Lesson 2 of 6
Mises is hard, and why
Human Action is a thousand pages that open with philosophy of science. How the book is built, which parts this track needs, and what to read before it.
By Javier Sanz
Founder of ValueScreener. Built Ninety Nine, a securities services provider, and sold it to a tier-one global bank; ran operations and internationalization at Alpaca, the brokerage API.
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In one minute
- The book opens with method and epistemology rather than with economics, which is where most readers stop. That part can be read last without losing the argument.
- The cycle chapter is chapter twenty, and it sits after the chapters on money, on time and on interest, which it uses.
- Reading order by need: the market process chapters, then money and interest, then the cycle, then the method, then the sections on socialism.
Human Action was published in English in 1949 and is the book people mean by Mises. It is long, it is dense, and its structure is the reason so few readers get past the first hundred pages.
What is where in the book
How the book is arranged
- Part one is action, method and epistemology.
- Part two is action in society, including calculation.
- Later parts cover the market, money, interest and the cycle.
- The last parts deal with intervention and with the place of economics.
What this track needs
- Chapters eleven and twelve, on calculation and its limits.
- Chapter nineteen, on interest.
- Chapter twenty, on credit expansion and the cycle.
- Chapters twenty-five and twenty-six, on socialism and calculation.
A reader who starts at page one meets the hardest material first and the economics last.
Why the opening is hard
The first part is a treatise on how economics can know anything, and it argues for a position most economists reject. A reader who is not already interested in philosophy of science meets a long methodological argument before any economics arrives, and often concludes the book is not for them.
The material is not filler and the third course of this track takes it seriously, along with the standard objection to it. But it can be read after the economics rather than before it, and the economics does not depend on agreeing with it: the account of credit expansion and the cycle can be stated, argued about and tested without any commitment to how its author thought economic knowledge is obtained.
The reading order that works
Start where the book is closest to what you already know. The chapters on the market, on prices and on entrepreneurship describe a process a reader of company accounts recognises.
Then money and interest, because the cycle chapter uses both. Then chapter twenty itself, which is where the theory this track teaches is stated in one place, with its own section naming it the monetary or circulation credit theory of the trade cycle.
Then, if the argument has held your attention, the calculation chapters and the socialism chapters, which connect to the fourth course of this track. And last, part one, read as what it is: an argument about method that you can now assess against economics you have already read.
What to read before it
Two things make the book much easier.
A short statement of the cycle theory, so that the chapters have somewhere to land. This track is one; the 1920 calculation paper and the 1945 knowledge paper are another, and both are short.
And some capital theory, because Bohm-Bawerk's account of roundaboutness and time preference is assumed throughout rather than explained. The second course of this track covers it, and the alternative is meeting the assumption without noticing it is one.
Check yourself
What does the first part of Human Action cover?
- Money and credit
- Action, method and the epistemology of economics
- Socialism and intervention
Show the answer
Answer: B.
It is a long methodological argument, and reading it first is the commonest reason people abandon the book.Where is the cycle theory stated?
- In the first chapter
- In chapter twenty, on interest, credit expansion and the trade cycle
- It is spread across the book with no single statement
Show the answer
Answer: B.
Chapter twenty carries it, including a section that names it the monetary or circulation credit theory of the trade cycle.What should a reader have met before chapter twenty?
- The chapters on intervention
- Money and interest, and some capital theory
- The chapters on the philosophy of science
Show the answer
Answer: B.
The cycle chapter uses both, and the capital theory it assumes is not restated in it.Sources
- Mises, Human Action, 1949: the arrangement of the book into parts, with part one on action and method, chapter eleven on valuation without calculation, chapter twelve on the sphere of economic calculation, chapter nineteen on the rate of interest, whose second section defines originary interest as a ratio of valuations manifesting as the discount of future goods against present goods and denies that it is the price paid for the services of capital, chapter twenty on interest, credit expansion and the trade cycle including its section on the monetary or circulation credit theory, and chapters twenty-five and twenty-six on the imaginary construction of a socialist society and the impossibility of economic calculation.
What this leaves out
- This is a heterodox tradition. The mainstream account of the same phenomenon differs, and nothing here is a forecast or a view on any security.
- This lesson is about how the book is built and where its arguments sit. It does not summarise those arguments, which is what the courses in this track are for.
- Editions differ in pagination. Chapter numbers are used here for that reason, and no page numbers are given anywhere in this track.