Praxeogenic Economics vs. Mainstream Economics: A Philosophical Contrast

To understand the uniqueness of Praxeogenic Economics, one must first examine the core philosophical assumptions that undergird the dominant economic paradigms of our age. Economics, like all sciences, is never neutral. Every school of thought is built upon a set of epistemological, ontological, and methodological assumptions—most of which remain unstated or assumed in mainstream discourse. Praxeogenic Economics differs from neoclassical, Keynesian, and Marxian models not merely in theory, but at the very level of philosophical architecture.

A. Ontology: Static Equilibrium vs. Dynamic Formation

Mainstream economics begins with an image of static equilibrium. In the neoclassical imagination, economies are conceived as systems tending toward optimal balance—supply equals demand, prices adjust instantaneously, agents are rational in the same manner machines are optimized. This worldview reduces the market to a mathematical abstraction—an idealized mechanism devoid of time, uncertainty, and actual human experience.

Praxeogenic Economics rejects this image. It affirms a dynamic ontology—one in which economic reality is the outgrowth of real human actions that unfold over time. There is no equilibrium “state” in which the economy rests; there are only evolving formations shaped by choices, errors, discoveries, and readjustments. Economic life is not like a pendulum swinging back to balance, but like an organism growing, decaying, and transforming.

This ontological contrast is foundational. The praxeogenic economist does not assume “the market” is a fixed object to be studied like a physical system. Instead, markets are understood as formations in process, constantly generated by the complex interaction of human intentions, institutional contexts, and the forward flow of time.

B. Epistemology: Aggregation vs. Action

Mainstream economists often pride themselves on their scientific rigor—by which they usually mean the use of quantitative methods, formal models, and statistical tests. But behind this lies an epistemological sleight of hand: the assumption that knowledge of the economy can be acquired by aggregating behaviors, averaging preferences, and modeling agents with representative utility functions.

Praxeogenic Economics holds this to be a fundamental error. True economic knowledge is not gained through aggregation, but through understanding individual action. Knowledge is not derived from correlation, but from the logical structure of human purposes, means, ends, and constraints. Economic laws—such as marginal utility, time preference, or the law of returns—are not statistical regularities, but logical implications of the fact that humans act.

This difference in epistemology leads to radically different approaches to data. While the mainstream sees data as foundational and theory as disposable, Praxeogenic Economics sees theory as primary and empirical observation as interpretive. The praxeogenic economist does not reject data, but insists that data must be interpreted through sound theoretical categories—not mined blindly for “patterns” or “trends” that appear devoid of context or causal meaning.

C. Methodology: Prediction vs. Interpretation

Mainstream economics—especially as shaped by positivism and Popperian falsificationism—has long sought predictive power as the hallmark of a good theory. A model, it is claimed, is useful if it generates accurate predictions, even if its assumptions are unrealistic or its theoretical foundation weak. The famous phrase “All models are wrong, but some are useful” expresses this pragmatic instrumentalism.

In contrast, Praxeogenic Economics embraces interpretive clarity as its core methodological aim. It does not predict future events, because economic action is grounded in human creativity and knowledge which is both dispersed and not yet fully known. Instead, it seeks to offer causal explanations and structural diagnoses based on the known categories of human behavior: scarcity, time, uncertainty, valuation, entrepreneurship.

Predictive modeling depends on constant relationships—something economic life does not supply. Interpretive theory depends on invariant structures of action—which is precisely what praxeology and Formational Economics provide. The praxeogenic economist, then, trades the illusion of prediction for the substance of understanding.