|Human Action: A Treatise on Economics|
2010 Pocket Edition cover
|Author(s)||Ludwig von Mises|
|Subject(s)||Economics, Political economy|
|Publisher||Yale University Press|
"It is true that economics is a theoretical science and as such abstains from any judgment of value...Science never tells a man how he should act; it merely shows how a man must act if he wants to attain definite ends."
 Part One: Human Action
 I. Acting Man
Main Article: Action.
 II. The Epistemological Problems of the Sciences of Human Action
Ludwig von Mises takes the logical deductive approach to economics, as opposed to the empirical (or the logical positivist approach). Economic problems cannot be solved empirically because renunciation and long-term planning can not be seen. Humans act to attain definite ends--and economic phenomena can be understood as such.
"Praxeology is a theoretical and systematic, not a historical, science...It aims at knowledge valid for all instances in which the conditions exactly correspond to those implied in its assumptions and inferences. Its statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori."
 III. Economics and the Revolt Against Reason
Mises dismisses the Historical School, Hegel and Marx with it. In discussing the "bourgeois logic" and "bourgeois mentality" of Marx, Mises is able to attack polylogism in general. There does not exist multiple logics, only differing interests and their logical conclusions--whether they are spurious or well-founded. Mises states with regard to the Historical School, "History, in due time, will arrange everything for the best. It does not need the advice of mortal men."
See German Idealism.
 IV. A First Analysis of the Category of Action
Main Article: Value
All actions are directed toward goals, aims or ends. The end, speaking generally, is always to remove a felt uneasiness. Means are the ways by which we reach an end. Things in the world, when applied to our ends, become means and are commonly referred to as goods. Means are scarce.
Actions are reflective of our scale of values. All things equal, we satisfy wants of higher value to us, and leave unsatisfied wants of lower value to us. Things in the world have no intrinsic value, our actions give things value.
Given that every action is an attempt to establish a more satisfactory state of affairs, viz., to remove a felt uneasiness, all actions are in a sense an exchange. We exchange one state for another, hopefully better, state. Lastly, value judgments arrange wants, but do not measure them. They are expressive of sequence and order rather than of measurement and weight.
 V. Time
Time is a praxeological category: all action is in time and is subject to time. As humans, our time is scarce and we must economize it accordingly. Our scales of value and therefore our actions are always with reference to time. As we will see later, time is important in the determination of interest and consumption.
 VI. Uncertainty
All action is speculative. We never know exactly what will occur. The natural sciences make it possible to foretell results from specific actions. They do not make the future predictable. But, Mises tells us, probability is a primary concern of praxeology.
"Class probability means: We know or assume to know, with regard to the problem concerned, everything about the behavior of a whole class of events or phenomena; but about the actual singular events or phenomena we know nothing but that they are elements of this class."
For example, car insurance works on the premise that with a large pool of policies, they can use class probability to decide upon an approriate premium given the class probability of accidents. But, they know nothing about the probability of the individual policy holder getting into an accident.
"Case probability means: We know, with regard to a particular event, some of the factors which determine its outcome; but there are other determining factors about which we know nothing."
For example, foreign policy experts may make predictions about the settlement of foreign disputes. They are well informed but it is impossible for them to predict the outcome perfectly because they can not grasp all the data and all the opinions of individuals shaping decisions. Therefore, they may know some of the factors that will shape the future, but never perfectly.
For Mises, we make decisions with incomplete knowledge. To say it again, all action is speculative in character. To this difficulty in decisions, specifically in social cooperation where selection occurs, competition serves as a function to select the most able person for specific positions. It assigns every member of society to the position where they best serve society.
 VII. Action Within the World
Each person possesses one scale of valuations, which is visible through action. Goods and modes of action are chosen based on their utility, or their causal relevance for the removal of felt uneasiness. Here Mises discusses the paradox of value: why is gold more valuable than iron? Despite the many uses of iron, gold is valued more on the market because of its value in exchange. Iron may have more technological prospects or objective use-value but it lacks subjective use-value, that is, gold is valuable in exchange due to scarcity, appearance and its tradition as a form of money. Mises, however, dismisses the question as one which never occurs in reality.
The Law of Marginal Utility is implied by the category of action: If a supply increases from quantity n to n + 1 the extra unit provides less utility than unit n. This is because n is satisfying a more urgent want than unit n + 1. We satisfy more urgent wants first by their definition. Unit n is satisfying the more urgent want, n + 1 is satisfying a less urgent want. Therefore, increasing units of a homogeneous supply are each applied to decreasingly important wants (seeing as the more urgent wants are always satisfied first). The law of marginal utility, "does not deal primarily with the value of things, but with the value of the services a man expects to get from them."
"Labor," says Mises, "is preferred to leisure only insofar as the yield of labor is more urgently desired than the enjoyment of leisure." Work involves disutility. To this note, labor is more scarce than other material factors of production:
"In our world there is no abundance, but a shortage of manpower, and there are unused material factors of production, i.e. land, mineral deposits, and even plants and equipment."
