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Further Implications of Human Action

February 14, 2012

Tags Free MarketsProduction Theory

1. The Concept of Action

The distinctive and crucial feature in the study of man is the concept of action.[1] Human action is defined simply as purposeful behavior. It is therefore sharply distinguishable from those observed movements which, from the point of view of man, are not purposeful. These include all the observed movements of inorganic matter and those types of human behavior that are purely reflex, that are simply involuntary responses to certain stimuli. Human action, on the other hand, can be meaningfully interpreted by other men, for it is governed by a certain purpose that the actor has in view.[2] The purpose of a man's act is his end; the desire to achieve this end is the man's motive for instituting the action.

All human beings act by virtue of their existence and their nature as human beings.[3] We could not conceive of human beings who do not act purposefully, who have no ends in view that they desire and attempt to attain. Things that did not act, that did not behave purposefully, would no longer be classified as human.

It is this fundamental truth — this axiom of human action — that forms the key to our study. The entire realm of praxeology and its best developed subdivision, economics, is based on an analysis of the necessary logical implications of this concept.[4] The fact that men act by virtue of their being human is indisputable and incontrovertible. To assume the contrary would be an absurdity. The contrary — the absence of motivated behavior — would apply only to plants and inorganic matter.[5]

2. First Implications of the Concept

The first truth to be discovered about human action is that it can be undertaken only by individual "actors." Only individuals have ends and can act to attain them. There are no such things as ends of or actions by "groups," "collectives," or "States," which do not take place as actions by various specific individuals. "Societies" or "groups" have no independent existence aside from the actions of their individual members. Thus, to say that "governments" act is merely a metaphor; actually, certain individuals are in a certain relationship with other individuals and act in a way that they and the other individuals recognize as "governmental."[6] The metaphor must not be taken to mean that the collective institution itself has any reality apart from the acts of various individuals. Similarly, an individual may contract to act as an agent in representing another individual or on behalf of his family. Still, only individuals can desire and act. The existence of an institution such as government becomes meaningful only through influencing the actions of those individuals who are and those who are not considered as members.[7]

In order to institute action, it is not sufficient that the individual man have unachieved ends that he would like to fulfill. He must also expect that certain modes of behavior will enable him to attain his ends. A man may have a desire for sunshine, but if he realizes that he can do nothing to achieve it, he does not act on this desire. He must have certain ideas about how to achieve his ends. Action thus consists of the behavior of individuals directed towards ends in ways that they believe will accomplish their purpose. Action requires an image of a desired end and "technological ideas" or plans on how to arrive at this end.

Men find themselves in a certain environment, or situation. It is this situation that the individual decides to change in some way in order to achieve his ends. But man can work only with the numerous elements that he finds in his environment, by rearranging them in order to bring about the satisfaction of his ends. With reference to any given act, the environment external to the individual may be divided into two parts: those elements which he believes he cannot control and must leave unchanged, and those which he can alter (or rather, thinks he can alter) to arrive at his ends. The former may be termed the general conditions of the action; the latter, the means used. Thus, the individual actor is faced with an environment that he would like to change in order to attain his ends. To act, he must have technological ideas about how to use some of the elements of the environment as means, as pathways, to arrive at his ends. Every act must therefore involve the employment of means by individual actors to attempt to arrive at certain desired ends. In the external environment, the general conditions cannot be the objects of any human action; only the means can be employed in action.[8]

All human life must take place in time. Human reason cannot even conceive of an existence or of action that does not take place through time. At a time when a human being decides to act in order to attain an end, his goal, or end, can be finally and completely attained only at some point in the future. If the desired ends could all be attained instantaneously in the present, then man's ends would all be attained and there would be no reason for him to act; and we have seen that action is necessary to the nature of man. Therefore, an actor chooses means from his environment, in accordance with his ideas, to arrive at an expected end, completely attainable only at some point in the future. For any given action, we can distinguish among three periods of time involved: the period before the action, the time absorbed by the action, and the period after the action has been completed. All action aims at rendering conditions at some time in the future more satisfactory for the actor than they would have been without the intervention of the action.

