In order to solve a given problem, economic analysis is com- pelled to concentrate on the interaction of selected factors while disregarding a multitude of other influences. This book offers a discussion of certain central premises involved here and draws some analytical consequences. The argument is fo- cused on process analysis, i.e., on the analysis of economic processes within a given institutional setting, although certain corollaries for institutional analysis are patent. Many colleagues and students have helped me, for many years, to develop the views presented here, and it seems im- possible to trace individual influences. Thus I can only ex- press my indebtedness in a macro sense. I wish to thank the Westdeutscher Verlag for its kind per- mission to use material from my Grundlagen der okonomi- schen Analyse. The results of Chap. 4 were presented at the Econometric Society European Meeting in Pisa, 1983. Dr. W. A. MUller from Springer-Verlag has encouraged me to write this book and has been helpful in many ways.