Labor saving devices reduce want, they do not bring about "technological unemployment." Man economizes both labor and material factors.
Action is successful it it produces the intended result: it produces the product. The human mind directs action with a purpose and production is creative. It is not something physical, natural, and external; it is a spiritual and intellectual phenomenon. All material actions within the world are a product of the mind. "In this sense," Mises tells us, "praxeology can be called a moral science."
 Part Two: Actions Within the Framework of Society
 VIII. Human Society
We are born into society and only in this sense does society exist before the individual. Society is the supreme example of the benefits of the division of labor. It is an institution for the preservation of peaceful human relations. It is the social apparatus of compulsion and coercion.
"Liberalism aims at a political constitution which safeguards the smooth working of social cooperation and the progressive intensification of mutual social relations. Its main objective is the avoidance of violent conflicts, of wars and revolutions that must disintegrate the social collaboration of men and throw people back into the primitive conditions of barbarism where all tribes and political bodies endlessly fought one another. Because the division of labor requires undisturbed peace, liberalism aims at the establishment of a system of government that is likely to preserve peace, viz., democracy."
Mises expounds the Ricardian Law of Association or comparative advantage as the fundamental characteristic of society. The division of labor assigns to each man the best job for him in society. However, the end result of division of labor in society--a diversity which attests to the innate inequalities between individuals--does not illistrate ideas of Social Darwinism. Biology and evolutionary views cannot pass value judgments on the benefits of civilization.
 IX. The Role of Ideas
All action is preceded by thinking. Thinking is to deliberate before action and to reflect upon past action. Thinking is a tool of action and language is a tool of thinking. All action is based on a definite idea about causal relations. Thinking and ideas are, like material wealth, passed down the generations. Action is always directed by ideas.
Ideology and world views are explanations of social phenomena and technologies for prescriptive politics. All political doctrines imply that: "the political system we support will render you more prosperous and more content." Ideologies, to Mises, are the most powerful form of control. The might of a politician is due to his ideology, his interpretation of the world and his prescriptive measures to ensure his followers are more prosperous and more content. Thinking, the ideological interpretation, succeeds through the cooperation of other minds. No thinker is isolated in his thoughts, they have been influenced by others. A politician's power dwindles if his ideology loses support. To Mises:
"The power of an ideology consists precisely in the fact that people submit to it without any wavering and scruples."
Traditionalism and the idea of progress are ideologies also. Progress toward a more prosperous life and evolutionary progress must not be confused with evolution toward higher forms of life. Progress may not continue, majorities may error. Ideologies may protect the material interest of the race or they may destroy it.
 X. Exchange Within Society
Action always is essentially the exchange of one state of affairs for another state of affairs. The interpersonal exchange of goods weaves the bonds which unites men into societies. Mises defines two different kinds of social cooperation: cooperation by virtue of contract and coordination, and contract by virtue of command and subordination or hegemony. In the former state there are men who cooperate to achieve goals--their plans are symmetrical and share a common goal. In the latter state their is always two classes of men, those who command and those who obey. Again Mises emphasizes the important of ideology to animate the social body. The individuals must share an ideology if they are to cooperate. Hegemonic control needs an ideology that the controlling system is the best or the traditional norm. Ideologies imply obedience to the ideology. Contractual relation order society by free association held together by the order of right and law.
The praxeological categories, Mises tells us, are eternal and unchangable. They are the categories within which all action takes place. No action is free from the facts of existence--of which the praxeological categories belong. Man can never comprehend anything that is neither action or none action.
Modern civilization is characterized by the fact that it has elaborated a method which makes use of the arithmetic possible in a broad field of activities. Economic calculation, for example in modern capital accounting, is a fundamental issue in all comprehension of economic phenomena.
Despite the extended use of capital accounting and arithmetic, action can only make use of ordinal numbers. That is, actions order desires but do not measure them. But in our rational and contractual society we are able to make use of cardinal numbers in capital accounting. By this feature of capital accounting and contractual relations civilization opened the door to computation and calculation regarding the planning of the future and measuring the effects of past actions. Still, the applicability of cardinal numbers to economic thinking require these circumstances and economic law and theory cannot be deduced from economic history, namely, the history of prices.
 Part Three: Economic Calculation
 XI. Valuation Without Calculation
We apply the values we attribute to the ends of action, to the means necessary to achieve those ends: "Other things being equal, [acting man] assigns to the total amount of the various means the same value he attaches to the end which they are fit to bring about."
The preferences used in action, the laying aside of some things for other things, allows--as said above--the use of ordinal numbers but not cardinal numbers. Again, values attributable to actions cannot be measured arithmetically. Yet, in the activity of using means to attain certain ends, the acquisition of countable and measurable supplies of things becomes an immediate goal of action. Economic calculation can occur, despite that the values we attribute to different means and ends cannot be measured, by the results of actions of interpersonal exchange:
"The modern theory of value and prices show how the choices of individuals, their preferring some things and setting aside of other things, results, in the sphere of interpersonal exchange, in the emergence of market prices."
