Human Action

''Human Action: A Treatise on Economics'' is a work by the Austrian economist and philosopher Ludwig von Mises. Widely considered Mises' ''magnum opus'', it presents the case for laissez-faire capitalism based on praxeology, his method to understand the structure 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 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. Individuals make 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 effort 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. Loss, in Mises' own words, is failure, and is simply consumers projecting to the theoretical entrepreneur that he has failed. 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 writes:

"We have assumed that the director has already made up his mind in regard to the construction of a definite plant or building. However, in order to make such a desision he already needs economic calculation. If a hydroelectric power station is to be built, one must know whether or not this is the most economical way to produce the energy needed. How can he know this if he cannot calculate costs and output?"

Mises establishes that the allocation of resources requires economic calculation. In his view, without economic calculation, there is no economy, as one cannot allocate resources in a rational manner.

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 people 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.

Yale University Press published the first edition of ''Human Action'' in 1949. When production delays pushed back the planned released date of a revised and expanded second edition, Lyle Munson, publisher of Bookmailer, Inc., suggested that Mises could take the book to another publisher, and offered to publish it himself. Mises used this offer as leverage to get Yale University Press to accelerate its release. The resulting 1963 edition was full of typographical errors, and another one had to be printed quickly afterwards by another editor. Henry Regnery published the revised third edition in 1966.

A posthumous fourth edition was published in 1996, with revisions by Bettina B. Greaves. It is available in hardback single (Liberty Fund, ) and four-volume paperback editions (Liberty Fund, ), as well as single-volume paperback (Fox & Wilkes, ). In 1998, the Ludwig von Mises Institute brought back the first edition as the "Scholar's Edition" (). In 2010, the Institute reissued the first edition as a portable "Pocket Edition" ().

Translations

* In Italian (1959) as ''L'azione umana : trattato di economia'', Torino: UTET
* In Chinese (1976) as 人的行為 : 經濟學硏論 / ''Ren de xing wei : jing ji xue yan lun'' by 台湾銀行經濟硏究室, Taiwan yin hang jin ji yan jiu shi, (Bank of Taiwan)
* In French (1985) as ''L’action humaine: Traité d’économie''. Libre échange. Paris : PUF, 1985.
* In Portuguese (1990) as ''Ação humana: Um tratado de economia''. Rio de Janeiro: Instituto Liberal.
* In Spanish (1995) as ''La acción humana: tratado de economía''. Madrid: Unión Editorial D.L., ;
* In Czech (2006) as ''Lidské jednání: Pojednání o ekonomii''. Prague: Liberální institut.
* In Polish (2007) as ''Ludzkie działanie: traktat o ekonomii'' ;
* In Turkish (2008) as ''İnsan eylemi: iktisat üzerine bir inceleme'', Ankara: Liberte Yayınları. ;
* In Japanese (2008) as ヒューマン・アクション: 人間行為の経済学 / ''Hyūman akushon: Ningen kōi no keizaigaku'', 春秋社, Tōkyō: Shunjūsha. ;
* In Dutch (2016) as ''Het menselijk handelen: een economische verhandeling'', Amsterdam: Stichting Pierson & Templeton.
* In Romanian (2002), as „Acțiunea umană. Un tratat de economie” available on-line at http://mises.ro/43/actiunea-umana.
* In Swedish (2021), as ''Mänskligt handlande'', Stockholm: Timbro förlag.

See also

* Action theory
* Demonstrated preference
* Methodenstreit

References

External links

* 1949 edition (reissued 1998)
Full text in PDFHTML
* ''Nationalökonomie'', 1940 edition
Full text in PDF
* Audio files for Forewords, Introduction, and all chapters
Media File
{{Ludwig von Mises

1949 non-fiction books
Books by Ludwig von Mises
Books about capitalism
Classical liberalism
Yale University Press books
Treatises