Ludwig von Mises’ Human Action: A Tale of Two Analyses

Human Action, originally published in 1949, is regarded as Ludwig von Mises’s magnum opus. The work is gripping and engaging, and its commentary is wide reaching. Mises intersplices his famous work of political economy and action theory (praxeology), where he considers economics as a sub-discipline of praxeology), with evolutionary science, philosophy, political commentary, and literature. Thus, it is easy to get seduced by Mises’s seeming mastery of many subjects when, in reality, his book is best when it stays on the most immediate subject matter (being a treatise on economics) but wanders into territory easily scrutinized.

As such, the economics is a five out of five, but the other commentary (especially philosophy) at best a mixed bag. Mises is no student of the human condition, which makes his more general philosophical claims concerning man’s nature weak. His commentary on economics, however, is deeply insightful and it is of upmost important for people to actually read the Austrian economists so as not to have the caricatured straw man of them ingrained into their mind by folk who have not actually read them and think a five minute session on Wikipedia allows them to be authoritative commentators on Austrian economics. As a former student of economics (B.A. in economics among other subjects), this is the one book that university economic students should have read when going through their education!

Mises, though considered heterodox, really takes a hammer to the conventional wisdom of the orthodox economists. He demolishes, one by one, the standard myths that Econ 101 students learn: Homo Economicus (the economic man), social and private capital, practical utility (if true humans should value iron more than gold but they don’t; iron is far more “practical” than gold is), and division of labor among much more. In fact, Mises goes to great lengths to show how it is only a market economy that has true labor specialization, optimization, and division – reflecting man’s natural differences in physical and physiological gifts. Mises is not “anti-labor” as is often the straw man established against the Austrian economists. Mises is probably the most pro-labor economist there is (or as he might argue, true labor). He recognizes labor as not simply a material and physiological endeavor, but a moral and spiritual one too! Everyone is a laborer. How true (and commonsensical).

Mises is also critical of the two-faced hypocrisy of orthodox economics. We all learn that there is a scarce amount of resources. But most ideological economists (of the institutional, Marxian, and technological stripe) don’t really believe in the scarcity of resources. As he shows brilliantly, credit economists thing they can overcome the scarcity of resources by pumping an economy with endless credit (thus increasing debt—hmm, sound familiar?). Marxists believe scarcity is only a byproduct of historical dialectical conflict: in the end of history and the communist utopia there is nothing but abundance! Technologists believe that through increases in technological science we can minimize the waste of scarcity; we see this through those economists today who believe technology will meet the human crisis of scarcity and delay the reality of scarcity. So the university economics we all learn wants to have its cake and eat it too! (There will be more cake, always.) While proclaiming scarcity, deep down, the so-called orthodox economic schools don’t really believe it. As such, they are unscientific and construct an economics based on imagination rather than what is real. (And as such they become ideologies.)

As Mises brilliantly shows, all human action is done with imperfect information (uncertainty) and the intuitive recognition of scarcity. This is what drives man to action. Rational man, for Mises, is a man compelled to act to alleviate his uneasiness through any means he considers as best suited to assuage his uneasiness.

Between the lines of Mises’s economic commentary is his criticism of propagandist historians and ideologues. Here Mises is on the top of his game regarding insightful commentary apart from economics (strictly speaking). His criticism of historicism, Marxism, and ideology is on point and deeply relevant in today’s day and age. He shows why Marxists are “irrational” in their assault against the supposed “madness of reason.” A slew of books published in the last 40 or so years attack human rationality that undergirds classical economics (which Mises is not uncritical of though he sees himself as a builder of the classical tradition). Cultural Anthropologist David Harvey has recently published Marx, Capital, and the Madness of Economic Reason. Michel Foucault, the most famous of the intellectually immature and shallow postmodernists, wrote Madness and Civilization, with his famous line “the ultimate language of madness is that of reason.” Understanding this “revolt against reason” as a “revolt against [competitive] economics” is of the upmost importance for the 21st century. Likewise Mises shows the problems historians have with regard to understanding economics: they just see isolated events and try to construe a talking point based on ideological presuppositions.

That said, Mises falls into very weak territory when he begins to discuss the supposed brilliance of liberal philosophy.

Mises’s understanding of man is decisively against the classical liberal understanding of man. Mises believes man is social whereas the classical liberals like Hobbes, Locke, and Spinoza, believed man to be naturally a-social and forced into sociality through the miserableness of the state of nature. Mises sees man through the prism of vitalism and condemns those who seek to animalize man to the noble savage: That true man is the man of instinct like all other forms of life. In this regard Mises is more Aristotelian and Abrahamic in his understanding of man than liberal. The liberal philosophers of the so-called Enlightenment saw man as nothing more than an artificial body of matter in motion. Or, more bluntly, as La Mettrie said – who was a faithful disciple of Bacon, Hobbes, and Locke – “the man machine.” Today we see this antiquated view of man still peddled by scientists like Richard Dawkins who described man as a “survival machine” and “gigantic lumbering robot” in “The Selfish Gene.” Mises’s view of man is not within the liberal tradition’s understanding of man.