Mises reminds us that is it a fallacy to think things exchanged are of the same value. Rather, people buy and sell only because they appraise the things given up less than those received. "Market prices," Mises says in a later chapter, "are not expressive of equivalence, but of a divergence in the valuation of the exchanging parties."
In using technology, we are resorting to knowledge of causal relations. We are not, however, addressing the technologies applicability to human wants and desires.
"Technology tells how a given end could be attained by the employment of various means which can be used together in various combinations, or how various available means could be employed for certain purposes. But it is at a loss to tell man which procedures he should choose out of the infinite variety of imaginable and possible modes of production."
Engineering can tell us how to build a bridge but not whether its construction would draw resources from other areas where they would be used to satisfy more urgently felt needs. Action, as opposed to the casual relations of engineering, must discover the relations between dissimilar projects. Money, holding the status of "universally used medium of exchange," becomes the measure of the worthiness of differing possiblities in the realm of action. Because goods and services have money prices we can use these in planning and decisions.
With all action directed toward the future, all economic planning and calculation must be made in regards to the future state of prices. In entrepreneurial ventures the acting man wants the prices of goods produced and sold to be greater than the price of the goods used in production. The practical meaning of economic calculation is to show how much one is free to consume without impairing the future capacity to produce. The concepts of economic calculation--Profit and loss, capital and income, spending and saving, cost and yield--are developed to ensure efficient use of the resources of society.
 XII. The Sphere of Economic Calculation
The acting individual is always concerned with the future. In action he is either, (1) anticipating the future and acting accordingly, or (2) trying to change the outcomes of the future even if there are no other changes to the data. Economic calculation cannot predict the outcomes of the future, it can only assist man in adjusting his actions to his opinion of the future. The numerical exactitude of balance sheets and income statements must not prevent us from realizing their inherent uncertainty and estimation.
Money is not a measuring stick. Money prices do not transmit the intrinsic value of a good. Prices are not measured in money, they consist in money. They are either prices of the past or prices of the future. Furthermore, although it is possible to aggregate prices paid in goods, it makes no sense to talk about a national income or any other aggregate of spending which "characterizes" a society.
Economic calculation makes sense only in a society with private ownership of the means of production. Economic calculation is not to blame of the masses preferring detective stories to books of philosophy--that is an outcome of the desires and preferences of individuals acting in society. Economic calculation cannot be blamed for the less than ideal characters and habits of other members of society.
Prices, or exchange ratios, are in constant fluctuation with the changing data of the market and the changing whims of consumers.
"A measurement of purchasing power would have to rely upon the prices of the goods and services of the first order and, what is more, of all of them."
Further, changes in the purchasing power of money must necessarily effect different goods and services at different times and therefore efforts to stabilize the purchasing power of money by attempting to change the money relation is an impossible feat.
 XIII. Monetary Calculation as a Tool of Action
Monetary calculation is the decisive factor of action in the social system of division of labor. Every action of the entrepreneur is analyzed by monetary calculation. Only in the institutional settings of private property and division of labor where goods and services are exchanged by a money can the system of monetary calculation be used. The use of aggregates derived from the use of monetary calculation is useless. That is, monetary calculation is useful for individual acting but cannot be useful to determining "social" values or welfare. By the use of monetary calculation, for example in capital accounting, arithmetic has become a tool in the struggle for a better life. Capital accounting allows us to analyze the success or failure of men in satisfying the needs of consumers.
"Our civilization is inseparably linked with our methods of economic calculation. It would parish if we were to abandon this most precious intellectual tool of acting. Goethe was right in calling bookkeeping by double entry "one of the finest inventions of the human mind.'"
 Part Four: Catallactics or Economics of the Market Society
 XIV. The Scope and Method of Catallactics
"The subject matter of catallactics is all market phenomena with all their roots, ramifications, and consequences."
The study of actions which are conducted on the basis of monetary calculation, or catallactics, does not care whether actions have good or bad motives. People purchase goods for material reasons and ideal reasons. They make purchases based on metaphysical beliefs and aesthetic value judgments. For economics it is inconsequential the reasons and motives for specific actions--it only cares if the beliefs are acted upon because they help determine the structure of market prices.
The method of economics, Mises tells us, is the method of imaginary constructions. This is also the method of praxeology. Imaginary constructions are products of deduction "ultimately derived from the fundamental category of action, the act of preferring and setting aside." In reference to the imaginary construction Mises writes:
"The method of imaginary constructions in indispensable for praxeology; it is the only method of praxeological and economic inquiry. It is, to be sure, a method very difficult to handle because it can easily result in fallacious syllogisms. It leads along a sharp edge; on both sides yawns the chasm of absurdity and nonsense. Only merciless self-criticism can present a man from falling headlong into these abysmal depths."
The Autistic Economy: In order to study the effects of interpersonal exchanges, we study an imaginary construction in which they are absent. When it comes to a completely self-sufficient economy we have two imaginary systems we can hypothesize: the isolated individual and the socialist society. It does not matter whether these can calculate or whether they have historically existed, only that they can be thought of in theory.
