Encyclopedia of Keynesian Economics Book

A short book describing a very particular set of criticisms related to Austrian economics, in particular related to the ability of praxeology (the "logic of human action," the foundational framework of the Austrian school) to predict future events. The particular question relates to the Austrian idea that the free market tends toward equilibrium. Selgin suggests that this equilibrium can be seen through the concept of equilibration, that is, the destruction of profit opportunity upon market action. "Wherever there is action, there is an imagined profit opportunity. Where there is no action, there are no such imagined opportunities; and where there are no imagined profits, there is no action—that is, viewing things in a dynamic context, there is no basis for the modification of plans.” Thus, a market action is taken because profit opportunity exists; but once that action is taken, the profit opportunity is gone: Any imagined profit related to that action is either realized or unrealizable, meaning no further profit opportunity exists. Any further profit opportunity would relate to a new market action.

This is all well and good, but I didn't actually read this book for its economic lessons, but rather for its praxeological ones. As it happens, the first third or so of the book is a good primer on praxeology as a general study, as opposed to its application in economics where has historically most often applied. I believe there may be a variety of ways that praxeology could be applied to other disciplines beyond economics (and closely related fields, like game theory), but unfortunately most of what is discussed about praxeology is couched in economic terms – distinguishing what is praxeology and what is economics from a praxeological perspective is sometimes quite difficult. In developing his argument, Selgin does a good job here of placing praxeology in context of opposing nihilistic views of historicism and positivism/empiricism.