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117 of 124 people found the following review helpful
5.0 out of 5 stars A Work of Genius
Human Action is one of the ten 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...
Published on July 29, 2007 by D. W. MacKenzie

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135 of 350 people found the following review helpful
2.0 out of 5 stars Mixed Bag
As shown by the reviews below, Human Action is the object of a libertarian cult, and regarded by some right-wingers as the greatest economic text of the 20th century (if not of all time). In reality, it's a mixed bag. Buried within the 800+ pages of text are worthwhile sections on entrepreneurship, monetary theory, inflation, and the business cycle. There's even an...
Published on October 27, 2003


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117 of 124 people found the following review helpful
5.0 out of 5 stars A Work of Genius, July 29, 2007
By 
This review is from: Human Action: A Treatise on Economics (4 Volume Set) (Paperback)
Human Action is one of the ten 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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99 of 106 people found the following review helpful
5.0 out of 5 stars Mises's Greatest Work, September 10, 2005
HUMAN ACTION is the most important work of economic or social theory written in the twentieth century. It is also the most important defense of laissez faire capitalism ever written.

Ludwig von Mises (1881-1973) was born in the old Austro-Hungarian Empire. A prolific writer, he wrote two seminal works (SOCIALISM and THEORY OF MONEY AND CREDIT) before fleeing the Nazis. While living in Switzerland, he published an early version of this work in German in 1940. Over time, Mises added to it and rewrote it in English. Yale University Press published HUMAN ACTION in 1949.

This book isn't just a work of economics, but a full-orbed "science of human action." Starting from a few principles that Mises believed to be a priori, he deduces an entire body of economic theory. The first 200 pages of this 900-page work are heavily philosophical. I would not recommend readers skip this section. You can't understand what Mises was for unless you understand why he was for it. Mises' final work, THE ULTIMATE FOUNDATIONS OF ECONOMIC SCIENCE, deals with these methodological issues on a more elementary level.