The Evenly Rotating Economy: In creating imaginary constructions we must conceive that all actions ultimately aim at bring about a state in which there is no longer any action, "whether because all uneasiness has been removed or because any further removal of felt uneasiness is out of the question." That is, we create an imaginary construction in which no one wants or needs to act and use this to determine the importance of various aspects of our society.
 XV. The Market
"The market is not a place, a thing, or a collective entity. The market is a process, actuated by the interplay of actions of various individuals cooperating under the division of labor."
In the market place everyone is an end in himself and an end for other people. Each individual acts on his own behalf, but everyones actions of the market also serve another. In acting everyone is serving everyone else's ends while serving their own. They each aim at the satisfaction of other peoples needs as much as at his own.
The state of the market is characterized by the totality of prices within the market which are determined by individuals eager to buy and sell. Additionally, there is no such thing as a "mixed" economy: "it is directed either by the market of by the decrees of a production tsar or a committee of production tsars." Publicly owned entities which operating in a market economy must obey the rules of profit and loss as others do. The characteristic feature of the market economy is its ability to calculate. Monetary calculation along with the determination of market prices allows the market to calculate. The rational ordering of the division of labor and of production are resultants of this.
"The market economy is real because it can calculate."
The central principles in the market economy's calculation are income and capital. Income is the amount of resources which can be consumed without lowering the capital of the individual or business. If income is greater than the amount consumed, savings results. Conversely, if a man consumes more than his income is it referred to as capital consumption. Capital, here, is the quantity of money representing ownership in the assets of a enterprise (using the term broadly) or the total assets less the total liabilities.
"All civilizations" says Mises, "have up to now been based on private ownership of the means of production." Our system of private ownership of the means of production has poured the horn of plenty on growing population figures. Capitalism has served to allow each man a higher material wealth than even the kings of past ages. Many who argue against capitalism do so because they look upon capitalism as an accidental phenomenon. They do not understand private property and the concept of free-associations causal relationship with the material wealth of the era. It is the critics of capitalism, Mises contends, which lack historical understanding, not the economists. To capitalism's enemies, it is the policy advocated by big business, regardless of the fact that big business often advocates for "protectionism, cartels, and the abolition of competition." And today, it is considered a "legitimate task of government to prevent an efficient man from competing with the less efficient." Advocates of protection, and state imposed limitations on the free-market want to make us believe that the consequences of government intervention are produced by capitalism.
In a market economy the consumers are sovereign. Only sellers of the first order goods are in contact with the consumers, but the consumers buying and abstention from buying is transmitted from the consumer goods to the higher order goods (the producers goods). Consumers, in their capricious buying, determine the income of every member of society and direct production into the hands of individuals best able to serve the consumers.
The consumers designate everyones place in society. The classical economists favored the abolition of the all trade barriers because they protected the less efficient from the more efficient. Trade barriers curtail production and lower the standard of living of all those effected. It is the actions of consumers which determine the prices on the market, and it is these prices which push investors into new lines of business. The bigness of one business will not stop others from trying to compete with it. Mises writes:
"What a newcomer who wants to defy the vested interests of the old established firms needs most is brains and ideas. If his project is fit to fill the most urgent of the unsatisfied needs of the consumers or to purvey them at a cheaper price than their old purveyors, he will succeed in spite of the much talked of bigness and power of the old firms."
Competition in the catallactic sense (i.e., competition in the market place) has a different function than that of games and beauty contests. Its function is to select the individuals most able to control the resources of society to the greatest benefit of the consumers. Humans are not born equal and the consumers do not care: "Their only interest is to secure the best possible satisfaction of their needs."
In human society, the terms "freedom" and "liberty" reference to interhuman relations. For instance Mises writes, "man was not created free; what freedom he may possess has been given to him by society...Liberty and freedom are the conditions of man within a contractual society." Man in this condition is free to exchange goods and services, but he is by no means independent. He depends on other members of society. We say that a man is free in a contractual society because he serves others to serve himself. The restrains of freedom a man may experience in this environment is due to natural phenomenon only--the laws of nature to which we all unconditionally submit.
The market system will invariably bestow unequal rewards. This is primarily due to the different levels of service people provide to each other on the market. That is, it rewards every effort according to its value as determined by the subjective valuations of the consumers. With respect to inequality, Mises says:
"No system of social division of labor can do without a method that makes individuals responsible for their contribution to the joint productive effort. If this responsibility is not brought about by the price structure of the market and the inequality of wealth and income it begets, it must be enforced by the methods of direct compulsion as practiced by the police."
The economic phenomenon of profit and loss can be analyzed from an psychic point of view. Profit, in a boarder sense, is the gain derived from action; it is the increase in satisfaction brought about by the action. In this sense, then, profit is the end of every action. Profit in this psychic sense is not measurable. However in the market economy, goods and services are bought and sold with money prices. This allows for the computation of profit and loss using the market prices of the goods and services. Profit, in monetary calculus, is the surplus of money received over the money expended. It is everyone acting to attain the highest psychic which actuates the market-price mechanism and allows for monetary calculus.
