Source: Caixin China Reform Magazine, May 2013.In 1949, the book "Human Action" by the Austrian economist Mises was published by Yale University Press. At the time, the majority of Yale's academic committee was opposed. The reason was that after Mises moved to the United States, he could not find a faculty position at any university. After World War II, Keynesianism dominated American academia and advocated intervention and regulation of the economy by **. In the eyes of mainstream academics, the economics tome that Mises has devoted his life to writing is too outdated. However, at the insistence of an academic member, the book was published. Surprisingly, this anachronistic and expensive tome of scholarly monograph sold out, with two reprints in the first month of publication alone. Time has proved to be an epoch-making book, which profoundly influenced a large number of scholars such as Ann Rand, Herzlett, and Rothbard, and led to the comprehensive revival of free market economics and liberalism in the United States, and spread to all major industrial countries. Today, the impact is growing. Human Action is undoubtedly one of the most important books in the history of economic thought. What kind of book is this?Author: Cheng Ye.
Human beings have a long history of exploring market phenomena. As early as ancient Greece, keen philosophers had discovered that there were inherent laws in the operation of the market. In modern times, with the development of the market and the accumulation of economic ideas, economics has gradually developed into an independent discipline. Adam Smith discovered that human self-interest is like an "invisible hand" coordinating the market; Ricardo discovered the principle of comparative advantage, proving that international ** can benefit both rich and poor countries; European scholastic philosophers systematically studied the question of money and credit; Marx noticed the phenomenon of the economic cycle of capitalism and tried to explain it with the theory of surplus value; Menger founded the Austrian school of economics and creatively used subjective value theory to solve the "diamond and water" paradox that plagued classical economists, and his student Pombavik discovered that interest was a temporal phenomenon and questioned the theory of surplus value. All these efforts together paint a panorama of economics. However, these knowledge are like fragments, scattered into various fields such as production, consumption, distribution, supply and demand, value, currency, cycle, macro, etc., lacking connection with each other, and even conflicting with each other. In "Human Action", Mises creatively integrates all the knowledge of economics and presents a complete economic discipline with impeccable logic and insight. In this huge book, the market is no longer a local phenomenon of dispersion and isolation, but should be a closely related and interlocking whole. Not only that, but he also applied this theory to other fields, linking social, political, historical and other disciplines for the first time in history, greatly enriching the understanding of human society as a whole.
Mises's approach is embodied in the title of the book, "Human Action." As we all know, social science is the study of people. There are usually two opposing views on how to study human society. The first view is that human society is completely different from the natural world and, therefore, cannot be studied using scientific methods. Economic phenomena should be studied in the context of history, culture, and traditional practices, such as humanistic economics, historical schools, institutional economics, and so on. The second view is diametrically opposite, arguing that there is no difference between human society and the natural world, and that economic phenomena, like natural phenomena, can be reduced to mathematical formulas. Therefore, human society can apply the same scientific research method - building mathematical models based on hypotheses and then verifying them in reality. Macroeconomics and econometrics in today's mainstream economics are representatives of the latter. Mises, on the other hand, pioneered a unique approach to research that he called praxeology. Behavioral science combines the advantages of the above two methods: it not only takes into account the uniqueness of human beings, which is conscious, and human behavior cannot be reduced to mathematical formulas, but also recognizes that human society has objective and cognizable laws. This doctrine takes "man in action" as an unquestionable premise, and uses a special method of scientific research, logical deduction, to ensure that this premise is always adhered to in research.
Logical deduction is an ancient research method, and geometry is its most typical application. The logical deduction method starts from the premise of an axiom that is determined to be true, uses the introspective deduction method to explore the logical implication of the axiom, and derives various inferences, that is, theorems, step by step. Each theorem is as reliable as the axiom that is the premise. The reliability of the entire theoretical system is ensured by the rationality of human logical thinking. In Mises's theory of action, the ultimate axiom, the origin of all economic and social theories, is that "man's action is an act of purpose." Mises likes to give the example of why train stations tend to be crowded in the morning and evening, while empty at other times? The only way to explain this phenomenon is to look at the purpose of people - morning and evening rush hour, everyone has to catch the train.