HUMAN ACTION is a difficult work to read, particularly for those with minimal training in economics. Murray Rothbard's MAN, ECONOMY, AND STATE covers similar ground (at least as far as economics is concerned) but is more suitable for the beginner. Israel Kirzner has written the best introductory work on Mises.
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91 of 104 people found the following review helpful
5.0 out of 5 stars monumental., May 31, 2004
By 
There is no way I can say all that I want to say in this review. Murray Rothbard has aptly said: "Every once in a while the human race pauses in the job of botching its affairs and redeems itself by producing a noble work of the intellect. . . . To state that _Human Action_ is a `must' book is a greater understatement. This is the economic Bible of the civilized man."
I would take Rothbard's praise further. This is not only the single most important economic tome ever, but also the most pathbreaking, definitive exposition of praxeology, the correct basis for social sciences and also necessarily the foundation for epistemology. Only a few living economists of the "Austrian" school of economics seem to have truly absorbed the true praxeological methodology forged by Mises.
Mises' contribution to economics cannot be understated. In basing economics on the axiomatic status of action, Mises established the ultimate foundation for economic science. The fact that humans act -- that is, human beings *act* purposively to reach subjectively chosen ends -- is, of course, irrefutable (to argue against the axiom of action is itself an action). This, however, may seem like a trivial observation. Humans act, big deal? Why is it so important? Its importance is in praxeological economics' methodology deductive chains of reasoning to realize the implications. In understanding what is implied by action - values, ends, means, choice, cost, preference, profit, and loss - economic science can be deduced logically, so it is a purely an a priori science where economic laws tell describe apodictically true relationships in the real world. In this way, key economic principles follow from the action axiom (as well as a few general, explicit assumptions about the empirical reality in which the action occurs), such as the law of diminishing marginal utility, how taxation changes time-preference schedules, the counterproductive nature of interventionism, involuntary unemployment, and so on. So long as the logic deriving the principles is correct, then economic laws are a priori-valid, and empirical testing has no bearing on them.
This book initially appeared in a difficult time, when positivist methodology and the Keynesian paradigm were dominant. Thus, upon _Human Action_'s release it was mostly derided and ignored by the mainstream, rather than studied and criticized. It did, however, gain notoriety among academic circles for rebuilding economic science from the ground up, all the while plowing through the epistemological shortcomings of previous standards.
Mises has provided considerable ammunition for institutional critique. He uncovered the socialist calculation problem -- a central planning authority has no rational way to allocate resources for production without market prices -- and this is an insurmountable hurdle for any state-run economy. In fact, when analyzed fully, it shows that _any_ government intervention in the economy results in market distortion and inefficiency. In essence, nothing can ever be provided more efficiently by the government nor can the government do anything to make the market more efficient. Murray Rothbard, who was of course Mises' student, explored this thoroughly in his critique of interventionism, _Power and Market_ (now available with the Scholar's Edition of _Man, Economy_ and State_).
Lee Carlson's shamefully inane review can be wholly disregarded. Although he appeals to authorities it does not change the fact that the search for mathematical parameters for economic analysis is utterly impossible because of the existence of human choice. But would finding such parameters be possible even if one could isolate all the factors involved that affect decision-making? Again, no, simply because of the fact of human choice. You cannot quantify economic laws mathematically. All parameters quantifying human choice are historical data and nothing more.
In regards to the reviews criticizing Mises extreme rationalism, they would do well to better understand Mises' methodology and the epistemological nature of economic science. To Mises, ultimately, all economic laws were derived from the incontestable axiom that, trivially enough, humans act, choosing between alternatives in a finite universe. In understanding the effects of different forms of economic activity, the economist must determine correct theory by relying on human choice as the guiding factor. To consider the effects of a change brought about by action, we need recognize that by taking certain choices, the opportunities for other choices are destroyed. And because the relationship between these universes resulting from different choices are a priori related to the others, there is no need to rely on empirical confirmation for correct theory. The corpus of economic science is essentially a system of counterfactual laws where empirical testing is completely useless. For example, it would be foolish to argue that consumption need not be preceded by production, just as it would be foolish to argue that money inflation does not raise prices higher than otherwise, just as it would be foolish to argue that 1+1=3. Like a mathematical proof, all economic laws must be refuted by identifying errors in the axiomatic-deductive chain. This is also the only truly valuable way to understand complex economic phenomena. For example, were rising real incomes in Canada 1950-1990 a result of increased taxes, or despite of more taxes? Would they have been higher still with higher or lower taxes? Counterfactual laws of case-probability are greatly more valuable than any mathematical model because of their counterfactual method. They require no qualifying considerations and are always true.
Finally, on the Scholar's Edition itself: This is a BEAUTIFUL book. From the Mises Institute:
"The Scholar's Edition is printed on stunning, pure white, acid-free Finch Fine 50 lb. paper; carefully set in the readable and beautiful Janson typeface, including the 1954 index, the most comprehensive ever done; covered in spectacular dark azure Odyssey cloth from Prague, the finest natural-finish, moisture-resistance book fabric in the world; secured by the finest caliper Binders board; protected by an impressive slipcase from the famous Old Dominion company; graced with antique-soapstone endpapers from Ecologic Fibers; casebound with the strongest Smyth-sewn signatures; fitted at head and foot with silken endbands, thick wrapped for durability; complemented with a double-faced, satin-finish ribbon marker; stamped with brilliant, non-tarnishing gold foil from Japan's Nakai International; and produced at R.R. Donnelly's famed Crawfordsville Bindery, where's America's finest books are assembled." Pretty delicious, actually!
The Scholar's Edition also features an exhaustively compiled index and -- most importantly -- restores all the ambiguities and deleted material from the third and fourth editions.
UTTERLY ESSENTIAL FOR ALL CIVILIZED HUMAN BEINGS.
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104 of 120 people found the following review helpful