Mises’s critique of universalism is not to be missed, but he fails to see how the classical liberalism of the monistic philosophers functionally exhausts itself into its own universalism (at least in this work of his). Since the state of nature is bad, and conflict is bad, because conflict causes harm (per Hobbes, Locke, and Spinoza), we need to propel ourselves out of this miserable state of nature which is an alleviation of harm. Mises stands on schizophrenic foundations here. He recognizes that self-preservation (the want to assuage uneasiness) is central to economic action. Mises agrees with the classical liberals here. Insofar that he sees this as the underlying foundational of all economics, he also agrees with the classical liberals insofar that they saw self-preservation as the common denominator of human nature (thus lowering the bar of the human condition and human life). But since men leave the state of nature and form a multiplicity of commonwealths, wherein conflict among these commonwealths is guaranteed by the Lockean law of self-preservation, there are only two logical ends of the classical liberal vision (which we are seeing today): universal (international) law that all nations become subject to or the establishment of the universal world state to prevent conflict. Yet, in an earlier work on aptly titled “Liberalism” (1927), Mises wrote that the liberalism would create the “world superstate really deserving of the name” [if liberals] “succeed in creating throughout the world…nothing less than the unqualified, unconditional acceptance of liberalism. Liberal thinking must permeate all nations, liberal principles must pervade all political institutions” which would create, through law, the the conditions of world peace. So does Mises himself not embrace a sort of abolitionist and emancipatory universalism that he recognizes as inherent in the liberal tradition that he otherwise condemns among non-liberal political philosophies? In “Liberalism” he bluntly acknowledges the universalist ambitions of liberalism. But in Human Action he condemns universalism. (As far as I’m aware Mises did not have change of heart in the 22-year period of difference between these two books of his.)

Although Mises identified as a liberal he is something more unique when examined in totality. His devotion to economics lends himself nicely to liberalism as economism is the foundational hallmark of liberal philosophy going back to Francis Bacon and running through Hobbes, Locke, and Mill. Yet, his rejection of the liberal anthropology of reductionist materialism, monism, and the artificial constitution of man, and in his defense of vitalism and the a priori rather than a posteriori approach to epistemology, Mises finds friends among the more ancient Greek, Roman, Jewish, and Christian philosophical traditions.

Here in lies one of the conundrums with Mises. His defense of market economics (as the uncoerced interaction between humans to assuage uneasiness) is something that has drawn market socialists and laborites to the Austrian cause (since in the most reductionist sense Austrian economics is simply the science of human action, cause and effect). Mises astutely recognizes how catallactic competition is the characteristic feature of a market economy and how this competition drives dynamism, wealth-creation, greater choice and opportunity (thus greater degrees of freedom in Mises’s definition) and threatens monopolization. He astutely penetrates the totalitarian impulse as one that wants to eliminate all competition and establish monopoly – but this fails because of the social nature of man where humans are subject to “Hegemonic Bondage” that destroys contractual bonds and relations as found in a free and market society. Mises is skeptical to outright critical of the mathematical economists who see economics as a derivation of mathematics; but a mathematical worldview was essentially the metaphysic that undergirded mechanical liberalism. Had he studied the classical liberals more carefully, all of whom deplore competition because it causes conflict, thus needing to establish the universal monopoly to drive out competition and ensure world peace, he should have seen the internal logic of classical liberalism leading to driving out small competition and ensure a monopolization of power and control (things Mises ardently argues against).

As an analyst of market exchange, interpersonal interaction, and the praxeology of economics, Mises stands alongside a storied few other economists as a truly great economist (I would place him alongside the likes of Smith and Bastiat). His understanding of the problems of the imaginary construction of university economics is something that every student of economics who was a student of economics at university should be exposed to. You will see many of the “laws” of economics you learned in Econ 101 and Econ 102 in a new, truer, and realer light. His dialoguing with many 19th and 20th century philosophers, economists, and sociologists is also wonderful and worthwhile, and Mises shows no mercy in exposing the shallow thought and absurdities of the critics of economic reason (which applies to their heirs). Furthermore, Mises’s reflection about how the totalitarians will destroy language to advance their goals because common sense prevents the realization of their dreams was way ahead of the curve given today’s political climate.

Students of philosophy, however, will find Mises’s asides onto philosophical matters lacking, at other times extremely weak. This is offset by stronger philosophical discourses on the problems of the Historical School, his firm understanding of epistemological problems, which leaves Mises as an expositor of philosopher as akin to a dilettante; showing above average knowledge and insight in some areas and poor knowledge in others. But this is a work of economics, a treatise on economics, a treatise on human action. Here Mises shines. Yet, although a treatise on economics, Mises does venture into other waters where he is less sharp and brilliant. To that end the reader of Mises who has less familiarity with philosophy should not be seduced by everything Mises writes about on philosophy. The economic student, however, should not miss the opportunity to read Mises. His “cold” analysis of economics—the science of human action, interaction, and exchange, is nothing short of masterful. On economics alone, one should read Mises to leave the Cave of economic opinion and shadows that passes itself as law.

 

This review was adapted from my Amazon Review, 14 July 2018.

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