Once the axioms are established, other theorems can be introduced, such as "action shows that man is dissatisfied with the status quo, and action is to satisfy his desire - to achieve the goal", "man can understand the universal cause and effect relationship between the universe and therefore act, and cause and effect determine the means and ends", "man will always use the means he thinks is appropriate to achieve the end he wants to achieve - that is, human reason". Then, the constraints of the real world are introduced, such as "the real world does not have enough means to meet all the ends of people, resources are scarce, therefore, people have to make trade-offs (the behavioral meaning of the word economy)", "trade-offs mean that people should be ranked according to the importance (value) of the end, and fulfill their wishes one by one", "different people have different value rankings, and exchanging with each other can enhance the satisfaction of all". At this point, Mises discovered the essential feature common to all market phenomena – exchange. Therefore, Michaels economics is also known as exchange science. It is precisely because of the understanding that the market is based on real people, and that it is a network of choices and exchanges between people under the constraints of reality, that Mises has been able to stand at an unprecedented height and solve one economic problem and paradox after another.
Another valuable feature of the Michaelis theory is that it has always been in line with human social practice. In "Human Action", the economy and society are inseparable wholes, and Mises inherited the tradition of Carl Menger, the founder of the Austrian School, and used action science to redefine Menger's methodological individualism.
Mises argues that it is only possible to recognize broad human cooperation if it is realized that actions must be carried out by individuals. Insisting on individualism does not mean denying the existence of collective action, but only treating collective and social action as a special case of human action in a broad sense. From the perspective of individualism, the collective cannot exist independently of the individual, all social actions are composed of individual actions, and all historical events can also be reduced to individual actions. In this way, Mises began his sociological research with the individual as the starting point. Adam Smith believed that a market economy could benefit society as a whole when driven by human self-interest. Mises, on the other hand, went further, arguing that self-interest was the fundamental reason why human beings constituted society. Society does not originate from the dictates of a ruler, but is formed by people who are guided by reason to realize that exchange, division of labor, and cooperation can bring benefits to everyone, and that people are formed on the basis of self-interest. People follow the rules and conventions of society because it is good for everyone. Mises developed Ricardo's principle of comparative advantage and extended it to the universal principle of interpersonal cooperation as an argument that the division of labor leads to universal material prosperity; Combined with the subjective axiology of the Austrian School, he argued that market exchange based on the division of labor can increase the value satisfaction of all participants. In this way, Mises argues that "the division of labor is the cornerstone of all social relations" on both material and value levels.
Since everyone is not born "equal", people have different personalities, tastes, preferences, and abilities, and the resource endowments in nature are also very different, so what is the standard and how to carry out the division of labor? This brings us to the core of the book "Human Action" – economic calculations. The problem of economic calculation is a long story, and it can only be briefly summarized here: the spontaneous exchange of commodities, factors, capital, and labor in the free market can provide a visual reference for all members of society, and allow one to calculate between the various means of satisfying the end; Let people not only discover their own strengths, but also understand the wishes of others, and take into account the satisfaction of others while pursuing self-interest. It is under the guidance of the first that the rationality of the individual forms the rationality of the society, and the human society can organize large-scale social production and cooperation to promote the welfare of all members. The specific formation mechanism of ** is complex and cannot be described in detail here. It is important to emphasize that Mises's views differ significantly from today's mainstream economics on the issue of **. Mises adheres to the subjective axiology of the Austrian school, arguing that value itself is immeasurable, and that the level of value is only the order of subjective satisfaction, which cannot be measured by numerical values. However, through human actions, through market exchange under the constraints of reality, subjective value can be reflected in the form of ** (exchange ratio) for market participants' reference. Therefore, ** is not a measure of value, but an indicator that reflects relative scarcity (i.e., people's subjective will relative to the constraints of objective reality). Moreover, in Mises's view, the emergence of ** depends on exchange, which in turn presupposes the possession and domination of property by individuals. Therefore, economic calculations based on ** are the product of private property and the market. The market in Mie economics refers to the network of all human spontaneous and voluntary exchanges, and ** is a tool for market participants to coordinate their wills. On the contrary, mainstream economics tends to simply regard ** as a technical tool for allocating resources, and the market as a technical means to improve efficiency.
