Reason
The premise of this method is that every individual is the sole owner of their body by the force of their reason. Whether God-given or a mere fact of evolution, reason represents the bedrock of civilization. To prove the existence of human reason, it is necessary to think only about the concept of human reason. This process implies that thinking uses reason; hence, the initial assumption becomes self-evident. The attempt to define reason presupposes its existence. One will not be able to think about a definition or anything else in the absence of the ability to reason.
Reason is an ultimate given; it is irrelevant for this discussion to go back in time before reason emerged.
However, it is essential to understand that reason produces human action, and human action is the foundation of society.
Human action
The human being has reason, and they act accordingly. They set goals and choose between means to fulfill their ambitions. That is why Homo sapiens is Homo agens – the human being as an acting being. It is also true that reason is fallible; an action unfit for a purpose will not meet expectations. Through training, the human being becomes more effective in achieving goals but cannot increase his reason.
Acting is not just doing — it is, likewise, abstaining from doing something that could be done. For example, the limits of a survey are self-evident because the survey will only show intentions or preferences, not actual actions that someone will take. An action differs from a mere preference when the will is set in motion. Even the insane have the ability to set a goal and to follow it. To an outsider, their action will appear “irrational,” but irrational means reflex only, the naturally irrational person being the somnambulist.
The human being acts in search of happiness — the state of mind that does not require or cannot generate any action whatsoever. The action is started to eliminate the discomfort state in existence.
Praxeology
Human action and social cooperation comprise a science of relations, not a normative discipline of what should happen. Human action means choosing one thing and letting another aside. Praxeology is a deductive science (Ancient Greek “praxis” — meaning “action,” and “-logos” — meaning “science”). Moreover, praxeology is the general theory of human action.
While psychology looks at the subconscious, praxeology studies the conscious side of human action, including all social sciences.
On the other hand, Economics is, perhaps, the most elaborate part of praxeology.
Economics
Economics has to answer one question, at least. What is the relation between its theory and the reality of human action?
Economists must explain human action; to do that, they must explain money, property, capital, goods, credit, price, exchange, interest, production, labor, salary, unemployment, opportunity cost, market, competition — and so on, in no particular order.
The aim of economic studies is to clarify concepts such as these and the problems they will generate. What is money? How has money appeared? How are prices formed? Who is the actual entrepreneur? Is interest a real thing? What is the right salary? Can we be well off without capital and capital goods? What is an economic crisis? Do business cycles exist? Is there an invisible hand that guides the market? Is it possible to avoid the opportunity cost? And the list goes on endlessly.
Economics is a theoretical science that does not impose value judgments; hence, it is not its duty to tell people what to do or what purpose to choose. It is a science of means that can be applied to obtain the desired results.
The teachings of Economics are valid for any human action regardless of its motivations, causes, and goals.
Economics is not a laboratory science; it is not similar to natural sciences — which owe their success to the observation and experiment method. Take, for instance, a molecule of water — it is formed by two atoms of Hydrogen and one of Oxygen and, every time, this combination will create a water molecule. It is not possible for an atom to change its mind; it has no reason, and therefore, it cannot act.
Apriorism
The human being has the advantage of reason manifested through human action and has a priori knowledge about society — knowledge without looking for empirical verification. Reason cannot make them omniscient — no matter how much they would increase their knowledge, there will still be at least one ultimate given: reason itself. If humans want to gain knowledge, they must rely on reason. Using the deductive method, human beings understand how economics works.
For example, in the case of an exchange undertaken as a voluntary agreement between two people, both parties gain from it; if they did not expect to benefit, they would not agree to the exchange in the first place.
To get a hamburger, it is necessary to pay for it. If you decide to buy it, it means that you value the hamburger more than you value that sum of money. The same is valid for the vendor but in reverse. He values more that sum of money, the price you have to pay than he values the hamburger. If these two conditions are not met simultaneously, the voluntary exchange will not occur.
Society
In every action, the individual is the one who acts, whether we think about a state or a group of people. Nevertheless, “the mob mentality” could take over. For example, a group is formed to catch a thief, whereas no individual would have done that alone, but the correct interpretation is that the individuals in the group did that, not the group by itself.
Society is voluntary cooperation between people.
It is an intellectual and spiritual phenomenon. The principle of division of labor is the central pillar of society that made the emancipation of humanity possible. Social cooperation is based on natural conditions: the innate inequality of people in their ability to perform different types of work, the unequal distribution of production factors, and the success of some attempts require higher forces than one man.
Society does not have its own life and purposes; it is formed through individuals’ peaceful cooperation within the division of labor.
Liberalism
Liberalism is a set of ideas. It is not a theory but a way to apply theories created within the realm of praxeology, especially in Economics. Liberalism seeks to establish a system of government susceptible to preserving peace because the division of labor is a consequence of peace and the only way society can thrive.
It implies that people act by pursuing goals and aim to create the optimal framework for using the appropriate means to obtain the expected results. Furthermore, it seeks to free the average human from material worries so that they may become interested in higher goals than mere subsistence.
Liberalism is rationalistic.
It affirms that the majority of people can judge that their purposes, correctly understood, are better served under peaceful cooperation within society than by mutual conflicts and social disintegration.
A final thought
Ludwig von Mises had an optimistic way of looking at the world and high hopes for the future of humanity. He centered his beliefs on free human action and peaceful cooperation and left us with an evergreen saying: