Originally published: 1949
885 pages
Chapter 40


Ludwig von Mises

In 1922, when Ludwig von Mises published Socialism (Chapter 32), his exposition of collectivist government's fraudulent character, he made clear his strong convictions about the relationship between the two signal aspects of the human condition-our inner selves and our external, interrelated lives. Our societal relationships (governmental and economic in particular) reflect the interdependence of our public persona and our private character. Mises does not address these relationships in-depth in Socialism; however, in his summa work, Human Action (published almost thirty years later, following the Great Depression and a subsequent world war) he studies exactly these details: he investigates human society as a continuum of interactions, but without as much emphasis on government. Human Action is a compendium of observations and inferences from the fields of psychology, sociology, psychiatry, economics, history, anthropology, and evolutionary biology (before that field even had a name). Directly and often eloquently, Mises expresses basic and enduring comprehensions regarding human activity.
     Mises contends that there is essentially no break between economic and non-economic motives in human choices; he contends we individually act as consistently as we do in all phases of our lives because of how we are constituted, not primarily in response to externalities that induce desires or goals. However, this is not a nature versus nurture argument because Mises places in abeyance the question of whether one or the other causes any individual to think or react in one manner or another. For Mises, the salient point is that


our disposition makes our individual behavior generally predictable, but only generally.
     Mises observes that economics is the foundation of all societal relationships, even though life obviously encompasses more than just material concerns. He suggests that before we act in any environment, we must recognize and account for the substantial demands of the economic (in the broadest sense of the word) aspects of human existence. Thus, whether we contemplate a new purchase, or marriage or having children, or a new job one or a thousand miles away, or moving closer to parents to help them later in life, or simply in deciding whether or not to go fishing-economics plays a strong role. In other words, we have to determine how we are going to do these things, not just that they are what we want to do.
     As Mises defines it, the goal of human action is the reduction or removal of any "felt uneasiness," a phrase he uses to express why humanity progresses. Our attempts to improve our lives, in each and every way imaginable, are efforts to change whatever it is about which we feel "uneasy." Unfortunately in the modern era this uneasiness is sometimes portrayed as unhappiness; it is not. The uneasiness is a reflection of our nature; an interminable striving to make things, lives, better. Suggesting or even accusing the citizenry of being unhappy is to miss the point of human nature, but can be a facile method to exploit (especially politically) human vulnerability, ignorance, or insecurity. That the accusers may not even understand the mechanisms or character of human nature complicates matters further.
     Unease can be present intellectually, artistically, emotionally, structurally, economically, etc. For example, the unease that drove Beethoven to compose was not something he saw that he didn't like or he felt could be improved, but something in his mind that made him uneasy, until he "said" it in the form of a symphony. His unease was that he had to express himself. Bill Gates, the founder of Microsoft, and Ted Turner, the originator of the Cable News Network (CNN), were both uneasy about what they knew in their fields-not in a negative manner but in the opportunity each saw-thus they sought change at least, improvement at best.
     During the one hundred years preceding the publication of Human Action, philosophers, social scientists, politicians, and religious leaders had aimed at making the world a better place by either persuading people how they should live or, if they had enough power, dictating how they would live. The availability of the mass-produced printed


