Human Action

Human Action: A Treatise on Economics

First edition
Author Ludwig von Mises
Country United States
Language English
Subject Political economy
Publisher Yale University Press, Ludwig von Mises Institute
Publication date
 1949, 1998, 2010
Media type Print (Hardback & Paperback)
Pages 881
ISBN 9780865976313
OCLC 730271204

Human Action: A Treatise on Economics is a work by the Austrian economist and philosopher Ludwig von Mises. Widely considered Mises' magnum opus,[1] it presents the case for laissez-faire capitalism based on praxeology, or rational investigation of human decision-making. It rejects positivism within economics. It defends an a priori epistemology and underpins praxeology with a foundation of methodological individualism and speculative laws of apodictic certainty. Mises argues that the free-market economy not only outdistances any government-planned system, but ultimately serves as the foundation of civilization itself.

Nationalökonomie: Theorie des Handelns und Wirtschaftens is the 1940 German-language predecessor to Human Action.

Synopsis

Mises sees economic calculation as the most fundamental problem in economics. The economic problem to Mises is that of action. Man acts to dispel feelings of uneasiness, but can only succeed in acting if he comprehends causal connections between the ends that he wants to satisfy, and available means. The fact that man resides in a world of causality means that he faces definite choices as to how he satisfies his ends. Human action is an application of human reason to select the best means of satisfying ends. The reasoning mind evaluates and grades different options. This is economic calculation.

Economic calculation is common to all people. Mises insisted that the logical structure of human minds is the same for everybody. Of course, this is not to say that all minds are the same. Man makes different value judgments and possess different data, but logic is the same for all. Human reason and economic calculation have limitations, but Mises sees no alternative to economic calculation as a means of using scarce resources to improve our well being.

Human action concerns dynamics. The opposite to action is not inaction. Rather, the opposite to action is contentment. In a fully contented state there would be no action, no efforts to change the existing order of things (which might be changed by merely ceasing to do some things). Man acts because he is never fully satisfied, and will never stop because he can never be fully satisfied. This might seem like a simple point, but modern economics is built upon ideas of contentment-equilibrium analysis and indifference conditions. It is true that some economists construct models of dynamic equilibrium, but the idea of a dynamic equilibrium is oxymoronic to Mises. An actual equilibrium may involve a recurring cycle, but not true dynamics. True dynamics involve non-repeating evolutionary change.

Mises explains dynamic change in terms of "the plain state of rest". A final state of rest involves perfect plans to fully satisfy human desires. A plain state of rest is a temporary and imperfect equilibrium deriving from past human plans. Though any set of plans is imperfect, to act means attempting to improve each successive set of plans. Movement from one plain state of rest to another represents the process of change, either evolutionary or devolutionary.

Mises links progress and profits. Profits earned from voluntary trades are the indicator of economic success. It is monetary calculation of profits that indicates whether an enterprise has generated a net increase in consumer well being over true economic costs. The close association that Mises draws between economic calculation and monetary calculation leads him to conclude that market prices (upon which monetary profits are calculated) are indispensable to progress in bettering the human condition. Without markets there are no prices, and without prices there is no economic calculation. Monetary calculation is vitally important.

Mises stresses the importance of entrepreneurship because only entrepreneurs actually do monetary calculation. This fact puts entrepreneurs at the center of all progress (and failure). Entrepreneurs who estimate costs more correctly than their rivals earn high profits while also serving consumers. Such men rise to top positions in industry. Entrepreneurs who err seriously in their calculations experience financial losses and cease to direct production. Mises described this market test of entrepreneurial skills as the only process of trial and error that really matters. The concepts of monetary calculation, financial speculation, and entrepreneurship form the basis for the von Mises critique of socialism.

Publishing history

The German-language predecessor to Human Action, titled Nationalökonomie: Theorie des Handelns und Wirtschaftens, first appeared in 1940. Human Action was not a direct translation of the earlier work, but used its general framework and expanded on it.[2] Yale University Press published the first edition of Human Action in 1949. A revised and expanded second edition came out in 1963. This edition, also by the Yale University Press, was full of mistakes and another one had to be done quickly afterwards, by another editor.[3] Henry Regnery published the revised third edition in 1966. This was the last edition published in Mises' lifetime.

A fourth edition came out in 1996, with revisions by Bettina B. Greaves. It is available in hardback single (Liberty Fund, ISBN 0-86597-630-9) and four volume paperback editions (Liberty Fund, ISBN 0-86597-631-7), as well as single volume paperback (Fox & Wilkes, ISBN 0-930073-18-5) In 1998 the Ludwig von Mises Institute brought back the first edition as the "Scholar's Edition" (ISBN 0-945466-24-2). In 2010 they brought the first edition again as a "Pocket Edition", designed to be portable (ISBN 978-1-61016-145-9).

Translations

See also

References

  1. ↑ Younkins, Edward W. (2007). Champions of a Free Society: Ideas of Capitalism's Philosophers and Economists. Lanham, Maryland: Lexington Books. p. 184. ISBN 0-7391-2647-4. OCLC 228676591.
  2. ↑ Hülsmann, Jörg Guido (2007). Mises: The Last Knight of Liberalism. Auburn, Alabama: Ludwig von Mises Institute. pp. 759–760. ISBN 978-1-933550-18-3. OCLC 173847313.
  3. ↑ Margit von Mises, My Life with Ludwig von Mises
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