Human Action - A Treatise on Economics

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The Scholar Edition by Ludwig Von Mises

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Human Action - A Treatise on Economics

  1. 1. HUMAN ACTION A Treatise on Economics BY LUDWIG VON MISES LUDWIG VON MISES INSTITUTE AUBURN, ALABAMA
  2. 2. The Ludwig von Mises Institute gratefully dedicates this restored Human Action to all its Members who aided in this historic project, and in particular to the following Patrons: Mark M. Adamo Thomas K Armstrong TneAmmng Foundation Richard B. Bleiberg Dr. John Bratland Jerome V Bmni . The Bwni Foundation Sir John and Lady Dalhoff JohnW. Deming John A. Halter Mary and George Dewitt Jacob The Kealiher Family William Lowndes, 111 Ronald Mandle Ellice McDonald, Jr., CBE, and Rosa Laird McDonald, CBE W i i m W. Massey, Jr. Joseph Edward Paul Melville Roger Miliken Richard W. Pooley, MD Sheldon Rose Gary G. Schlarbaum Conrad Schneiker Loronzo H. and Margaret C. Thornson Quinten E. and Marian L. Ward Keith S. Wood The Ludwig von Mises Institute thanks Bettina Bien Greaves for permission to reissue the first edition of Human Action. Copyright O 1998 by Bettina Bien Greaves Introduction Copyright O 1998 by The Ludwig von Mies Institute Produced and published by The Ludwig von Mises Institute, 518 West Magnolia Avenue, Auburn, Alabama 36832, (334) 844-2500; fax (334) 844-2583; mail@mises.org;www.mises.org All rights reserved. ISBN 0-94546624-2
  3. 3. INTRODUCTION^ T O THE SCHOLAR'S EDITION 0 NCE in a great while, a book appears that both embodies and dramatically extends centuries of accumulated wisdom in a particular discipline, and, at the same time, radically challenges the intellectual and political consensus of the day. Human Action by Ludwigvon ~Mises (1881-1973) is such a book, and more: a comprehensive treatise on economic science that would lay the foundation for a massive shift in intellectual opinion that is still working itself out fifty years after publication. Not even such milestones in the history of economic thought as Adam Smith's Wealth ofNations, Alfred Marshall's Principles, Karl Marx's Capital, or John Maynard Keynes's General The09 can be said to have such enduring significance and embody such persuasive power that today's students and scholars, as much as those who read it when it first appeared, are so fully drawn into the author's way of thinking. For this reason, and others discussed below, this Scholar's Edition is the original 1949 magnum opus that represents such a critical turning point in the history of ideas, reproduced (with a 1954 index produced by Vernelia Crawford) for the fiftieth anniversary of its initial appearance. When Human Action first appeared, its distinctive Austrian SchooI approach was already considered a closed chapter in the history of thought. First, its monetary and business cycle theory, pioneered by Mises in 1912' and extended and applied in the 1920s had and 193O S , ~ been buried by the appearance of Keynes's General 1. T h e archives a t Yale University Press, Grove City College, and the Ludwig von Mises Institute provided source material. 2. The Theory ofMonqand Credit, trans. by H.E. Batson (Indianapolis, Ind.: Liberty Classics, [19 121 1980). 3. Essays can be found in On the Manipulation ofMonq and Credit, trans. by Bettina Bien Greaves (Dobbs Ferry, N.Y.: Free Market Books, 1978).
