What is Praxeonomy?

Praxeonomy is the Carl Menger Institute's framework that explains why prosperity and social harmony are best nourished through the dynamic market phenomena that occur when individuals are free to make their own choices based on their unique preferences. It tells us that how one should act in is not necessarily prescibed by any universal doctrine, but subject to what an individial values, and mediated by the costs and benefits that they will incurr from other market participants by taking one action or another.

Foundational Principles

  1. Human-Centric Axiom: Praxeonomy recognizes that all economic phenomena stem from purposeful human choices; this axiom recognizes the primacy of individual agency in shaping market outcomes and social institutions.
  2. Subjective Value Theory: Building upon Carl Menger's germinal work, praxeonomy reaffirms that value is not an intrinsic property of goods or services, but rather a subjective assessment made by individuals based on their unique preferences, knowledge, and circumstances.
  3. Emergent Normativity: Ethical norms and social heuristics are understood as emergent properties of human interaction. These norms evolve organically to facilitate cooperation and reduce transaction costs.
  4. Methodological Individualism: Praxeonomy builds its theoretical structure from the axiom of human action: Through logical deduction, we derive universal economic laws applicable across all times, cultures, and norms. Thereby, the Institute reveals the truth about market processes, capital formation, and monetary phenomena that empirical observation alone cannot uncover.

Praxeonomy in Praxis

Market Coordination: Our framework reveals markets as ethical discovery mechanisms without central authorities. Market processes test and refine moral norms alongside resource allocation: Profitable actions that align with societal values tend to persist and spread, while those that conflict with emerging ethical standards incur losses and diminish.

Institutional Evolution: Praxeonomy illuminates how market institutions emerge and evolve to support complex orders in the marketplace, emphasizing the role of tacit knowledge and cultural learning in this process.

Subjective Entrepreneurship: The entrepreneurial function is expanded beyond mere financial profit-seeking to encompass the discovery of ethical subjectivity and psychological profit that enhances social cooperation and market efficiency.

Knowledge Problem: Praxeonomy addresses economic information asymmetry by recognizing markets as ethical information processors. Price signals convey not just scarcity, but evolving social values. Profit opportunities arise from identifying and resolving ethical tensions, driving societal progress. Reputation systems emerge organically, reducing uncertainty about trustworthiness—once again, without central oversight.

Scientific Rigor and Future Directions

  1. Cross-Disciplinary Synthesis: While rooted in aprioristic reasoning, praxeonomy does not preclude—but encourages—insights from cognitive science, evolutionary psychology, and cultural anthropology to enrich its understanding of human decision-making and social interaction.
  2. Market-Policy Critique: Praxeonomy provides a framework for evaluating externally-imposed market policies based on their alignment with emergent ethical norms and their capacity to harness distributed knowledge.
  3. Entrepreneurial Ingenuity: Our research explores how entrepreneurs identify and act upon opportunities that arise from evolving societal values and norms. This work aims to reveal how market processes naturally guide entrepreneurial activity whilst addressing complex ethical challenges.

In all of its colorful facets, praxeonomy represents a bold reimagining of economic science—one that places human action, subjective valuation, and emergent order at the center of analysis. By bridging the gap between economic theory and ethical considerations, it offers a more holistic and nuanced understanding of market phenomena, paving the way for more effective and humane approaches to addressing complex economic challenges.