Human Action: A Treatise on Economics
By Ludwig Mises
IT GIVES me great satisfaction to see this book, handsomely printed by a distinguished publishing house, appear in its third revised edition. Two terminological remarks may be in order. First, I employ the term “liberal” in the sense attached to it everywhere in the nineteenth century and still today in the countries of continental Europe. This usage is imperative because there is simply no other term available to signify the great political and intellectual movement that substituted free enterprise and the market economy for the precapitalistic methods of production; constitutional representative government for the absolutism of kings or oligarchies; and freedom of all individuals for slavery, serfdom, and other forms of bondage…. [From the Forward to the Third Edition]
First Pub. Date
Irvington-on-Hudson, NY: The Foundation for Economic Education
Printed 1998. 4th revised edition. Foreword by Bettina Bien Greaves.
The text of this edition is under copyright. Picture of Ludwig von Mises: file photo, Liberty Fund, Inc.
- Foreword to Fourth Edition, by Bettina Bien Greaves
- Foreword to the Third Edition
- Part 1, Chapter I. Acting man
- Part 1, Chapter II. The epistemological problems of the sciences of human action
- Part 1, Chapter III. Economics and the revolt against reason
- Part 1, Chapter IV. A first analysis of the category of action
- Part 1, Chapter V. Time
- Part 1, Chapter VI. Uncertainty
- Part 1, Chapter VII. Action within the world
- Part 2, Chapter VIII. Human society
- Part 2, Chapter IX. The role of ideas
- Part 2, Chapter X. Exchange within society
- Part 3, Chapter XI. Valuation without calculation
- Part 3, Chapter XII. The sphere of economic calculation
- Part 3, Chapter XIII. Monetary calculation as a tool of action
- Part 4, Chapter XIV. The scope and method of catallactics
- Part 4, Chapter XV. The market
- Part 4, Chapter XVI. Prices
- Part 4, Chapter XVII. Indirect exchange
- Part 4, Chapter XVIII. Action in the passing of time
- Part 4, Chapter XIX. Interest
- Part 4, Chapter XX. Interest, credit expansion, and the trade cycle
- Part 4, Chapter XXI. Work and wages
- Part 4, Chapter XXII. The nonhuman original factors of production
- Part 4, Chapter XXIII. The data of the market
- Part 4, Chapter XXIV. Harmony and conflict of interests
- Part 5, Chapter XXV. The imaginary construction of a socialist society
- Part 5, Chapter XXVI. The impossibility of economic calculation under socialism
- Part 6, Chapter XXVII. The government and the market
- Part 6, Chapter XXVIII. Interference by taxation
- Part 6, Chapter XXIX. Restriction of production
- Part 6, Chapter XXX. Interference with the structure of prices
- Part 6, Chapter XXXI. Currency and credit manipulation
- Part 6, Chapter XXXII. Confiscation and redistribution
- Part 6, Chapter XXXIII. Syndicalism and corporativism
- Part 6, Chapter XXXIV. The economics of war
- Part 6, Chapter XXXV. The welfare principle versus the market principle
- Part 6, Chapter XXXVI. The crisis of interventionism
- Part 7, Chapter XXXVII. The nondescript character of economics
- Part 7, Chapter XXXVIII. The place of economics in learning
- Part 7, Chapter XXXIX. Economics and the essential problems of human existence
Part 1, Chapter
1. Time as a Praxeological Factor
THE notion of change implies the notion of temporal sequence. A rigid, eternally immutable universe would be out of time, but it would be dead. The concepts of change and of time are inseparably linked together. Action aims at change and is therefore in the temporal order. Human reason is even incapable of conceiving the ideas of timeless existence and of timeless action.
He who acts distinguishes between the time before the action, the time absorbed by the action, and the time after the action has been finished. He cannot be neutral with regard to the lapse of time.
