Human Action: The Scholar's Edition

Human ActionWhat is obvious and must be said first is that this is book is not for everyone. In fact it is not for most. It took me three years to work through this small font and tightly spaced 881 page tome for various reasons not the least of which it was just a hard slog through many of its chapters. I put it aside often but kept picking it up. It is however for those who seek an intellectual challenge. Because that is what it is, a mountain to climb for those who choose to take it on. What you will get from expending the effort to study this book is a taste of what high end scholarship looks like. Von Mises is an intellectual with more than an intellectual pedigree having had a role in guiding economic policy for his own beloved country of Austria. In this work he brings rigorous analysis to the search for the foundational underpinnings of society. In his view, this is rooted in the economic activity of individuals making informed choices in everyday matters that they believe will advance or improve their own condition.This book is a painstaking analysis of economic man with a deep, almost tedious dive into the relationship of such economic concepts and terms as capital, interest, labor, raw materials and other such factors of production. You will grind thru such chapter titled as the following:*The Rate of Interest, *Interest, Credit Expansion and The Trade Cycle, *Work and Wages, *The Data of the Market, *Harmony and the Conflict of Interests, and so forth.But before you enter into this technical analysis that is deep wide and extensive you will first be treated to a comprehensive review of von Mises philosophical and sociological framework of human society which in its natural state von Mises readily and unconditionally proves is in all its essential attributes that of a Free Market; A framework that he describes as self-organizing with a heartbeat that is embodied in the book’s title-Human Action. On page 539 Von Mises sums things up nicely with the following statement:“The market economy is essentially characterized as a social system in which there is an incessant urge towards improvement.”It is the market economy that breathes life and energy into human society according to von Mises and its in understanding this ecosystem that one comes to appreciate the role that freedom, liberty and in particular private property plays in the story of mankind in its incessant struggle over want, ignorance and deprivation.Von Mises is almost epistemological in his approach as he exposes the musculature of the human social organization and the nature of the world everyday human’s inhabit. You will therefor first work thru these setup chapters:*Purposeful Action and Animal Reaction, *The Prerequisites of Human Action, *Human Action as an Ultimate Given, *Rationality and Irrationality, *Causality as a Requirement for Action, * The Alter Ego, and so forth.What von Mises painstakingly bring to light in Human Action is that it is the organic free actions of the individual that makes all the difference, and in the end really advances society and ultimately shapes the course of human history. In this understanding von Mises brings forward the most active force within his explanatory system: The Entrepreneur.Although all individual human action is supportive it is the unique nature of the Entrepreneur and his/her activities that highlight the consciousness of the will to self-improvement and the individual’s striving for self-advancement within the commons. In the actions of the Entrepreneur we witness most clearly the calculating mindfulness of man organizing the stuff of this world and planning beyond the current moment toward a future goal or state.It is this exact thinking so carefully described by von Mises that is the foundation of economic and financial analysis itself. It embodies human imagination, conscious forward projection, risk analysis, concrete planning and ultimately and once again as the title describes - Human Action.In the final section of the book von Mises counterpoises the Free Market up and against the Socialistic model. This final section is setup earlier in the book where von Mises disposes of Karl Marx’s explanation and support for Socialism one which Marx personally viewed as a transitional state that would ultimately lead to the inevitable Collectivist Communist state he envisioned and promoted in both Das Capital and the Communist Manifesto.It is my opinion a golden nugget is captured in a very brief statement on page 676. It is in this short sentence where he- Ludwig von Mise- throws the gauntlet down and the reader should take due note. Von Mise writes the following: “The choice is between Capitalism (Free Markets) and Chaos”.From about this point forward to the end he systematically connects the logical end point of Socialism to all the old tyrannical systems of governance throughout history. Systems where the few held near total sway over the many. Where the economic needs, desires and hopes of the masses were ultimately subjugated to the dictates and mandates of their wise overlords. In the Socialist system as von Mises describes it the wisdom of free