The Influence and Significance of Human Action after 75 Years

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Is Human Action the Hidden Impact Crater of Modern Economics?

MARK THORNTON *

In this immense volume [Mises] presented his exhaustive analysis of all things economic. This treatise is not beach reading. It is deeply philosophical as well as impressively analytical. And yet it is accessible to any intelligent reader who can spare the time, and expend the concentrated effort, required to grasp its lessons. Regrettably, too few people are willing to spare such time and expend such effort on reading Human Action.

—Donald J. Boudreaux, from the foreword to Robert P. Murphy’s Choice: Cooperation, Enterprise, and Human Action

For most professional economists Human Action is a forgotten artifact. As a “treatise” it supposedly investigates everything from a theoretical point of view, an outmoded model from prior to the professionalization of the discipline. The introductory quote from Professor Boudreaux is a typical refrain from champions of Human Action on the difficulties of reading it, particularly the first three hundred pages. However, this essay argues that its opening analysis, or theorizing, had a profound impact on subsequent post-1950 developments in the economic profession, including the Chicago School, public choice theory, the microeconomics revolution, and potentially even mathematical economics and econometrics. In addition to having a profound effect on solidifying our understanding of human behavior as rational and maximizing, Ludwig von Mises’s approach has come to define economics.

Impact Craters

An impact crater, or basin, is a very large impression on the surface of a planetary object that transforms the body in a lasting, usually circular pattern, sometimes with revolutionary impact on life. Over thousands of years, even a massive impact structure gradually begins to be erased by weathering and hidden by vegetative growth.

Only in certain climates where weathering and vegetation are limited are we able to see such geological features such as the Barringer Crater in Arizona. As with large manmade objects in the desert, such as the pyramids in Egypt, it can be easily detected, while similar structures located in the jungle or under water were long hidden to history until sophisticated viewing technologies, such as lidar, were invented.

In terms of the history of ideas, we are similarly handicapped by the ideological limitations to what is obvious, such as the connections between teacher and student, or direct written testimony concerning the influence of some genius, idea, or technology. While some lidartype technology, such as artificial intelligence, is now on the horizon to reveal much more about the historical pathways of ideas, here we propose a preliminary investigation of the impact of Mises’s Human Action on the development of economics in the second half of the twentieth century. We find some noteworthy evidence that Mises and his treatise Human Action had a substantial yet unnoticed impact on academic economics and is, as such, like a hidden impact crater.

From Prodigy to Intellectual Outcast

Mises began his academic career as a successful avant-garde liberal economist, but his career was largely derailed by the advent of Hitler and World War II. After fleeing to Switzerland and then to the United States, he remained an academic outcast and never regained his status as an important innovator within academia.

The first version of his magnum opus, Nationalökonomie (Mises 1940), which he wrote in German while in exile, collapsed stillborn from the publisher during Hitler’s onslaught. Although its 1949 English version, Human Action (Mises 1998), sold many copies, it failed to make any obvious or acknowledged impression on the economics profession.

The marketing success of the book for Yale University Press seemed to do nothing for Mises’s academic reputation or even earn him a regular professorship. The book received accolades from conservative and anticommunist circles and became the economics bible of the new philosophical movement centered around novelist Ayn Rand, now known as objectivism.

From today’s perspective, Mises is widely recognized for his foundational contributions to monetary economics, business cycle theory, and as the “winner” of the socialist calculation debate but is more broadly considered the final academic remnant of the European liberal tradition (Hülsmann 2007). His contributions and treatise are considered relics of the field of economics’ past, a teasing of all problems and issues from a purely theoretical exercise. Sherwin Rosen (1997) suggests that anything of value in Austrian economics has already been incorporated into neoclassical economics.

Obscurity

The first few hundred pages of the book, where Mises describes and defends his theoretical approach and method, seem to have had little impact on the modern reader and academic economists. Even in staunch libertarian circles chapters 1–14 are considered “infamous,” a tedious, convoluted, and unnecessary obstruction to the rest of the book. Even the continuing modern revival of appreciation for his contributions has failed to resuscitate the place of his magnum opus in economics beyond the status of his “textbook,” or compilation of his thoughts and works.

Of course, this modern-day view fails to recognize the revolutionary contribution of the book even though Human Action’s recasting of economic methodology and epistemology is in full agreement with accepted economic theory. In essence, Mises provides the raw material of a compelling, comprehensive, and rigorous view of human behavior that forms the basis of economic theory and human action more broadly.

The hypothesis of this essay is that Human Action—particularly the first few hundred pages—was instrumental to the new way of economic thinking that emerged with the new Chicago School, the Public Choice School, price theory, economic imperialism, general equilibrium analysis, and, ironically, the rise of economic formalism. Here we find the distinct features of “rational” behavior, praxeology applied to nonmarket action, and a dependence on economic laws of behavior.

Here is the claim of this essay: because the reader is “forced” to “test” and accept all the steps in Mises’s argument introspectively, a basis of agreement is established. This unconscious agreement might not be recognized by the reader or might be recognized as nothing more than mere common sense. However, this acceptance by the reader is a form of learning by osmosis: the unconscious learning or “practical mastery” of otherwise “complicated situations which cannot be clearly analyzed” defined or explained (Murphy 2023). This learning of the principles of human behavior could take place even if the reader explicitly rejected Human Action. In fact, we would expect this type of “rejection” from recently trained professional economists in light of Mises’s damning criticisms of the emerging features of modern economics, such as mathematical modeling and econometric testing. We would also expect such rejection from those who were ideologically or professionally predisposed to activist government involvement in the economy.

This essay examines the contents of the book and its possible influences on its readers. The findings of these examinations suggest further research is warranted. An unanticipated finding of this investigation is that Mises’s earlier works were instrumental in the definition of modern economics as an ends-means framework based on cause and effect and no ethical judgments.

Lessons from Osmosis

The material in Human Action begins in part 1, chapter 1, with the basic notion of purposeful human action, where the humanwill” results in a choice and an action to achieve a purpose. For Mises’s praxeology, it is not scientifically important what motivates the process, such as hunger, emotion, psychological impulse, or some instinct, and neither does it matter how the individual’s action goal (e.g., happiness, incentive, or utility), or even the individual’s ultimate goal, is understood.

Here, rational action is a redundant phrase, and most importantly no ethical judgment of apparent purpose of action is permissible from the scientific point of view. We might have ethical objections to a particular course of action, or we may want to counsel alternative means to achieve stated ends, but we are otherwise neutral from the scientific point of view. Mises presents a unique scientific case for economics as a value-free science.

Armed with an understanding of cause and effect and an understanding of action, Mises describes a comprehensive analysis of what human action is, what it is not, and why it is the key basis for understanding an individual’s actions and social phenomena. This exposition continues through the first nine sections of chapter 2 before Mises arrives at the procedure of economics. These introductory materials include what might be viewed as insulting statements toward “philosophers” but also show Mises disclaiming any originality. He claims that the method and theorems of praxeology already existed and that he is merely enunciating and explaining what already exists.

In a seemingly endless series of clarifications, judgments, and diversions, Mises has led the reader to a useful approach for understanding human action. He is able to accomplish this because the reader himself is the subject of examination and can evaluate Mises’s claims introspectively. While it is not possible to present the entire contents of the first third of Human Action here, we can recap the central aspects that would impact the reader’s outlook on economic science: autistic exchange, profit and loss, interpersonal exchange, and the issues of time and uncertainty.

Autistic exchange may or may not include scratching an itch, but it includes simple independent actions we take without respect to other individuals but expect to “profit” by. Examples are turning off your alarm clock, getting dressed, brushing your teeth, making coffee, and so forth. As a noteworthy illustration of autistic exchange, economists have often employed the Robinson Crusoe economy to describe the isolated individual providing for himself, engaging in actions such as catching fish or making a fishing net, to analyze the phenomenon of investment.

This model brings attention to the purposes of the individual, the scarcity of resources and knowledge, and costs and benefits prior to action. The Robinson Crusoe situation sharpens the reader’s awareness of competing purposes (food, water, clothing, shelter, leisure, rescue, etc.) under highly limited resource constraints compared to picking a job and shopping at the supermarket. The reader clearly sees the decision-maker, Robinson Crusoe, employing the marginal principle in an attempt to maximize “profits” under conditions where survival is threatened.

