7. Carl Menger, Principles of Economics, trans. by James Dingwall (New York: New York University Press, [1871] 1976).
8. Eugen von Böhm-Bawerk, “Grundzüge der Theorie des wirtschaftlichen Güterwertes,” Jahrbücher fur Nationalökonomie und Statistik 13 (1886), 1–82, 477–541; John Bates Clark, The Distribution of Wealth: A Theory of Wages, Interest, and Profits (New York: Augustus M. Kelley, [1899] 1965); Philip H. Wicksteed, The Alphabet of Economic Sense, Pt. I: Elements of the Theory of Value or Worth (London: Macmillan, 1888); Frank A. Fetter, Economic Principles (New York: The Century Co., 1915); Herbert J. Davenport, The Economics of Enterprise (New York: Augustus M. Kelley, [1913] 1968).
9. The two economists for whom Schumpeter felt the “closest affinity” were Walras and Wieser; see Fritz Machlup, “Joseph Schumpeter's Economic Methodology,” in idem., Methodology of Economics and Other Social Sciences (New York: Academic Press, 1978), p. 462.
10. Schumpeter's translation of the title: The Nature and Essence of Theoretical Economics (Munich and Leipzig: Duncker & Humblot, 1908). This book coins the phrase “methodological individualism.”
11. Selected Economic Writings of Oskar Morgenstern, ed. Andrew Schotter (New York: New York University Press, 1976), p. 196.
12. Earlene Craver, “The Emigration of Austrian Economists,” History of Political Economy, 18 (Spring 1987), 1–30.
13. Gustav Cassel, The Theory of Social Economy (2d ed. New York Harcourt, Brace and Company, 1932). As Mises wrote, “The decade-long neglect of theoretical studies had led to the remarkable result that the German public must look to a foreigner, the Swede Gustav Cassel, for a principled explanation of the problems of economic life.” Ludwig von Mises, “Carl Menger and die Austrian School of Economics,” Austrian Economics: An Anthology, ed. Bettina Bien Greaves (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1996), p. 52.
14. Hayek himself explicitly distinguished between “the two original branches of the Austrian School,” the Böhm-Bawerkian and the Wieserian, and characterized himself as an adherent of the latter branch. See F.A. Hayek, “Coping with Ignorance” in idem, Knowledge, Evolution, and Society (London: Adam Smith Institute, 1983), pp. 17–18; and The Collected Works of FA. Hayek, vol. 4: The Fortunes of Liberalism: Essays on Austrian Economics and the Ideal of Freedom, ed. Peter G. Klein (Chicago: University of Chicago Press, 1992), p. 157.
15. See F. A. Hayek, “Economics and Knowledge,” in idem, Individualism and Economic Order (Chicago: Henry Regnery Company, [1948] 1972), pp. 33–56.
16. See Bruna Ingrao and Giorgio Israel, The Invisible Hand: Economic Equilibrium in the History of Science (Boston: MIT Press, 1990), for a perceptive description of Hayek's crucial role in the early development of die Anglo-American version of general equilibrium theory (pp. 232–235). Hayek himself regarded die analysis of value theory in Hick's Value and Capital in terms of marginal rates of substitution and indifference curves as “the ultimate statement of more than a half a century's discussion in the tradition of the Austrian School.” The Fortunes of Liberalism, pp. 53–54.
17. See Joseph T. Salerno, “The Place of Human Action in the History of Economic Thought,” Quarterly Journal of Austrian Economics, 2, no. 1 (1999).
18. See Bettina Bien Greaves and Robert W. McGee, comps., Mises: An Annotated Bibliography (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1993), pp. 41–45, for a listing of Miscs's published and unpublished writings in these years.
19. “My Contributions to Economic Theory,” in Mises, Planning for Freedom and Sixteen Other Essays and Addresses (4th ed. South Holland, Ill.: Libertarian Press, 1980), pp. 230–231.