Once Mises's social theory is understood, his policy propositions are easy to understand. From the perspective of actology, ** intervention is a mandatory order and is therefore fundamentally different from voluntary exchange in the market. Economic calculations allow market participants to objectively calculate gains and losses in order to seek maximum personal satisfaction; And whether the intervention really helped the people it wanted to help, there are no objective indicators to refer to. When applied to politics, behavioral studies have become a discipline that analyzes policies and their outcomes. Mises agrees with David Hume's factual value dichotomy. Action, as a theoretical science, cannot make value judgments on its own. Economic science, as a branch of behavioral science, can never tell people what to do, what it can do is tell people what to do if you want to achieve a certain goal. Economics reveals the consequences of a policy, allowing people and ** to make informed value judgments. In Human Action, Mises defends laissez-faire policies from a utilitarian value standpoint. Of course, utilitarianism here is not the kind of utilitarianism that we usually understand, arguing that the utilitarianism of the few can be sacrificed for the benefit of the many. In fact, individualism rejects all additions and subtractions of interpersonal utility and rejects the concept of social utility. Mises acknowledges the role of ** in curbing crime and safeguarding liberty and property. The essence of his laissez-faire proposition is to let individuals decide how they want to participate in the social division of labor, and consumers to decide what entrepreneurs should produce. According to Mises, the logical structure of the human mind is the same, so everyone can understand the principles of economics. As he argues in "Human Action", the division of labor and social cooperation are the fundamental interests of every human being. Violent predation and coercive intervention can bring short-term benefits to others at the expense of some, but they are not the long-term solution. The free market is in the long-term interest of all, the backbone of civilization and prosperity. Michael's utilitarianism inherits and carries forward the traditional concept of morality, believing that it is ethical to consider the long-term interests.
In Chapter 30 of Human Action, Mises applies economic theory to the decline and fall of the Roman Empire. He found that although the Roman Empire lacked the institutional basis for the operation of a modern market economy, under the rule of the Ming Emperor, a system of division of labor and cooperation had developed, and agriculture, handicrafts, and commerce began to be specialized, and the division of labor made cities dependent on each other. However, the empire was at war for years and had to use currency depreciation to finance expenses, which led to high inflation. In order to suppress inflation, the rulers issued strict control orders, which destroyed the entire cooperative system: the grain grown by the peasants could not be sold at market prices, so they had to stop large-scale agricultural production and start making their own handicraft tools on the farms; There is a food shortage in the cities, and people flee the cities and return to the countryside to grow their own food. At this time, no amount of draconian laws can prevent the collapse of civilization. Civil strife combined with foreign invasion led to the collapse of the empire, and most of the territory returned to a primitive state of self-sufficiency. Of course, the modern political system cannot be simply compared to ancient Rome, but this historical lesson is still useful today.
Human Action has a lot of roots in China. In 1976, the Chinese translation by Taiwanese scholar Xia Daoping was published for the first time. Jiang Shuojie, an academician of Taiwan's "** Research Institute", was deeply influenced by Mises's economic thoughts, and he used Mises's theory to explain Taiwan's experience and comprehensively discuss the reasons for Taiwan's economic success. According to Hong Kong publisher Lin Xingzhi, the Chinese ambassador to the United States specifically asked for "People's Action" in 1989. Although it is impossible to determine the extent to which Chinese mainland's economic reform was influenced by Mises, the universal principles of Michael's behavioral theory, the connection between economic policy and its consequences can be traced in the course of reform. For example, the economic policy represented by the dual-track system has brought serious political consequences, leading to the interruption of the reform process for a time. It was not until after 1992 that the rulers fully liberalized and relaxed other regulations, and the market economic system was initially established. Today, however, the right notion seems to have been forgotten by many, with a series of consequences – environmental pollution, inflation, asset bubbles, distorted investment structures, and so on. Today, more than ever, it's important to listen to Mises's teachings: Can the people change their mindset of short-term gain? For the long-term interests of all, it is necessary to change functions, reduce direct intervention, and promote the construction of infrastructure for a modern market economy as soon as possible – private property, freedom, justice, the rule of law, and so on. Then, as Mises's theory of action reveals, large-scale social division of labor and cooperation must lead to more lasting material prosperity and spiritual enrichment.