The Fatal Flaw of Austrian Economics (Part 1)

Is Austrian economics' "action axiom" really that useful?

The action axiom has been evaluated by most philosophers as true, but extremely abstract. Upon a reading of parts of Human Action (or at least Robert Murphy's excellent condensed study guide), I discovered that Mises himself even acknowledged that what makes a man happier will vary from man to man, because it is purely subjective feeling.

We cannot make economic arguments, then, without making generalizations about what "the average man" would be made happier by. We do not, and cannot, know entirely a priori what will reliably generate happiness, on either an individual or economy-wide scale. We may know what will bring happiness to ourselves through deep and irrefutable introspection, but to generalize this to everyone is an obvious fallacy. The question is, how do we know what will bring the most happiness to the most people? We don't.

To find out, we do need a posteriori analysis: not necessarily economic analysis, but at least general psychological analysis, and certainly some degree of experimentation with incentives and their corresponding responses.

We can try to make unvalidated claims about what we might intuit the average man might want, but this is not even social science, rather pure rhetoric and speculation. In light of this realization, I am forced to conclude that Austrian economics is therefore faulty as-is. The praxeological deductions it provides, in order to produce any practically useful results, must be built on real data on how humans behave and what their preferences are, in both micro and macro scales. Without such data, we have no way of knowing even what the micro outcome is going to be of a given policy, let alone how those micro outcomes will coalesce and interact to generate a macro outcome.

Humans act. This is true. Humans act to minimize their own unhappiness. This is also true, although it is partly an a posteriori observation of natural human evolutionary tendencies. But since even Mises himself admitted that happiness is always a subjective determination, he effectively self-refuted his own work which purported to be able to draw real-world inferences from pure axioms. Since we only know what will make men happy a posteriori, we can only analyze the exact manner in which they will act a posteriori, and thus we can only analyze the economy a posteriori as well.

Part 2: In Partial Defense of Deductive Economics: https://steemit.com/libertarian/@seanbrown/in-partial-defense-of-deductive-economics-austrian-economics-critique-part-2