In an expanding or progressing economy the amount of capital invested is increasing per capita. Income is increased either by an increase in technological methods brought about by the increase in capital or simply by an increase in production. Of the increase in wealth (the result of the progressing economy) the majority of it goes to non-entrepreneurial groups. To note again, the market has a tendency to eliminate entrepreneurial profit and it is therefore temporary. In the long run, i.e., when profits have been eliminated by competition, the increase in productivity benefits exclusively the workers and consumers. On progress Mises writes:
"The vehicle of economic progress is the accumulation of technological methods of production the execution of which is almost always conditioned by the availability of such new capital."
The greater profits are, the greater is the increment in general prosperity that the enterprise brings. The entrepreneurial function, the driving after profits, is the driving of capital into the most profitable line of business. Which is another way of saying, the driving of capital into which the greatest increase in general prosperity results. Profits and losses are the devices through which consumers exercise their superiority over the owners of capital.
The entrepreneur hires workers and acts as the mandatary of the consumers. In addressing the many problems and issues that a project encounters the entrepreneur and the technician approach the problem inherently differently. The technician may suggest a method of production which has the greatest physical output. But the entrepreneur must judge differently, namely, economically. Economic calculation saves the entrepreneur from having to look too deeply into problems. Profit and loss are not about prefect production, but about the production which reaps the highest profit--i.e., the production where the most is produced at the lowest cost to society. Managers in an enterprise are essentially an extension of the entrepreneur. They assist in the solving of problems, make use of economic calculation and discover the most economical solution to their problems.
Mises distinguishes between bureaucratic management and profit management. In profit management all activities of business are given their worth from the actions of consumers. They dictate the salaries of management and the profits of the entrepreneur and capitalist. Where ever the operation of a system can not be run by profit management, it must be directed by bureaucratic management--i.e., one not concerned with profit and loss.
"Bureaucratic conduct of affairs, as such, is not an evil. It is only appropriate methods of handling governmental affairs, i.e., the social apparatus of compulsion and coercion. As government is necessary, bureaucratism is--in this field--no less necessary. Where economic calculation is unfeasible, bureaucratic methods are indispensable."
The interplay of market forces, the actions of individuals, their incessant choosing and renunciation, places each individual in their nook of society. It determines the number of copper mines and symphony orchestras. This selection process goes on adjusting peoples station to supply and demand. The owners of factories and capital are compelled to serve the interest of the consumers lest they go out of business. Their ownership in the factories and capital is a liability if they do not concede to the desires of the consumers.
"The point of view from which the consumers choose the captains of industry and business is exclusively their qualification to adjust production to the needs of the consumers."
It is common to speak of the automatic reactions of the market. But the market is not automatic: it is a social body made up of individuals acting, it "is the foremost social body." Individuals on the market are both consumer and producer. They play both sides, which leads to contradictions: they want to be protected as a consumer and be protected as a producer. This is fundamental flaw in many social reforms. Politicians pander to this dichotomous interpretation, advocating interventions of various kinds. But the rhetoric is always the same: "my program will make you as affluent as conditions may permit, while my adversaries' program will bring you want and misery."
 XVI. Prices
All that catallactics can assert with regards to the pricing process, is that exchanges only take place if each party values what he receives more highly than what he gives away. Money, being the generally accepted medium of exchange, stands as the common denominator in all exchanges. Money prices are discovered by the continuous exchanges in which individuals trade until what they have is worth more than what the would give away. Mises writes:
"[Money prices] are determined between extremely narrow margins: the valuations on the one hand of the marginal buyer and those of the marginal offerer who abstains from selling, and the valuations on the other hand of the marginal seller and those of the marginal potential buyer who abstains from buying."
Prices are the outcome of the valuation of preferring a to b. The exchange ratio of goods, the price, is not the product of an equality of valuation, but, on the contrary, the product of a discrepancy. Appraisement can be clearly distinguished from valuation in that it is the anticipation of future prices.
Our inability to grasp the entirity of the interplay of forces of the market force us to resort to make shift mental concepts. But all parts cannot be thought of without the context of the whole:
"The price of the goods of higher orders are ultimately determined by the prices of the goods of the first or lowest order, that is, the consumers' goods. As a consequence of this dependence they are ultimately determined by the subjective valuations of all members of the market society. It is, however, important to realize that we are faced with a connection of prices, not with a connection of valuations."
Valuation by itself does not bring about the calculating ability of the market. It is the interplay of many individuals preferring and abstaining which brings about market prices and allows for market prices to be used in economic calculation. The market prices the entrepreneur uses for deliberation are always prices of the immediate past. The entrepreneur, however, must focus on prices in the future. Since he must successfully appraise the future price of consumer goods so that he has a reference point from which to bid for the producers goods. Of the factors of production which can be used to produce a product, the factor must be chosen so that it is satisfying the need which it needs most.
"There the economic problem is to employ these factors in such a way that no unit of them should be used for the satisfaction of a less urgent need. It is this that the market solves in determining the prices of the factors of production."
