 This is Mises weekends with your host Jeff dice Ladies and gentlemen, welcome back once again to Mises weekends. I'm your host Jeff diced happy to be joined this weekend by Two very special guests. Of course, you all know dr. Joe Salerno He's the VP of academic affairs here at the Mises Institute and one of our returning summer fellows Carl Friedrich Israel from Germany He is a PhD candidate at University of Auger with dr. Gito Hulsman and will be a PhD. I think by about your end in economics And so we're thrilled to have him back for a second summer Coming up this next week is the Rothbard graduate seminar RGS. It's an annual program where we have about 3050 sometimes more People who are interested in the ideas of Austrian economics come to Auburn and spend a week with us Studying one of the great treatises This week, it's human action the scholars edition which of course Is identified by Joe and others as one of the four major treatises in Austrian economics Obviously Carl Manger's principles would be the first and earliest then Bombay everx, I guess three volumes on capital and interest Mises comes along with human action First as national economy in the 30s and then the fuller human action in the 40s and then Murray Rothbard finally in I guess 1962 yes comes out with man economy and state so Obviously from our perspective, there's there's a tremendous amount of value in studying these great works We have a fantastic lady Alice J. Lily who provides us some some funding every year to make this Rothbard graduate seminar possible and we're so grateful to her but You know to the attendees it's really almost a privilege isn't it to be able to take a week of your life To come and spend and study and read a masterpiece like this most people don't have that luxury Yeah, that's true. I think and the Rothbard graduate seminar really fills a niche that is not filled by Universities nowadays increasingly so so the the seminar is in the tradition of a great books Seminar where you read an important text and then get to discuss the text with with the other participants and Nowadays at the university It's mostly only lecture format. That's the way you learn stuff today And there are only just a few universities and you guys still that hold up to the great books tradition, right? I think One one of the leading universities that still does it is the University of Chicago, right, right? And also st. John's in Annapolis. Yes, but what happened to this seminar model? Why don't we read great books any more other than the white privilege aspect of it? What happened? Why why why are we stuck on this one-way lecture model? Yeah, I mean that's unfortunately the way it's been since the you know, 1400s You know the the chalk and talk Model right as we call it the technology is changing that's somewhat and they're even talking about reversing the classroom where The students would actually do the problems and problem-solving in the classroom and read the text at home But that's far that's still far away from the great books model Which is I think a very important way to learn especially on the graduate level, right? I think right now when we look at human action. What's what strikes me first and foremost? This is a book. I read in fits and starts in the 1990s But what really impresses me or has been impressed upon me Mises didn't write this as a textbook This this is a treatise. It's a compendium. It's sort of an overarching Work, but it doesn't read like a textbook like it was designed for graduate or even undergraduate students Would you agree? I do agree. Yes, and it also it is also more than just a book on economics So it it is it had it provides a broader perspective On really draws a big picture on social reality and goes beyond what is commonly considered to be economics I think the part that really fits into what is Today seen as economics would be a maybe part four the part on the free market economy and but he has all these Foundations laid out at the beginning in the first three parts that you would not find and certainly not in a textbook in economics day Well Joe, what's interesting means I'm a lawyer not an economist and a lot of non-economists who read this book actually enjoy and Find part one the human action part The most interesting part of the book. I found a lot of economists find that the most daunting part of the book So it's sort of a Left-rate part of the brain question I found the philosophical elements of the book to be the most interesting right I think the epistol you know the epistemology that's set out in the beginning of the book Is such that it deals with something that we all do But we don't know that we're doing it. That's the way wick steed Defined economics who was a sort of in the Austrian tradition and what Mises does is is to set out the the fact the Philosophical foundations of economics which really goes deeply into philosophy means was a very good philosopher But he was a very economical one. He just picked those parts that he thought Were necessary to found economics But when you look through the book, you know today, we're in age of hyper specialization in academia Yeah, but this book has philosophy. It has logic as sociology as political science Do you think in a sense was it just a different time then or did Mises know that this would open him to criticism that he's writing this overarching book about about human action and society and This seems like first a daunting task and second something that's going to open you open one to criticism from people and other In other Academic fields or is oh my gosh this guy's talking about fields in which he's he's not qualified to speak about it seems like that Would be the reaction today? I don't think that this is the reason why the book was criticized It's generally considered to be good to to write up treat us more and compassing treat Incorporate more aspects of then not not only economic ones, but I think the book and Certainly the epistemological foundations that Mises explains Went very much against the trend of the time. So in national economy already. He spends a lot of time criticizing Spann and Marx and then in the English version human action He shifts he adapts the content a bit to the English speaking audience and focuses more on criticizing positivism as leading Methodological epistemological foundation for economics and this was very much against the mainstream at the time I think and that is the reason why it was Very critically received. Okay Also, it's it's policy prescriptions The the policy towards the end of the book Which is really hardcore laissez-faire that drew a lot of criticism of John Kenneth Galbraith, for example In his review of the book Was astounded that Mises would would a call for the legalization of opium So, you know this these were you know his policy prescriptions were going or were dead set against the the modern liberal Beliefs of the time You're talking about methodology and positivism How this is the book where he really lays out and solidifies his