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Summary: The Bible of Economics
Review: A masterful volume. The breadth and scope of this work leaves one breathless. Oh, if only the world would read and understand this - we'd all be better off...
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Summary: Utterly amazing; this book may change your life
Review: 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.
Rating:
Summary: Comprehensive and Prophetic
Review: 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.
Rating:
Summary: Excellent
Review: Simply the best, most comprehensive study of human action ever recorded. It is grounded in rational axioms and constructs an encompassing worldview around them.
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Summary: Human action, not plans, make the world go 'round
Review: Starting from two irrefutable premises 1) Humans act, 2) They act in order to improve their current condition, Mises builds an astounding edifice that demonstrates the supremacy of what is called laissez faire capitalism. Only each individual knows how best to meet his or her own needs. All the other isms which require or depend on government intervention to one degree or another are doomed to ultimately fail because of this. This is not an easy book to read but worth the effort. Mises smashes what passes for economic reasoning by most journalists, lawyers, and politicians through the use of logic based on sound economic theory.
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Summary: Speaking With the Gods
Review: That is surely where Von Mises is - conversing amiably with the gods in his masterful, rational, clear and refined manner. The man was a wonder himself. From the classically liberal European tradition of the turn of the century, he fought valiantly to establish economics on a rational basis with rules, laws, and theorems - all based on "human action". He builds an elaborate system from axioms to dizzying heights of eloquent logic. He is important not because he championed material wealth - Marx did that - but for his recognition that this wealth rested on an edifice composed by people acting in their own self interest. Despite his dry style and subject matter, his writings were paeans of praise for humanity's soul. His theories (naturally) involved a synthesis with other arenas, notably philosophy, politics, morality, government, and aesthetics. It is on the subject of human freedom that he made an indelible mark by demonstrating that laissez-faire capitalism is not only the best in terms of economics but also by far the one that bequeaths the greatest freedom to the individual. It has been stated before - and was repeated in "Human Action" - there is a direct correlation between a nation's economic freedom and its political freedom. It is no accident that the US, Europe and some Southeast Asian nations are not only the richest in terms of material wealth but also in terms of human potential. What astonishes one are the public pronouncements from those who willingly choose systems that limit both wealth and freedom. While professional nitwits continue to blast Western culture, millions risk life and limb just to reach our shore. Am I the only one noticing the one-way flow of traffic from such vacation paradises as Cuba, Vietnam, China, Sudan and Syria? This book should be required reading in all high school - but then that would be a coercive action that the author would disdain.
Rating:
Summary: Absolute Brilliance
Review: That much can be said of this great work. I will now address Walt Byars' criticisms of the Positive Theory of Time Preference (PTTP). Byars' first argument seems to be that since external factors affect utility, they "override" time preference. His second is that since external factors change from time to time, this supposedly negates the PTTP. Or to use his words, "Since we can't observe a state in which all else is equal from time to time, we can't use the fact that we observe humans acting as a basis for proving we all have a positive rate of time preference." First, the contention that external factors "override" time preference can be easily dealt away with when we consider that both external factors and time preference are part of utility. If you were aware that something in the future will prevent your enjoying the hamburger now, say an arrangement, the negative effect of that "external factor" would take away from the utility of present consumption and what positive benefits were gained by the virtue of it being a present satisfaction. Time preference would therefore be a deciding factor in utility only if it outweighs the external factors. Regardless, this justifies rather than negates the actual *structure* of the PTTP (and preferences in general) as "external" factors are part of utility and should be counted as such. In any case it's all curtains for the external-factors-override-time-preference argument (since they are *part* of utility, and therefore time preference). His second notion that "we can't observe a state in which all else is equal from time to time" is equivalent to (since 'all else' is part of utility) "we can't observe a state where *utility* is equal from time to time." Ignoring the fact that this would prove nothing insofar as it also entails a rejection of *all* value scales (external and time factors counting as part of utility after all, and all value scales being composed of comparable utilities), it is still just as patently absurd. The first question that comes to mind is, well, observed by whom? "We" apparently include people who may be acting out of uncertainty, indifference to "all else," unawareness of "all else," or even those who are delusional and "aware" of non-existent external factors! By "observe," Byars seems to be suggesting an objective observer. But this is also absurd -- people's value scales are not omniscient, and are often unaffected by "objective" external changes. Man judges and acts by a priori contentions of his own -- faulty or no. An example of this would be a person choosing to buy an item now while being unaware of a sale next week. (Byars then gives the hypothetical scenario that if you were given the choice of either eating a hamburger now or in an hour your tastes might change to be more favorable towards pizza in an hour. This alleged 'refutation' is invalid mainly because it is impossible to know for certain what the future would be, thus creating a state of uncertainty. If you had to choose between eating a hamburger now or in an hour, the fact that you don't know what your tastes will be in an hour will compel you to eat the hamburger now while it can be enjoyed. If in an hour your tastes change, this future occurrence would not have affected your decision when you were unaware of the outcome, and therefore would not have affected the PTTP, a factor shaping *current* decisions based on current knowledge. What is significant here is therefore not the alleged "objective" consequence of a future event, but your *subjective* ignorance of its potential existence.)