20. Notes and Recollections, trans. by Hans F. Sennholz (South Holland, 111.: Libertarian Press, 1978), p. 112.
21. Ibid.
22. The Theory of Money and Credit; Nation, State, and Economy, trans. by Leland B. Yeager (New York: New York University Press, [1919] 1983); Socialism: An Economic and Sociological Analysis, trans. by J. Kahane (Indianapolis, Ind.: Liberty Classics, [1922] 1981); Liberalism: In the Classical Tradition, trans. by Ralph Raico(Irvington-on-Hudson, N.Y.: Foundation for Economic Education, [1927] 1985); “Monetary Stabilization and Cyclical Policy,” in Mises, On the Manipulation of Money and Credit; A Critique of Interventionism, trans. by Hans F. Sennholz (New Rochelle, N.Y.: Arlington House, [1929] 1977); Epistemological Problems of Economics, trans. by George Reisman (New York: New York University Press, [1933] 1976).
23. Which included such outstanding scholars as Gottfried von Haberler, F.A. Hayek, Felix Kaufmann, Fritz Machlup, Oskar Morgenstern, Paul N. Rosenstein-Rodan, Alfred Schütz, Richard von Strigl, and Erich Voegelin.
24. (Munich: Philosophia Verlag, [1940] 1980).
25. Long thought to be lost, the papers were rediscovered in 1991 in a formerly-secret Soviet archive in Moscow. The initial discoverers were two German researchers associated with a German labor union foundation; see Götz Aly and Susanne Hein, Das zentrale Staatsarchiv in Moskau (Düsseldorf, Germany: Hans-Blöckler-Sriftung, 1993). Following up on their work were two Austrian historians Gerhard Jagschitz and Stefan Karner, Beuteakten aus Österreich: Der Osterreichbestand im russischen “Sonderarchiv” Moskau (Graz, Austria: Ludwig Boltzmann-Institut, 1996).
26. Mises's Erinnerungen was published posthumously (Stuttgart, Germany: Gustav Fischer, 1978), p. 88; translated as Notes and Recollections.
27. Only two members of the former Mises-Kreis reviewed the book, Hayek (Economic Journal, April 1941) and Walter Sulzbach (Journal of Social Philosophy and Jurisprudence, October 1941). Greaves and McGee, Mises: An Annotated Bibliography, list only two other reviews, one by Hans Honegger in a Swiss newspaper, and the other by Frank H. Knight (Economica, November 1941).
28. As the result of the continued success of Human Action, forty years after its initial publication Mises's Nationalökonomie was reprinted (Munich: Philosophia, 1980). Unlike the original, the reprint received widespread attention, including reviews in the two leading German language newspapers, the Frankfurter Allgemeine Zeitung (by Wilhelm Seuss) and die Neue Zuercher Zeitung (by Egon Tuchtfeldt).
29. Private correspondence to Eugene Davidson, February 12, 1945.
30. Private correspondence to Eugene Davidson, February 13, 1945.
31. Private correspondence to Eugene Davidson, March 3, 1945.
32. Private correspondence to Eugene Davidson, February 22,1945.
33. Private correspondence to Eugene Davidson, January 23, 1945.
34. Private correspondence to Eugene Davidson, January 29, 1945.
35. Private correspondence to Eugene Davidson, February 9, 1945.
36. Mises suggested the following as possible tides: (1) Economics: A Treatise on Human Action, (2) Man and Reality: A Treatise on Human Action, (3) Means and Ends: A Treatise on Economics, (4) Man in the Pursuit of a Better Life: A Treatise on Economics, and (5) Human Action: A Treatise on Economics. Next to this final suggestion, Davidson wrote “I like this” but worried that it “doesn't make the subject immediately clear.”
37. (New York: Atheneum, [1947] 1967).
38. (Auburn, Ala.: Ludwig von Mises Institute [1962] 1993).
39. (New York: Richardson and Snyder, [1963] 1983); also, Power and Market (Kansas City: Sheed Andrews and McMeel, 1970); The Logic of Action (Brookfield, Vt.: Edward Èlgar, 1997); see David Gordon, Murray N. Rothbard: A Scholar In Defense of Freedom (Auburn, Ala.: Ludwig von Mises Institute, 1986).
40. Rothbard's efforts culminated in a monumental two-volume history of economic thought, Economic Thought Before Adam Smith, vol. 1 and Classical Economics, vol. 2 (Brookfield, Vt.: Edward Elgar, 1995).