  4. 4. vi Human Action Theory, which gave a facile but appealing explanation of the lingering global depression. Second, Mises's 1920 demonstration that a socialist economy was incapable of rational economic calculation4sparked a long debate in which the "market socialists" had been widely perceived to be the eventual victors5 (in part because it became a debate among Walrasians6).Third, and fatal for the theoretical core of the Austrian School, was the displacement of its theory of price, as originated by Carl Menger in 1871' and elaborated upon by Eugen von Bohm-Bawerk, John Bates Clark, Philip H. Wicksteed, Frankk Another strain had begun to Fetter, and Herbert J. D a ~ e n ~ o r t . ~ develop along the lines spelled out by Menger's other student Friedrich von Wieser, who followed the Walrasian path of developing price theory within the framework of general equilibrium. Wieser was the primary influence on two members of the third generation of the Austrian School, Hans Mayer and Joseph A. ~chum~eter.' Members of the fourth generation, including Oskar Lhlorgenstern, Gottfi-ied von Haberler, Fritz Machlup, and Friedrich k von Hayek, also tended to follow the Wieserian approach. T h e crucial influence on this generation had been Schurnpeter's treatise Das Wesen und der Hauptinhalt dm Theoretischen Nationalokonomie, published in 4. Economic Cakulation in the Socialist Commonwealth, trans. by S. Adler (Auburn, Ala.: Ludwig von Mises Institute, [I9201 1990). 5. Trygve J.B. Hoff, E c m i c Cahhtion in the Socialist Sociq, trans. by M A Michael (Indianapolis, Ind.: Liberty Press, [I9491 1981). 6. Murray N. Rothbard, "The End of Socialism and the Calculation Debate Revisited," Review ofAustrian Economics, 5, no. 2 (1991), 51-76. 7. Carl Menger. Principles ofEconmics. trans. by James D i n p a l l N e w York: New York University Press, [I8711 1976). 8. Eugen von Bohm-Bawerk, "Grundziige der Theorie des winschaftlichen Giiterwertes," Jahrhiichw @ r Nationaliikonmie und Statistik 13 (1886), 1-82, 477-541; John Bates Clark, The Dirtribution of Wealth: A Theory of Wages, Interest, and Profits (New York: Augustus M. Kelley, [I8991 1965); Philip H. Wicksteed, The Alphabet ofEconmic Sense, Pt. I: Elements o the Theory o Value f f or Worth (London: Macmillan, 1888); Frank A. Fetter, Eonomic Principler (New York: T h e Century Co., 1915); Herbert J. Davenport, The Economics o f Enterprise (New York: Augustus M. Kelley, [I9131 1968). 9. T h e two economists for whom Schumpeter felt the "closest affinity" were Walras and Wieser; see Fritz Machlup, "Joseph Schumpeter's f Economic Methodology," in idem., Methodology o Economics and Other Social Sciences (New York: Academic Press, 1978), p. 462.
  5. 5. Introduction to the Scholar's Edition vii 1908."This bookwas a general treatment ofthe methodological and theoretical issues of price theory from a Walrasian perspective. Apart from Wieser's writings, it was the only "Austrian" workofpure theory to appear prior to Mises's Nationalokonomie, the German-language predecessor to Human Action. For the young economists studying in Vienna, and despite criticisms by Bohrn-Bawerk, Schumpeter's book became a guide to the future of the science. As Morgenstern said, "the work was read avidly in Vienna even long after the First World War, and its youthful freshness and vigor appealed to the young students.... [Llike many others in my generation I resolved to read everything Schumpeter had written and would ever write."" After Bohm-Bawerk's death in 1914, no full-time faculty member at the University of Vienna was working stricdy within a Mengerian framework, while Mises's status as a Privatdozent diminished his academic standing. Prior to the geographical dispersal of the school in the mid-1930s,12moreover, none of the members of these latter generations had achieved international recognition, particularly among English-speaking economists, on the order of Bohm-Bawerk. After the retirement of Clark, Wicksteed, Fetter, and Davenport from the debate on pure theory by 1920, the School's influence on the mainstream of Anglo-American economics declined precipitously. This left the field of high theory, particularly in the United States, completely open to a Marshallian ascendancy. In Germany, the long night of domination by the anti-theoretical German Historical School was coming to an end, but the book that reawakened the theoretical curiosityof German economistsafter the First World War was Gustav Cassel's Theoretische Sozialokonomie, which offered a verbal rendition of Walrasian price theory.13 In the Romance countries of France and Italy, Mengerian price theory never 10. Schumpeter's translation of the title: The hTatzlre b m c e o Theoretical and f Econumics(Munichand Leipzig: Duncker & Humblot, 1908). This book coins the phrase "methodological individualism." 