Mises does not treat this conceptual setting as a historical tale or an otherworldly situation, but rather as an essential analytical step in part 4. Here, imaginary constructions, which are sometimes fictitious, are employed to develop understanding of human behavior, economic science, and the market society: “No other imaginary construction has caused more offense than that of an isolated economic actor entirely dependent on himself. However, economics cannot do without it. In order to study interpersonal exchange, it must compare it with conditions under which it is absent” (Mises 1998, 244).

For economic analysis, psychic profit is often seen as an unmentioned criterion or afterthought, especially compared to the more controversial and everyday useful concepts of accounting profits and losses. But Mises (286–88), building on the concept of autistic exchange, begins his analysis with this universal understanding of costs and benefits (as well as profits and losses) and its impact on action before proceeding to the economic and accounting versions. We expect to profit from all our actions:

Profit, in a broader sense, is the gain derived from action; it is the increase in satisfaction (decrease in uneasiness) brought about; it is the difference between the higher value attached to the result attained and the lower value attached to the sacrifices made for its attainment; it is, in other words, yield minus costs. To make profit is invariably the aim sought by any action. If an action fails to attain the ends sought, yield either does not exceed costs or lags behind costs. In the latter case the outcome means a loss, a decrease in satisfaction.

Profit and loss in this original sense are psychic phenomena and as such not open to measurement and a mode of expression which could convey to other people precise information concerning their intensity. (286–87)

He then goes on to show that in the economy our actions get translated into money units and prices. This conveys a more “precise information” in the form of economic calculation and ultimately provides for a social wide objective evaluation of our actions and contributions toward value, productivity, and efficiency. But even here, “we cannot even think of a state of affairs in which people act without the intention of attaining psychic profit and in which their action result neither in psychic profit nor in psychic loss” (287).

Moving from autistic exchange to interpersonal exchange enters the realm of the most accepted concept of economic analysis, the mutual gains from trade, and its best-developed mode of analysis, price theory. Mises can then move ahead to place interpersonal exchange at an even higher level of significance. Although autistic and interpersonal exchange share the same motivating features conceptually, there is an important distinction between them historically: “The step which leads from autistic to interpersonal exchange was no less a jump into something entirely new and essentially different than was the step from automatic reaction of the cells and nerves to conscious and purposeful behavior, to action” (196).

Mises concludes that transitioning from the wilds of animalistic behavior of pure autistic exchange to interpersonal exchange between people therefore marks the emergence of “society.” This new type of exchange is a joint action of conscious and purposeful people who recognize property rights that results in mutual gain.

The pricing process is what regulates such exchanges and the entire ongoing development of the division of labor in society. As such, we can rightly attribute human developments, broadly conceived as everything that enhances trade (private property, language, money, weights and numbers, law, accounting, etc.) to the same market process (Thornton 2025). These developments or institutions are how we describe society in general, and we differentiate between different societies by variations in those same institutions, suggesting a neutral view of the basic nature of man.

Time and Uncertainty

In Mises’s praxeological system, cause and effect play a central role; this then introduces the concepts of time and uncertainty, which were largely lacking in previous theorizing. Mises (99) states that while the logical simultaneity of the praxeological system is outside of time and is therefore categorically different from the real-world acquisition of knowledge, thought, and action. However, it does include change and cause and effect so that it necessarily introduces time into the analysis: then and now, before and after, sooner and later. For Mises (100), “Action is always directed toward the future,” which introduces time and therefore necessarily introduces uncertainty—and both concepts are critical aspects of his system.

The present is often considered as just an imaginary boundary between the past and the future, but in praxeology it has a special significance as the domain of reason, choice, and action and therefore of special import in judging rationality. The future is uncertain, and the end (of the present) is always near, so that time itself must be economized, apart from the economization of resources. This realization provides an impenetrable barrier against charges of the possibility of irrational action. Such charges are often based on alleged inconsistencies between plans and actions, or between scales of value and action, but these challenges fail to account for the roles of time and uncertainty. Plans and scales of value are conceptual placeholders in the epistemological investigation, not concrete features of reality. Mises presents the case of a stock market speculator on the floor of an exchange as an illustration of how plans and scales of value can be in a state of flux, responding to ever-changing stimuli, and this defeats all charges of irrationality. He deductively concludes:

