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18 of 21 people found the following review helpful:
5.0 out of 5 stars
Monumental Contribution, December 8, 2009
This review is from: Human Action, The Scholar's Edition (Hardcover)
Human Action is one of the most insightful books on economics ever written. This is impressive, but even more impressive that Mises has more than one book on this list (in my opinion). Human Action is the most recent (hopefully not the last) great treatise on political economy. While some treatises compile the ideas of others, there are many original and important insights to this book. Perhaps the most important insight of this book concerns economic calculation. Mises sees economic calculation as the most fundamental problem in economics. The economic problem to Mises is that of action. We act to dispel feelings of uneasiness, but can only succeed in acting if we comprehend causal connections between the ends that we want to satisfy, and available means. Mises is drawing upon Menger's brilliant 1871 book here, but he has his own ideas as well. The fact that we live in a world of causality means that we face definite choices as to how we satisfy our 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. We make different value judgments and posses 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). We act because we are never fully satisfied, and will never stop because we 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. How then do we experience progress?
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. This is especially clear on page 704 of the scholar's edition. Monetary calculation is vitally important, but who actually carries out these calculations?
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.
Mises has nothing good to say about interventionism either. As for the business cycle, this is generated by the manipulation of interest rates by central banks. It is fairly obvious that Mises opposed the idea of government run economic systems, but Mises did see limited roles for government in providing national defense, police protection, and criminal justice. Some contemporary Mises enthusiasts would disagree, yet the state proposed by Mises would (in my opinion) be a vast improvement over our present state of affairs.
There are too many angles to this book to discuss fully in this review, but the more controversial parts concern methodology. Mises rejects positivism and mathematical economics. As for positivism, Mises does not argue that economics should not be empirical. Mises argues that it CANNOT be empirical. Ideas are logically prior to data of complex phenomena. Without ideas to interpret data on social phenomena we could not make sense of anything in society. Critics of von Mises tend to be totally unaware of this argument.
Mises sees ideas as all-important. It is our ideas that govern our actions. We act because we have ideas as to particular means of dispelling uneasiness. Some see causal connections between government intervention and increased societal welfare. Students of Mises see things differently, because we hold different ideas. This is a very important angle of the Mises paradigm. As Mises wrote in 1922, only ideas can overcome ideas. Marxian notions of the material forces of history and class interest as the prime movers of history are not only wrong, but dangerous because they are anti-rationalist. Ideas matter above all else, and the ideas developed by Mises in Human Action matter above all others.
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10 of 12 people found the following review helpful:
5.0 out of 5 stars
$20 are you kidding?, May 11, 2010
This review is from: Human Action, The Scholar's Edition (Hardcover)
You can get this book for $20 over at the Mises Institute website.
20 Federal Reserve Notes and two months later and I cannot imagine a better way I could have spent that time or money.
If you have a high time preference for becoming smarter, understanding the market economy, refuting trite fallacies other annoy you with daily, and want a solid understanding of the repercussions that will come from your government's decisions, this book is not just going to be your n...it is going to be your (n - 1).
Buy it, read it, rock harder than the rest.
*Edit: Mises Institute just released a $10 edition of the book. It is so cheap you should feel like you are stealing when you get it for that price.
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1 of 1 people found the following review helpful:
5.0 out of 5 stars
Mises Magnum Opus, December 29, 2011
This review is from: Human Action, The Scholar's Edition (Hardcover)
A great book. I have been a libertarian of various kinds and varieties throughout the last five or six years and the source of nearly all the economic beliefs of those various groups were from Mises or some variation building on or going against Mises. The history of Austrian economics in general is very similar. Mises building upon Bohm Bawerk and Carl Menger put forward his magnum opus here and off of that would come virtually all of the Austrian economists after and libertarian thinkers in the classical liberal vein. The book and Author have a sad history. Mises wrote and finished the original German version only to be barred from publishing it because he was a jew during the Nazi Anschluss of Austria. Several of his manuscripts including parts of the completed Human Action were taken and his home was ransacked. He and his family had to move away and he lost the economics career, he had worked his whole life towards. Eventually making his way to America, he had to start over again completely. When eventually he came around to writing an English version, a series of problems concerning the format, missing pages and type settings beset its initial English publishing. Mises also had a problem reinitializing his career, now seeming like a dinosaur in the age of macro-economic Keynesians he had to settle on an unpaid professorship. Eventually Scoring some key students, including Ayn Rand, Murray Rothbard and rekindling old friendships with FA Hayek and Israel M Kirzner. (They would all eventually disagree.) His life ended on a happy, but uneventful note. The book never got the fame he and most Austrian-economists and libertarians of all stripes believe it should have until recent decades. I understand the importance of the book in a historical and foundational sense. I have many disagreements with it and feel that ultimately while it is still good to read for other reasons, it has been superseded in most of the ideas it represents. The economic aspects of the book are still relevant and to some extent so are the political points he makes. Philosophically this book runs into more than a few problems. Mises before leaving Vienna knew and worked with many people in the Vienna Circle, the burgeoning philosophical school centered around logical positivism. I believe Mises had a cousin or a close friend who brought him to meetings and exchanged ideas with him. Regardless the talks did little to sway mises from his rationalistic approach to philosophy. It did however make him hyper focused on logical proofs and constructions. Not to the point that detractors of the Austrian school sometimes like to mischaracterize him as using it, but to an extent that seems a little more then contrived. Especially considering he nor has anyone else given a basis for believing these can be shown to be true, that being rationalistic foundations or logic. Now Mises was smart enough to realize that Rationalism couldn't be proven as a wide ranging foundation and merely said it should provisionally be the basis of economic thought, but this is merely a deferring tactic. Why is it anymore true in a limited sense, then as a compositional whole? While I don't think it hampers his economic insights much, it does seem like a huge weakness philosophically that his praxeology is based on a philosophy that even at the time was out of fashion and that now is pretty much seen as false from every angle imaginable. He made numerous errors in characterizing Nietzsche's philosophy, which I will chalk up to him having read the German propaganda versions of his works. Although people often view this book as a refutation of macro-economic theories such as that of John Maynard Keynes, the book in its original version and ultimately what we read today are primarily focused on more traditional kinds of socialism and Marxism. The Majority of Mises economic writings were aimed at bringing down that view of economic thinking. Keynes tried to have a correspondence with Mises when he was still a somewhat respected professor in Austria and he didn't even bother replying if I remember correctly. Mises didn't think such economic theories would ever be mainstream or seen as important, so he didn't bother refuting them. Some of his criticisms apply broadly to ideas of that nature, but because they weren't his main aim, the nuances of those particular theories are some what hard to attack purely based on what Mises had here. Luckily for us Austrians, others such as Henry Hazlitt and FA Hayek would make up for that. The good things about this book. Mises used the early Austrian theory to cover and examine virtually every facet of economic thought. When it comes to books few get as comprehensive as this based on so little. Mises cant be ignored by Austrians even today. Unlike others, I do find the logical sequencing of his arguments good, barring the problems I already stated. I liked his colorful use of examples. A great book, but one that should be read after many others in the Austrian corpus. I recommend it to those interested in economics or libertarianism.
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