11. SelectedEconomicWritingsofOskarMmgenstern,ed. Andrew Schotter (New York: New York University Press, 1976), p. 196. f 12. Earlene Craver, "The Emigration of ,4ustrian Economists," Histoly o Political Economy, 18 (Spring 1987), 1-3 0. 13. Gustav Cassel, The Theory ofsocial Economy (2d ed. New York Harcourt, Bracc and Company, 1932). As Mises wrote, "The decade-long neglect of theoretical studies had led to the remarkable result that the German public
  6. 6. ... vlu Human Action achieved a fr foothold and, by the 1920s, it had been shunted im aside by the Lausanne School and Marshallian-style neoclassicism. By the rnid- 193Os, the Austrian School had melted away in Ausma as more attractive prospects abroad or the looming National Socialist threat drove the leading Austrian economists to emigrate to Great Britain (Hayek), the United States (Machlup, Haberler, and LMorgenstern),and Switzerland (Mises). Hayek was well positioned to spark a revival of Mengerian theory in Great Britain, but having been a student of Wieser rather than ~ i i h m - ~ a w e r k , ' ~ saw the core of he economics as the "pure logic of choice," which could be represented by the timeless equations of general equilibrium.15In the end, Walrasian general equilibrium theory was imported into Great Britain by John R. Hicks under Hayek's influence.'" In addition, analytical deficiencies internal to the pre-Misesian approach contributed to the sharp decline of the Austrian School after the First World War. T h e Austrians themselves lacked the analyucal wherewithal to demonstrate that the timeless and moneyless general equilibrium approach and the one-at-a-time Marshallian approach-the analytical pyrotechnics of the 1930s notwithstanding-are both plainly and profoundly irrelevant to a must look to a foreigner, the Swede Gustav Cassel, for a principled explanation of the problems of economic life." Ludwig von Mises, "Carl Menger and the Austrian School of Economics," Azmian Economire An Antholo , ed. Bettina Bien Greaves Qrvington-on-EIudsoi~, N.Y.: Foundation or Economic Education, 1996), p. 52. 14. Hayek himself explicitly distinguished between "the two original branches of the Austrian School," the Bohm-Bawerkian and the Wieserian, and characterized himself as an adherent of the latter branch. See F.A. Hayek, "Coping with Ignorance" in idem, Knowledge, Evolution, and Society (London: Adam Smith Institute, 1983), pp. 17-18; and The Collected Works of F.A. Hayek, vol. 4: The Fortunes o Liberalism: Ersays on Awwian Economics and the Ideal of Freedom, ed. Peter Klein (Chicago: University of Chicago Press, 1992), p. 157. 15. See F A Hayek, "Economics and Knowledge," in idem, Individmlljrn and LGonmic Ordw (Chicago: Henry Regnery Company, [I9481 1972),pp. 33-56. 16. See Bruna Ingrao and Giorgio Israel, The Invkible Hand: Economic &ilibrium in the Hhory $Science (Boston: M I T Press, 1990), for a perceptive description of Hayek's crucial role in the early development of the Anglo-American version of general equilibrium theory (pp. 232-235). Hayek himself regarded the analysis of value theory in Hick's Valueand Capital in terms of marginal rates of substitution and indifference curves as "the ultimate statement of more than a half a century's discussion in the tradition of the Austrian School." The Fortunes of LiberalIjm, pp. 53-54. P cf
  7. 7. Introduction to the Scholar-'sEdition ix central problem of economic theory: explaining how monetary exchange gives rise to the processes of economic calculation that are essential to rational resource allocation in a dynamic world." Thus, after a period of remarkable development and influence from 1871 to 1914, by the early 1930s the Austrian School was on the edge of extinction. Mises was fully cognizant of this unfortunate state of affairs when he emigrated to Switzerland in 1934. Ensconced at the Graduate Institute of International Studies in Geneva, for the first time he could fully focus his attention on academic research. Mises used this opportunity to write Nntionalokonmie, a book that intended to revive the Mengerian approach and elaborate it into a complete and unified system. As evidence of the importance that Mises attached to this book, and of the time and energy he poured into it, he wrote very little else in the years leading up to its publication in 1940. Previously an enormously prolific writer, the extent of his output from 1934 to 1939 was comparatively meager: in addition to book reviews, short memos, newspaper and magazine articles, notes, and introductions, there was only one substantial article for an academic audience.18 Retrospectively describing his purpose in writing XatimaZokonomie, Mises left no doubt that he sought to address the two burning issues left unresolved by the founders of the Austrian School: the status of the equilibrium construct and the bifurcation of monetary and value theory. "I try in my treatise," Mises wrote, "to consider the concept of static equilibrium as instrumental only and to make use of this purely hypothetical abstraction only as a means of approaching an understanding of a continuously changing world."" Regarding his effort to incorporate money into the older Austrian theoretical system, - i s e s identified his immediate inspiration as his 17. See Joseph T. Salerno, "The Place of Human Action in the History of Economic 'Thought," Quarterly3oumal ofAwtrian Economics, 2, no. I (1999). 18. See Bettina Bien Greaves and Robert W. McGee, comps., Mises: An Annotated Biblio apby (Inington-on-Hudson, N.Y.: Foundation for Economic Education, 1 9 6 , pp. 4 1 4 1 , for a listing of Mires's published and unpublished writings in these years. 19. Y/Iv Contributions to Economic Theory," in Mises, Planning fur Freedom and Sixteen Other fisays and Addruses (4th cd. South Holland, 111.: Libertarian Press, 1980), pp. 2 3 0-23 1.
  8. 8. Human Action x opponents in the socialist calculation debate of the 1930s. These economic theorists, under the influence of the general equilibrium approach, advocated the mathematical solution to the problem of socialist calculation. As Mises argued: "They failed to see the very first challenge: How can economic action that always consists of preferring and setting aside, that is, of making unequal valuations, be transformed into equal valuations, and the use of equations?'do But without an adequate theory of monetary calculation, which ultimately rests upon a unified theory of a money-exchange economy, Mises realized that there could be no definitive refutation of the socialist position. Accordingly, Mises revealed: "LVationalokonomie finally afforded me the opportunity to present the problems of economic calculation in their full significance.... I had merged the theory of indirect exchange with that of direct exchange into a coherent system of human a~tion."~' Thus, Nationalb2onomie marked the culmination of the Austrian theoretical approach, and, in a real sense, the rebirth of the Austrian SchooI of economics. It was designed to play a decisive role in reconstructing the whole of economic science in its moment of crisis, including reformulating and unifylng price theory, monetary theory, and business cycle theory, and at the same time establishing the correct methodological foundations of the social sciences. Using this mighty architectonic of economic theory, Mises formulated a radical and impermeable defense of laissezfaire policy conclusions that were distinctly unfashionable when the book first appeared. M was uniquely prepared to undertake such a radical task Beginning in 1912, during a long tenure as economic advisor and chief economist of the Vienna Chamber of Commerce, Mises produced a steady stream of works in economic and political theory. T h e publication of his first treatise, Theorie des Geldes und ISES 20. Notes and Recolkctim, trans. by Hans F. Sennholz (South Holland, Ill.: Libertarian Press, 1978), p. 112. 2 1. Ibid.
  9. 9. Introdzlttiim to the Scholar's Edition x i der Umlaufmittel(19 12) was followed by Nation, Staat und Wirtschafi (19 19), Die Gemeinwirtschaf2 (1 922), Liberalismw (192 7), Geldwertstabilisierzlngand Konjunktulpolitik (192 €9,Kritik des Interventionism~(1929), and Grundprobleme der Nationaliikonomie (1933).*' Among the professional public, these works earned Mises a reputation as a leading monetary theorist and defender of the gold standard, and as an outstanding critic of socialism and proponent of laissez-faire capitalism. In academia, he was also recognized as the heir to the intellectual tradition of ~Menger Bohrn-Bawerk, and and a leading defender of the deductive method in the social sciences against the claims of historicists. However, outside the circle of the participants in his Privatsmina7; the ('Misq-Ki-eis,''j the philosophical depth and systematic breadth of Mises's work was rarely acknowledged or recognized. Even his students and friends, who beginning in 1920 met regularly every two weeks in his Chamber of Commerce office, had at best only an inkling of ,Wses's systematic ambition. From book to book, they witnessed the appearance of the successive building blocks of a Misesian system. But when Mises left Vienna in 1934 to move to Geneva, even they could not have had more than a vague notion of how to fit these pieces into a unified whole. Mises was fifty-eight years old when Nationalbkonomie: appeared. I t was Mises's Theorie des Handelm and Wirts~haftens~~ crowning intellectual achievement and the sum of his scholarly life. At long last, this book should have established him as the foremost German-language economist and social theorist of his generation. 22. The Theory $Money and Credit; Nation, State, and Economy, trans. by Leland B. Yeager (New York: New York University Press, [I9191 1983); Socialism: An Economic and SocioIopcalAm&sk,trans. by J. Kahane (Indianapolis, Ind.: Liberty Classics, [I9221 1981); Liberah:In the CWTr*, trans. by Ralph Raico (lrvmgton-on-Hudson, N.Y.: Foundation for Economic Education, [I9271 1985); "Monetary Stabilization and Cyclical Policy," in Mises, On the Manipulation o Monq and Credit; A Critique of Internentionism, trans. by f Hans F. Sennholz (New Rochelle, N.Y.: Arlington House, [I9291 1977); f EpistemologicalProblems o Economics, trans. by George Reisman (New York: New York University Press, [I9331 1976). 23. Which included such outstanding scholars as Gotdried von Haberler, F.A. Hayek, Felix Kaufmann, Fritz Machlup, Oskar Morgenstern, Paul N. Rosenstein-Rodan, Alfred Schiitz, Richard von Strigl, and Erich VoegeIin. 24. (Munich: Philosophia Verlag, [I9401 1980).
  10. 10. xii Human Action Mises's masterwork, however, appeared in the midst of political and personal crisis. After the Anscblzlss on March 12, 1938, Mises could no longer travel to Austria. His apartment in Vienna had been ransacked by National Socialists and his library and personal papers c~nfiscated.~' June 1940, German troops had virtually encircled By Switzerland, and, urged by his wife, Mises decided to leave Geneva and emigrate to the United States. "I could no longer bear," he explained in his Erinnmngen written shortly after his arrival in New York City on August 4, 1940, "to live in a country that regarded my presence as a political burden and danger to its security."26 From the outset, the book was cut off almost completely from the German market, and its Swiss publisher would become one of the countless economic casualties of war. Meanwhile, almost all members of the former Afises-kieis had likewise left Austria and emigrated to other countries. In their new, foreign, and uncertain environment, they paid little or no attention to it. Thus, Nationalokonomie remained virtually unread." What should have been a moment of immense satisfaction and even triumph, a moment which might have brought about a shift away from the growing ~e~nesiadWalrasian-~arshallian consensus, and even inoculated the profession against the positivist onslaught of later decades, became for LI/Iisesa moment of tragedy and likely the lowest point in his career. Nine more years would pass until, with the publication of Human Action, Mises would reap some of the rewards that had 2 5. Long thou ht to be lost,the paperswere rediscoveredin 1991in a formerly secret Soviet arckve in Moscow. The initial discoverers were two German -b i fonn&&fi; see G6tzxjr researchers assGc-a:ed -$iL$ a Gem-,n !, o ufiion and Susanne Hein, DaszentraleStaatsarcbivin Moskau (Diisseldorf, Germany: Hans-Blijckler-Stiftung, 1993). Following up on their workwere,two Austrian historians Gerhard Jagschitz and Stefan Karner, Beuteakten aur Osterreicb: D m Ostmeichbestand im W c h e n "Sondm-archiv" Moskau (Graz, Austria: Ludwig Boltzmann-Institut, 1996). 26. I s e s ' s Erinnerclngen was published posthumously (Stuttgart, Germany: Gustav Fischer, 1978), p. 88; translated as Notes and Recollections. 27. Only two members ofthe formerMises-fieisreviewed the book, Hayek (Economic Journal, April 1941) and Walter Sulzbach (Journal of Social Philosophy andJurisprudence, October 1941). Greaves and McGee, Mises: An Annotated Bibliography, list only two other reviews, one by Hans Honegger in a Swiss newspaper, and the other by Frank H. Knight (Economica, November 1941).