- Indirect Exchange
- Action in the Passing of Time
- Interest, Credit Expansion, and the Trade Cycle
- Work and Wages
- The Nonhuman Original Factors of Production
- The Data of the Market
- Harmony and Conflict of Interests
Postponements of consumption, or saving, is always embodied in concrete goods. "The act of saving," Mises tells us, "always has its counterpart in a supply of goods produced and not consumed...Man's savings are always embodied in concrete capital goods."
Main Article: Interest
Time preference manifests itself in the phenomenon of originary interest, i.e., the discount of future goods as against present goods. Originary interest is a ratio, like profit and loss, and not a price. It is the ratio between the value assigned to presents goods against the value assigned to future goods. This discounting explains, for example, the reason why there is finite prices on usable land:
"If the future services which a piece of land can render were to be valued in the same way in which its present services are valued, no finite price would be high enough to impel its owner to sell it."
We discount future services and goods because of time preference. The fact that we can purchase land which is usable into the foreseeable future is proof of this. Furthermore, originary interest is not determined by supply and demand of loanable funds. Time preference, manifesting in the discount of future goods against present goods (i.e., originary interest) determines both the demand and supply of capital and capital goods.
Interest rates in loans, in a changing economy, always have an element of entrepreneurial profit. The lender, taking a risk and and making a prediciton about the future state of the market, is engaging in an entrepreneurial venture. Therefore, interest rates on loans are never pure originary interest but also entrepreneurial profit.
 Part Five: Social Cooperation Without a Market
- The Imaginary Construction of a Socialist Society
- The Impossibility of Economic Calculation Under Socialism
 Part Six: The Hampered Market Economy
- The Government and the Market
- Interference by Taxation
- Restriction of Production
- Interference with the Structure of Prices
- Currency and Credit Manipulation
- Confiscation and Redistribution
- Syndicalism and Corporativism
- The Economics of War
- The Welfare Principle Versus the Market Principle
- The Crisis of Interventionism
 Part Seven: The Place of Economics in Society
- The Nondescript Character of Economics
- The Place of Economics in Learning
- Economics and the Essential Problems of Human Existence
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- Ludwig von Mises. VI. Uncertainty, 1. Uncertainty and Acting, Human Action, online version, referenced 2011-02-08.
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- Ludwig von Mises. VI. Uncertainty, 4. Case Probability, Human Action, online version, referenced 2011-02-08.
- Ludwig von Mises. VI. Uncertainty, 6. Betting, Gambling, and Playing Games, Human Action, online version, referenced 2011-02-08.
- Ludwig von Mises. VII. Action Within The World, 1. The Law of Marginal Utility, Human Action, online version, referenced 2011-02-13.
- Ludwig von Mises. VII. Action Within The World, 3. Labor as Means, Human Action, online version, referenced 2011-02-13.
- Ludwig von Mises. VII. Action Within The World, 4. Production, Human Action, online version, referenced 2011-02-13.
- Ludwig von Mises. VIII. Human Society, 1. Human Cooperation, Human Action, online version, referenced 2011-02-17.
- Ludwig von Mises. VIII. Human Society, 2. A Critique of the Holistic and Metaphysical View of Society, Human Action, online version, referenced 2011-02-17.
- Ludwig von Mises. VIII. Human Society, 4. The Ricardian Law of Association, Human Action, online version, referenced 2011-02-17.
- Ludwig von Mises. VIII. Human Society, 7. The Great Society, Human Action, online version, referenced 2011-02-17.
- Ludwig von Mises. IX. Human Society, 1. Human Reason, Human Action, online version, referenced 2011-02-18.
- Ludwig von Mises. IX. Human Society, 3. Might, Human Action, online version, referenced 2011-02-18.
- Ludwig von Mises. IX. Human Society, 2. World View and Ideology, Human Action, online version, referenced 2011-02-18.
- Ludwig von Mises. IX. Human Society, 4. Meliorism and the Idea of Progress, Human Action, online version, referenced 2011-02-18.
- Ludwig von Mises. X. Exchange Within Society, 1. Autistic Exchange and Interpersonal Exchange, Human Action, online version, referenced 2011-02-25.
- Ludwig von Mises. X. Exchange Within Society, 2. Contractual Bonds and Hegemonic Bonds, Human Action, online version, referenced 2011-02-25.
- Ludwig von Mises. X. Exchange Within Society, 3. Calculative Action, Human Action, online version, referenced 2011-02-25.
- Ludwig von Mises. XI. Valuation Without Calculation, 1. Gradation of Means, Human Action, online version, referenced 2011-02-26.
- Ludwig von Mises. XI. Valuation Without Calculation, 2. The Barter-Fiction of the Elementary Theory of Value and Prices, Human Action, online version, referenced 2011-02-26.
- Ludwig von Mises. XXVI. Economic Calculation under Socialism, 3. Recent Suggestions for Socialist Economic Calculation, Human Action, online version, referenced 2011-04-25.
- Ludwig von Mises. XI. Valuation Without Calculation, 3. The Problem of Economic Calculation, Human Action, online version, referenced 2011-02-26.
