Contra Neoclassicalism

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Thus we see how Austrian economists can build all their theories on the mere facts that human beings use means to attain ends and that they choose means and ends. Neoclassical economists are not even aware that this approach is possible. In any case, they seek to explain human action in terms altogether different from their Austrian colleagues. They want to analyze how people act as a corollary or sequel of given circumstances; that is, they want to explain human behavior in terms of other observable and introspectively knowable facts. Clearly, to perform this kind of analysis one needs to have more than just knowledge of the relationships between realized and non-realized elements of human action. Thus, the neoclassical theory of value and choice seeks to explain how people should or would act by relating their behavior to feelings of pain and pleasure, or more generally to feelings of satisfaction. In short, neoclassical value theory not only stresses that what we feel determines how we behave. It presupposes that there are constant relationships between our feelings on the one hand, and our behavior on the other hand that can be studied and described by the neoclassical consumer theory.

Such are the problems that monopolize the attention of neoclassical economists. Their efforts and ingenuity have brought us a huge literature on game theory, on maximization problems in different market settings, on equilibrium paths, etc. However, all of this literature is based on the wrong premise that there are constant relationships between the conditions of action and action itself. The truth is that there are no laws governing which things people choose and which ends they pursue.

~ Jörg Guido Hülsmann