Mises Greatly Enlarged the Field of Economics
JULY 01, 1996 by HANS SENNHOLZ
Human Action is the legacy of a genius, left to us and to be passed on from generation to generation. Most books, like their authors, are soon forgotten. Human Action lives, and its influence will live throughout the centuries. It is one of those books to which we return again and again—it never fails us, never ceases to instruct.
In the world of economic literature, Human Action now holds the position which Adam Smith’s Wealth of Nations used to occupy. Smith had derived his economic knowledge from universal propositions which he deemed clearly established. He proceeded from the assumption that nature has endowed man with a motivating power that prompts him to better his condition. And he accepted the axiom that the individual aiming only at his properly understood interests tended to promote the public good. Government and other institutions that interfere with the smooth operation of the natural order are bound to defeat their own end. Yet, the economics of Adam Smith encompassed only a small phase of the whole range of human action, only “economic action.” Economics dealt with individual action as it was affected by the profit motive and economic selfishness. From Adam Smith to John Maynard Keynes, economics was a philosophy of the “economic side of man.”
Professor Mises widened the scientific horizon and greatly enlarged the field of economics. On the foundation of classical economics and the teaching of his Austrian predecessors he presented a general theory of choice and preference in all human action, a more universal science which he called “praxeology.”
Praxeology is a theoretical science which either deduces the ends from the application of certain means or, inversely, the means from the attainment of chosen ends. It shows man how he must act in order to attain definite ends. Praxeology thus derives substantive truths about man and his work. It is the science of every kind of human action. It applies to all ends and all means, both material and ideal, the sublime and the base, the noble and ignoble. Man arranges them in a single row, and subjects them to his preferences, to his individual scale of gradation and choice. Catallactic chores (i.e., exchanges) are embedded in this arrangement. No treating of economic problems proper can avoid starting from acts of choice; economics is merely a part, although the best developed part of the more universal science, praxeology.
Unfortunately, most economists still are blind to the general theory of human action. Like the Medieval philosophers and Mercantilistic economists before them, they continue to search either for the ultimate destiny of mankind or for the perfect society as they envision it. They do not search for the principle of praxeology which corrects old creeds, sweeps away erroneous notions, and discloses universal laws.