However one twists things, one will never succeed in formulating the notion of “irrational” action whose “irrationality” is not founded upon an arbitrary judgment of value. Let us suppose that somebody has chosen to act inconstantly for no other purpose than for the sake of refuting the praxeological assertion that there is no irrational action. What happens here is that a man aims at a peculiar goal, viz., the refutation of a praxeological theorem, and that he accordingly acts differently from what he would have done otherwise. He has chosen an unsuitable means for the refutation of praxeology, that is all. (104; emphasis added)

Mises provides a very deep and fundamental analysis of the human condition, reason, and choice. Using the isolation of autistic exchange, he shows how human thought processes transform our purposes into actions. This in turn is used to illuminate interpersonal exchange and to derive all the commonly accepted theorems of economics.

While the first three hundred pages of Human Action have been broadly criticized by both professional and amateur economists, as well as by both friends and foes of free markets, it is not inconceivable that many readers found this foundational material unconsciously convincing in terms of the theory of rational behavior and developed a general understanding of it, a form of learning by osmosis. This hypothesis seems highly likely given that the text challenges the reader to “test” the analysis point by point, introspectively, against his own thinking about his own actions.

If this hypothesis is correct, or at least not patently false, then the next question is whether or not Mises’s analysis was conveyed to a large enough number of professionally influential people, pro and con, to make an impact on professional economics and its future direction. The next section turns to the reception of Human Action when it was first published in 1949 and what was said (and unsaid) about the various parts of Mises’s book.

Who Was Reading Human Action?

While the German edition in 1940 was aborted by the forces of history, the English edition, published by Yale University Press in 1949, was a runaway bestseller by academic publishing standards. It was widely read by academics and intellectuals, as well as by Mises’s new fan base in the United States. Given that Mises’s top European student had in 1944 published the bestselling book Road to Serfdom, which sold two million copies in all forms, including twenty translations, the teacher’s theoretical treatise would have been much anticipated by academics across the ideological spectrum and by the general public.

At the time of Human Action’s publication, mathematical economics and econometrics were fringe aspects of the economics profession and were strictly the domain of a small number of specialists. In contrast, the average academic economist of the day would have been aware of the book, and research-oriented economists would likely have purchased and read the book. Prior to the publication of Human Action, institutional and socialist-type economics, both of which had a negative view of individual rationality, were important components of the economics profession.

Here we will survey some reviews of the book published in the leading economics journals and the popular press. It is noteworthy that many of the reviews were written by leading theoretical economists of lasting import, as well as a few specialists on methodological topics, for some of the leading general interest economics journals.

Seymour Harris, a professor of economics at Harvard University writing in the Saturday Review, does at least take note of Mises’s “long discussion of the epistemological problems of the sciences of human action, of the market and the pricing system, etc.” amid his diatribe against the book. Harris was an ardent proponent of Keynesian economics and government planning of the economy, so it is not surprising that he did not like the book or bother addressing the contents of that “long discussion” (Harris 1949, 31).

Another Harvard professor who was likewise ill trained to address the “long discussion” was the famous agriculturalconomist John Kenneth Galbraith. Writing for the New York Times, he likewise avoids raising Mises’s methodological issues but does accurately, if cynically, describe Mises’s generalized conclusion: “If that market is completely free, . . . then man achieves the highest state of grace to which he can rise.” However, rather than discussing Mises’s “impressive scholarship,” Galbraith (1949) instead focuses on defending proponents of the government interventionist model, such as himself, “who would subvert [the completely free market economy] to the service of selfish or shortsighted ends.

Ludwig Lachmann, the South African iconoclast economist, wrote a lengthy review in the leading economics journal of the time, Economica. Seemingly comfortable with both Austrians and Keynesians, he situates the great methodological issues facing the economics profession and the two schools’ respective positions on those issues without attempting to come to wide-ranging, definitive conclusions. Despite his attempt to avoid bias and partisanship, he does note that on the fundamental issue of a priori knowledge “it seems to us, however, that in this particular case it is possible to side with Professor Mises” (Lachmann 1951, 415). Lachmann (419) also agrees with and quotes Mises’s (1998, 195) universal conception of the social order and the theory of exchange: “The exchange relation is the fundamental social relation. Interpersonal exchange of goods and services weaves the bond which unites men into society.” Most importantly, Lachmann (1951, 413) describes Mises’s first seven chapters as a culmination, a “centre of gravity,” of a then-developing literature establishing a methodology of theoretical economics that conveys precise knowledge of exact things—that is, theory concerning human activity on par with the natural sciences, but of a completely different nature. Lachmann accepts Mises’s views on the concomitance of human reason and action but is more concerned about the issues related to plan coordination in the macroeconomy.