Logic and mathematics deal with an ideal system of thought. The relations and implications of their system are coexistent and interdependent. We may say as well that they are synchronous or that they are out of time. A perfect mind could grasp them all in one thought. Man’s inability to accomplish this makes thinking itself an action, proceeding step by step from the less satisfactory state of insufficient cognition to the more satisfactory state of better insight. But the temporal order in which knowledge is acquired must not be confused with the logical simultaneity of all parts of an aprioristic deductive system. Within such a system the notions of anteriority and consequence are metaphorical only. They do not refer to the system, but to our action in grasping it. The system itself implies neither the category of time nor that of causality. There is functional correspondence between elements, but there is neither cause nor effect.
What distinguishes epistemologically the praxeological system from the logical system is precisely that it implies the categories both of time and of causality. The praxeological system too is aprioristic and deductive. As a system it is out of time. But change is one of its elements. The notions of sooner and later and of cause and effect are among its constituents. Anteriority and consequence are essential concepts of praxeological reasoning. So is the irreversibility of events. In the frame of the praxeological system any reference to functional correspondence is no less metaphorical and misleading than is the
2. Past, Present, and Future
It is acting that provides man with the notion of time and makes him aware of the flux of time. The idea of time is a praxeological category.
Action is always directed toward the future; it is essentially and necessarily always a planning and acting for a better future. Its aim is always to render future conditions more satisfactory than they would be without the interference of action. The uneasiness that impels a man to act is caused by a dissatisfaction with expected future conditions as they would probably develop if nothing were done to alter them. In any case action can influence only the future, never the present that with every infinitesimal fraction of a second sinks down into the past. Man becomes conscious of time when he plans to convert a less satisfactory present state into a more satisfactory future state.
For contemplative meditation time is merely duration, “la durée pure, dont l’écoulement est continu, et où l’on passe, par gradations insensibles, d’un état à l’autre: Continuité réellement vécue.”
*59 The “now” of the present is continually shifted to the past and is retained in the memory only. Reflecting about the past, say the philosophers, man becomes aware of time.
*60 However, it is not recollection that conveys to man the categories of change and of time, but the will to improve the conditions of his life.
Time as we measure it by various mechanical devices is always past, and time as the philosophers use this concept is always either past or future. The present is, from these aspects, nothing but an ideal boundary line separating the past from the future. But from the praxeological aspect there is between the past and the future a real extended present. Action is as such in the real present because it utilizes the instant and thus embodies its reality.
*61 Later retrospective
The present qua duration is the continuation of the conditions and opportunities given for acting. Every kind of action requires special conditions to which it must be adjusted with regard to the aims sought. The concept of the present is therefore different for various fields of action. It has no reference whatever to the various methods of measuring the passing of time by spatial movements. The present encloses as much of the time passed away as still is actual, i.e., of importance for acting. The present contrasts itself, according to the various actions one has in view, with the Middle Ages, with the nineteenth century, with the past year, month, or day, but no less with the hour, minute, or second just passed away. If a man says: Nowadays Zeus is no longer worshipped, he has a present in mind other than that the motorcar driver who thinks:
Now it is still too early to turn.
As the future is uncertain it always remains undecided and vague how much of it we can consider as
now and present. If a man had said in 1913: At present—now—in Europe freedom of thought is undisputed, he would have not foreseen that this present would very soon be a past.
3. The Economization of Time
Man is subject to the passing of time. He comes into existence, grows, becomes old, and passes away. His time is scarce. He must aconomize it as he economizes other scarce factors.
The economization of time has a peculiar character because of the uniqueness and irreversibility of the temporal order. The importance of these facts manifests itself in every part of the theory of action.
Only one fact must be stressed at this point. The economization of time is independent of the economization of economic goods and services. Even in the land of Cockaigne man would be forced to economize time, provided he were not immortal and not endowed
4. The Temporal Relation Between Actions
Two actions of an individual are never synchronous; their temporal relation is that of sooner and later. Actions of various individuals can be considered as synchronous only in the light of the physical methods for the measurement of time. Synchronism is a praxeological notion only with regard to the concerted efforts of various acting men.
A man’s individual actions succeed one another. They can never be effected at the same instant; they can only follow one another in more or less rapid succession. There are actions which serve several purposes at one blow. It would be misleading to refer to them as a coincidence of various actions.