41. As further evidence, Human Action has been translated into Spanish, French, Italian, Chinese, Portuguese, Japanese, and Rumanian.
42. For a sample of this output, see The Austrian Economics Study Guide (Auburn, Ala.: Ludwig von Mises Institute, 1998; and continuously updated).
43. See, for instance, Rothbard, Man, Econo
my, and State, pp. 498–501; Hans-Hermann Hoppe, “On Certainty and Uncertainty, Or: How Rational Can Our Expectations Be?,” Review of Austrian Economics, 10, no. 1 (1997), 49–78.
44. Nationalökonomie, p. 268.
45. See Richard von Mises, Probability, Statistics and Truth (New York: Dover, 1957). The first edition appeared in 1928 in German (Julius Springer Verlag).
46. See Hans-Hermann Hoppe and Jeffrey M. Herbener, “The Story of Human Action: 1940–1966 “Quarterly Journal of Austrian Economics, 2, no. 1 (1999).
47. Thus, for instance, Nationalökonomie contains in its first two chapters several references to Immanuel Kant and Heinrich Rickert, as well as references to Franz Brentano, Wilhelm Windelband, Ernst Mach, Fritz Mauthner, and Hans Rothacker which were omitted in Human Action.
48. Similarly, Nationalökonomie's chapter Die Idee im Handeln contains references to Hendrik de Man, Hans Delbrück, Carl Menger, Hans Keiseren, Ludwig Gumplowicz, Gustav Ratzenhofer, Joseph-Arthur Gobineau, and Houston Chamberlain not to be found in the corresponding Chapters III and IX of Human Action.
49. “Capitalist Manifesto,” Saturday Review of Literature (September 24, 1949), 31–32.
50. “In Defense of Laissez-Faire,” New York Times Book Review (October 30, 1949).
51. “Dogmatic Liberalism,” Manchester Guardian (December 30, 1949), 3.
52. “The Science of Human Action,” Economica (November 1951), 412–1–27.
53. American Economic Review, 40, no. 3 Qune 1950), 418–422; 41, no. 1 (March 1951), 181–190; 41, no. 5 (December 1951), 943–946.
54. The mystery of who precisely was responsible for mangling the treatise has never been solved. Margit von Alises, discussing the matter in her memoirs, offers this: “the villain in a Perry Mason story is easy to detect. It is always the one whom you suspect least and whom the author treats with a certain indulgent negligence.” My Years with Ludwig von Mises (Cedar Falls, Iowa: Center for Futures Education, [1976] 1984), p. 111.
55. The “fourth revised edition” (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1996) is the third edition with an expanded index.
56. Murray N. Rothbard, “New Deal Monetary System,” Watershed of Empire, ed. Leonard Liggio (Colorado Springs, Colo.: Ralph Myles, 1972), pp. 43–48.
57. Additions in later editions not discussed here include XVI.6, pars. 5–6 and XXVII.6 “Corruption.” As further evidence of a general thinning of language that takes place in later editions, consider that on page 566, in a discussion of the manner in which busts follow artificial booms, the last sentence of the continued paragraph (“They are inevitable“) was removed.
58. Mises conveyed this view in private correspondence, and during his New York seminar, where he was frequently asked about possible differences with Rothbard following the release of Man, Economy, and State (Bettina Bien Greaves's notes, privately held, 1962–1965).
59. This is consistent with Mises's Liberalism: “Human society cannot do without the apparatus of the state, but the whole of mankind's progress has had to be achieved against the resistance and opposition of the state and its power of coercion. No wonder that all who have had something new to offer humanity have had nothing good to say of the state or its laws!” (San Francisco: Cobden Press, [1927] 1985), p. 58.
60. “No people and no part of a people shall be held against its will in a political association that it does not want.” Nation, State, and Economy (New York University Press, [1919] 1983), p. 65.
61. For Mises, the only possible objections to unlimited secession were practical or technical, not principled concerns. Liberalism, pp. 109–110.