5.0 out of 5 stars Essential treatise for free-market supporters, March 17, 1999
Ludwig von Mises's _Human Action_ is essential reading for any supporter of free-market economics (and it might be nice if some of the _enemies_ of economic liberty read it too). Mises's plan here is to place the science of economics on a firm axiomatic foundation. In particular, his aim is to derive economic theory from the axiom that (my paraphrase) human beings act to achieve ends under conditions of scarcity in a world in which finite and delimitable causes have finite and delimitable effects.
Two other major treatises will be of interest to readers of this work: Murray Rothbard's _Man, Economy and State_, and George Reisman's _Capitalism: A Treatise on Economics_.
I also agree with the other reviewer who suggests reading Carl Menger's _Principles of Economics_. Mises describes that work as the book that made an economist of him, and it's a much quicker read than any of the three major treatises I've named.
Also of great interest: Mises's _The Theory of Money and Credit_, described by Murray Rothbard as the best book on money ever written. And so it is.
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30 of 32 people found the following review helpful
5.0 out of 5 stars Comprehensive and Prophetic, April 6, 1999
By A Customer
Review from Investor's Business Daily: March 6, 1999
Acting Human Can great books live on, even in the Internet age? The re-release of an old classic argues yes.
Every now and then a book comes along that both sums up and extends the collected wisdom of some science. ''Human Action,'' by Ludwig von Mises, was such a book. Fifty years after it first came out, it is still one of the classics of economics.
Mises is probably best known as the mentor of Nobel prize-winning economist Friedrich Hayek, and as the father of the modern ''Austrian'' school of economics.
''Human action is purposeful behavior,'' wrote Mises.
That may seem obvious. But many social scientists have treated man as some sort of automaton, responding in some programmed way to whatever conditions he faces.
Mises said man is a species that plans and chooses his actions. Man thinks.
And the actions a man takes are a ''conscious adjustment to the state of the universe that determines his life.''
Why care? Let's say the Federal Reserve expands the money supply whenever unemployment goes up. The theory behind this is that the Fed can stimulate the economy by artificially boosting demand. Or course, this will also lead to inflation.
But if people are rational, they'll notice this policy and act in response. Every time unemployment goes up, firms will raise their prices and workers will demand higher wages. So pumping up the money supply will only affect prices, not real output.
Robert Lucas, a University of Chicago economist, popularized this theory of ''rational expectations'' in the 1970s. He later won a Nobel prize for his work.
But Mises had discovered the basic insights of rational expectations some 30 years earlier.
Since individuals are free to choose their actions, there's always an element of uncertainty in economics. That's why attempts to make specific predictions about the economy are bound to fail.
Mises resisted modern economics' heavy reliance on mathematical models and attempts to model itself after physics.
Such efforts were bound to fail, he said. They overlooked the uncertainty that human choice brings to economic activity. And he said that economists' focus on models in which the economy is already in a state of equilibrium overlooks what's truly key: the actions that bring supply and demand into equilibrium.
Unlike other economists, Mises rejected the use of the theory of economic man, or Homo economicus, in economics. That model holds that man is driven solely by economic motives, the desire to make the greatest material or economic profit.
Mises thought that was too narrow. He preferred to study man as he really acted, with a multitude of motivations.
Still, that doesn't mean that men don't often act for economic motives. Nor does Mises' belief that the future is uncertain mean that it is completely unpredictable.
For instance, most economists would say that, all things equal, raising the minimum wage will boost unemployment.
Mises would have no quarrel with that sort of prediction. But he'd look skeptically on attempts to predict exactly how much such an increase would affect unemployment in the real world.
There are few economic subjects Mises doesn't touch on in ''Human Action.'' Mises clearly explains a range of complex economic ideas -from inflation to monopoly to government interference in the market. He examines and debunks Marxist notions of class conflict and capitalist exploitation of workers. And he outlines a powerful theory of the causes of business cycles.
But Mises goes beyond pure economics, defending the idea of science and logic itself. His criticisms of those who hold there is no such thing as objective truth seem relevant today when many in the academy decry reason as a tool used to oppress others.
Few books remain in print for 50 years. And few still speak to the vital debates of the day. ''Human Action'' is one of those.
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38 of 45 people found the following review helpful
5.0 out of 5 stars Utterly amazing; this book may change your life, September 25, 2002
By 
Mika Nystroem (Pasadena, CA USA) - See all my reviews
(REAL NAME)   
I find Ludwig von Mises to be a tragic figure. Why?
1. He expresses himself in direct and to the point language; when speaking of syndicalism, "in short, it is nonsense."
2. He writes about things that are terribly important, today and always, yet not so easy to understand.
3. He can't help but judge nonsensical ideas on the merits. No half-measures here. Don't expect him to go easy on your favorite ideology.
4. He expresses himself in old-fashioned language ("men" instead of "persons" or "people" or...) and uses expressions that no sane author would use today ("the white man") And he says what he thinks: Western society is superior to Eastern society because...
5. He sneaks in little quotations in Latin and Greek here and there and uses words not in some dictionaries. (Look up at least 'autarky,' 'praxeology,' 'catallactics,' 'epigone,' 'apodictic' before reading this book.)
In short, very few people today will ever read "Human Action." I am sure there are people that will refuse to read it because von Mises calls homosexuality a "perversion" (why he says that, I don't know, but it has no effect on the economic arguments) And that's too bad. Very much too bad.
Mises clearly strongly believes he's right. It certainly colors his writing. But try as you may, you won't find it coloring his reasoning. His personal opinions on economic matters are clearly the *product* of his reasoning, not the other way around.
There are a lot of people that believe that government intervention is necessary for a healthy economy. If you are one of them, you have to read this book. Once you have read and understood Mises's arguments, if you still believe that the government has any constructive role to play by "fixing" things wrong in the economy, I want to hear about it. (F. A. Hayek, of all people, once believed in socialism, too. Until he read Mises's "Socialism.")
Mises's argument goes like this:
First, capitalism clearly works. The more capitalistic a country is, the wealthier it is---you could even say, the more capitalistic a country is, the wealthier its *poor* are.
