Human Action Reappraised
SEPTEMBER 01, 1981 by JOHN CHAMBERLAIN
It takes a long time for chickens to come home to roost. Thirty-one years ago I was asked to review Ludwig von Mises’ gigantic Human Action, then just published by the Yale University Press. I took on the job with some misgivings—it represented a month’s work compressed into a week’s time to give the book even a cursory reading. But I remember the immense satisfaction that it gave me. For the first time I saw the nature of our epoch with what I felt was absolute clarity. True, a couple of women writers, Isabel Paterson and Rose Wilder Lane, had indicated the fallibility of the New Deal approach (I remember being impressed with Mrs. Paterson’s dic tum that if you were going to give J. P. Morgan the RFC you couldn’t deny the little man his dole.) But Mises laid it all out on the table, making the first great case against so-called entitlements that I had seen.
I began my review with a description of the epoch of the Great Grouse, the complainer who seemed to dominate Harry Truman’s Washington. Virtually everybody (I wrote) wants something out of the blue: a pension without contributing to it, a subsidy without incurring a tax, ease with out prior effort, Heaven without fighting sin. I spoke of the politician, ever wary of the stir of desire at the grassroots, hastening to make his constituents happy by removing the cause of the Grouse. But the grousing, I observed, went on, with people doubling their complaints.
Envy, I said, was the most catching of emotions—and if one man or group or class could have a subsidy there was no reason why everyone else wasn’t entitled to his own largesse. The result was self-defeating; when everybody was getting his, nobody was better off. Indeed, everybody outside the governing bureaucracy was worse off—there had to be a skimming to support a burgeoning state apparatus that made no contribution to primary production. With less to go around for grousers, the poverty could be shared, but hope had to be deferred for the naturally energetic individual, and progress tended to stop.
A Matter of Choice
The foregoing was more or less my paraphrase of what Mises had set forth in Human Action. He put it in more classic economic language, telling of how state interventionism ran to crisis, provoking piecemeal socialism that led on to socialist centralization and eventually to tyranny or apathy or a combination of the two. I felt a willingness to grant Mises his terms, even the use of the word “praxeology” as the study of what happens when human beings exercise choice. Mises, with his theory that every human choice, whether strictly economic or not, had an effect on prices (if you suddenly take to the ascetic life you may leave more in the market at least momentarily for others), seemed to be placing the free market in the foreground of a much wider philosophical picture. Civil liberties seemed to flow naturally from the Misesian view—to be philosophically consistent a free enterpriser had to be willing to grant a freedom of choice to blacks who wanted to ride in Pullmans.
I do recall looking figuratively over my shoulder at my liberal friends and caviling at Mises’ uncompromising use of the term “laissez faire.” The phrase, I wrote, must be scrubbed clean of past associations if it were ever to be truly useful again. To Americans who read Arthur Schlesinger, Jr., or Charles A. Beard, laissez faire meant what Jay Gould and Jim Fisk practiced when they milked the Erie Railroad; it was a verbal cloak used by Smoot-Hawley tariff snatchers when they talked to their Rotary Club. Today I would use the phrase unapologetically—we can assume that it has been rehabilitated.
I still think, however, that Mises was mistaken in his attack on the idea of natural law, with its corollary of natural rights. It seemed to me in 1950 that the whole Misesian system of economics depended on the ability of human beings to discover the natural rules to which positive, or man- made, law must correspond if man is not to do violence to himself. A natural law is not something that came on tablets from Sinai; it is merely a true statement of the way things work out. A society that denies the property right will, as a result of the natural action that Mises described in his famous Socialism, ultimately find itself without an ability to calculate and to trade intelligently. The natural law of socialism is that it must create a world without signposts. Mises was the first economist to understand this-and the great value of his work is that it shows, in elaborate detail, just how and why an interventionist government, by infringing natural rights, leads to an impoverished society.
Signs of Progress
How far have we come in thirty-one years toward catching up with the truths of Human Action? There is much more general understanding of the Misesian system. Every year four or five distinguished champions of freedom hie themselves to Hillsdale College in Michigan, the repository of Mises’ extensive library, to take an invited part in a Ludwig von Mises Lecture Series. Free market economists—F. A. Hayek and Milton Friedman—have won Nobel Prizes. “Austrian” economics is no longer a pariah study, and the so-called monetarists (not quite ready to accept an official return to the gold standard) are everywhere. The supply-siders owe much to Mises’ brilliant explanation of Say’s Law of Markets which Harry Hazlitt, with an air of triumph, brought into The Freeman office for publication thirty years ago.
But if we have reached a turn in 1981 with the timid spending cuts that leave us some thirty billion dollars short of a balanced budget, we still have a long way to travel. David Stockman, the budget management man, has been condemned as a coldhearted fellow for saying that, strictly speaking, the government owes nobody an “entitlement.” Jack Kemp, to justify his proposed tax cuts politically, had to evolve the figure of the “safety net”—meaning that government must remain responsible for a citizen’s minimum needs.
Abroad, the British Misesians have not been able to shake the labor unions out of their cradle- to-grave Fabianism. And the French, with the socialist Mitterrand plugging for more nationalized industries and a higher compulsory minimum wage, are about to embark on a seven-year period of retrogression.
Still, we make an undeniable progress. Where the Soviets sent tanks into Czechoslovakia at the drop of a hat, they have hesitated about Poland. Where positive law goes flagrantly against the natural laws of economics, we get fascinating developments in the underground economy. The Italians will soon be teaching Mitterrand’s Frenchmen some new tricks about moonlighting. And with moonlighting, the more computers we build, the less reliable is the statistical stuff that goes into them.
Luckily for the Misesians, Austrian economics is not econometric—and the computer, though useful, is not essential to its teaching.