62. Nationalökonomie, pp. 725–728.
63. Jörg Guido Hülsmann and David Gordon also contributed to this Introduction.
FOREWORD
FROM the fall of 1934 until the summer of 1940 I had the privilege of occupying the chair of International Economic Relations at the Graduate Institute of International Studies in Geneva, Switzerland. In the serene atmosphere of this seat of learning, which two eminent scholars, Paul Mantoux and William E. Rappard, had organized and continued to direct, I set about executing an old plan of mine, to write a comprehensive treatise on economics. The book— Nationalökonomie, Theorie des Handelns and Wirtschaftern —was published in Geneva in the gloomy days of May, 1940.
The present volume is not a translation of this earlier book. Although the general structure has been little changed, all parts have been rewritten.
To my friend Henry Hazlitt I wish to offer my very special thanks for his kindness in reading the manuscript and giving me most valuable suggestions about it. I must also gratefully acknowledge my obligations to Mr. Arthur Goddard for linguistic and stylistic advice. I am furthermore deeply indebted to Mr. Eugene A. Davidson, Editor of the Yale University Press, and to Mr. Leonard E. Read, President of the Foundation for Economic Education, for their kind encouragement and support.
I need hardly add that none of these gentlemen is either directly or indirectly responsible for any opinions contained in this work.
LUDWIG VON MISES
New York, February, 1949.
Acknowledgments
Permission has been granted by the publishers to use quotations from the following works: George Santayana, Persons and Places (Charles Scribner's Sons); William James, The Varieties of Religious Experience (Longmans, Green & Co.); Harley Lutz, Guideposts to a Free Economy (McGraw-Hill Book Company); Committee on Postwar Tax Policy, A Tax Program for a Solvent America (The Ronald Press Company).
Contents
Introduction
1 Economics and Praxeology
2 The Epistemological Problem of a General Theory of Human Action
3 Economic Theory and the Practice of Human Action
4 Résumé
PART ONE HUMAN ACTION
Chapter I. Acting Man
1 Purposeful Action and Animal Reaction
2 The Prerequisites of Human Action
On Happiness
On Instincts and Impulses
3 Human Action as an Ultimate Given
4 Rationality and Irrationality; Subjectivism and Objectivity of Praxeological Research
5 Causality as a Requirement of Action
6 The Alter Ego
On the Serviceableness of Instincts
The Absolute End
Vegetative Man
Chapter II. The Epistemological Problems of the Sciences of Human Action
1 Praxeology and History
2 The Formal and Aprioristic Character of Praxeology
The Alleged Logical Heterogeneity of Primitive Man
3 The A Priori and Reality
4 The Principle of Methodological Individualism
I and We
5 The Principle of Methodological Singularism
6 The Individual and Changing Features of Human Action
7 The Scope and the Specific Method of History
8 Conception and Understanding
Natural History and Human History
9 On Ideal Types
10 The Procedure of Economics
11 The Limitations on Praxeological Concepts
Chapter III. Economics and the Revolt Against Reason
1 The Revolt Against Reason
2 The Logical Aspect of Polylogism
3 The Praxeological Aspect of Polylogism
4 Racial Polylogism
5 Polylogism and Understanding
6 The Case for Reason
Chapter IV. A First Analysis of the Category of Action
1 Ends and Means
2 The Scale of Value
3 The Scale of Needs
4 Action as an Exchange
Chapter V. Time
1 The Temporal Character of Praxeology
2 Past, Present, and Future
3 The Economization of Time
4 The Temporal Relation Between Actions
Chapter VI. Uncertainty
1 Uncertainty and Acting
&nbs
p; 2 The Meaning of Probability
3 Class Probability
4 Case Probability
5 Numerical Evaluation of Case Probability
6 Betting, Gambling, and Playing Games
7 Praxeological Prediction
Chapter VII. Action Within the World
1 The Law of Marginal Utility
2 The Law of Returns
3 Human Labor as a Means
Immediately Gratifying Labor and Mediately Gratifying Labor
The Creative Genius
4 Production
PART TWO ACTION WITHIN THE FRAMEWORK OF SOCIETY
Chapter VIII. Human Society
1 Human Cooperation
2 A Critique of the Holistic and Metaphysical View of Society
Praxeology and Liberalism
Liberalism and Religion
3 The Division of Labor
4 The Ricardian Law of Association
Current Errors Concerning the Law of Association
5 The Effects of the Division of Labor
6 The Individual Within Society
Human Action: A Treatise on Economics Page 3