individuals acting in their own best interest as either consumers or as an entrepreneurs (the Free Market) is replaced by that of a single authority(s). Authorities who, lest we forget, are themselves merely human, but place their proprietary assessment and dictates upon all in a totally non-democratic top down system. The collectivistic economic model is cogently summed up on section 3 of chapter 25:“The essential mark of Socialism is that one will alone acts. It is immaterial whose will it is. The director may be an anointed king, or a dictator, ruling by virtue of his charisma, he may be a Führer or a board of Führer’s appointed by the vote of the people. The main thing is that the employment of all factors of production is directed by one agency.It is upon the transparent truth of this statement that I believe von Mises systematically delivers the coup de grace. It is here he takes the kill shot. In this statement the table is set and now von Mises destroys any chance that adherents to Socialism could salvage even a pretense of an argument that Socialism could economically manage even a regional chain of KoolAid stands no less a total economic system.Von Mises goes on to establish why Socialism can not by its very nature assess worth or apply real financial value to the various factors of production. It just can’t. And because it can’t the economic calculation that a society has to make in order to deploy scarce resources to meet the needs, wants and desires of its citizens is simply impossible. According to von Mises value can only be assessed locally by those closest to these factors or means of production. Only by those capable of assessing or projecting the needs, wants and desires of the citizen consumer. Only by those capable of organizing these same factors of production into directed purposeful activities to meet these needs, wants and desires of its citizens. Needs, wants and desires that can and often are discrete, local and unique within a geographic region or unique with in a specific consumer group or class. Who is this person(s) closest to assessing these two requirements? As von Mises points out it is the oft-maligned Entrepreneur.In contrast the single will of the Socialist economic state is clearly demonstrated by von Mises to be blind on all counts. His detailed deconstruction of the problem the state Socialist system faces in its attempt to create and manage a functioning economy- up to and including trying to mimic the free market without free market institutions- is nothing short of devastating.One hair brained concept in particular von Mises includes is a theoretical concoction of having “the director” (single will) pretend to be a bank and make “loans” to mangers for economic projects for which the managers have no real personal financial risk if their project fails. I found myself almost chuckling as I read von Mise both reference and then categorically refute the strained ungrounded apologetic explanations made by Socialist thinkers as they try to concoct any method no matter how unrealistic or absurd to make their beloved scheme work.In this tome you can actually feel the difference between an explanation based in reality and not pie in the sky theorizing. All served up by a true master of the subject counterpoised against the untethered nonsense of ivory tower academics and theorists: NaÏf’s promoting a system that they (the armchair academic theorists) believe creates equity regardless of how unworkable. All up and against a system (the Free Market) for whom most of them never were actually meaningly apart of and have no actual grasp of. One they viscerally and in many cases irrationally despise.Von Mise makes the case that in the end Socialism as an economic order is doomed to failure. It cannot possibly meet the long standing needs, wants and desires of humankind. This system eventually ends in society-wide discontentment. Conflict is in the cards as this discontentment over unfulfilled failed promises reach a crescendo. Why? Because as von Mise clearly shows it leaves real human needs, wants and desires unmet. This leads to revolution thus confirming von Mise’s previously mentioned warning: “The choice is between capitalism (Free Markets) and Chaos”.Von Mises make it abundantly clear that the Free Market has the exact opposite effect. In Free Markets conflict is avoided to the greatest extent possible. The emphasis is placed on cooperation. It is normally some outside force or interest interested in something other than economic advancement that pursue adversarial initiatives.In summation von Mises is one of modern life’s heroic guides. In Human Action von Mise offers the individual a concrete foundation for their deepest intuitive beliefs. He places practical and moral limits on the power of the state and he correspondingly reinforces where the authentic ground of both economic and moral authority actually resides and that is within the individual whose free will and creative acts illuminates the space he or she is organically apart of. A reality where self directed men and women’s day to day decisions create the world reflective of their own special creative energy and God given gifts.

