Von Mises’ Human Action

Ludwig von Mises’ intimidating treatise on economics, Human Action, is the go-to text on the Austrian theory of economics and the science of praxeology.  Most have not read it because of how little attention it has received outside of libertarian philosophy.  However, some may have avoided it due to its 881-page length.¹  I have been reading it and I have decided that something like a book report would be helpful for myself.  At the same time, what better way to add more avenues for people to discover the book and the man behind it.  Maybe it will illuminate for some the reality surrounding many of today’s social, economic, and political issues.

I have decided to cover it in sections, most likely the seven parts of the book, due to the sheer size of the book and depth of the ideas covered throughout.  I’ll try to translate it into layman’s terms and real-world situations.  People more reputable and capable than myself have done this before and I’ll refer to them often.²  I still find it important to do this for the self-serving reason and also to make this book and subject more searchable on Google.

Coming soon, an introduction to the book!

¹ This is referring to the copy I own, the Scholar’s Edition available via Mises.org.
² My favorite is Dr. Robert Murphy’s Lessons for the Young Economist, which I reviewed here, and also his Human Action Study Guide.  They are also available via Mises.org.

Lessons for the Young Economist Review

The single biggest motivating force behind starting this blog is my realization that one of the most important and practical sciences, economics, is one left out of the common curriculum.  Student after student leaves the American school system with no understanding of the science of exchange and how it shapes every aspect of their lives.  How can we expect young adults to understand the workings of the world without a basic understanding of the division of labor, supply and demand, and interest rates?

Enter Austrian economist Dr. Robert P. Murphy and his latest book, Lessons for the Young Economist.  This book functions as a foundational introduction to economics and succeeds masterfully.  Don’t let the name fool you, it means young in respects to economic knowledge more than in years.  I wish I had discovered this book before diving headfirst into Dr. Murray Rothbard and the like.  The book is arranged much like Dr. Ludwig von Mises’ Human Action and Dr. Murphy’s own study guide for Mises’ treatise.

It begins with a thorough explanation of the science, its basic laws, and their application to human action.  These first four chapters, or lessons, are indispensable as economics is impossible to understand without it.  It is no wonder that people are still fearing capitalism and basing opinions on long-disproved doctrines when they don’t understand the necessarily a priori, social, and individualistic natures of economics.  Only with this knowledge can one begin to follow the logic that explains human action.  The first part of the book wraps up with a study of things like goods, labor, savings, and investment as they are deduced from the basic givens of economics.  As economics is based on the fact that only individuals act, this closing chapter is based on an individual.

The reader is now ready for the next part of the book, which expounds upon the basics with how individuals come together in a society to make a market.  This describes capitalism and its features.  One is bound to start sympathizing with the Austrian school of economists by the end of these chapters on things like the advent of money, the division of labor, competition, supply, demand, and interest.  To be fair, Dr. Murphy admits he is describing an extreme, the completely free market.

Dr. Murphy dedicates a two-chapter part of the book on the opposing extreme, complete socialism.  This describes the goal of socialism and then its failures not only in theory but in practice.  The historical examples shed a light on how likely it is that Austrian economists are in fact correct in their disparaging of socialist philosophy.  The incentive and calculation problems seem all to familiar, conjuring correlatives in current experience.  However, no government is completely socialist.

The final part of the book is dedicated to the application of the previous parts to today’s experience – the mixed-market economy.  The general premise of such an economy is to utilize the benefits of capitalism while curtailing the negatives via state regulation.  How can we expect a voting resident of the United States of America to understand what they are truly voting for without a solid grasp of economics?  As Mises said, “Those writers who consider historical events as an arsenal of weapons for the conduct of their party feuds are not historians but propagandists and apologists.”¹  That being said, how can a layman separate the propagandist economists without an independent knowledge of economic science?  These final chapters demystify the problems we see everyday through teaching about price controls, government spending, taxes, mercantilism, prohibition, inflation, government debt, and the business cycle.

Like his Human Action Study Guide, each lesson is followed by a recap, a glossary, and study questions.  This book is well-executed and to say that this should be read in every high school is not an overstatement.  It is never condescending, even when putting a spotlight on the Utopian nature of socialism.  Anyone wanting to learn the science behind what’s going on in every human interaction possible should read this book.  Don’t be confused by discussions of the current international recessions or governmental policy, be informed.  Robert P. Murphy has been demanding a debate with Keynesian Dr. Paul Krugman and I, for one, am hoping I get to witness such a debate.

¹ Mises, Ludwig von, Human Action: A Treatise on Economics (San Fransisco: Yale University, 1949) p. 48