understanding that human action is purposeful and driven by individual goals and preferences.

Praxeology focuses on studying the consequences of human action and the principles governing voluntary human interactions. By examining the principles of praxeology, we gain a deeper understanding of economic phenomena and the functioning of a market economy.

  1. Methodological Individualism: Praxeology emphasizes methodological individualism, which asserts that the individual is the primary unit of analysis in economic theory. Each person's actions, choices, and decision-making processes are seen as crucial for understanding economic phenomena. This perspective recognizes the uniqueness of individuals and the diversity of their preferences, knowledge, and circumstances. “The smallest minority in the world is the Individual” understanding this statement allows us to recognise the importance of choice.

  2. Subjective Value: Praxeology recognizes that individuals possess subjective values and preferences. Rather than attempting to measure value objectively, praxeologists understand that value is determined by an individual's subjective assessment of the usefulness or desirability of a good or service. Subjective value forms the basis of economic exchanges and provides insights into consumer choices and market behaviour. “Every choice is to meet our emotional needs”, understanding this statement allows you to reflect on the “Why” and not the “what” for motivation.

  3. Marginal Analysis: Praxeology utilizes the concept of marginal analysis, which focuses on the incremental changes or additions to a particular action or decision. Economists employing praxeological principles recognize that individuals make choices at the margin, considering the additional benefits and costs associated with each decision. By evaluating marginal costs and benefits, economists can explain phenomena such as consumer demand, production decisions, and resource allocation. “All great changes in human history occur not from the average, however, from the unique”, understanding this statement allows recognition of exceptions, rather than the norm.

  4. Spontaneous Order: Praxeology embraces the concept of spontaneous order. It recognizes that the complex coordination of economic activities in a society emerges spontaneously through voluntary interactions, rather than being centrally planned or directed. Praxeologists emphasize the importance of decentralized decision-making, market prices, and competition as mechanisms that enable the coordination of individual actions without the need for a centralized authority. “Price Matters”, understanding that individuals determine real value and not “groups” as they are controlled by fear, not hope, we recognizeforce, that it is choice, not force that leads to natural justice, and natural laws.

  5. Time Preference: Praxeology acknowledges the concept of time preference, which highlights individuals' inclination to value present goods and services more than future ones. Understanding time preference is essential for comprehending savings, interest rates, capital accumulation, and investment decisions. It helps explain how individuals weigh immediate satisfaction against future benefits and how this affects their economic choices. “Time is not linear”, people grow into ideas and intelligence based on experiences. The most egregious action and most harmful in terms of economics and also lives affected and lost is through debt and inflation. Burdening the most vulnerable “those not even born yet” for the benefit and comfort of those alive today will never be “acceptable”. Historically, those who attempted to do such were called out for the thieves and bigots they were, “There is no redeemable feature of one who profits from the death of others, whether intentional or not”, Praxeologists hold the individuals responsible for the actions of the “MOB” for we do not recognise the attempts to remain “anonymous and faultless by surrounding themselves with likeminded monsters”.

  6. Entrepreneurship and Profit-Loss: Praxeology recognizes the critical role of entrepreneurship in the market economy. Entrepreneurs play a crucial function in identifying and pursuing profit opportunities by combining various resources to create valuable goods and services. Praxeology emphasises that the profit and loss system provides crucial signals that guide resource allocation and decision-making in the market, enabling the efficient coordination of economic activities. “There is nothing as accountable as broke feels”, an individual's choices should be respected, giving a fool extra money is not for their welfare, it only rewards cowardice.

By embracing these praxeological principles, economists gain a more comprehensive understanding of how individuals make choices, how markets function, and how economic systems operate. This perspective emphasizes the importance of individual freedom, voluntary interactions, and decentralized decision-making in achieving economic prosperity and societal well-being. It enables economists to analyze and evaluate policies and interventions based on their alignment with these foundational principles of praxeology. In a world full of emotionally rewarded cowards, who rely on the exploitation and theft of others, especially by taking from those who are not responsible, nor even alive during perceived wrongs, it is common for the Praxeologist to be considered an anomaly. However, it is through the degradation of cultural values, the family unit, and the exceptional, that cowards, and deviates are elevated into positions of power. It is through "Mob" rule, that evil perpetuates and people die. Praxeology teaches you to understand human value and the ability to survive the “flood” of the morally inept and corrupt. It recognizes that it is not “religion” that has killed more in the last 100 years alone than the combination of 2000 years before, it is “human action”. In 1999, I had a Chinese article translated to me from an MGM Grand Casino colleague named “Frank” (he was a Chinese escapee, so for his sake, I do not place his real name on social media). He explained the jubilation of the CCP as they celebrated the 1 Billionth imposed abortion since their policy was introduced in 1949. I spontaneously teared up, I could not imagine the murder of one child acceptable through coercion, let alone 1 Billion. Frank placed his hand on my head and said, “This is why I am here, to learn how to feel, like you just did, I don’t do that”. That experience was my “emotional” charge towards praxeology, not to hate, but to understand human action, as much as Frank was seeking to learn the culture of empathy and compassion after a lifetime in a country that all but outlawed it, I needed to understand the values of “Man/Women”. From pain, one can always find value, maybe not forgive, never to forget, however, a lesson learned. From the author The opinions and statements are those of Sam Wilks and do not necessarily represent whom Sam Consults or contracts to. Sam Wilks is a skilled and experienced Security Consultant with almost 3 decades of expertise in the fields of Real estate, Security, and the hospitality/gaming industry. His knowledge and practical experience have made him a valuable asset to many organizations looking to enhance their security measures and provide a safe and secure environment for their clients and staff. Sam has run 15 successful businesses and companies and sold or traded many of them over 3 decades.

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