Human Action, by Ludwig von Mises is one of the greatest Austrian economic books written. It is widely considered to be Mises magnum opus, and published in 1949. The book first introduces economics as the study of human action, based on praxeology and rationality of actions. The laissez-faire capitalism that is referred to in this book, is a view of hands-off government intervention on economic activities, or the separation between the economy and state. Mises argues that the free-market is better than a government planned economy, due to limited regulations or destructive policies of which impede on daily economic activities. To see that the free-market is better, just look at everything you own and think about how and who produced that and made it readily available for you, it does not take a genius to work that the free-market is the builder and serves as the foundation of civilization.
The book views economic calculation and action are the fundamental and important issues in the discipline of economics. People act to rid the feeling of uneasiness, in other words to choose between alternative activities that will increase ones happiness and wealth. Action is explained through the relationship between choosing the best available means to pursue these ends that one wishes to satisfy. Economic calculation describes this human action of all the market participants, in which scarce resources are directed to the factors of production of which satisfy human needs the most.
No action would imply even the basic human needs are not satisfied. This shows us the link that Mises makes between progress and profits. Any profit that is earned from the voluntary actions must result in increased wealth for both parties that are involved in an exchange. Therefore, any government policy of which limits or prevents good economic action should be eliminated as it can severely distort market price signals. The association drawn from this book, therefore, revolve of both economic calculation and monetary calculation. Concluding that the improvement of human progress rely on market prices, upon which monetary profits are calculated are monetary profits are calculated.
The entrepreneur is the one who calculates monetary decisions, based on profit and loss, and between alternative costs and benefits. Entrepreneurs however, have limited knowledge just like any other human being, therefore, there projects can lead to failures, and in the same way lead to market failure. However, these market failures are not as widely severe compared to the mass failure for public goods and public markets. individuals are quite capable and more informed of their own daily economic activity than any central planner who plans for all. Additionally, the entrepreneur of who errs in their calculation are guided by financial losses from halts in production, Mises describes this as a market test of which is the only economic process of trail and error that matters. The government should not prohibit or hinder the failure of an unprofitable business, however, as this just continues and lengthens the misdirection of resources and decreases societies overall wealth.
Copyright © 2016 Zoë-Marie Beesley
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