A man's time is always scarce. He is not immortal; his time on earth is limited. Each day of his life has only 24 hours in which he can attain his ends. Furthermore, all actions must take place through time. Therefore time is a means that man must use to arrive at his ends. It is a means that is omnipresent in all human action.

Action takes place by choosing which ends shall be satisfied by the employment of means. Time is scarce for man only because whichever ends he chooses to satisfy, there are others that must remain unsatisfied. When we must use a means so that some ends remain unsatisfied, the necessity for a choice among ends arises. For example, Jones is engaged in watching a baseball game on television. He is faced with the choice of spending the next hour in: (a) continuing to watch the baseball game, (b) playing bridge, or (c) going for a drive. He would like to do all three of these things, but his means (time) is insufficient. As a result, he must choose; one end can be satisfied, but the others must go unfulfilled. Suppose that he decides on course A. This is a clear indication that he has ranked the satisfaction of end A higher than the satisfaction of ends B or C.

From this example of action, many implications can be deduced. In the first place, all means are scarce, i.e., limited with respect to the ends that they could possibly serve. If the means are in unlimited abundance, then they need not serve as the object of attention of any human action. For example, air in most situations is in unlimited abundance. It is therefore not a means and is not employed as a means to the fulfillment of ends. It need not be allocated, as time is, to the satisfaction of the more important ends, since it is sufficiently abundant for all human requirements. Air, then, though indispensable, is not a means, but a general condition of human action and human welfare.

Secondly, these scarce means must be allocated by the actor to serve certain ends and leave other ends unsatisfied. This act of choice may be called economizing the means to serve the most desired ends. Time, for example, must be economized by the actor to serve the most desired ends. The actor may be interpreted as ranking his alternative ends in accordance with their value to him. This scaling of ends may be described as assigning ranks of value to the ends by the actor, or as a process of valuation. Thus, suppose that Jones ranked his alternative ends for the use of an hour of time as follows:

(First) 1. Continuing to watch the baseball game
(Second) 2. Going for a drive
(Third) 3. Playing bridge

This was his scale of values or scale of preferences. The supply of means (time) available was sufficient for the attainment of only one of these ends, and the fact that he chose the baseball game shows that he ranked that highest (or first). Suppose now that he is allocating two hours of his time and can spend an hour on each pursuit. If he spends one hour on the game and then a second hour on the drive, this indicates that his ranking of preferences is as above. The lowest-ranking end — playing bridge — goes unfulfilled. Thus, the larger the supply of means available, the more ends can be satisfied and the lower the rank of the ends that must remain unsatisfied.

Another lesson to be derived is that action does not necessarily mean that the individual is "active" as opposed to "passive," in the colloquial sense. Action does not necessarily mean that an individual must stop doing what he has been doing and do something else. He also acts, as in the above case, who chooses to continue in his previous course, even though the opportunity to change was open to him. Continuing to watch the game is just as much action as going for a drive.

Furthermore, action does not at all mean that the individual must take a great deal of time in deliberating on a decision to act. The individual may make a decision to act hastily, or after great deliberation, according to his desired choice. He may decide on an action coolly or heatedly; none of these courses affects the fact that action is being taken.[9]

Another fundamental implication derived from the existence of human action is the uncertainty of the future. This must be true because the contrary would completely negate the possibility of action. If man knew future events completely, he would never act, since no act of his could change the situation. Thus, the fact of action signifies that the future is uncertain to the actors. This uncertainty about future events stems from two basic sources: the unpredictability of human acts of choice, and insufficient knowledge about natural phenomena. Man does not know enough about natural phenomena to predict all their future developments, and he cannot know the content of future human choices. All human choices are continually changing as a result of changing valuations and changing ideas about the most appropriate means of arriving at ends. This does not mean, of course, that people do not try their best to estimate future developments. Indeed, any actor, when employing means, estimates that he will thus arrive at his desired goal. But he never has certain knowledge of the future. All his actions are of necessity speculations based on his judgment of the course of future events. The omnipresence of uncertainty introduces the ever-present possibility of error in human action. The actor may find, after he has completed his action, that the means have been inappropriate to the attainment of his end.