- Ludwig von Mises. XI. Valuation Without Calculation, 4. Economic Calculation and The Market, Human Action, online version, referenced 2011-02-26.
- Ludwig von Mises. XII. The Sphere of Economic Calculation, 1. The Character of Monetary Entries, Human Action, online version, referenced 2011-02-27.
- Ludwig von Mises. XII. The Sphere of Economic Calculation, 2. The Limits of Economic Calculation Human Action, online version, referenced 2011-02-27.
- Ludwig von Mises. XII. The Sphere of Economic Calculation, 3. The Changeability of PricesHuman Action, online version, referenced 2011-02-27.
- Ludwig von Mises. XII. The Sphere of Economic Calculation, 4. Stabilization Human Action, online version, referenced 2011-02-27.
- Ludwig von Mises. XIII. Monetary Calculation as a Tool of Action, 1. Monetary Calculation as Method of Thinking Human Action, online version, referenced 2011-03-14.
- Ludwig von Mises. XIV. The Scope and Method of Catallactics, 1. The Delimitation of Catallactic ProblemsHuman Action, online version, referenced 2011-5-30.
- Ludwig von Mises. XIV. The Scope and Method of Catallactics, 2. The Method of Imaginary Constructions Human Action, online version, referenced 2011-5-31.
- Ludwig von Mises. XIV. The Scope and Method of Catallactics, 4. The Autistic Economy Human Action, online version, referenced 2011-5-31.
- Ludwig von Mises. XIV. The Scope and Method of Catallactics, 5. The State of Rest and the Evenly Rotating Economy Human Action, online version, referenced 2011-5-31.
- Ludwig von Mises. XV. The Market, 1. Characteristics of the Market Economy, Human Action, online version, referenced 2011-04-03.
- Ludwig von Mises. XV. The Market, 2. Capital, Human Action, online version, referenced 2011-04-03.
- Ludwig von Mises. XV. The Market, 3. Capitalism, Human Action, online version, referenced 2011-04-10.
- Ludwig von Mises. XV. The Market, 4. The Sovereignty of the Consumers, Human Action, online version, referenced 2011-04-30.
- Ludwig von Mises. XV. The Market, 5. Competition, Human Action, online version, referenced 2011-05-17.
- Ludwig von Mises. XV. The Market, 6. Freedom, Human Action, online version, referenced 2011-05-18.
- Ludwig von Mises. XV. The Market, 7. Inequality of Wealth and Income, Human Action, online version, referenced 2011-05-18.
- Ludwig von Mises. XV. The Market, 8. Entrepreneurial Profit and Loss, Human Action, online version, referenced 2011-05-19.
- Ludwig von Mises. XV. The Market, 9. Entrepreneurial Profits and Losses in a Progressing Economy, Human Action, online version, referenced 2011-05-21.
- Ludwig von Mises. XV. The Market, 10. Promoters, Managers, Technicians, and Bureaucrats, Human Action, online version, referenced 2011-05-30.
- Ludwig von Mises. XV. The Market, 11. The Selective Process, Human Action, online version, referenced 2011-06-03.
- Ludwig von Mises. XV. The Market, 12. The Individual and the Market, Human Action, online version, referenced 2011-06-04.
- Ludwig von Mises. XV. The Market, 1. The Pricing Process, Human Action, online version, referenced 2011-06-04.
- Ludwig von Mises. XV. The Market, 2. Valuation and Appraisement, Human Action, online version, referenced 2011-06-06.
- Ludwig von Mises. XV. The Market, 3. The Prices of the Goods of Higher Orders, Human Action, online version, referenced 2011-06-06.
- Ludwig von Mises. XVIII. Action in the Passing of Time, 2. Time Preference as an Essential Requisite of Action, Human Action, online version, referenced 2011-02-04.
- Ludwig von Mises. XVIII. Action in the Passing of Time, 9. Money and Capital; Saving and Investment, Human Action, online version, referenced 2011-02-08.
- Ludwig von Mises. XIX. The Rate of Interest, The Phenomenon of Interest, Human Action, online version, referenced 2011-02-13.
- Ludwig von Mises. XIX. The Rate of Interest, Originary Interest, Human Action, online version, referenced 2011-02-13.
- Ludwig von Mises. XIX. The Rate of Interest, Originary Interest in the Changing Economy, Human Action, online version, referenced 2011-02-13.