Ludwig von Mises was one of the intellectual giants of the twentieth century. His contributions to economics, political theory and the social sciences were profound.Born in Lemberg in the Austro-Hungarian empire in 1881, Mises graduated from the University of Vienna with a Doctor of Laws in 1906. From 1909, he worked in economic public policy for the Austrian Chamber of Commerce, combining this with research, writing scholarly works and lecturing at the University. In the twenties, he ran a fortnightly Privatseminar for a select group of young Viennese intellectuals many of whom later became famous in their own right; they included economists Gottfried von Haberler, Friedrich Hayek, Fritz Machlup, Oskar Morgenstern, Richard von Strigl, and Paul Rosenstein-Rodan, plus philosopher Felix Kaufmann, sociologist Alfred Shutz, and philosopher of history Erich Voegelin.During this period he wrote his path-breaking work on monetary theory, The Theory of Money and Credit (1912), Nation, State and Economy (1919), Socialism (1922), Liberalism (1927), Monetary Stabilization and Cyclical Policy (1928), A Critique of Interventionism (1929), and Epistemological Problems of Economics (1933).In 1934, after forty years in Vienna, concerned about the inevitability of Nazi takeover, Mises accepted a position at the Graduate Institute of International Studies in Geneva. Here he was able to devote himself completely to his study of economics which resulted in Nationalokonomie, the basis for his magnum opus Human Action. In 1940, blacklisted by the Nazis and feeling unsafe, he and his wife Margit escaped to America.He arrived in New York, aged nearly 60, with no job and without complete familiarity with English. The first few years were not easy; a grant from the Rockefeller Foundation to the National Bureau of Economic Research provided a modest livelihood; with support from Henry Hazlitt, he undertook a number of assignments for the National Association of Manufacturers; he gave guest lectures at Columbia, Harvard, and Princeton. Two books, Omnipotent Government and Bureaucracy were published by Yale University Press in 1944. By 1946 he held a visiting professorship at New York University’s Graduate School of Business Administration and a staff position at Leonard Reed’s Foundation for Economic Education.In 1949, he published Human Action; it is a comprehensive treatise on economics. Although built on his Nationalokonomie, it is not a translation; all parts were rewritten and additions made. This is Mises’ magnum opus where he integrates the elements of economic theory that had been his life’s work.He sets economics within a more universal science of praxeology – the pure logic of choice. People have purposes. They try to achieve goals. They act because they want to change things for the better; to eliminate some felt dissatisfaction. Action is the use of means to achieve ends. People choose their most highly valued preference. All action is rational in that it is attempting to use a means to achieve an end. (That does not preclude people making mistakes!) He believed that our knowledge of praxeology was a priori; “the only way to a cognition of these theorems is logical analysis or our inherent knowledge of the category of action”.From this base, Mises developed universal laws of economics. This differed from his contemporaries such as Schmoller of the German Historical School who thought that economic laws were true only for particular historical periods and conditions; that each age had its own way of thinking about things. Mises pointed out that attempts to define economics by what has happened historically fail because they are subject to individual, different interpretation (or understanding) of what happened. He explained that economic society is so complex that analysis needs to be based wherever possible on reason, as there are always multiple interpretations of real life events. The champions of logically incompatible theories claim the same events as proof that their point of view has been tested by experience. History cannot teach us any general rule, principal, or law.So Mises theories apply to all peoples and all times. His contributions are vast. Some of the more significant are: that prices are determined by subjective values; that economic calculation requires the price mechanism to determine the most economic use of resources; that socialism cannot allocate resources efficiently because it lacks this price mechanism; that social cooperation through the free market makes possible the division of labor; that trade and specialization are keys to continued prosperity; that the role of the entrepreneur is crucial - not only to correct disequilibria in the market place but to discover opportunities; that government manipulation of the money supply and interest rates causes recessions; and that humans gain more from peaceful exchange than from destructive struggles.Mises had many years’ experience advising government. He said, “Economic history is a long record of government policies that failed because they were designed with a bold disregard for the laws of economics. Economics … is a challenge to the conceit of those in power. An economist can never be a favorite of autocrats and demagogues. With them he is a mischief maker, and the more they are inwardly convinced that his objections are well founded, the more they hate him.”In retrospect, it seems that Mises spent his whole life at odds with the prevailing views of the economics profession. He began by disagreeing with the German Historical School which dominated European economics and provided the economic ideas for socialism; he disagreed with Keynes and the interventionism of the New Deal; and he was never a fan of the movement to mathematical economics and econometrics. Nonetheless, he continued to write prolifically and to lecture – he was still presenting seminars at the age of 90! His wife Margit later claimed that the post-War period was his most productive. Now, years after his death, there is a resurgence of Austrian Economics; his contributions are being recognized and his ideas understood.The Ludwig von Mises Institute, founded in 1982, is a thriving research and educational center for classical liberalism, libertarian political theory, and the Austrian School of economics. It provides scholarships, educational materials, conferences, media, and literature. There is a Mises Academy providing on-line courses.Here was a genius whose persistence in challenging the intellectual and political consensus of his day has left us with one of the greatest books on economics ever. Human Action is a masterpiece.