Rating:
Summary: Everyone should read
Review: The Wall Street Jounral said it best with "-ought be on the shelf of every thinking man".
Rating:
Summary: monumental.
Review: 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.
Rating: 
Summary: Purely descriptive...
Review: This book is a non-quantitative, non-analytical, purely descriptive overview of economics as given by one of the main figures in the 'Austrian' school of economics. The author does not hesitate to denounce those who would seek to bring in mathematics and statistics in to the study of economics, and he makes it clear that introducing these tools is a meaningless endeavor. It is interesting to think about the author's statements in the context of the Nobel prizes in economics this year, as they were given to honor the use of psychological modeling and empirical studies in economics. What these individuals have shown is that one can indeed quantity the subjective factors behind economic behavior. The author of this book would be find their contributions completely vacuous, based on his statements in this book. Indeed, the author holds that "identical events result sometimes in different human responses, and different external events produce sometimes the same human response. We do not know why". This is a particularly odd statement, as the author is asserting implicitly that he has an ability or a tool for distinguishing one event from another, and for judging when they are the same. Is the author asserting the existence of a metric, a purely quantitative notion, for distinguishing between events? This would go against another statement he makes elsewhere, namely that "no such constant relations exist in the field of human action". And later, he states that "in the field of economics, no constant relations, and consequently no measurement is possible." If what he is saying is true, then it would definitely be impossible to label one event as being identical to another, nor in a "quantitative" nor "qualitative" sense. Identical events would definitely stand in a constant relation to one another. The author attempts to categorize his approach to economics, which he labels as a "praxeological system", as different from a "logical system", the latter of which does not include notions of time and causality. But logical systems that contain these notions have been constructed and have been studied by a number of individuals, going by the name of deontic logic. And just because "events are irreversible", as the author (only partially) correctly observes, does not mean that historical or economic events cannot be categorized and studied to the extent that future events can be predicted (albeit within a certain tolerance) using this information. In fact, it is sometimes astounding to the degree that one can do this, particulary in the the use of artificial intelligence for economic time series prediction. Irreversibility can be dealt with, given the patience and sound mathematical tools. The notions of probability that the author holds to in the book are also interesting (and somewhat troubling). One is called "class probability" and is the familiar frequentist notion. The other is called "case probability", and is apparently the one that the author favors in the study of economics. I thought when reading the book that case probability would perhaps be a Bayesian notion, since he states that it deals with the incompleteness of our knowledge. But alas, the author states that "it is not open to any kind of numerical evaluation". His notion of case probability could perhaps however be compared with the field of inductive logic programming in artificial intelligence, wherein one is given a certain amount of "background knowledge" and positive examples and attempts to find the reasons or "hypotheses" for obtaining this knowledge without generating any "negative examples". All of this is done in a purely qualitative framework. Game theory has generated much research in economics, and there are fine examples of just how fruitful this approach can be. The author however does not hold any place for game theory in economics, stating that "there is not the slightest analogy between playing games and the conduct of business within a market society". This is an outstanding statement, given the many examples of just how game theory can in some instances exactly model the business arrangements among a certain group of individuals. Examples of this include QoS provisioning in telecommunication networks and wireless bandwidth allocation. The theory of noncooperative games has in this case been extremely helpful in bargaining and allocation strategies in the business environment. Noncooperation does not by result automatically in the "social disintegration" of the participants, as claimed by the author. With the proper mathematical tools they can instead reach a level mutually satisfactory to all. "Human Action" should be read as perhaps a warm-up to the study of economics. Anyone genuinely interested in the dynamics of a capitalist economy however will not find a sound and scientific study of such in this book.
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