Secondly, socialism worked in small, self-sufficient medieval households, but it can't possibly work in a large industrial society. Why? Because the planners can't plan adequately without the help of a marketplace to set prices.
Thirdly and lastly---and this is the nail in the coffin for the wannabe socialists that get their opinions splattered all over the newspapers---any "in between" attempt at combining socialistic ideals with a capitalistic society must inevitably fail. Why? Because any interference with the market has the opposite effects to what the interferers themselves wanted!
(Fiasco policies that fall into this category are rent control, minimum wages, overtime rules, compulsory insurances of different kinds, Keynesian printing of money, etc. etc.---in short, almost every measure that "progressive" politicians use to "help" us.)
Mises is famous for having started the "socialist calculation debate," and there's even a book about it out there now. Critics of Mises's position in the calculation debate *must* read "Human Action." The basic point that Mises makes here---and he never makes it entirely explicitly---is that prices are ephemeral one-time phenomena that are controlled by buyers and sellers (their "human action"); prices are historical data, past information; prices do not control people, they are controlled by people. It's utterly impossible to predict the future price of any good better than that of any other good. The reason is that we don't know today what people will want tomorrow. The idea of a "demand curve" is just an abstraction useful for teaching the simplest principles of supply and demand to college students. Once you understand this simple but subtle point, Mises's position becomes clear. The planners can't plan, not because they can't calculate today's prices in order to satisfy today's demands, but because they can't figure out how to rig the prices so as to meet the consumers of today and those of ten years from now and everybody inbetween! The same idea of the unpredictability of prices applies to Mises's argument that macroeconomic indicators (such as the CPI) are totally useless: either they tell you nothing at all, or else they tell you what's completely obvious. Using the CPI to answer the question "has Sam's purchasing power increased over the last year" is a bit like trying to answer the question "is it hot in Los Angeles" by referring to the average temperature in the United States.
In short, this book collects a remarkable set of truly amazing insights. Everyone that can handle it should---must!---read it, and read it carefully. I hope history remembers this book, because yes, it may one day, when everyone understands its contents, be considered one of the most important of the 20th century. If civilization survives that long, that is.
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34 of 41 people found the following review helpful
5.0 out of 5 stars Human Reaction, October 13, 2003
By 
This work towers above the mediocore garbage that currently passes for economic writing. (As late as 1989, Samuelson could say with a straight face that the Soviet economy was more productive than ours!) This book can be traced directly to the Austrian School of Classical Liberalism that attempts to define economic activity in terms of human activity, wants and needs. This is in direct contradiction to modern "economic speak" in which it is a given that the State play a vital if not pervasive role in individual human economic activity.
Von Mises, Hayek and Menger (among others) were diametrically opposed to a "middle way" between statism (socialism/fascism) and capitalism for one simple reason: Statism, once introduced, becomes the dominant force and eventually wins the contest since in a centrally-run economy all economic decisions become political ones.
Von Mises struggled his whole life to develop general rules for economic activity. There was (and is) a gray area in which economic theory and economic reality coexist in an uneasy relationship. Despite von Mises assertion that economics was basically a theoretical science - as opposed to physics or chemistry where axioms could be physically proven - he continued to maintain that economics was a rational science based upon human needs.
It is this latter point that exalts his work. For perhaps the first time since Adam Smith he set about demonstrating that Capitalism is the economic system most conducive to human nature, how it makes the most sense from a "human" point of view of wants and needs and rewards and - most important - how it delivers the goods and affects material life. Both von Mises and Hayek were convinced that when the state attempts to lead economic activity, failure and misery are sure to follow since it would eventually become a contest among competing interest groups, each vying for their turn at the trough (which it has).
Von Mises's work on economic swings was another example of brilliant logic that has held true ever since. Hayek, because he was convinced of the evolutionary nature of the economic system, also believed in cycles. HUMAN ACTION does its part in demonstrating the correlation between increasing State control of the economy and decreasing individual freedom. After having heard yet another of the Presidential campaign "debates" it is apparent that the "debaters" get their economic schooling from the editorial page. Let us pray this is a farce for the uneducated and they really don't believe what they say. If they do, the Viennese Classical School was correct in its predictions.
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14 of 16 people found the following review helpful
5.0 out of 5 stars The best economic treatise ever written, June 27, 2008
This review is from: Human Action: A Treatise on Economics (4 Volume Set) (Paperback)
Although not for the novice (especially you Socialists out there who have never even bothered to study basic economics), this economic treatise is the first of the two greatest economic treatises ever written (the other being Murray Rothbard's "Man, Economy and State"). If you believe (1) in the sovereignty of the individual, (2) in the freedom of association and contract between individuals, and (3) if you DON'T believe in people such as Hitler, Stalin, Mao, Roosevelt, Nixon, Reagan, Clinton, etal., then this book is required reading. Take note, a basic understanding of economics is essential. May I suggest Carl Menger's "Principles of Economics" as the best place to start.
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10 of 11 people found the following review helpful
5.0 out of 5 stars The magnum opus of Austrian economics, December 14, 2007
This review is from: Human Action: A Treatise on Economics (4 Volume Set) (Paperback)
~Human Action: A Treatise on Economics~ is the magnum opus of economist Ludwig von Mises, and the Austrian School of economics. Therein, Mises presents a sound case for a laissez-faire free-market, unimpeded by encroachments of the state. Based on Mises' praxeology, or rational investigation of human decision-making, his book offers a cogent case for the market economy which rests on a prudent understanding of human action. I have never adequately confirmed in my own mind the validity of his epistemology (i.e., framework/methodology for the dissemination of knowledge,) and economics seems like a strictly inductive science on the surface. Mises embraces a priori reasoning, and laws of apodictic certainty, advances what is called praxeology.