To sum up what we have learned thus far about human action: The distinguishing characteristic of human beings is that all humans act. Action is purposeful behavior directed toward the attainment of ends in some future period which will involve the fulfillment of wants otherwise remaining unsatisfied. Action involves the expectation of a less imperfectly satisfied state as a result of the action. The individual actor chooses to employ elements in his environment as means to the expected achievement of his ends, economizing them by directing them toward his most valued ends (leaving his least valued ones unsatisfied), and in the ways that his reason tells him are most appropriate to attain these ends. His method — his chosen means — may or may not turn out to be inappropriate.

3. Further Implications: The Means

The means to satisfy man's wants are called goods. These goods are all the objects of economizing action.[10] Such goods may all be classified in either of two categories: (a) they are immediately and directly serviceable in the satisfaction of the actor's wants, or (b) they may be transformable into directly serviceable goods only at some point in the future — i.e., are indirectly serviceable means. The former are called consumption goods or consumers' goods or goods of the first order. The latter are called producers' goods or factors of production or goods of higher order.

Let us trace the relations among these goods by considering a typical human end: the eating of a ham sandwich. Having a desire for a ham sandwich, a man decides that this is a want that should be satisfied and proceeds to act upon his judgment of the methods by which a ham sandwich can be assembled. The consumers' good is the ham sandwich at the point of being eaten. It is obvious that there is a scarcity of this consumers' good as there is for all direct means; otherwise it would always be available, like air, and would not be the object of action. But if the consumers' good is scarce and not obviously available, how can it be made available? The answer is that man must rearrange various elements of his environment in order to produce the ham sandwich at the desired place — the consumers' good. In other words, man must use various indirect means as cooperating factors of production to arrive at the direct means. This necessary process involved in all action is called production; it is the use by man of available elements of his environment as indirect means — as cooperating factors — to arrive eventually at a consumers' good that he can use directly to arrive at his end.

Let us consider the pattern of some of the numerous cooperating factors that are involved in a modern developed economy to produce one ham sandwich as a consumers' good for the use of one consumer. Typically, in order to produce a ham sandwich for Jones in his armchair, it is necessary for his wife to expend energy in unwrapping the bread, slicing the ham, placing the ham between bread slices, and carrying it to Jones. All this work may be called the labor of the housewife. The cooperating factors that are directly necessary to arrive at the consumers' good are, then: the housewife's labor, bread in the kitchen, ham in the kitchen, and a knife to slice the ham. Also needed is the land on which to have room to live and carry on these activities. Furthermore, this process must, of course, take time, which is another indispensable cooperating factor. The above factors may be called first-order producers' goods, since, in this case, these cooperate in the production of the consumers' good. Many of the first-order producers' goods, however, are also unavailable in nature and must be produced themselves, with the help of other producers' goods. Thus, bread in the kitchen must be produced with the cooperation of the following factors: bread-in-retail-shop and housewife's labor in carrying it (plus the ever-present land-as-standing-room, and time). In this procedure, these factors are second-order producers' goods, since they cooperate in producing first-order goods. Higher-order factors are those cooperating in the production of factors of lower order.

Thus, any process (or structure) of production may be analyzed as occurring in different stages. In the earlier or "higher" stages, producers' goods must be produced that will later cooperate in producing other producers' goods that will finally cooperate in producing the desired consumers' good. Hence, in a developed economy, the structure of production of a given consumers' good might be a very complex one and involve numerous stages.

Important general conclusions can, however, be drawn that apply to all processes of production. In the first place, each stage of production takes time. Secondly, the factors of production may all be divided into two classes: those that are themselves produced, and those that are found already available in nature — in man's environment. The latter may be used as indirect means without having been previously produced; the former must first be produced with the aid of factors in order to aid in the later (or "lower") stages of production. The former are the produced factors of production; the latter are the original factors of production. The original factors may, in turn, be divided into two classes: the expenditure of human energy, and the use of nonhuman elements provided by nature. The first is called labor; the latter is nature or land.[11] Thus, the classes of factors of production are labor, land, and the produced factors, which are termed capital goods.

