Critics Misunderstand Praxeology — Many critics attack Austrian economics (especially Mises’s praxeology) for lacking empirical falsifiability, mistakenly assuming it functions like predictive natural sciences such as physics.

Economic Theory Is Like Mathematics, Not Physics Hypotheses — Austrian economic laws (e.g., diminishing marginal utility, law of demand) are descriptive and necessarily true, much like the mathematics that underpins physics. They are not quantitative predictions to be tested against data.

Austrians Avoid “Physics Envy” — Unlike mainstream economics, the Austrian school does not try to be a quantitative predictive science. It uses praxeology to derive causal economic laws from human action, then applies them to specific situations, avoiding the errors of over-reliance on empiricism and mathematical modeling.

Most critics of Austrian economics have little or no clue about the theory or what it explains. But it happens, albeit not often, that critics have at least cursory knowledge of the Austrian corpus. Such critics, far and wide between, tend to target Mises’s praxeology rather than the economic theory per se. They obviously consider the logic of action a low-hanging fruit. The problem is that they pick it from the wrong tree.

I will explain their error by way of a simple analogy. My hope is that this will save future critics from embarrassment and at the same time fuel a real and substantial debate on these important matters.

For analogy we will look to the discipline physics, or at least a simplified version of how physics research is often understood. Mainstream economics has long suffered from “physics envy” and attempted to become the physics of the social sciences, so the analogy is not entirely untethered from reality.

Physics is a powerful and accurate (if not “real”) predictive science whose success rests on the adoption of Popperian falsification at the core. It is an empirical science that follows what is commonly referred to........

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