word, and eventually rapid communication and transportation, afforded humankind's would-be benefactors opportunities to proselytize, even coerce action that matched their views. Social engineering came into vogue. The idea was to make people better and happier by causing them to behave in certain ways-mostly to the benefit of society itself, not directly for the benefit of any specific individual. The thought was that the individual would experience greater comfort if everyone else did. The theory fell apart with its first step because what makes one person happy won't ordinarily do the same for the next individual-particularly over the long term. The efforts were pure self-righteousness, conceit, and narcissism. With time it became clear that social engineering was nothing but thinly disguised totalitarianism and tyranny-no matter the alleged goal or the "good" intentions of the actor.
     Mises observes that life offers neither stability nor safety; it is a ceaseless risk because it cannot be controlled. Each day brings only possibilities, including the simple possibility that things will remain as they have or that they will get much better or much worse. We must continually determine how we will act and react in this real but quite uncertain world. Social engineers seek to transcend these realities and transform life's vagaries into certainty and convert people into predictable, and presumably secure, automatons, who will unfortunately be bereft of individuality and humanity. However, history has shown us that human beings cannot be taught or forced to give up their individuality. Mises illuminates the myriad fallacies of the social engineer's intentions in regard to this truth.
     He methodically attacks the utopians through his explication of how we organize ourselves in a human society. We do that not through theory, but through actions. Mises takes the "actions-speak-louder-than-words" aphorism a step further than normal. In his view, only actions speak. Praxeology, the study of human action, became the foundation of all of the investigations Mises pursued. Economics is action; it is not values or goals. Although those exist, especially on an individual level, economics itself is only about active relationships among people, and between people and things.
     The primary tool Mises uses for explanation is freedom of choice. He focuses on how personal actions have consequences and create relationships such that the ensuing agglomeration of individuals and their behavior results in society. Since the unmarked beginning of human sociability, through the invention of tools and language, we ultimately arrived at the division of labor. Division of labor drove progress because


people were better off through specialization and cooperation. When people collaborated society was born and man became a social animal.
     Yet, for Mises, society exists only in the actions of its individual members. Society is not an entity; he observes that it can no more act than it can eat or drink. Society is the result and reflection of individual choices, nothing more. It follows from this axiom that society is subject to control only if individual actions are controllable. Because of the human condition, however, this is obviously not the case except in very proscribed circumstances.
     Mises investigates the ideas and ideals of equality. He starts with the fact that although neither society nor individuals are controllable, they may be led to cooperate out of self-interest. Of course, the consummate American achievement is equality of opportunity-but not of results. The modern battle is recognizing the fundamental difference between these two antithetical goals. The great American liberal myth, the supposed embodiment of equality in our founding documents, miscasts the Founding Fathers' subtext of equal opportunity and forms a demagogic justification for equalitarianism-equal results. (James Madison, primary author of the Constitution, foresaw the probability of a call for equal result by means of the Constitution's insistence of equal opportunity, and addressed this possibility directly in Federalist #10.) As Mises explains, the myth of equal outcome's desirability ends up as an intellectual conspiracy that gives birth to socialism and, when that fails to deliver on its promises, the welfare state ensues. Welfarism is nothing but socialism via the back door—either may exist until a society can no longer support itself.  Welfarism will fail as socialism did—when the liberal class runs out of other people’s money. Both socialism and welfarism embody the idea that equality of result is not only desirable, but that it is attainable. As he demonstrates-and this was a crucial twentieth-century understanding-it is neither. Such an achievement would be paradoxical to the essence of individuality and the progress of humanity.
     Mises notes that we attempt to achieve equal opportunity under civil law not because people are fundamentally equal (clearly they are not) but because this policy is beneficial to society as a whole and to all members as individuals. Equal rights to individuality lead to unequal results because of individual differences in talent, character, luck, family, intelligence, circumstance, etc. Liberals would take away the right to be who we are in order to make equal the oppressed, those whom they see as encumbered with disabilities because their