Anyway, Mises argues persuasively that the free-market economy not only surpasses any government-planned system in terms of efficiency of productivity and output, but ultimately serves as the foundation of civilization itself. To the extent, we as a society tolerate socialistic ideology and notions of central planning, we abdicate the moral foundations for a healthy functioning of human society.

Human Action, written by Austrian-born economist Ludwig von Mises, builds on the legacy of German Austrians like Eugen von Böhm-Bawerk. To Mises, economists served a role in the political life of the nation to inform about the limits and practicalities of certain public policies. He warned of the perilous consequences that result from state intervention in the economy such as price fixing (which leads to shortages,) state ownership of enterprises (which leads to inefficiencies,) and subsidies which stifle the accumulation of private capital and cause distortions in the market economy. Beyond providing for a civil and legal framework for upholding private property rights, enforcement of contracts, deterrence and prosecution of acts of force and fraud, state intervention is seldom advantageous or efficient.

This is one of the definitive economics treatises of all time in my humble opinion. Adam Smith's 1776 Wealth of Nations treatise was certainly a good start, as it elaborated upon concepts like the division of labor and comparative advantage. Where Smith fell short was his theory of surplus labor, which Karl Marx took license with, in formulating his labor theory of value. The Austrians corrected some of the errors of classical economists like Adam Smith and David Ricardo.