- Mises Made Easier: Glossary for Human Action
- Human Action interactive index
- Human Action publication history
- "Human Action: What the Archives Tell Us" by Jeffrey M. Herbener, January 1999
- Human Action: A Treatise on Economics, 1998 Scholar's Edition:
- Resources page at Mises.org (including full text)
- Study Guide at Mises.org
- Audiobook read by Jeff Riggenbach (YouTube)
- Mises Daily excerpts
- (not representative of the full text)
- Chapter 1 "Acting Man"
- Chapter 2 "The Sciences of Human Action" (study guide)
- Chapter 3 "Economics and the Revolt Against Reason" (study guide)
- Chapter 4 "A First Analysis of the Category of Action" (study guide)
- Chapter 5 "Time and Praxeology" (study guide)
- Chapter 6 "Uncertainty" (study guide)
- Chapter 7 "Action Within the World" (study guide)
- Chapter 8 "Human Society" (study guide)
- Chapter 9 "The Role of Ideas" (study guide)
- Chapter 10 "Exchange Within Society" (study guide)
- Chapter 11 "Valuation Without Calculation" (study guide)
- Chapter 12 "The Sphere of Economic Calculation" (study guide)
- Chapter 14 "The Scope and Method of Catallactics" (study guide)
- Chapter 15 (Part I, Part II) "The Market" (study guide)
- Chapter 16 (Part I, Part II, Part III) "Prices" (study guide)
- Chapter 16 "Mathematics Versus Economic Logic", "Brand Confidence and the Economics of Good Will"
- Chapter 17 "Demand for Money and Supply of Money", "Carl Menger's Theory of the Origin of Money", "The Determination of the Purchasing Power of Money", "The Notion of Neutral Money", "Inflation and Deflation", "The Anticipation of Changes in Purchasing Power", "The Specific Value of Money", "There is Money and Then There Are Money Substitutes", "Free Banking and Contract Law", "Free Banking versus Large-scale Credit Expansion", "Unconditional Redemption for Gold", "Government Against Capitalists", "The Inflationist View of History", "The Gold Standard", "International Monetary Cooperation"
- Chapter 18 "The West's Available Capital Goods ", "Some Applications of the Time-Preference Theory"
- Chapter 19 "The Phenomenon of Interest", "The Nature of Interest"
- Chapter 20 "Role of Interest in Entrepreneurial Calculations", "Malinvestment, Not Overinvestment, Causes Booms", "The Alleged Absence of Depressions under Totalitarianism", "Credit Expansion vs. Simple Inflation", "The Monetary or Circulation-Credit Theory of the Trade Cycle", "The Market Economy as Affected by the Recurrence of the Trade Cycle", "The Role Played by Unemployed Factors of Production in the First Stages of the Boom", "The Fallacies of Nonmonetary Explanations of the Trade Cycle", "Catallactic Unemployment"
- Chapter 21 "Gross Wage Rates and Net Wage Rates", "Wages and Subsistence", "The History of Capitalism", "The Popular Interpretation of the "Industrial Revolution", "Wage Rates as Affected by the Vicissitudes of the Market"
- Chapter 23 "Market Data: Power, War, and Man", "The Problems of External Costs and External Economies"
- Chapter 24 "The Ultimate Source of Profit and Loss on the Market", "The Harmony of the 'Rightly Understood' Interests", "Private Property", "Economic Nationalism Is a Philosophy of War"
- Human Action: A Treatise on Economics, 1996 4th Revised Edition:
- Human Action: A Treatise on Economics, 1966 3rd Revised Edition:
- Human Action: A Treatise on Economics, Abridged Edition:
- Text (HTML)
 Other resources
- Articles, essays & reviews
- "The Book History Conspired to Bury" by Llewellyn H. Rockwell Jr., August 2006
- "The Promise of Human Action" by Llewellyn H. Rockwell Jr., September 1999
- "Mises's Non-Trivial Insight" by Robert P. Murphy, August 2003
- "The Power of the Pocket Edition" by Jeffrey Tucker, November 2010
- "Human Action at Sixty" by Richard M. Ebeling, March 2009
- "Mises's Gift of Human Action" by Jonathan M. Finegold Catalan, May 2011
- The Freeman: Human Action 60th Anniversary issue September 2009
- "Human Action, 1949: A Dramatic Episode in Intellectual History" by Israel M. Kirzner, September 2009 (also published here)
- "What Human Action Has Meant to Me: Reflections of a Young Economist" by Peter T. Leeson
- "Human Action: The Treatise in Economics" by Peter J. Boettke
- "Human Action: The 60th Anniversary" by Bettina Bien Greaves
- "Human Action as a Work of Art" by Sheldon Richman
- "Reflections on Human Action after 50 Years" by Vernon L. Smith, Fall 1999
- "The Methodology of Human Action" by Lawrence H. White, Fall 1999
- "Epistemological Relativism in the Sciences of Human Action" Ludwig von Mises, 1960
- "The Place of Mises's Human Action in the Development of Modern Economic Thought" (PDF) by Joseph T. Salerno, Spring 1999
- "The Why of Human Action" by Ludwig von Mises, September 1949
- "The Case for Capitalism" by Henry Hazlitt, September 1949
- Mises Review: "Human Action, The Scholar's Edition" by David Gordon, Winter 1999 (republished as Mises Daily here)
- Other media
- In Studio: "Human Action: Pocket Edition" interview with Douglas French, (YouTube)
- The Science of Human Action lecture by Hans-Hermann Hoppe, July 2011 (YouTube)
- Human Action animation
- Authors Forum: Human Action Study Guide lecture by Robert P. Murphy, March 2009 (YouTube)
- Acting Man online lesson
- Quotable Mises: Human Action