Labor and land, in one form or another, enter into each stage of production. Labor helps to transform seeds into wheat, wheat into flour, pigs into ham, flour into bread, etc. Not only is labor present at every stage of production, but so also is nature. Land must be available to provide room at every stage of the process, and time, as has been stated above, is required for each stage. Furthermore, if we wish to trace each stage of production far enough back to original sources, we must arrive at a point where only labor and nature existed and there were no capital goods. This must be true by logical implication, since all capital goods must have been produced at earlier stages with the aid of labor. If we could trace each production process far enough back in time, we must be able to arrive at the point — the earliest stage — where man combined his forces with nature unaided by produced factors of production. Fortunately, it is not necessary for human actors to perform this task, since action uses materials available in the present to arrive at desired goals in the future, and there is no need to be concerned with development in the past.

There is another unique type of factor of production that is indispensable in every stage of every production process. This is the "technological idea" of how to proceed from one stage to another and finally to arrive at the desired consumers' good. This is but an application of the analysis above, namely, that for any action, there must be some plan or idea of the actor about how to use things as means, as definite pathways, to desired ends. Without such plans or ideas, there would be no action. These plans may be called recipes; they are ideas of recipes that the actor uses to arrive at his goal. A recipe must be present at each stage of each production process from which the actor proceeds to a later stage. The actor must have a recipe for transforming iron into steel, wheat into flour, bread and ham into sandwiches, etc.

The distinguishing feature of a recipe is that, once learned, it generally does not have to be learned again. It can be noted and remembered. Remembered, it no longer has to be produced; it remains with the actor as an unlimited factor of production that never wears out or needs to be economized by human action. It becomes a general condition of human welfare in the same way as air.[12]

It should be clear that the end of the production process — the consumers' good — is valued because it is a direct means of satisfying man's ends. The consumers' good is consumed, and this act of consumption constitutes the satisfying of human wants. This consumers' good may be a material object like bread or an immaterial one like friendship. Its important quality is not whether it is material or not, but whether it is valued by man as a means of satisfying his wants. This function of a consumers' good is called its service in ministering to human wants. Thus, the material bread is valued not for itself, but for its service in satisfying wants; just as an immaterial thing, such as music or medical care, is obviously valued for such service. All these services are "consumed" to satisfy wants. "Economic" is by no means equivalent to "material."

It is also clear that the factors of production — the various higher-order producers' goods — are valued solely because of their anticipated usefulness in helping to produce future consumers' goods or to produce lower-order producers' goods that will help to bring about consumers' goods. The valuation of factors of production is derived from actors' evaluation of their products (lower stages), all of which eventually derive their valuation from the end result — the consumers' good.[13]

Furthermore, the omnipresent fact of the scarcity of consumers' goods must be reflected back in the sphere of the factors of production. The scarcity of consumers' goods must imply a scarcity of their factors. If the factors were unlimited, then the consumers' goods would also be unlimited, which cannot be the case. This does not exclude the possibility that some factors, such as recipes, may be unlimited and therefore general conditions of welfare rather than scarce indirect means. But other factors at each stage of production must be in scarce supply, and this must account for the scarcity of the end product. Man's endless search for ways to satisfy his wants — i.e., to increase his production of consumers' goods — takes two forms: increasing his available supply of factors of production and improving his recipes.

Although it has seemed evident that there are several cooperating factors at each stage of production, it is important to realize that for each consumers' good there must always be more than one scarce factor of production. This is implied in the very existence of human action. It is impossible to conceive of a situation where only one factor of production produces a consumers' good or even advances a consumers' good from its previous stage of production. Thus, if the sandwich in the armchair did not require the cooperating factors at the previous stage (labor of preparation, carrying, bread, ham, time, etc.), then it would always be in the status of a consumers' good — sandwich-in-the-armchair. To simplify the example, let us suppose the sandwich already is prepared and in the kitchen. Then, to produce a consumers' good from this stage forward requires the following factors: (1) the sandwich; (2) carrying it to the armchair; (3) time; (4) the land available. If we assume that it required only one factor — the sandwich — then we would have to assume that the sandwich was magically and instantaneously moved from kitchen to armchair without effort. But in this case, the consumers' good would not have to be produced at all, and we would be in the impossible assumption of paradise. Similarly, at each stage of the productive process, the good must have been produced by at least more than one (higher-order) scarce cooperating factor; otherwise this stage of production could not exist at all.