innate talents and gifts are different. As a premise it is doubtful those who do not see themselves as Albert Einstein, Bill Gates or Dwight Eisenhower or someone even akin to them on a far smaller scale and in a local venue, do see themselves as disabled. The nanny state and political correctness-the twenty-first-century tools used to effect equalitarianism-were born of the liberal's disability thesis. Taking away the right to use our differences, which are not disabilities-they are simply differences, and appreciate the fruits thereof, no matter how small or great, makes society less than it could be. If a person can imagine or invent or create, everyone benefits from the product of that labor; if you take away some or most of the results of that talent through government intrusion into private lives, you also destroy the incentive to use it; everyone's life is smaller for that.
     For Mises, the individual's ability to reason through facts is everything. Thinking precedes action. It is only the individual who thinks-not society, certainly not the government. Thus, only individuals can create society. Any and all change begins with the thoughts, followed by the actions, of but a single person. And each reasoned thought by each individual contributes to the social whole.
Mises's goal was recognition of not just the value of reason applied to facts, but the primacy of this relationship. Reason is man's unique tool. The problems of all social interactions are amenable to solution, but only through reasoned action that recalls man's innate characteristics. This is not the pure reason of the Enlightenment, but tempered reason that recognizes society's human element.
The rub comes when demagogues shift problems of facts to fields of morality or ethics or even desire-in other words, to realms of subjective judgments.
     Morals and ethics obviously are not bad elements, but they can be misused to distort or even deny the validity of rational responses. For example, the concept of Christian charity can be misrepresented to justify theoretical equalitarianism, by taking from those who have and giving to those who have not. However, when one citizen's property is reduced and another's is increased-by the hand of the government and not through the free action of the parties-there is little that can be termed equal treatment. Under this model there is a simplification of society and human nature that not only doesn't exist today, but didn't exist in the time of Christ or at any other time. Even the Bible offers the Parable of the Talents where using one's capabilities is a valued and expected act. There is no moral or other demand in Christian theology that the abundance created thereby is to be equally distributed in


an act of Christian charity. The demand for conformity to a mythical model of charity (enforced by government if such is not forthcoming voluntarily) is both dishonest and destructive of what society can create when freedom of action is the governing principle.
     Uniform and unbending moral codes used to make universal rules in response to idiosyncratic behavior (to either prevent or force "appropriate" actions) work against social comity and common sense. Neither bad nor good behavior is universal, nor can either be prevented or promoted with universal rules. Bad behavior can only be proscribed, even punished, but it cannot be eliminated, no matter the foundation or breadth of the rules. Good behavior cannot be forced; it can only be offered and encouraged by example and by means of our innate humanity. For Mises, society is formed by means of choices that are made on no other basis than individual freedom. If we intend to constrain that freedom in some fashion, we must construct our rules from observed action; we cannot make them out of whole cloth; we cannot create them by theorizing alone.
     From consideration of individual action, Mises broadens his investigation to contemplate how that activity affects social organization. Socialism was the blueprint for government and economic interaction during much of the twentieth century when Mises was addressing statist economic intentions. He begins this portion of his study by exploring the foundations of modern economic understanding. Mises contends that what started the study of economics was the observation that remote consequences of current action can be more important than that action's immediate effects. For this reason thoughtful planning and observation are important factors in economic relationships and activities.
     The main achievement of modern economic practice was the discovery of the value of long-term and broad-based thinking with regard to human activity. Macroeconomics became not just important, but paramount in societal actions, particularly in governmental behavior. Economically oriented debates have been raging ever since, between the observers of ultimate goals (teach a man to fish, feed him for a lifetime) and those emotionally committed to immediate desires (give a man a fish, feed him for a day). What is sociologically interesting is those who want to teach fishing seem likely to understand the necessity of also offering sustenance as the process is learned. But those who see only the short term-the hungry man-too often don't seem to think about the longer term-how this person will be hungry again next week and next month and next year. In the terse view of Mises, economics


opposes the frenzy and insistence of the apostles of the short term. In his view "History, one day, will have much more to say."
     One of Mises more interesting observations is his contention that modern demagogues espouse an old error, one rampant in the ancient world, but whose modern incarnation arose from what Mises termed the Montaigne dogma. The view in Michel Eyquem de Montaigne's era (1533-92) was that economics is a zero-sum game, in which one can profit only at the expense of another. The theory holds that there are a limited number of resources available; therefore, what one person gains, someone else must lose. This notion, still as false and illogical as it has been since the division of labor created modern economic relationships, was part of the foundation of socialism. Socialist theory purported to "scientifically" recognize that limited resources allowed capitalists to gain additional wealth only if proletarians suffered an equivalent loss. If this is true, socialists contended, we have to institute a system of equal distribution so that none will be harmed or denied participation while others unfairly experience gains.
     Of course, the fallacy of zero-sum game theory is obvious even to unsophisticated observers: if such a relationship did exist, how could one explain any material or social progress for one group without an equal povertization of others? How would we explain the unending improvement of the standard of living for all groups in all open societies? But the persistence of this error is so strong in contemporary economic thinking and liberal political dogma that equalitarian politicians still excoriate the exploiters and commiserate with the exploited, as though neither material nor social progress (let alone the comprehension of economic realities) has occurred since the Stone Age. The apologists for equalitarianism eventually resort to propaganda and indictment-rather than valid argument or a study of economic reality-to advance their objective of economic and social leveling in order to achieve "fairness." They couple their striving for equalization with some form of punishment for the exploiters (the entrepreneurs who actually created the progress the equalitarians use simultaneously as a springboard and a whip) to offer both an example of and to justify their concept of what is fair. All of these convolutions can only be termed Alice in Wonderland economics.
     In Human Action, the efforts of Mises to explain both the fallacies of socialism and the necessity of taking all economic (human) actions to their logical conclusions does not always make for light reading, but it is methodical and clear. Because socialism isn't just a bankrupt


