In response to a suggestion by one of my reader’s I’m going to take a crack at this gigantic undertaking.
I’m going with the Scholar’s Edition, available free here: http://mises.org/books/humanactionscholars.pdf Everything in italics is a quote from there.
Most books have an intro worth skipping. Thanks to the wife, to the dog, to the publisher. But this intro explains why he wrote the first hundred or so pages.
Devil’s Advocate: I always wondered about that. Praxeology, methodological individualism, polylogism, ideal types, that stuff belongs in a philosophy book, not an economics book.
Smiling Dave: The intro explains that he wrote it to refute Marx. But first, let’s follow Mises as he places Economics in context, explaining where it belongs in that great map of Knowledge.
I. Economics and Praxeology
ECONOMICS is the youngest of all sciences.
[It]…opened to human science
a domain previously inaccessible
and never thought of.
The discovery of a regularity
in the sequence and interdependence of market phenomena
went beyond the limits
of the traditional system of learning.
It conveyed knowledge which could be regarded
neither as logic, mathematics,
DA: OK, so it’s a whole new field.
SD: Now Mises explains where it fits into the scheme of things.
Philosophers had long since been eager to ascertain the ends which God
or Nature was trying to realize in the course of human history.
They searched for the law of mankind’s destiny and evolution.
DA: Sounds good to me. The ultimate question. What’s it all about?
But even those thinkers whose inquiry was free from any theological tendency
failed utterly in these endeavors
because they were committed to a faulty method.
DA: Which was?
They dealt with humanity as a whole
or with other holistic concepts
like nation, race, or church.
They set up quite arbitrarily
the ends to which the behavior of such wholes
is bound to lead.
DA: A bit harsh, no? Quite arbitrarily?
SD: Let’s be generous and say he means that they faced no problems proclaiming what man’s destiny is.
That was the easy part.
But after deciding what man’s destiny is,
they ran into a brick wall explaining how he is supposed to get there.
But they could not satisfactorily answer the question
regarding what factors compelled the various acting individuals
to behave in such a way
that the goal aimed at by the whole’s inexorable evolution was attained.
SD: In other words, they understood quite clearly that a nation, race or church is not a living physical thing. A nation does not get up in the morning and drink coffee, or do anything else. It’s an abstract concept. The only ones who get anything done here on Earth are people. So if mankind is going to reach it’s destiny, or evolve into something, it’s people who are going to get it done.
DA: But nobody ever says, “How will I fulfill mankind’s destiny today?” They think about their job, their, family, their beer in the evening, but almost never about mankind’s destiny. Which means they are going to make no effort at all to get mankind closer to its destiny, whatever its destiny may be. And if nobody is trying, how will it get done?
SD: That was the brick wall they ran into. Having set up an abstraction, and a goal for that abstraction, they then realized that almost nobody is out there trying to move that abstraction closer to its goal. So they had to resort to mysticism. Some supernatural force had to take on the burden.
DA: He who lives by the abstract, dies by the abstract. By the way, what’s wrong with a little mysticism?
SD: Nothing, except that you are no closer to understanding what it’s all about than when you started. You have a mystical goal, which gets accomplished by mystical means. You have no way of proving anything, and so no way of knowing that your conclusion is correct.
So once the mysticism was out of the way, the next step was to say, “If there is no provable goal, then I’m going to go out on a limb and say there is no goal at all. Which means the world is my oyster. I can make the world have any goal I like.”
Other philosophers were more realistic. They did not try to guess the designs of Nature or God. They looked at human things from the viewpoint of government. They were intent upon establishing rules of political action, a technique, as it were, of government and statesmanship. Speculative minds drew ambitious plans for a thorough reform and reconstruction of society.
DA: Like Plato, and like the Spartans.
[A]ll were fully convinced that there was in the course of social events no such regularity and invariance of phenomena as had already been found in the operation of human reasoning and in the sequence of natural phenomena. They did not search for the laws of social cooperation because they thought that man could organize society as he pleased. If social conditions did not fulfill the wishes of the reformers, if their Utopias proved unrealizable, the fault was seen in the moral failure of man. Social problems were considered ethical problems. What was needed in order to construct the ideal society, they thought, was good princes and virtuous citizens. With righteous men any Utopia might be realized.
DA: The beatings will continue until morale improves.
SD: One classical example of this blunderous way of thinking is good old Marcus Aurelius. I mean, talk about virtue. Talk about ethics. He had it all. But he didn’t know economics. He thought that you could debase the coinage and nothing will happen. There are historians who claim that the debasement was the key reason the Roman Empire fell.
So the realists too, ran into a brick wall, without even knowing it was there:
The discovery of the inescapable interdependence of market phenomena overthrew this opinion.
DA: Can you give me an example?
SD: Sure. Many people still think that it’s not right to charge interest, or to collect rent for doing nothing but owning the land, or to raise the price of drinking water right in the middle of Hurricane Katrina, when people need water most. It’s not right, and not ethical, and what we should do is educate people to be fair, or else use the full power of govt force to make them do the right thing.
DA: Sounds pretty reasonable to me, actually.
SD: That’s because, begging your pardon, you don’t know economics. It teaches us that if you enact those laws that forbid interest, or collecting rent, or raising prices during a shortage, the consequences will be disastrous.
Bewildered, people had to face a new view of society. They learned with stupefaction that there is another aspect from which human action might be viewed than that of good and bad, of fair and unfair, of just and unjust. In the course of social events there prevails a regularity of phenomena to which man must adjust his action if he wishes to succeed. It is futile to approach social facts with the attitude of a censor who approves or disapproves from the point of view of quite arbitrary standards and subjective judgments of value. One must study the laws of human action and social cooperation as the physicist studies the laws of nature. Human action and social cooperation seen as the object of a science of given relations, no longer as a normative discipline of things that ought to be—this was a revolution of tremendous consequences for knowledge and philosophy as well as for social action.
DA: So economics came along and everybody wised up.
SD: But not wise enough, as we’ll see next time, God willing.
The other parts of this epic attempt can be found here: https://smilingdavesblog.wordpress.com/2014/07/26/human-action-smiling-dave-style-toc/