4. Further Implications: Time

Time is omnipresent in human action as a means that must be economized. Every action is related to time as follows:

Figure 1
Figure 1

… A is the period before the beginning of the action; A is the point in time at which the action begins; AB is the period during which the action occurs; B is the point at which the action ends; and B … is the period after the end of the action.

AB is defined as the period of production — the period from the beginning of the action to the time when the consumers' good is available. This period may be divided into various stages, each itself taking a period of time. The time expended during the period of production consists of the time during which labor energy is expended (or working time) and maturing time, i.e., time required without the necessity of concurrent expenditure of labor. An obvious example is the case of agriculture. There might be six months between the time the soil is tilled and the time the harvest is reaped. The total time during which labor must be expended may be three weeks, while the remaining time of over five months consists of the time during which the crop must mature and ripen by the processes of nature. Another example of a lengthy maturing time is the aging of wine to improve its quality.

Clearly, each consumers' good has its own period of production. The differences between the time involved in the periods of production of the various goods may be, and are, innumerable.

One important point that must be emphasized when considering action and the period of production is that acting man does not trace back past production processes to their original sources. In the previous section, we traced back consumers' goods and producers' goods to their original sources, demonstrating that all capital goods were originally produced solely by labor and nature. Acting man, however, is not interested in past processes, but only in using presently available means to achieve anticipated future ends. At any point in time, when he begins the action (say A), he has available to him: labor, nature-given elements, and previously produced capital goods. He begins the action at A expecting to reach his end at B. For him, the period of production is AB, since he is not concerned with the amount of time spent in past production of his capital goods or in the methods by which they were produced.[14] Thus, the farmer about to use his soil to grow crops for the coming season does not worry about whether or to what extent his soil is an original, nature-given factor or is the result of the improvements of previous land-clearers and farmers. He is not concerned about the previous time spent by these past improvers. He is concerned only with the capital (and other) goods in the present and the future. This is the necessary result of the fact that action occurs in the present and is aimed at the future. Thus, acting man considers and values the factors of production available in the present in accordance with their anticipated services in the future production of consumers' goods, and never in accordance with what has happened to the factors in the past.

A fundamental and constant truth about human action is that man prefers his end to be achieved in the shortest possible time. Given the specific satisfaction, the sooner it arrives, the better. This results from the fact that time is always scarce, and a means to be economized. The sooner any end is attained, the better. Thus, with any given end to be attained, the shorter the period of action, i.e., production, the more preferable for the actor. This is the universal fact of time preference. At any point of time, and for any action, the actor most prefers to have his end attained in the immediate present. Next best for him is the immediate future, and the further in the future the attainment of the end appears to be, the less preferable it is. The less waiting time, the more preferable it is for him.[15]

Time enters into human action not only in relation to the waiting time in production, but also in the length of time in which the consumers' good will satisfy the wants of the consumer. Some consumers' goods will satisfy his wants, i.e., attain his ends, for a short period of time, others for a longer period. They can be consumed for shorter or longer periods. This may be included in the diagram of any action, as shown in figure 2. This length of time, BC, is the duration of serviceableness of the consumers' good. It is the length of the time the end served by the consumers' good continues to be attained. This duration of serviceableness differs for each consumers' good. It may be four hours for the ham sandwich, after which period of time the actor desires other food or another sandwich. The builder of a house may expect to use it to serve his wants for ten years. Obviously, the expected durative power of the consumers' good to serve his end will enter into the actor's plans.[16]

Figure 2
Figure 2
Period of Production and Consumption

Clearly, all other things being equal, the actor will prefer a consumers' good of greater durability to one of lesser, since the former will render more total service. On the other hand, if the actor values the total service rendered by two consumers' goods equally, he will, because of time preference, choose the less durable good since he will acquire its total services sooner than the other. He will have to wait less for the total services of the less durable good.