J. R. Hicks, writing a short review in the Guardian, claims that the book is a counter to Marx, a strident rather than conciliatory version of liberalism, and not very original in terms of traditional economic theory. However, he does acknowledge Human Action as “a powerful book, which presents a real challenge, and which deserves attention even from those who will be least in sympathy with it” (Hicks 1949, 3). Indeed, the book would not seem to be original for an economic theorist of J. R. Hicks’s stature and age, because, as we will later see, most of this important reasoning was not original after the early work of Joseph Schumpeter, Mises’s own previous writings, and those of Lionel Robbins.

Probably the most telling review of Human Action—published in the American Economic Review, the flagship and most-read economics journal—indicates that Mises was basically on solid ground. According to George J. Schuller (1950, 419), “In addition, he offers the best defense the reviewer has seen of apriorism in economic methodology and some important modifications of marginalist theory in relation to quantitative and temporal analysis.” Schuller also has numerous problems with the book, but the problems raised either are based on misunderstanding or are highly nuanced: nothing that would undermine any aspect of Mises’s analysis or distract from a normal reading of the text. Murray Rothbard (1951) is able to reject a dozen of the most noteworthy criticisms in a short comment on the review.

There was one friendly review from Henry Hazlitt, someone who might be considered the “dean” of economic journalism in America at the time. Unfortunately, he does not discuss the early material on epistemological aspects of Mises’s treatise other than to agree with him and to note that “once his more abstract theoretical foundations have been laid his chapters are models of lucidity and vigor” (Hazlitt 1949). One can only surmise that Hazlitt saw an impressive rigor provided by those “theoretical foundations” but failed to provide readers with any further guidance to their significance.

Another important review was by Frank Knight, who was the leading American theoretical economist. He was a cofounder (with Jacob Viner and Henry Simons) of the early Chicago School of economics, and whose students included Milton Friedman, George Stigler, and James Buchanan. It seems very reasonable to assume that the three students were also intimately familiar with Mises and his work. They all were members of the Mont Pelerin Society, which was founded in 1947 by Mises’s “student” Friedrich von Hayek with a membership heavily weighted toward leading academic economists, including Mises himself.

Knight’s (1941) review is telling in that it opens with general admiration and agreement but feigning many disagreements with the “methodological” and “fundamental” issues (409–10). After abandoning this field, he uses the remainder of his review (410–27) to rehash his disagreement with Eugen von Böhm-Bawerk and Mises on the topics of capital and interest. But of course, had Knight had a well-developed criticism of Mises’s fundamental method, rather than a stream of quibbles, he no doubt would have pursued it in his lengthy review. I will suppose that Knight did not have a well-developed argument against Mises in terms of the fundamentals of action as much as he had disagreements with the implications of those differences in terms of theory and policy and even in terms of the understanding of the complexity and unpredictability of events. Where Knight was ever the skeptic and curmudgeon, Mises could easily be perceived in contrast as an optimist when it came to the power of economic theory.

Notes on Misesian Influence

It would be quite absurd to attempt here a thorough examination of the possible influences of Mises’s book Human Action on the post-1950s economics profession. However, even a cursory examination of the evidence reveals both some obvious influences and some deeper historical seams of influence from Mises’s own prior works on economic calculation and epistemological issues.

James Buchanan

Buchanan was one of the few “students” of Frank Knight, a theoretical/methodological opponent of Mises. However, Buchanan rejected Knight on key points in favor of Mises in accepting methodological individualism, subjectivism, and praxeology while launching the public choice revolution. According to Ross Emmett (2018), “Buchanan adopted a catallactic perspective,” in contrast to Knight, who wanted to argue ethical issues, to dispute matters of taste, and to use metaphors when it came to capital theory and democratic processes. Knut Wicksell, not Knight, was the positive influence on Buchanan, and we learn from Buchanan’s Cost and Choice (1969) the extent of the influence of Mises and the Austrians on his overall approach. Human Action is noted by Buchanan, but he traces the subjective-theoretical notion of cost from the economists at the London School to Hayek and Lionel Robbins, and then back to Mises’s early work. When Buchanan (1954) launched his praxeological extension of economics into politics, creating public choice theory, he leaned heavily on the foundational work of Mises’s Human Action.