  11. 11. Introduction to the Scholar's Edition ... xlll escaped him in 1940.~'Yale University Press, headed by Eugene Davidson, had published Mises's Omnipotent Government and Bureaucracy in 1944, on the recommendation of Henry Hazlitt, who was then working for the New York Times as an editorial writer. The success of these works prompted Davidson to send a note to Mises in mid-November that would set the process in motion. Mises and Davidson met on Monday, December 4, at the Roosevelt Hotel for lunch, and made plans for a translation of Nationalokonornie, under the working title Treatise in Economics. Davidson found the idea enticing and solicited further opinions on the matter from a variety of economists and public figures. Hazlitt recommended immediate publication, as did John V. Van Sickle of Vanderbilt University ("I hope you will decide on publication"*^, Ray Bert Westerfield of Yale University ("a firstrate bookn3?,Hayek ("the general standard of the workis of a kind and that it will do credit to any University Pressn3'), Machlup (who, with effusive praise for Mises, encouraged Davidson to ignore all protests against publication; any book "out of sympathy with the New Deal in economics" would be opposed by the same people'2). Haberler, however, wrote, "It is a little embarrassing for me to answer your question because Professor Mises is a good friend of mine. Please do keep the contents of this letter strictly confidential. The book you are considering for translation is a very big one. It contains Professor Mises's life work in economics. It is well written and interesting but I must say for my taste it is very extreme, and I am pretty sure it will not be well accepted in academic quarters.... May I suggest that you ask Professor Knight of the University of Chicago for his opinion?"33 28. As the result of the continued success of Human Action, forty years after its initial publication Mises's Natimliikmumie was reprinted (Munich: Philosophia, 1980). Unlike the original, the reprint received widespread attention, includingreviews in the two leadin German language newspapers, the Frankfirter All emeine Zeitung (by Wilhe m Seuss) and the Neue Zuercher Zeimng (by Egon 'fuchtfeldt). 29. Private correspondence to Eugene Davidson, February 12,1945. 30. Private correspondence to Eugene Davidson, February 13, 1945. 31. Private correspondence to Eugene Davidson, March 3,1945. 32. Private correspondence to Eugene Davidson, February 22,1945. 3 3. Private correspondence to Eugene Davidson, January 23, 1945. 7
  12. 12. xiv Human Action Yale then consulted Frank H. Knight, who wrote back that Mises is "no doubt the last of the great Austrian or Viennese school, since other members of comparable standing turned their scientific along with their political coats, if they did not leave Ausaia and Germany, and started work on new problems under new auspices.... It is my impression-not based on adequate knowledgethat the author's views on monetary and cycle problems are more important than those on general theory." In an addendum,Knight says he in turn consulted Oskar Lange (one of Mises's leading opponents in the socialist calculation debate) who was "surely not more in favor of the project. He thinks vonMises did some pioneering at one time in the monetary ~~In field but that is old and long available in ~ n ~ l i s h . " addition, B.H. Beckhart, a former student of Mises's teaching at Columbia University, wrote a terse reply to Davidson: "I doubt if Professor Mises's work would have a sufficiently wide sale to justify its translation or publication. Professor Mises's theories are developed rather fully in his works which have already appeared in English."35 Despite the protests, Yale's Committee on Publications voted to approve the publication March 5, 1945, under the working title National Economy, which would become Human Action just prior to publication.36The publisher received the final manuscript on October 1,1948.By the time the English-language version appeared, circumstances were no longer conducive to an early renewal of the Austrian School. ~ e a d e r s hin pure economic theory had passed i~ from Europe to the United States, in part because of the migration of many Central European economiststo America. Marshallian price theory in various forms had dominated the textbook literature and undergraduate teaching in the United States since the 1920s, and this dominance was strengthenedby the widespread interest in the doctrine of imperfect competition in the journals. In addition, the general equilibrium approach had secured a firm foothold in the United 34. Private correspondence to Eugene Davidson, January 29, 1945. 35. Private correspondence to Eugene Davidson, February 9,1945. 36. Mises suggested the following as possible titles: (1) Economics: A Treatise on Human Artion, ( 2 ) Man and Reality: A Treatise on Human Action, (3) Means and En&: A Tmtise on Eccmomics, (4) Man in the Pumit of a Better Life: A Treatie on Economics, and (5) Human Action: A Treatzie on Economics. Next to this final suggestion, Davidson wrote "I like this" but worried that it "doesn't make the subject immediately clear."
