REFLECTIONS ON HUMAN ACTION AFTER 50 YEARS
Vernon L. Smith
The core of Ludwig von Mises’ thought is the theory of human action, or praxeology, the general science he seeks to articulate. Within this general science is included—embedded in it—catallactics, or the science of exchange (Mises  1996: 1–3; hereafter M). Consequently, to Mises everything we seek to study in economics stems ultimately from individual choice, the key to which is subjectivist economics (stemming from the 1870s revolution by Menger, Jevons, and Walras). Thus, ‘‘Choosing determines all human decisions. In making his choice man chooses not only various material things and services. All human values are offered for option. All ends and all means . . . are ranged in a single row and subjected to a decision which picks out one thing and sets aside another’’ (M, p. 3). Moreover, ‘‘Human action is necessarily always rational’’ (M, p. 19). For Mises this is a truth, not a hypothesis to be tested that can be right or wrong. This is because praxeology is neutral with regard to any value judgments concerning its data—that is, the ultimate ends chosen in human action. Hence, there is no objective basis for asserting that anyone’s choices can be irrational. Externalities (whether costs or benefits) are not a problem in principle for Mises because he saw clearly, as did Coase, that these involve the delineation of property rights—the problem of no man’s property, or public free access resources. The problem is one of holding individuals accountable though liability for those costs of human action that are borne by others. Mises sees the principle of liability as being widely accepted; any alleged deficiencies he attributes to loopholes ‘‘left in the system’’ (M, p. 658). Finally, in this thumbnail sketch there are the well-known strong views of Mises against intervention: ‘‘There are hardly any acts of government interference with the market
Cato Journal, Vol. 19, No. 2 (Fall 1999). Copyright ©...