Human Action: A Treatise on Economics
Page 125
The semantic confusion in the discussion of the problems concerned is due to an inaccurate use of terms on the part of many economists. An economist investigates whether a measure a can bring about the result p for the attainment of which it is recommended, and finds that a does not result in p but in g, an effect which even the supporters of the measure a consider undesirable. If this economist states the outcome of his investigation by saying that a is a bad measure, he does not pronounce a judgment of value. He merely says that from the point of view of those aiming at the goal p, the measure a is inappropriate. In this sense the free-trade economists attacked protection. They demonstrated that protection does not, as its champions believe, increase but, on the contrary, decreases the total amount of products, and is therefore bad from the point of view of those who prefer an ampler supply of products to a smaller. It is in this sense that economists criticize policies from the point of view of the ends aimed at. If an economist calls minimum wage rates a bad policy, what he means is that its effects are contrary to the purpose of those who recommend their application.
From the same point of view praxeology and economics look upon the fundamental principle of human existence and social evolution, viz., that cooperation under the social division of labor is a more efficient way of acting than is the autarkic isolation of individuals. Praxeology and economics do not say that men should peacefully cooperate within the frame of societal bonds; they merely say that men must act this way if they want to make their actions more successful than otherwise. Compliance with the moral rules which the establishment, preservation, and intensification of social cooperation require is not seen as a sacrifice made to a mythical entity, but as the recourse to the most efficient methods of action, as a price expended for the attainment of more highly valued returns.
It is against this substitution of an autonomous, rationalistic and voluntaristic ethics for the heteronomous doctrines both of intuitionism and of revealed commandments that the united forces of all antiliberal schools and dogmatisms direct the most furious attacks They all blame the utilitarian philosophy for the pitiless austerity of its description and analysis of human nature and of the ultimate springs of human action. It is not necessary to add anything more to the refutation of these criticisms which every page of this book provides. Only one point should be mentioned again, because on the one hand it is the acme of the doctrine of all contemporary pied pipers and on the other hand it offers to the average intellectual a welcome excuse to shun the painstaking discipline of economic studies.
Economics, it is said, in its rationalistic prepossessions assumes that men aim only or first of all at material well-being. But in reality men prefer irrational objectives to rational ones. They are guided more by the urge to realize myths and ideals than by the urge to enjoy a higher standard of living.
What economics has to answer is this:
1. Economics does not assume or postulate that men aim only or first of all at what is called material well-being. Economics, as a branch of the more general theory of human action, deals with all human action, i.e., with man's purposive aiming at the attainment of ends chosen, whatever these ends may be. To apply the concept rational or irrational to the ultimate ends chosen is nonsensical. We may call irrational the ultimate given, viz., those things that our thinking can neither analyze nor reduce to other ultimately given things. Then every ultimate end chosen by any man is irrational. It is neither more nor less rational to aim at riches like Croesus than to aim at poverty like a Buddhist monk.
2. What these critics have in mind when employing the term rational ends is the desire for material well-being and a higher standard of living. It is a question of fact whether or not their statement is true that men in general and our contemporaries especially are driven more by the wish to realize myths and dreams than by the wish to improve their material well-being. Although no intelligent being could fail to give the correct answer, we may disregard the issue. For economics does not say anything either in favor of or against myths. It is perfectly neutral with regard to the labor-union doctrine, the credit-expansion doctrine and all such doctrines as far as these may present themselves as myths and are supported as myths by their partisans. It deals with these doctrines only as far as they are considered doctrines about the means fit for the attainment of definite ends. Economics does not say labor unionism is a bad myth. It merely says it is an inappropriate means of raising wage rates for all those eager to earn wages. It leaves it to every man to decide whether the realization of the labor-union myth is more important than the avoidance of the inevitable consequences of labor-union policies.
In this sense we may say that economics is apolitical or nonpolitical, although it is the foundation of politics and of every kind of political action. We may furthermore say that it is perfectly neutral with regard to all judgments of value, as it refers always to means and never to the choice of ultimate ends.
3. Economic Cognition and Human Action
Man's freedom to choose and to act is restricted in a threefold way. There are first the physical laws to whose unfeeling absoluteness man must adjust his conduct if he wants to live. There are second the individual's innate constitutional characteristics and dispositions and the operation of environmental factors; we know that they influence both the choice of the ends and that of the means, although our cognizance of the mode of their operation is rather vague. There is finally the regularity of phenomena with regard to the interconnectedness of means and ends, viz., the praxeological law as distinct from the physical and the physiological law.
