Regular readers know that I increasingly believe that having a firm grasp of basic economics is one of the most important duties of a citizen. Placing religion to the side, the free market has been the greatest engine for improving the lives of humanity in recorded history. Understanding it is central to being a responsible citizen.
For a couple of years now, I have been studying Austrian economics, which offers (in my judgment) the best set of tools with which to battle the Keynesians and those who seek to regulate and manipulate the economy. And I think it’s beyond question that the most important figure in Austrian economics is Ludwig von Mises, and his most important work is “Human Action.” (Hayek is certainly more well known, and “The Road to Serfdom” should be required reading for every citizen, but Mises is still #1.)
The problem is that Human Action is a monstrously intimidating work. Not only is it long, but Mises assumes that you are familiar with the work of previous economists like Carl Menger or Eugen Böhm von Bawerk. And if you’re like most people, you aren’t.
Economist Robert Murphy has done the world a great service in writing a book that communicates to the general public, in crystal clear English, the basics of “Human Action.” Murphy’s book is called Choice: Cooperation, Enterprise, and Human Action. At $23.70, it is on the pricey side, which is an unfortunate side effect of the fact that it is likely to be used as a textbook. (Ironically, this treatise against coercion gains value by virtue of the fact that many students will be compelled to buy it!) But I consider it to have been well worth the price, and urge anyone interested to buy it.
Murphy ends the book by quoting Mises to the effect that civilization depends upon every citizen studying basic economics. Murphy notes that this is the point of his book, and urges readers that if they convinced that Mises is right, it is their “duty to relay this precious knowledge to others.”
I have made some attempts at discussing Austrian economics here and there on the blog, and in particular I have always wanted to take a stab at discussing the Austrian theory of the business cycle. But that’s a hell of a post to write, and I could never find a way to put it all in one post. [UPDATE 8-29-15: Perusing my old posts, it appears I did try this once after all. Hubris!] Well, it took Bob Murphy this entire book to do it right. And the end result is compelling. And you need to hear about it.
Hence this planned series of posts. I intend to summarize Murphy’s summary of Mises, chapter by chapter. Since Murphy’s book has 17 chapters, I plan 17 posts.
In part this is for my benefit, as I believe that the best way to thoroughly master complex material is to try to restate it to others in your own words. You soon learn where the gaps in your understanding are. But in a larger sense, I am undertaking this project because I think it’s important to relay this knowledge to you, the blog reader, and get you interested in Murphy’s book.
And maybe some of you are interested in reading something that isn’t about Donald Trump or the Republican primary race.
My summary of Chapter One will be in the extended entry. It is short, but foundational to the project.
In Chapter 1, Murphy simply explains Mises’s views about what economics is really about. The answer may surprise you, as it is quite different from what you might assume, reading almost any modern mainstream economist.
Let’s start with what it is not. Economics, in the view of Mises, is not a science of measurement. It is not a collection of tables, charts, and graphs. It is not a science in which, like physics, one forms a hypothesis and then runs experiments to prove or disprove the hypothesis.
No. To Mises, economics is fundamentally a study of, well, human action. (Hence the title of his treatise.) It is the study of why men and women make decisions in order to carry out defined goals, and then implement those decisions in action.
What’s more, Mises thought of economics as a deductive discipline, in which one divines, through analysis and reflection, the fundamentals of why humans act, and derives the necessary logical implications of these fundamentals using a deductive and logical chain of reasoning. Kind of like geometry (but I’m getting ahead of myself).
Some people object that this has nothing to do with the real world. They’re wrong. But that’s a future post.
I hope everyone will be interested in this project and will follow it. And I hope folks are interested enough to get Murphy’s book, or even to start reading the free copies of Human Action itself available online (at Mises.org, which I financially support for the good work they do).
It should be fun!
UPDATE: Well, this is satisfying:
UPDATE x2: Note well: any errors in these summaries are mine and not Murphy’s.