Gordon Tullock

Tullock, the cofounder of public choice, is said to have claimed that the only economics book he read before becoming an economist was Human Action. Tullock remained committed to economic theory and methodological objectivity and retained an interest in topics related to the Austrian School.

Milton Friedman

Although he took his first microeconomics class from Jacob Viner (a student of Frank Taussig) at Chicago in 1932 and was a keen anecdotal observer (alcohol prohibition, 1920–33; see Thornton 2016), Friedman’s intellectual influences included applied mathematics, statistics, institutional economics, and Keynesian economics up through World War II. But according to David Henderson and Jennifer Burns, at least by 1950 he had become an outspoken critic of Keynesian economics and mathematical-econometric modeling: “Friedman was unsparing in his criticisms of that approach to macroeconomics” (Henderson 2024, 31). In contrast to the emerging Keynesian Revolution, Friedman’s major contributions are not inconsistent with those of Austrian School, so there is some potential here for future investigators to examine.

Gary Becker

Becker exemplifies what might be called “Chicago-style praxeology,” the application of Mises’s principle of human behavior to noneconomics, or noncatallactics, in both the autistic and interpersonal forms. The title and opening remarks of his Nobel Prize acceptance speech are very Misesian (see Becker 1992). Becker accepted the definition of economics by Lionel Robbins as an open-ended approach to human behavior. Two historians of economic thought, Roger Backhouse and Steven Medema (2009b, 230), make this point clear: “Given Gary Becker’s role in pushing outward the boundaries of economics, one might expect that he would have had strong views about a broad definition of the subject. However, in his 1971 graduate textbook, Becker (p. 1) defined economics with a straightforward extension of the Robbins definition to a choice theoretic framework: ‘the study of the allocation of scarce means to satisfy competing ends.’ In 1976, though, Becker (1976, p. 4) felt compelled to point out that most economists find the generality of this definition embarrassing and qualify it ‘to exclude most nonmarket behavior.’”

Robert Lucas, Armen Alchian, and Lionel Robbins

Likewise we could extend the possible influences of the Austrians to “rational expectations” and Robert Lucas as well as Armen Alchian’s (1950) work related to uncertainty and profit maximization.

Robbins himself credits Mises and the Austrians for influencing his thinking on the nature of economics and basic aspects of theory. Backhouse and Medema (2009a) chart the long road to the acceptance of Robbins’s definition of economics as the study of attaining ends with scarce means, but do so, remarkably, without ever mentioning Mises and the Austrians. The modern definition of economics is essentially a Misesian one that emerged from the work of Carl Menger and the early Austrians. According to Wikipedia,

[In the 1930s], Lionel Robbins noticed that [Jean-Baptiste Say’s] definition [of economics] no longer sufficed, because many economists were making theoretical and philosophical inroads in other areas of human activity. In his Essay on the Nature and Significance of Economic Science, he proposed a definition of economics as a study of human behaviour, subject to and constrained by scarcity, which forces people to choose, allocate scarce resources to competing ends, and economise (seeking the greatest welfare while avoiding the wasting of scarce resources). According to Robbins: “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” Robbins’ definition eventually became widely accepted by mainstream economists, and found its way into current textbooks. Although far from unanimous, most mainstream economists would accept some version of Robbins’ definition, even though many have raised serious objections to the scope and method of economics, emanating from that definition.

Mathematical Economics and Econometrics

Both mathematical economics and econometrics were nascent until World War II and were the domain first of noneconomists and later of economists who specialized in those topics, only to dominate graduate education and publication in the leading economic journals by the end of the twentieth century. However, both subdisciplines rely on assumptions of rational human behavior and stable preferences, as well as subsidiary assumptions such as large numbers and normal distributions, as fundamental supports of their approaches. According to Mark Blaug (2003, 145):

Something happened to economics of the 1950s that is little appreciated by most economists and even by professional historians of economic thought. The subject went through an intellectual revolution as profound in its impact as the so-called Keynesian Revolution of prewar years. I call it the Formalist Revolution. . . .