The elucidation and the categorial and formal examination of this third class of the laws of the universe is the subject matter of praxeology and its hitherto best-developed branch, economics. The body of economic knowledge is an essential element in the structure of human civilization; it is the foundation upon which modern industrialism and all the moral, intellectual, technological, and therapeutical achievements of the last centuries have been built. It rests with men whether they will make the proper use of the rich treasure with which this knowledge provides them or whether they will leave it unused. But if they fail to take the best advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race.
INDEX
A | B | C | D | E
F | G | H | I | J
K | L | M | N | O
P | Q | R | S | T
U | V | W | Y
Prepared in 1954 by Vern Crawford for the 1949 first
edition of Human Action. This index is more complete
than the one included in the book itself.
A
Ability-to-pay principle
in fixing wage rates, 811–812
in taxation, 731–732
Abnormality, 95 see also, Irrationality
Absolute, 28, 70, 72
Abstinence, reward of, 842n
Abundance, 234–237 see also, Saving; Scarcity
Acceleration principle, 581–583
Accounting
capital, 231, 260–264, 468, 488, 511, 517
cost, 336–347
method of, 214, 301
Accounts, foreign exchange equalization, 458–459, 781
Accumulation, capital, 465, 487–490, 511–514, 518n, 840–847
Acting man, ch. 1, pp. 11–29
Action, human, Part 1, pp. 11–142
analysis of, ch. 4, pp. 92–98
as an ultimate given, 17–18
backwardness of science of, 664n
calculative, 199–200
categories of, 64, 196
causality and, 22–23
changing features of, 18, 46–47, 223
differs from psychology, 12
economic calculation and, 232
economic cognition and, 881
emotional, 16
ends and means of, 70, 92–94, 201–202, 208, 476
epistemological problems of, 4–7; ch. 2, pp. 30–71
exchange and, 97–98
goals of, 15, 315
history and, 59
individual and, 45–47, 403, 719–725
influenced by past action, 502–510
in passing of time, ch. 18, pp. 476–520
insecurity and, 847–849
marginal utility and, 119–124, 632
meaning of, 11, 26, 28, 42, 59, 92
monetary calculation as tool of, ch. 13, pp. 230–232
originary interest and, 524
practice of, 7–10
prerequisites of, 13–16
on happiness, 14–15
on instincts and impulses, 15–16
purposeful, 11–13
requisite of, 22–23, 480–487
righteousness of, 719–725
routine and, 46–47
science and, 6, 21, 30, 51, 57
selfish, 243, 674
social cooperation and, see, Cooperation, social
temporal relation between, 102–104, 490
theory of, 4–7
thinking and, 24, 177, 584n
tool of, ch. 13, pp. 230–232
uncertainty and, ch. 6, pp. 105–118, 249
value judgment and, 17, 491
within framework of society, ch. 7, pp. 119–142; Part 2, pp. 143–200 see also, Praxeology; Rationalism;
Understanding; Valuation;
Want-satisfaction; World view
Adams, Thomas Sewall, 523n, 734n
Adjustment, period of, 648–650
Advertising, 316–319, 378n see also, Propaganda
Age of Reason, 69
Aggression and destruction, 169–173
Agreements
barter, 796–799
bilateral exchange, 794–796
clearing, 472, 796
Agriculture
monopoly and, 367
New Deal and, 236, 384
subsidies and, 365, 600n, 656
Alter ego, 23–26
American Institutionalism, 4, 755
Amonn, Alfred Otto, 631n
Amortization of taxes, 640
Analogies, 114
Anarchism, 148–149, 191, 240, 256, 248n, 579–580
Ancestors, 3, 36, 145
Anderson, Benjamin McAlester, 406n
Animals
reaction to purposeful action, 11–13, 16
use of, 624
Anteriority and consequence, 99
Anthropomorphism, 69
Antimonopoly party, 383
Apologists, 48 see also, Propaganda
A posteriori theory, 31, 41
Appraisement and valuation, 328–332
Apriorism
methodological, 35, 65
of praxeology, 32–36, 64–65, 407
reality and, 38–41
reasoning of, 38, 318