[product:0]

The concepts of period of production and duration of serviceableness are present in all human action. There is also a third time period that enters into action. Each person has a general time horizon, stretching from the present into the future, for which he plans various types of action. Whereas period of production and duration of serviceableness refer to specific consumers' goods and differ with each consumers' good, the period of provision (the time horizon) is the length of future time for which each actor plans to satisfy his wants. The period of provision, therefore, includes planned action for a considerable variety of consumers' goods, each with its own period of production and duration. This period of provision differs from actor to actor in accordance with his choice. Some people live from day to day, taking no heed of later periods of time; others plan not only for the duration of their own lives, but for their children as well.

Notes

[1] For further reading on this topic, the best source is the epochal work of Ludwig von Mises, Human Action (New Haven, Conn.: Yale University Press, 1949), pp. 1–143, and passim.

[2] Cf. ibid., p. 11; F.A. Hayek, "The Facts of the Social Sciences," in Individualism and Economic Order (Chicago: University of Chicago Press, 1948), pp. 57–76; Hayek, The Counter-Revolution of Science (Glencoe, Ill.: The Free Press, 1952), pp. 25–35; and Edith T. Penrose, "Biological Analogies in the Theory of the Firm," American Economic Review, December, 1952, pp. 804–19, especially 818–19.

[3] Cf. Aristotle, Ethica Nicomachea, Bk. I, especially ch. vii.

[4] This chapter consists solely of a development of the logical implications of the existence of human action. Future chapters — the further parts of the structure — are developed with the help of a very small number of subsidiary assumptions. Cf. Appendix below and Murray N. Rothbard, "Praxeology: Reply to Mr. Schuller," American Economic Review, December, 1951, pp. 943–46; and "In Defense of 'Extreme Apriorism,'" Southern Economic Journal, January, 1957, pp. 314–20.

[5] There is no need to enter here into the difficult problem of animal behavior, from the lower organisms to the higher primates, which might be considered as on a borderline between purely reflexive and motivated behavior. At any rate, men can understand (as distinguished from merely observe) such behavior only in so far as they can impute to the animals motives that they can understand.

[6] To say that only individuals act is not to deny that they are influenced in their desires and actions by the acts of other individuals, who might be fellow members of various societies or groups. We do not at all assume, as some critics of economics have charged, that individuals are "atoms" isolated from one another.

[7] Cf. Hayek, Counter-Revolution of Science, p. 34. Also cf. Mises, Human Action, p. 42.

[8] Cf. Talcott Parsons, The Structure of Social Action (Glencoe, Ill.: The Free Press, 1949), pp. 44 ff.

[9] Some writers have unfoundedly believed that praxeology and economics assume that all action is cool, calculating, and deliberate.

[10] The common distinction between "economic goods" and "free goods" (such as air) is erroneous. As explained above, air is not a means, but a general condition of human welfare, and is not the object of action.

[11] The term "land" is likely to be misleading in this connection because it is not used in the popular sense of the word. It includes such natural resources as water, oil, and minerals.

[12] We shall not deal at this point with the complications involved in the original learning of any recipe by the actor, which is the object of human action.

[13] Cf. Carl Menger, Principles of Economics (Glencoe, Ill.: The Free Press, 1950), pp. 51–67.

[14] For each actor, then, the period of production is equivalent to his waiting time — the time that he must expect to wait for his end after the commencement of his action.

[15] Time preference may be called the preference for present satisfaction over future satisfaction or present good over future good, provided it is remembered that it is the same satisfaction (or "good") that is being compared over the periods of time. Thus, a common type of objection to the assertion of universal time preference is that, in the wintertime, a man will prefer the delivery of ice the next summer (future) to delivery of ice in the present. This, however, confuses the concept "good" with the material properties of a thing, whereas it actually refers to subjective satisfactions. Since ice-in-the-summer provides different (and greater) satisfactions than ice-in-the-winter, they are not the same, but different goods. In this case, it is different satisfactions that are being compared, despite the fact that the physical property of the thing may be the same.

[16] It has become the custom to designate consumer goods with a longer duration of serviceableness as durable goods, and those of shorter duration as nondurable goods. Obviously, however, there are innumerable degrees of durability, and such a separation can only be unscientific and arbitrary.


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