Praxeogenic Economics: Toward a First Principles Reconstruction of Economic Science

Introduction: The Need for a Foundational Reconstruction

Modern economics stands at an inflection point. For decades, the field has been defined more by its mathematical form than by its philosophical substance. Elegant models have been constructed upon assumptions no one believes: perfect rationality, knowledge symmetry, ergodic uncertainty, continuous markets, and timeless equilibrium. These models are not merely approximations—they are ontological errors, category mistakes that misdescribe human action and misidentify the object of economic science itself.

The result is a discipline suspended between empirical scaffolding and theoretical emptiness. Theories are not derived from first principles; they are extracted from regressions. Economic laws are not deduced; they are “fit.” The most important causal forces in the market—entrepreneurship, uncertainty, intertemporal choice, institutional context, coordination failures—are either ignored or reduced to noise. Economists have become technicians of statistical artifacts rather than scientists of human action.

Praxeogenic Economics emerges as a response to this axial crisis. It is not a modification of neoclassical thought, nor a subfield of Austrian economics, nor a hybrid of behavioral, institutional, or complexity theories. It is a first-principles reconstruction of economic science rooted in the irreducible fact that all economic phenomena arise from purposeful human action in time, under uncertainty, with alternative possible states of the world.

This is the central thesis:

If economics is to be a genuine science, it must be reconstructed upon the logic of action, the structure of time, and the reality of uncertainty.

These are not add-ons to existing models. They are the foundations that were never properly laid. Praxeogenic Economics lays them now.

Part I: Why Modern Economics Cannot Explain Economic Reality

1. The Ontological Confusion at the Heart of Economics

The central problem of modern economics is not that its models are wrong, but that its assumptions are metaphysically impossible. Rational agents with perfect knowledge, markets that clear continuously, probability distributions that govern uncertain outcomes—none of these entities exist. They cannot exist.

They are not simplifications; they are counterfactual universes. And by building models on impossible presuppositions, economists have created a discipline that often explains nothing about real economic order.

In short:

• Humans do not optimize—they act.

• Markets do not equilibrate automatically—they coordinate through entrepreneurial judgment.

• Probability does not govern human uncertainty—expectation, imagination, and interpretation do.

• The future is not revealed—it is created by the very actions that seek to anticipate it.

Firms do not maximize a known function; they attempt to survive. Entrepreneurs do not solve equations; they take leaps. Investors do not react mechanically to signals; they interpret an unfolding world.

This is the metaphysical bedrock upon which Praxeogenic Economics is built.

2. The Failure of Statistical-Empirical Foundations

Modern economics is empirical in aspiration but positivist in method. The result is a discipline that believes it can discover necessary economic laws through contingent statistical correlations. But economic science is not geology or astrophysics. Its subject matter is not physical systems governed by invariant laws—it is human action, structured by choice, uncertainty, expectation, and meaning.

Thus:

• Statistical regularity cannot reveal economic law.

• Empirical correlations cannot reveal causation.

• Econometric models cannot predict inherently uncertain action.

When the underlying reality is non-ergodic, empirical extrapolation collapses.When actors create the future rather than receive it, regression becomes circular.When preferences, expectations, and plans change endogenously, the econometric apparatus becomes self-refuting.

This does not mean measurement is useless—Praxeogenic Econometrics develops a non-positivist model of illustration rather than prediction—but it does mean empirical methods must be subordinated to theory, not the other way around.

Part II: The Praxeogenic Reconstruction—Action, Time, Uncertainty

Having diagnosed the problem, we now turn to the reconstruction.

Praxeogenic Economics begins not with supply and demand, not with utility functions, not with equilibrium conditions, but with the one thing that cannot be reduced to anything more basic:

Human beings act with purpose, in time, under uncertainty, to remove felt uneasiness and achieve imagined states of affairs.

From this single axiom, an entire economic architecture unfolds.

3. Action-Logic: The Irreducible Core of Economic Science

Praxeogenic reasoning begins with the structure of action. Action is always:

• purposive

• future-oriented

• constrained

• uncertain

• choice-based

• cost-laden

These are not assumptions; they are necessary truths. An action without purpose is not an action. An action outside time is impossible. An action without cost is meaningless. An action without uncertainty is robotic.

From action-logic, we derive the core economic categories:

• scarcity is implied by choice

• cost is implied by mutually exclusive alternatives

• preference ordering is implied by purposeful ranking

• value is implied by subjective judgment

• capital is implied by indirect, time-oriented production

• entrepreneurship is implied by the necessity of judgment

• coordination is implied by interdependence

• disequilibrium is implied by uncertainty

Every economic law emerges from this logic.

This means Praxeogenic Economics is deductive, but not rationalistic. It is empirical, but not positivistic. It is mathematical, but not determinist. It is philosophical, but not abstract.

It is the first economic system that treats human action on its own terms.

4. Time as the Primary Economic Dimension

Time is not an external variable in Praxeogenic Economics. It is the dimensional structure in which all economic life occurs.

Modern economics treats time like a mathematical coordinate​...But this is the wrong ontology. Economic time is not uniform, divisible, or reversible. It is:

• experienced time (subjective)

• production time (capital maturation)

• planning time (expectation horizons)

• market time (coordination cycles)

• institutional time (policy regimes)

The economy is an unfolding temporal order, not a series of mechanical states.

This leads to one of the core contributions of Praxeogenic Economics:

Intertemporal coordination is the essence of economic order.

Interest rates, profits, losses, price signals, capital structures, and entrepreneurial judgment are all mechanisms for coordinating plans across time, not simply across individuals. Fail to coordinate across time, and you get recession. Misalign capital structures with time, and you get cycles. Misprice time preference, and you get bubbles, crashes, and financial disorder. Time is the heartbeat of economics. Praxeogenic Economics restores it to its rightful place.

5. Uncertainty: The Creator, Not the Destroyer, of Economic Order

Mainstream economics treats uncertainty as an imperfection.Praxeogenic Economics treats it as a creative condition.

Where neoclassical systems view uncertainty as a friction, Praxeogenic reasoning sees:

• the possibility of entrepreneurship,

• the existence of profit,

• the need for coordination,

• the reality of subjective expectation,

• the driver of economic evolution.

Uncertainty is not noise. Uncertainty is the canvas upon which economic life is painted.

This requires abandoning probabilistic interpretations of human action. Probability can describe the frequency of roulette wheels; it cannot describe the expectation structures of entrepreneurs imagining future states that do not yet exist.

Thus:

Economic uncertainty is not stochastic—it is creative.

This insight destroys the foundational assumptions of most macroeconomic and financial models. It also lays the groundwork for Praxeogenic Finance and the Market Microstructure Intelligence (MMI) framework you are building.

Part III: The Emergence of a New Architecture

Now that we have established action, time, and uncertainty as first principles, the task ahead is to show how these generate:

• a redefined theory of value

• a reconstructed model of capital

• a dynamic, agent-centered macroeconomics

• a non-positivist econometric framework

• a new understanding of cycles, coordination, and crisis

This will be the subject of Installments 2–5.