science of, 48
Aquinas, Thomas, 723
Arbitration, 770
Aristotle, 204, 845n
Artists, 241n see also, Genius
Asceticism, 28–29, 87, 178–180
Assisi, St. Francis D', 156
Association
human process of, 147n
Ricardian law of, 158–163, 168, 174
Atheist, 147n
Atomic bomb, 828
Austria
economists of, 4, 120, 492–493
Post Office Savings Service of, 442
Autarky, 163, 267n, 314, 322, 743, 824–826
Authority, importance of, 284, 321
Autistic economy, 195–196, 244–245
Autocracy, 647, 686
Automatic, economic meaning of, 725
Averages, Computation of, 223
B
Backwardness, technological, 504–505
Bailey, Samuel, 220
Baker, John Randall, 496n
Balance of payments, 447–449, 453–455
Balance sheets, 213
Balkania, 797
Ballistics, 77
Banking School, 436–437, 441
Banknotes, 441–445
Banks and banking
booms and, 559
British, 439
cartels of, 444
central, 457, 462
currency expansion and, 789n
European, 442
Federal Reserve Act of 1913, 566
fiduciary media and, 431
free, 440, 441–445
international, 473
interventionism and, 437, 444
liberalism and, 440–141
loans, 568
private, 462
Swiss, 462, 463 see also, Credit expansion; Cycle theory; Malinvestment; Money; Trade
“Barbarous relics,” 468
Barone, Enrico, 697
Barter
agreements, 796–799
fiction, of value and prices, 202–206
Bastiat, Frédéric, 147n, 827
Beard, Charles and Mary, 625n
Behaviorism
animal versus man, 16
conscious versus unconscious, 11
criticism of, 7
purposeful, 26–27
Bentham, Jeremy, 174, 192–193, 670, 827, 830
Berdyaew, Nicolas, 671n
Bergmann, Ernst, 204n
Bergson, Henri, 33n, 49, 100n
Bernard, Claude, 28n
Bernoulli, Daniel
doctrine de mensura sortis, 125–126
Betting, 115–116
Beveridge, William Henry, 764
Bias, 48, 686 see also, Valuation
Bilateral exchange agreements, 794–796
Bimetallism, 468–469, 775–776
Birth control, 663
Bismarck, Otto, 363, 364
Bodin, Jean, 232, 817
Böhm-Bawerk, Eugen, 121, 202n, 311, 477, 478, 479, 484–486, 523, 524–525
Bonald, Louis, 860
Bonaparte, Louis Napoleon, 509, 662
Bonar, James, 664n
Bondage, 197, 624–630, 817, 835
Bonds
contractual and hegemonic, 196–199, 280, 281, 497, 461, 841
government, 226
Bookkeeping, 231, 301
Booms
characteristics of, 550–562
crack up, 424, 433
economic progress and, 573, 576–578
end of, 783
generation of, 789n
industry and, 557
investments and, 574 see also, Credit expansion; Cycle theory; Depressions
Bourgeoisie, 9, 74, 78, 81, 268, 605
Brentano, Lujo, 618
Bretton Woods Conference, 475
Bribery, 273
British, see, Great Britain
Brüning, Heinrich, 855
Brunner, Emil, 671n
Buddhism, 28
Bureaucratic management, 300–307
Burke, Edmund, 860
Business
calculation, 301
fluctuations, 583
forecasting, 649, 866–868
good will and, 3 76
New Deal plan to control, 815
outlays, 242n
production and, 489
propaganda, 316–319
risk-taking and, 106, 108, 112, 115, 805–807
socialist control of, 257 see also, Entrepreneurs; Interventionism
C
Caesarism, 182n
Cairnes, John Elliott, 204, 627n
Calculation
business, 301
economic, see, Economic calculation in Soviet Russia and Nazi Germany, 698–699
lack of precision in, 225n
monetary, ch. 13, pp. 230–232
valuation and, 97; ch. 11, pp. 201–212 see also, Accounting; Mathematics; Measurement
Carman, Edwin, 532n
Capacity, unused, 391, 576–578
Capital
accounting, 231, 260–264, 468, 488, 511, 617
accumulation of, 465, 487–490, 511–514, 518n, 840–847
circulating, 557
consumption, 261, 511–514, 846
convertibility of, 499–502, 505, 510
fixed, 557
flight, 515
foreign, 493–495, 497–499
goods, 263, 292, 293, 487–490, 493, 499–502, 505, 510
income and, 260–261, 482
investment, 342, 369, 378, 499
labor and, 637
maintenance, 260–264, 511–514, 844–845
marginal productivity of, 293, 632
market, 543
praxeology and, 482, 512
stock exchange and, 514–517