On this day in 1949 Yale University Press published Ludwig von Mises’s economic treatise, Human Action. Later in 1949 another book appeared, George Orwell’s 1984.
Almost everyone has at least heard of Orwell and 1984. The same is unfortunately not true of Mises and Human Action.
Both books are attached to their authors as if they were extended surnames. Orwell is 1984, Mises is Human Action.
Among the many who’ve read it, 1984 is regarded as a premonition of what could happen if the proclivities of the state are not checked.
Among those who have studied it, Human Action is understood as what would happen if the proclivities of the state are checked.
It’s the difference between a slave and a free man, war and peace, poverty and prosperity, misery and the potential for happiness.
A person cannot breathe in Orwell’s fictional world. Aside from a tiny ruling elite, members of the society live impoverished lives with no hope of anything better. They are ciphers, expected to obey and spied upon constantly to ensure that they do. Society’s history and language are whitewashed in conformity with the state’s mission of total control. War and hate are directed to serve state interests. State informers are everywhere. At the end Orwell’s hero, Winston Smith, himself betrayed by confederates, betrays his love for a woman for a sheep’s existence under Big Brother’s watch. Winston Smith, the individual with thoughts of his own, who had dared fall in love, exists no more.
Many people will say 1984 or something close to it is where we’re headed. They don’t like that direction, but feel powerless to change it. They feel powerless because they’ve listened to government mouthpieces. They’re told by politicians and their friends that everything’s really okay. Nothing wrong with a $20,000,000,000,000 debt. Or a federal tax haul of $3,248,723,000,000 (2015). Life is expensive. We’ve got enemies everywhere, welfare needs everywhere. This is how modern civilization works — you work, government takes. But you’re in on the deal, too.
Something’s missing. It’s missing from people’s thoughts. As it turns out it’s staring us in the face.
In Human Action Mises provided a comprehensive treatment of why civilization flourishes only when liberty flourishes in every area of life. He wrote an unapologetic defense of laissez-faire capitalism, otherwise known as the free market economy.
Unhampered markets stand between us and 1984.
In a letter to a reader in 1944, Orwell wrote: “I believe very deeply, as I explained in my book The Lion and the Unicorn, in the English people and in their capacity to centralise their economy without destroying freedom in doing so.”
Like interventionists generally, Orwell had a flawed understanding of economics. Earlier in his career Mises demolished the arguments of those recommending state control of the economy. Socialist states establish a means of distributing consumption goods, since all productive goods are state-owned. A certain amount is allotted to each person, usually in the form of coupons for a definite quantity of specified goods. People can directly exchange these coupons with others, as a form of barter, if they please. Indirect exchange will develop and lead to a universal medium of exchange — money.
But unlike money in a market economy, socialist money can only be exchanged for consumption goods. Since production goods cannot be exchanged for money, there is no way to price them. There is no way of knowing whether some proposed project would cover expenses, whether it would be a waste of resources or not. As Mises concludes,
we have the spectacle of a socialist economic order floundering in the ocean of possible and conceivable economic combinations without the compass of economic calculation. . . .
We cannot act economically if we are not in a position to understand economizing.
Under socialism, freedom is the freedom accorded a slave to obey or not.As Mises writes in Human Action, “it means the unrestricted centralization and unification of the conduct of all affairs in the hands of one authority.”
In a tribute to Mises and Human Action delivered at the Mises Institute on this day in 1999, Lew Rockwell pointed out that at the time of publication 50 years earlier, it was widely believed FDR had saved the world from the Nazis and the Depression by entering World War II. Given enough power, the state could do anything.
Ruling the land was a regime characterized by regimentation in intellectual, social, and political life. Human Action appeared in this setting not as polite suggestion that the world take another look at the merits of free enterprise. No, it was a seamless and uncompromising statement of theoretical purity that was completely at odds with the prevailing view.
If humanity has a future it will because people change their thinking and learn why freedom and free markets are indivisible, that any form of coercion is our enemy, especially when it pours forth from a monopoly institution. The works of Ludwig von Mises, especially Human Action, will be indispensable for a civilized society.