ideology but also an impossible goal, Mises views the political choice as being not between capitalism and socialism, but between "capitalism and chaos." His insights remain cogent today, for socialistic tendencies and equalitarian goals are far from dead. They are present in statist administrative activities, bureaucratic regulatory interpretations, the judicial interpolation of statutory mandates, and politically correct approaches to "social justice." How, one asks, can the educated, the experienced, the studied be so naive or so blind as not to appreciate how ordinary logic clearly explodes the welfare state's fallacious methods and goals? Mises puts it simply:

               In enacting . . . measures governments and parliaments have hardly ever
               been aware of the consequences of their meddling with business. . . . The
               statesmen who were responsible for the . . . policy were not aware of the
               import of their action . . . . The plight of Western Civilization consists
               precisely in the fact that serious people can resort to such artifices without
               encountering sharp rebuke.

     Politicians think about elections, popularity, and political choices. When they do think more substantively, they often do not think logically or with a long-term view (they are far too often neither educated nor experienced enough to be able to do so). Sometimes they simply don't want to think that way because it might be (electorally) unpopular. They are not practiced in simple fiscal integrity, and the show of confidence with which they present the economically impossible as the socially feasible, or worse, the socially just, has become routine and is often declaimed by fawning media as virtuous. They forget from whom they take and what such policies will do to those who do grow the economic pie—to their incentive to earn only to be even more heavily taxed.  The result is falsely called justice but it is no less a political crime than if you steal this book because you cannot pay for it.
     The profound understanding of the human condition that Mises exhibits-actually his book could rightly bear the title The Human Condition as easily as Human Action-does not deter him from politely and sometimes impolitely railing against that condition when he observes how real people respond to real problems with wholly unreal answers. His investigations and dissections are detailed, persuasive, and ultimately irrefutable. However, it is worth noting that parts of his analyses are sometimes so professional and professorial that only the


truly insistent will need to devour this whole work. For those who wish to indulge in the philosophy without seeing every proof, it is possible to skip chapters XVII, XVIII, and XX.


Although Mises does not directly define any of the terms he uses context usually makes their meaning reasonably clear. Nonetheless, a distinct understanding of certain concepts will prove valuable. Some of the terms Mises employs, though in vogue in the early part of the twentieth century and therefore part of his vocabulary, have long since gone out of popular usage. The words that have been defined for the reader appear after the synopsis of The Theory of Money and Credit (Chapter 34).

About the Author
Ludwig von Mises was a product of antipathy to nineteenth-century European economic dogma; he became a prime creator of twentieth-century economic science. Born in 1881 in Austria, educated in Vienna, and chased to Geneva, Switzerland by the Nazis in the 1930s, he finally settled in the U.S. in 1940. His battles were never ending. Even in the United States, his views were so widely disputed by the ultimately discredited Keynesians that he could not secure regular employment. He eventually landed a job at New York University, but his salary was paid by outside interests not the school, and he never became a regular member of the faculty. During his career he wrote twenty-five books and hundreds of scholarly articles; his students changed economic thinking and policy in the twentieth century, literally around the world. Mises died in New York City in 1973.

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