It is common to think of interwar economics in terms of a struggle between institutionalists and neoclassicists but as a number of historians have recently reminded us, “pluralism” is a more accurate description of the state of play in economics between the two World Wars. The extraordinary global uniformity in the analytic style of the economics profession that we nowadays characterize as neoclassical economics only dates from the 1950s.

The use of mathematics and quantitative analysis goes back to the earliest days of the profession. Antoine Augustin Cournot, Léon Walras, and their followers would have been unlikely to be swayed by Mises’s criticisms nor enthused by his positive contributions. However, Mises’s development of a rational theory of human behavior may have discouraged dissent and encouraged acceptance of formalism by non-mathematical economists. Even more directly, Oskar Morgenstern, who was at least initially influenced by Mises, went on to become one of the primary developers of game theory in economics.

Summary and Conclusion

The hypothesis of this essay is that Human Action, particularly the first few hundred pages, were instrumental to the new ways of economic thinking that emerged after World War II, such as the new Chicago School, the Public Choice School, the importance of price theory, and the application of rational behavior to nonmarket activities. The claim of the essay is that the reader of this bestselling book is forced to test and accept all the steps in Mises’s argument introspectively and that this forms a basis of agreement. This unconscious agreement is a form of learning by osmosis: the unconscious learning of otherwise “complicated situations which cannot be clearly analyzed,” defined, or explained by the reader.

This essay examines the contents of the book and its possible influences on its readers, which are then compared with prominent reviews of the book published in leading academic journals and popular publications. Some evidence of the book’s influence on subsequent developments in professional economics is introduced, including that Mises was instrumental in shaping the modern definition of economics. The findings from this examination suggest that further research is warranted.

References

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Harris, Seymour. 1949. “Capitalist Manifesto.” Review of Human Action: A Treatise on Economics, by Ludwig von Mises. Saturday Review, September 24, 1949. https://archive.org/details/sim_saturday-review_1949-09-24_32_39/page/30/mode/2up.

Hazlitt, Henry. 1949. Review of Human Action: A Treatise on Economics, by Ludwig von Mises. Newsweek, September 19, 1949.

Henderson, David R. 2024. “Good Book, Bad Title.” Review of Milton Friedman: The Last Conservative, by Jennifer Burns. Regulation 47, no. 2 (Summer): 30–34. https://www.cato.org/sites/cato.org/files/2024-06/regulation-v47n2in-review.pdf.

Hicks, J. R. 1949. Review of Human Action: A Treatise on Economics, by Ludwig von Mises. The Guardian, December 30, 1949.

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———. 1998. Human Action: A Treatise on Economics. Scholar’s ed. Auburn, AL: Ludwig von Mises Institute. https://mises.org/library/book/human-action.

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* The author wishes to acknowledge the research assistance of David Brady and the helpful suggestions of Joseph T. Salerno, Jonathan Newman, and David Gordon.

According to Murphy (2015), his book is a “modern, condensed treatment” of Human Action, which otherwise suffers from being too long and formal for the reader.

He also never realized his efforts to rebuild economics on stronger theoretical grounds or to reform and reinvigorate the Austrian School, which was displaced and scattered during World War II. Nor did he succeed in reestablishing the vigor of his prewar seminar in Vienna in his new location in New York.

In spite of this recommendation, Rand did not like Mises’s philosophical views in Human Action. Of all her marginalia in her copy of the book, thirty-four pages’ worth were negative comments on the first three hundred pages, with one comment on the rest of the book. See Mayhew (1995).

It is worth noting that in addition to broadly endorsing Mises’s contributions, Lachmann (1951, 427) also shares Mises’s concern about the broad acceptance of economics proper: “The outlook for the praxeological sciences is not exactly bright. In our time they are bound to come into conflict with the dominant ideologies at almost every point. . . . It will be for History to judge.

Wikipedia, s.v. “Economics,” last modified September 16, 2024, https://en.wikipedia.org/wiki/Economics#Neoclassical_economics.

Blaug suggests that the “ultimate objective” was to achieve a complete mathematical axiomatization of economic theories.