  13. 13. Introduction to the Scholar's Edition xv States economics profession with the publication of Paul Samuelson's Foundations of Economic Analysis in 1947. 3 7 In the decades following the appearance of Human Action, it was left to Mises's own students, who studied with him while he served as an unsalaried professor at New York University from 1945-1969, to take u p the task of developing, propagating, and extending Austrian School theory. Preeminent among these students was Murray N. Rothbard, whose Man, Economy, and State in 1962 ,j8America's Great Depression in 1963, and a long series of theoretical and historical studies,3Y prepared the groundwork for a full-scale revival of the Austrian School in the 1970s (precipitated by F.A. Hayek's Nobel T Prize in 1974) and the 1980s.~ h e revival became firmly entrenched and internationalized4'in the 1990swith the establishment of scholarlyjournals dedicated to advancingMisesian economics, and a vast and continuing series of papers, conferences, books, teaching seminars, and professional meetings." H UMAN ACTION Nationaliikonmie have the same overall and structure of seven parts, and the bulk of the English edition consists of material directly translated from the German. However, significant differences exist. Human Action is considerably longer, and contains numerous additions to its predecessor. There are also passages, sections, and chapters in Nationalakonomie which were either omitted, shortened, or significantly altered in Human Action. 3 7. (New York: Atheneum, [1947] 1967). 38. (Auburn, Ala.: Ludwig von Mises Institute [I9621 1993). 39. (New York: Richardson and Snyder, [I9631 1983); also, Power and Market (Kansas City: Sheed bdrews and McMeel, 1970); The Lo ic ofAction (Brookfield, Vt.: Edward Elgar, 19977); see David Gordon, bumzY N. Rothbard: A Scholar In Defense of Freedom (Auburn, Ala.: Ludwig von Mises Institute, 1986). 40. Rothbard's efforts culminated in a monumental two-volume history of economic thought, Economic Thou ht Before Adam Smith, vol. 1 and Classical Economics, vol. 2 (Brookfield, Vt.: fidward Elgar, 199.5). 41. As further evidence, Human Actzon has been translated into Spanish, French, Italian, Clunese, Portuguese,Japanese, and Rumanian. 42. For a sample of this output, see The Awtrian Economics Study Guide (Auburn, Ala.: Ludwig von fises Institute, 1998; and continuouslyupdated).
  14. 14. xvi Human Action The most important addition in Human Ahon is Chapter V on I uncertainty. This chapter does not appear in its predecessor, nor is its subject matter discussed elsewhere. Here, ,Mses further clarifies his earlier epistemological investigations through the introduction of the categorical distinction between apodictic certainty (the realm of praxeology), class probability (the realm of the natural sciences), and case probability (the realm of history). Several commentators have noted the similarity of Mises's distinction between class probability and case probability and that between risk and uncertainty introduced by Knight in Risk, Uncertaintyand Profit in 1921.43 Yet, it does not appear that Mises was influenced by Knight in this regard. Mises had been long familiar with Knight's ik work, and had already made reference to R s , Uncefiainty and Profit in Nationalokonomie in conjunction with his discussion of profit and uncertainty? Rather, it appears more likely that MisesS Chapter VI was stimulated and influenced by his younger brother, Richard von Mises (1883-1953). A professor of aerodynamics and applied mathematics at Harvard University, Richard von Mises's most outstanding theoretical achievement was his contribution, from 1919 onward, to the frequency theory of probability.4s In principle, Ludwig accepted Richard's frequency interpretation of probability, but Ludwig provided a new definition of randomness, and thus significantlyimproved on Richard's Apart from the addition of Chapter VI, all other changes or additions to Human Adon from its predecessor can be described as non-substantial. Some material is reorganized,the discussion of some subjects is expanded or further applications are provided, and there are some changes in emphasis or perspective. Most reorganization concerns the book's first philosophical parts, i.e., Chapters I and 1 .Thus, i