Myself, I am a bigger fan of German-born Swiss economist Wilhelm Roepke, because Wilhelm delved deeper into the moral dimension of economics, and the interplay of political economy, which explains why a federal polity is desirable.
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6 of 6 people found the following review helpful
5.0 out of 5 stars Marvelous masterwork, built from the ground up, April 28, 2011
This review is from: Human Action: A Treatise on Economics (4 Volume Set) (Paperback)
Human Action is considered by many to be the definitive theoretical work for what is known as the Austrian school of economics. Reading this economic theory-of-everything was 10 weeks of brain-stretching concentration, peppered liberally with moments of personal paradigm shaking, and exciting demystification of how our actions affect each other. It's not that this book changed my life, so much as it enhanced my appreciation of the beautiful way in which life orders itself.

In the first section of this masterwork, Mises gets right down to laying a solid philosophic and epistemological foundation for the study of the social sciences. The ideas in this section could be Mises' most powerful contribution to mankind's body of ideas, and I consider it one of the most fascinating discoveries of my adult life. Mises shows the inherent difference between the nature of the subject matter of natural sciences and the social sciences. For example, it is not possible to carry out controlled social laboratory experiments in reliably revealing ways. This does not in any way de-legitimatize the study of the social sciences, but it indicates that sound understanding of them requires a more suitable methodological approach than that of the natural sciences. In order to make some sense of the virtually infinite white noise of historical data, one must have a theoretical base with which to recognize the relevant data, and use it to draw causal-links between events and phenomena. This is the context of his introduction of the basic ideas of praxeology, the study of human action.

The fundamental concepts of praxeology are that human action is performed by individuals, individual action arises from a motive or purpose, and that purpose is the attempt to satisfy some perceived need or want. By starting here, we don't have to understand where purposes come from, the complex neurological mechanisms going on, whether they are completely deterministic, or if there is some sort of mystical/spiritual aspect to desires/intentions. No matter what sort of truths are discovered or beliefs held along these lines, we still know that there is action, and action is purposeful. Mises uses this principle to build his economic theory from the ground up.

Mises illustrates that the economic models used by more mathematically-oriented economic schools of thought are based on an assumption of static resource levels, consumer demands, and technological knowledge. It is meaningless to take these models and derive impressive-looking mathematical formulas that attempt to describe reality, as reality is always unpredictable, and in flux. However, Mises doesn't dispense with these static economic models altogether, but uses them brilliantly as theoretical tools. By changing one "variable" at a time, Mises shows how a given static model relates to the dynamic unpredictability of reality, in which every action of an individual actor aggravates the static state illustrated by the model. Mises shows the respective ways in which the various types of individual and institutional actions shift the end equilibrium state within these models, which the economy is approaching (but never reaching) at any given instant of time.

As Mises would put it, economics is a value-free science. It does not aim to tell us what we should strive for. Rather, whatever it is that we strive for, it tells us the most effective way to achieve it. I don't agree with every philosophic idea that Mises presents, and found that even though I was seeing the same "trees" he was describing, my "forest" was often somewhat different. But as Mises elegantly shows, it is not necessary to be lock-step with his cosmological or social philosophy in order to understand the great practical applicability of his economic ideas to the ongoing drama of human action and exchange. Having said that, in my mind Human Action handily rebuts the major criticisms I have seen of his epistemological and economic theories, and more generally those of the Austrian school. In the face of the praxeological base of Mises' theoretical work, the criticisms leveled against them usually seem pretty shallow and lacking in any real attempt to understand the fundamental concepts of praxeology.

Five years ago if you told me I would be as fascinated by an economics book as I was by Human Action, I would have had a good hearty laugh. All through my formal schooling, I found economics a bore at best, and a racket at worst. However, I discovered Austrian economics at a time when lots of fundamental questioning had me trying to figure "everything" out, and I find the logically and philosophically rigorous approach of its major writers consistently elucidating. After reading a half-dozen or so other books from within this school of thought, a book club that I was participating in took on this treatise, much to my good fortune.

Don't make this your first step into the world of theoretical economics, but if you have an understanding of some basic philosophical concepts, have a moderate level of economic literacy, and understand the commitment of time and energy involved in absorbing this masterwork, then I highly recommend Human Action.
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Human Action: A Treatise on Economics (4 Volume Set)
Human Action: A Treatise on Economics (4 Volume Set) by Ludwig von Mises (Paperback - March 14, 2007)
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