Human Action
Encyclopedia
Magnum opus
Magnum opus , from the Latin meaning "great work", refers to the largest, and perhaps the best, greatest, most popular, or most renowned achievement of a writer, artist, or composer.-Related terms:Sometimes the term magnum opus is used to refer to simply "a great work" rather than "the...
of the Austrian
Austrian School
The Austrian School of economics is a heterodox school of economic thought. It advocates methodological individualism in interpreting economic developments , the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have...
economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
Ludwig von Mises
Ludwig von Mises
Ludwig Heinrich Edler von Mises was an Austrian economist, philosopher, and classical liberal who had a significant influence on the modern Libertarian movement and the "Austrian School" of economic thought.-Biography:-Early life:...
. It presents a case for laissez-faire
Laissez-faire
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....
capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
based on Mises' praxeology
Praxeology
Praxeology is the study of human action. Praxeology rejects the empirical methods of the natural sciences for the study of human action, because the observation of how humans act in simple situations cannot predict how they will act in complex situations...
, or rational investigation of human decision-making. It rejects positivism
Positivism
Positivism is a a view of scientific methods and a philosophical approach, theory, or system based on the view that, in the social as well as natural sciences, sensory experiences and their logical and mathematical treatment are together the exclusive source of all worthwhile information....
within economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
. It defends an a priori epistemology and underpins praxeology with a foundation of methodological individualism
Methodological individualism
Methodological individualism is the theory that social phenomena can only be accurately explained by showing how they result from the intentional states that motivate the individual actors. The idea has been used to criticize historicism, structural functionalism, and the roles of social class,...
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. One point that Mises made, but did not get enough attention, is that monetary calculation takes place primarily in financial markets. Monetary calculation is vitally important.
Mises stresses the importance of entrepreneurship because it is entrepreneurs who 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 first edition of the work came out in 1949, from the Yale University PressYale University PressYale University Press is a book publisher founded in 1908 by George Parmly Day. It became an official department of Yale University in 1961, but remains financially and operationally autonomous....
- The 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.
- The revised third edition came out in 1966 from Henry RegneryRegnery PublishingRegnery Publishing in Washington, D.C., is a publisher which specializes in conservative books characterized on their website as "contrary to those of 'mainstream' publishers in New York." Since 1993, Regnery Publishing has been a division of Eagle Publishing, which also owns the weekly magazine...
. - The fourth edition came out in 1996, with revisions by Bettina B. Greaves. Available in hardback single (Liberty FundLiberty FundLiberty Fund, Inc. is a private, educational foundation established and headquartered in Indianapolis, Indiana, USA. It is dedicated to the study of the ideal of a society of free and responsible individuals...
, ISBN 0-86597-630-9) and four volume paperback editions (Liberty Fund, ISBN 0865976317), as well as single volume paperback (Fox & Wilkes, ISBN 0930073185). - In 1998 the Ludwig von Mises InstituteLudwig von Mises InstituteThe Ludwig von Mises Institute , based in Auburn, Alabama, is a libertarian academic organization engaged in research and scholarship in the fields of economics, philosophy and political economy. Its scholarship is inspired by the work of Austrian School economist Ludwig von Mises...
brought back the first edition as the "Scholars Edition" ISBN 0945466242. - In 2006 it was published in Czech language. ISBN 80-86389-45-6.
- In 2007 was published in Poland by the Polish Ludwig von Mises Institute.
- In 2010 the Ludwig von Mises Institute brought back the first edition unabridged as the "Pocket Edition", designed to be portable with dimensions 4"x7" 25 oz (708.7 g). ISBN 9781610161459.
- In 2011 the Ludwig von Mises Institute Brazil translated it to Portuguese language and published it as "Ação Humana - Um Tratado de Economia". ISBN 85-62816-05-1
Full text
- Human Action, 1996 edition:
- Human Action, 1949 edition (reissued 1998):
- Nationalökonomie, 1940 edition:
- Human Action, audio files for Forewords, Introduction, and all chapters:
- Human Action Study Guide: