'Human Action' in the Life of a Student

0:00At the beginning of the last semester in August, I participated in my first-ever interview by our school newspaper, SBU's Omnibus. And after a number of the usual questions like, do you like it in Bolivar? What courses do you teach? How many students did you have in Auburn? Did you like Auburn? Where did you come from? The reporter got down and asked me, why did you decide to become an economist? as if she wanted to get at the mystery of why not just me, but perhaps why anyone would want to be in that profession. And without a moment of hesitation, I spun my chair around, reached up to the second shelf of my bookcase, and pulled down my now slightly worn copy of Human Action.

0:46This book, I can say without any reservations, had a greater effect on the course of my life than any other book besides the Bible. It was reading Human Action that convinced me to major in economics. To want to teach economics, it convinced me to go to graduate school and it convinced me to become a scholar. It was this book that showed me what economics is, why it's important, what liberty is and why liberty is important and what true scholarship is all about. As I was beginning as an undergraduate to kind of stretch my sophomore mind, as opposed I joined Neil McCaffrey's conservative book club. I did that primarily because I could get Francis Schaeffer's complete works for $10.95.

1:36It was one of those deals where he had to buy three books over the course of the next two or three years or something like that. Within the next few weeks I received their bulletin advertising what they called the magnum opus of some Austrian economist named Ludwig von Mises. And the book looked big and was called Human Action. The advertisement featured high praise for both the author and the book, but I had heard of neither. It cost in the neighborhood of $35, which was a lot of money for a college student in 1986, and it counted for two of my required selections. So I thought, well this is 35 bucks, but it counts for two, so I'm like, you know, two, come on, come on, bad deal.

2:22And so what I want to guide you is, I've never heard of this person before, and I want to talk to my economics professor at Northwestern College, and I will be forever grateful to Dr. Elder for encouraging me to actually purchase the book if I had the money. I did purchase a book and it was one of the most profitable investments I ever made as a student or as for my entire life. When a rocket is launched, if its trajectory is just off-target a little bit, just one degree or two, it can miss its destination by miles. And the same holds true with scholarship. Scholarship. When one sets out on the path of the academic, it is important that he is starting from a firm foundation and that his course is true. Human Action was such a foundation for me in many ways and continues to be an intellectual cornerstone for the many students who have discovered its contents. The chief virtue that Human Action possesses for the

3:19student is that it is strongly, yet matter-of-factly, sets forth economics as a pursuit of truth, Not the truth of the passing fantasy, not the yet-to-be-refuted-with-statistics mini-truths, but economic truth that will stand for all ages. Upon beginning the first chapter, the student is immediately set forth on the right road, as Mises begins where economics must begin, human action. Mises defines human action as purposeful behavior, and all of his economic theorems and corollaries are deduced from this non-controversial axiom. This immediately rests economics on intellectual bedrock. As I read the opening chapters of Human Action during my sophomore year, I had sort of an epiphany as all of the conclusions that I've learned in my principles classes suddenly fell into a logical place.

4:05The laws of supply and demand were not really plausible sounding notions that were true only in an unrealizable ideal world. They were not the necessarily implications or merely the necessary implications of assumptions of the neoclassical model. But along came Mises, who showed me that economics is logically whole. Supply and demand are rooted in the law of marginal utility, which is itself induced from the axioms that human beings act a purposefully. Mises' defense of the law of demand, for example, is much superior to the Nobel Prize-winning economist George Stigler's.

4:56Stigler, in his price theory text, says that there is no rigorous proof that as the price of goods goes up, the quantity of that good that is demanded goes down thanks to him. He merely says we can be pretty sure this is the case, quote, if an economist says this is the case, he's pretty sure about it, he's not quite sure, pretty sure, because, quote, if an economist were to demonstrate his failure in a particular market at a particular time, he would be assured of immortality, professionally speaking, and rapid promotion. Since most economists would not dislike either reward, we may assume that the total absence of exceptions is not from lack of trying to find them, end of quote. That's it. That's its proof.

5:42In other words, we think this is the case. This is the way it's always been. We think this is the case because this is the way it's always been. However, you know, there's always a possibility that it might not be the case to move around. It could be that tomorrow people will begin to demand more as the price goes up, other things equal. I mean, we can never really be sure, but a student who reads Mises, however, is not left walking on the shifting sands of empiricism. No, he's walking on the terra firma of true axioms and sound logic. It's hard to overestimate the importance of Mises' rooting economics in the truth of human action. For the student, the intellectual consequences are many. One of the most important consequences is that it allows the students to integrate economics with other bodies of thought. And for me, as a student, this was especially important. As a student being exposed to new ideas and new thoughts on both the undergraduate and graduate level, I wanted to make sure

6:43that economic theory could be integrated with my primary frame of reference, Christian Orthodoxy. Did economic doctrine regard to the nature of humans and human action square with Christian doctrine? A Christian orthodoxy teaches that a man is a person who acts with a purpose. As Jay Gressen Matron writes in his Christian View of Man, quote, the actions of a person, just because they are free actions, and no mere meaningless beggaries of blind chance, are determined by motives. When a man is placed before some turning point in his life, In life, he sets before himself the considerations on the one side and the considerations on the other side, and then, in light of those considerations, he acts. Mainstream economics gives lip service to what it calls choice theory. However, it starts from the assumptions of the neoclassical model and proceeds to do analysis as if economic agents are more like the inanimate object of physics, and finally reacting to the stimuli we call relative costs.

7:42Mises on the other hand takes a different approach. Mises recognized that economic activity was the result of purposeful choices made by individuals, a point of view that fits nicely with Christian doctrine and integrates the body of economic truth with truth in the larger context, which gave me a prime motivating factor to want to go ahead and learn more of this stuff. Finally, a great tension was resolved in my mind as I read Mises' exposition of self-interest. This is so important for a student, because in so many other classes, he is being told that economists assume that people are motivated only by selfish greed and a desire to gain the things only of this world, kind of like old man Potter in It's a Wonderful Life, right?

8:29That there's something out there that he can't get his finger on and it's gone, and that's Now, Mises, on the other hand, destroys this criticism when he writes, quote, What a man does is always aim at an improvement of his own state of satisfaction. In this sense, and in no other, we are free to use the term selfishness and to emphasize that action is necessarily always selfish. Even an action directly aiming at the improvement of other people's conditions is selfish. The actor considers it as more satisfactory for himself to make other people eat than he'd eat himself. In other words, it's perfectly possible for people to find satisfaction procuring for others.

9:19That's what Mises is saying. Mises allowed me to see that economics takes into account all the variation of various motivations that people have. He explains that human actions are motivated to increase their level of satisfaction, not necessarily that they are greedy. This is one of the most important stumbling blocks that students, especially at Christian colleges and universities, have to overcome. He also, in his book, makes a clear distinction right off the bat between economics and ethics and was very good at communicating the point that what economics is about is linking cause-effect theory, identifying the cause and effect relationship between human action and the consequences of that action.

10:11and kind of, as Roger pointed out, not exactly the why people act, but the ends that they're searching. It's not about identifying the ends, Dwayne, well, are the ends good or bad, noble, ennoble, etc. And so very quickly, as such, you get a sense of human action that what is efficient is not necessarily what is ethical. And so early on I became very skeptical of a defense of intervention based on the notion of quote-unquote efficiency. Which again was important for my mind as I started learning more and more about economics. Besides increasing my understanding of economics, my reading Human Action set me forth on my career.

11:00Reading Human Action made me want to become an economist. A few college students know exactly what they want to be when they graduate. Of course, they don't want to make a living, but they don't want just any job. They look for vocations they feel are worth pursuing. After my exposure to Human Action, I knew what I wanted to do. I wanted to do this. Economic theory is true. It isn't a waste of one's life researching, studying and teaching economics. It is furthering a body of knowledge. It is teaching more students the fundamental truths of economic law. Human Action was also encouraging because while it was high-level economics, I could read it and I could understand it, most of the time. Mises' prose was clear and his logic made sense, unlike the professional economic journals that were on the periodical shelves of our school library.

11:50I would never have become an economist if all there was to read was the American Economic Review. One of my economic students, who happens to be from China, who's attending this conference, he's read all of Human Action and he's praised it for his readability. In fact, and I've never heard this before by anybody, he thinks it's a lot easier to read than Man Economy and State by Murray Rothbard. In our conversations I've directed a couple of independent studies in the intermediate Micro and Intermediate Macro courses, since we don't offer them on a regular basis at SBU. He told me that the reason he likes Human Action was reading Human Action that convinced him that communism was an impossible utopia.

12:40And this student hopes someday to complete a PhD in economics. I was further encouraged as I read Human Action because it became apparent that good economics provides knowledge very relevant to the world in which we live. Mises did not spin out some sort of ideal theory of perfect competition that is removed from life. As I sat then in my microeconomics classes and heard the professor describe the characteristics of perfect competition, I join my fellow students in doubting whether any market was really like this. While the model may provide some helpful conclusions, it is unrealistic enough to cause even the most earnest economic student ample cognitive dissonance.

13:26As I describe to my students, the same market construct for the sake of exposing them to the model. I mean, I don't after a while want them to get out and be considered mental magics because I've never heard of perfect competition and the construct of the model or perfect monopoly for that matter. As I explain to them what the quote unquote profession thinks about how the market really works or how we study the market, I often hear my students ask, does it really work like this? and you know they give me the same reaction that I had and this is a perfectly reasonable question now in Human Action Mises gives a picture of the real market where real entrepreneurs make real decisions and real uncertainty in real time with real information limitations as a student I was able then to compare the standard textbook model with the real economy described by Mises and this kept me incidentally from changing majors and And it also gave my students, and gives my students, a better theory upon which they can hang their hat.

14:37Now, one of the most important benefits the student receives from reading Human Action is its authoritative comments on policy issues. When assigned to write a paper on the viability of Social Security, the first place I turned to was Human Action. The passage I read then, I have never forgot. It is a passage that is as timely as today's headlines, as it turns out. Mises writes, quote, One may try to justify Social Security by declaring that the wage earners lack the insight and the moral strength to provide spontaneously for their own future. But then it is not easy to silence the voices of those who ask whether it is not paradoxical to entrust the nation's welfare to the decisions of voters whom the law itself considers incapable of managing their own affairs.

15:32And you'll recognize this question rings as true today as it did when it was written. Additionally, I was required from the American Public Policy Class to discuss welfare reform. And if you read Mises' comments on welfare, you quickly understand the problems of intervening in the economy just a little bit to help just some people get out of poverty. I became quickly acquainted with the truth that any sort of middle-of-the-road welfare policy, any sort of middle-of-the-road interventionism could never be a stable solution. Such interventions quickly create new problems, right? If you subsidize poverty, you're going to get more poverty. If you subsidize grain, you're going to get more grain.

16:17If you subsidize anything, you get more of it. So we subsidize illegitimate children. What do we get more? Illegitimate children. Such interventions quickly create new problems. And then, of course, what do we do? Well, we have a crisis. We've got to intervene more, right? So we create new problems and call for even more intervention until we're at the doorstep of full-blown socialism. And I knew this was right, but I must confess that at that period of time I wasn't quite, I didn't always act on my convictions, particularly when a grave seemed to be writing on things, and I kind of, I weaseled out, because my soul, I want to be honest with you, I do think it was my soul effort and pure intellectual dishonesty when I pretty much kind of offered up Friedman, of all people, Friedman's negative income tax is a possible solution.

17:07And I did this because I knew the professor seemed like he could be possibly sympathetic to Friedman's negative income tax idea. I knew there was no way in the wide, wide world of sports he would be sympathetic to Mises's, you know, suggesting we abolish the whole thing completely. I mean, he's said as much in class. And so, I kind of, I went ahead and wrote the paper with a Friedman-like perspective, and I've always regretted that. I've always regretted that. It's always kind of gnawed on my conscience for the rest of my life. So, you know, if you're ever in that position, don't do it. And don't sell out. It doesn't work. It doesn't pay. You know, sometimes, you know, an A is, there's no cost high enough to get, you know, to have to go through to get an A. So it's not worth it.

17:55When confronted with the pure socialist ideology in my Cultural Anthropology course, again I found Human Action to be a fount of much wisdom. In fact, the Cultural Anthropology course was taught by our only, or I guess one of our only two sociology professors, and the sociology professor even looked like Karl Marx. He had kind of the bushy hair, kind of his beard. In fact, he had like a poster of Karl Marx up on the wall behind his thick desk, The Cultural Anthropology course was all about the haves and the have-nots and the haves are generally irresponsible, the have-nots are poor, oppressed folk. Early on, Mises exposed my mind to the hypocrisy of much egalitarian rhetoric.

18:47I mean, when a leftist begins chanting, you know, fraternity, equality, he's really yelling, what about my needs? That tends to be what was really communicated. And in a passage that is ever struck with me, Mises writes, quote, when the American wage earner refers to equality, he means that the dividends of the stockholder should be given to him. It does not suggest a curtailment of his own income for the benefit of those 95% Mises provided me with an early reputation of deconstructionism, the anti-theory literary Criticism that claims there is no meaning to be found in what an author says, except that which the individual reader brings to the text, that he constructs for himself.

19:54So if you think an author is saying one thing, and I think he's saying exactly the opposite, well that's okay, both are equally true constructions, I used to say. There's no meaning in the text, it's just how we interpret the words. Students need a sure mind now more than ever in these postmodern times, for our very president has taken a stab at deconstructing the meaning of the word alone, and questioning what our definition of the word is. Throughout the modern era, different interest groups have argued for what Mises termed polylogism. Marxists, for instance, thought that there was an inseparable gulf between the proletariat mind and the bourgeois mind.

20:39Not that the two classes had just had different opinions about things, but that they really used two different types of logic. Their minds were constructed differently. So let's kill the bourgeois. Working in Washington D.C. for a couple of years, I often saw a popular teacher that spoke to this philosophy along racial lines. Perhaps you've seen it. It proclaims it's a black thing. You wouldn't understand. as if to say, well look, I've got problems, but your white mind just can't think about problems the way my black mind can think about them, so there's no use of us even talking about anything, we just can't communicate, except in case you are understanding me right now, give me my subsidy, that's kind of the thinking behind this sort of line of thought.

21:30Now the same thought of thinking is found in feminist academic circles, in all brands of multiculturalism. Mises, by the way, demonstrates that Marx was bourgeois himself. And somehow, you know, Marx never did really explain how he escaped the bourgeois mind even though he was, you know, bread of bourgeois parents. It's kind of an interesting little paradox that Marx didn't want to discuss, at least openly. Mises concludes his reputation of all this sort of illogic by writing, quote, A theory is either correct or incorrect. A theory can never be valid for a bourgeois or an American if it is invalid for a proletarian or a Chinese. As I was a junior, having read this tonic for such diseased thinking, I became fully conversant in the discussions that I was having with my friend at the time, an English major, about the various schools of literary nonsense.

22:25She was taking her senior seminar in literary criticism and discussing the poetry of Hopkins from all these different perspectives, from the Marxist perspective, the feminist perspective, and then finally just the basic, I don't know, the normal perspective, I guess. She really didn't buy any of it either, but because I'd read Mises, I felt fully up to speed on this intellectual conflict. And over lunch we had much joy deconstructing the deconstructions, and in fact, in a particular moment of zeal, when I knew she was at the computer lab, I re-read this passage in Mises, I got all excited and I grabbed my copy of Human Action, ran over to the computer lab and said, look, look at this, look at what I just read, and it was such an exposition of why Marxist polylogism was a bunch of rot.

23:20And she read it and said, uh-huh, hmm, and she kind of agreed with it and said, I hope you didn't bring this all the way over here just for me. I thought, well, of course not, I often, you know, walk around campus with a 900-page economics textbook. Some people get more excited about Human Action than others, and we can't help that. In writing Human Action, Mises did not only provide us with a coherent treatise on economic theory. He did not only set forth a ringing defense of reason and liberty. In Human Action, a student holds in his hands a supreme act of scholarship. Human Action did not only make me want to become an economist, it also inspired me, and still inspires me, to be a true scholar.

24:07From the beginning, the reader of Human Action was struck by how sweeping Mises' knowledge is. Murray Rothbard once commented, once recounted, how when someone first recommended the book to him, he asked, well, what's it about? And the response to Rothbard was, everything. Just this week, a student of mine was impressed with the same observation. For my managerial economics course that I was again directing him one-on-one with, because the regular classes fit into his schedule quite right, I assigned him to read a particular brief section out of Human Action about the distinction between the manager and the entrepreneur and how, while sometimes those functions kind of overlap, they're two distinct functions. And the student then, after he read it, he came back and he volunteered that he liked the section and then reported that he liked it so much he went and started to read the beginning of the book.

25:00And as he read the first part of the book he was greatly impressed with just how much Mises knew. He said he doesn't just write about economics, he said of course it's an economics test, But he also writes about everything else. This student now has in his mind what real scholarship is. That's the value of human action. Mises's high standard is manifested throughout the book. He is obviously well versed in economic thought. He's read in his, you know, comprehended Bamba work, you know, as Garrison pointed out. But he also demonstrates his familiarity with History, Political Theory, Philosophy and Culture. Throughout Human Action, one finds references to Aristotle, Bentham, Mill, Bismarck, Napoleon, Marx, Engels, St. Francis of Assisi, Locke, Leibniz and Einstein, just to name a few.

25:51One facet of Mises' thinking that particularly impressed me was his reference to the arts. Whenever Mises discussed art, it was clear that he knew what real art was. He was a man Mises was a man of high culture. His examples of creative genius were Mozart, Dante, and Beethoven. No Snoop Doggy dog for him. After reading Human Action as a student, I was left with the feeling that this is what real scholarship is. This is the level I should aspire to. This is the level that all scholars should aspire to. Mises provides for every student a role in prayer meetings. Now of course, you know, it wouldn't hurt these critics to attend a real prayer meeting just once in a while. That's what happens. Nonetheless, this criticism is patently untrue. It's patently false.

26:38Of course, shallow minds can take any book that they read and turn it into a holy text. But the fact of the matter is that if a student comes to Human Action with a critical mind, he will find economic truth on page after page. And this is not the truth of dogma, but the truth of objective logic. There is nothing supernatural or mystical about it. Mises simply gets it right, time after time after time after time. Would that more of today's economists had such a record? It is impossible to calculate the full benefits I have taken from Human Action. It showed me the truth of economics. It showed me, or it made me want to become an economist. It helped me to be a scholar and it set forth the rational case for liberty. It does the same for my students. I am extremely honored to have the opportunity to speak at a conference celebrating the 50th anniversary of this great book.

27:28When my economics professor, Dr. Elder, encouraged me to buy a copy of Human Action, neither of us knew where we would end up, or where I would end up. If you want to fan the embers of liberty and economic truth, buy a student you know a copy of Human Action. Someday, he will be speaking at a conference like this, explaining the great impact it had on his life.