People have often failed to recognize the meaning of the term “scale of value” and have disregarded the obstacles preventing the assumption of synchronism in the various actions of an individual. They have interpreted a man’s various acts as the outcome of a scale of value, independent of these acts and preceding them, and of a previously devised plan whose realization they aim at. The scale of value and the plan to which duration and immutability for a certain period of time were attributed, were hypostasized into the cause and motive of the various individual actions. Synchronism which could not be asserted with regard to various acts was then easily discovered in the scale of value and in the plan. But this overlooks the fact that the scale of value is nothing but a constructed tool of thought. The scale of value manifests itself only in real acting; it can be discerned only from the observation of real acting. It is therefore impermissible to contrast it with real acting and to use it as a yardstick for the appraisal of real actions.
It is no less impermissible to differentiate between rational and allegedly irrational acting on the basis of a comparison of real acting with earlier drafts and plans for future actions. It may be very interesting
The attempt has been made to attain the notion of a nonrational action by this reasoning: If
a is preferred to
a should be preferred to
c. But if actually
c is preferred to
a, we are faced with a mode of acting to which we cannot ascribe consistency and rationality.
*63 This reasoning disregards the fact that two acts of an individual can never be synchronous. If in one action
a is preferred to
b and in another action
c, it is, however short the interval between the two actions may be, not permissible to construct a uniform scale of value in which
c. Nor is it permissible to consider a later third action as coincident with the two previous actions. All that the example proves is that value judgments are not immutable and that therefore a scale of value, which is abstracted from various, necessarily nonsynchronous actions of an individual, may be self-contradictory.
One must not confuse the logical concept of consistency (viz., absence of contradiction) and the praxeological concept of consistency (viz., constancy or clinging to the same principles). Logical consistency has its place only in thinking, constancy has its place only in acting.
Constancy and rationality are entirely different notions. If one’s valuations have changed, unremitting faithfulness to the once espoused principles of action merely for the sake of constancy would not be rational but simply stubborn. Only in one respect can acting be constant: in preferring the more valuable to the less valuable. If the valuations change, acting must change also. Faithfulness, under changed conditions, to an old plan would be nonsensical. A logical system must be consistent and free of contradictions because it implies the coexistence of all its parts and theorems. In acting, which is necessarily in the temporal order, there cannot be any question of such consistency. Acting must be suited to purpose, and purposefulness requires adjustment to changing conditions.
Presence of mind is considered a virtue in acting man. A man has presence of mind if he has the ability to think and to adjust his acting
When the speculator goes to the stock exchange, he may sketch a definite plan for his operations. Whether or not he clings to this plan, his actions are rational also in the sense which those eager to distinguish rational acting from irrational attribute to the term “rational.” This speculator in the course of the day may embark upon transactions which an observer, not taking into account the changes occurring in market conditions, will not be able to interpret as the outcome of constant behavior. But the speculator is firm in his intention to make profits and to avoid losses. Accordingly he must adjust his conduct to the change in market conditions and in his own judgment concerning the future development of prices.
However one twists things, one will never succeed in formulating the notion of “irrational” action whose “irrationality” is not founded upon an arbitrary judgment of value. Let us suppose that somebody has chosen to act inconstantly for no other purpose than for the sake of refuting the praxeological assertion that there is no irrational action. What happens here is that a man aims at a peculiar goal, viz., the refutation of a praxeological theorem, and that he accordingly acts differently from what he would have done otherwise. He has chosen an unsuitable means for the refutation of praxeology, that is all.
Matière et mémoire (7th ed. Paris, 1911), p. 205.
Jahrbuch für Philosophie und Phänomenologische Forschung, IX (1928), 391 ff.; A. Schütz,
loc. cit., pp. 45 ff.
op. cit., p. 152.
Economica, XIII, 390.
The Common Sense of Political Economy, ed. Robbins (London, 1933), I, 32 ff.; L. Robbins,
An Essay on the Nature and Significance of Economic Science (2d ed. London, 1935), pp. 91 ff.