praxeological framework for for approaching economics How radical was that and and and how much of a diversion was it for him writing this at the time? I don't think it was radical from the point of view of what economics had been up until around the early 1930s General equilibrium theory, which is a static mechanical way of explaining economic economic activity was only big in France and Italy Italy and they were only small groups doing it But what happened was that as the 30s wore on and Mises saw this The old style economics that was deductive that started from principles that Or or axioms or facts that no one would deny that that started to go into decline And so what Mises saw himself as was the last Mangerian Carl Manga was the founder of the Austrian school He put the human wants and human choices and people striving to satisfy their wants at the center of economics and Mises saw that that was starting to be lost with with this introduction of of what we call general equilibrium theory which treats people like stones atoms and so on But he must have been a concern deeply concerned I mean this is he has the benefit You know now as we're getting late in the 1940s before the the books released He's unlike some of the earlier works. He's now has the hindsight benefit of having seen the Great Depression worldwide and also Two horrific world wars. So, you know these events and of course the rise of Marxist and Keynesian thought especially in academia these must have been seriously alarming Ideas to him this is a book. He wrote that was there was a warning Yeah, I think so Mises was very prolific throughout his career He would be published a lot But if you look from 1934 when he started work on human action till 1939 He only published a few book reviews in one or two articles because he was hard at work on this book And secondly, I think at that point Mises sort of the tide had turned against his style of economics So what he did was he just looked straight ahead and he He stated the foundations of economics and the content of economics itself and then what its policy prescriptions would be For a prosperous and peaceful society. So I think instead of losing heart from things going against him He just became more stronger in his beliefs and in his desire to put forth this what he believed to be the correct system of economics Carl, do you see this book as a as a His biggest achievement or do you think in in some senses that you know theory of money and credit something? He releases as a very a much younger man and something that applies the whole concept of Evaluation subjectivity to monetary theory In a sense, although this is his magnum opus in a sense That was a pretty big achievement on its own. That's certainly true I think the theory of money and credit was already a very big achievement Contains the first outlines of his famous business cycle theory, but Mises himself Said later in his life that yeah, his also his monetary theory only came to full completion in human action okay, and so Human action really is the the treatise that contains the whole Misesian framework But imagine having to come to the United States at an advanced stage back then 50 was older than is today and Having very rudimentary if any English. Have you read Mises in much in German? I actually have read him mostly in English. That's due to the Mises Institute to because you provide all the books for free online so But I have read parts of national economy the German language predecessor to human action and Yeah, on Mises's situation back in the 40s when he came to the US. I think his English was good in in written form but He had problems with the pronunciation and yet really to work on that But he was reading and also publishing in English before he came to the US, but but some of the Concepts contained in the books that he ultimately produced in English are very technical You know, there could be some things lost in translation. It must have been very difficult to express Some of the deep things he expresses in this book in a non-native tongue. It's an achievement. It is very difficult, but it also Can be helpful I think Hans-Henman Hoppe once said that when he came to the earth and had to write in English He had to be much more concise here to really think about what he wants to say Because he couldn't not just, you know use all the vocabulary that he has in his mother tongue to Provide a very stylistic Outline of his argument. He really had to be concise and precise In the use of language so that might also be helpful when you when you switch to English Yeah, I want to make a comment about a myth About human action and that is that well Mises wrote that when he was an older man I mean he was he was in the 60s when he wrote National Cut of Me and and and near 70 when the human action came out So many Or some Austrians claim that well if you want to look at Mises monetary theory You really have to read the theory of money and credit which you do have to read But that that that's what he really meant So he hadn't but but really he hadn't developed his thought yet It's like saying that well if you really want to know what Keynes meant don't look at the general theory He was older than he was in the 60s. Look look back at the Attract on on money that he wrote in 1920s So I think we can sort of dismiss that generally those people are people who who like the fact that that in the theory of Money and credit Mises was sort of ambiguous on whether or not he fought fiduciary media. Oh that is unbacked deposits Always created the business cycle whereas by time of human action He's saying yes Any time a bank injects new money into the credit markets by creating deposits there they will follow the symptoms of a business cycle Well Joe talk a little bit about how the book stands up over time I know that I mean there's there's lots of passages that are prescient. I was just reading one day that Bettina Graves points out he's talking about in the 40s talking about how what Social Security might look like in 1970 You know and he says well these I these are just IOUs you checks drawn on future taxpayers. Wow, which of course sounds pretty prescient today How do you think the book holds up? Well, I think it holds up because he pointed out early on that central banks were prone to to inflation that the ideology of the time was At first that well you need to create money to finance government deficits But that eventually it would shift and it was shifting at the time to holding interest rates low and he was completely correct about that Today the interest rate is the tool quote-unquote that is used by the Fed to Regulate the money supply and you know what they're talking about zero interest rates negative interest rates So so so Mises was I think prescient By by understanding that that this would would be the ideology that ruled central banks going forward and of course Mises already pointed out that the fundamental problem of of a socialist Alternative or interventionist alternative to the free market is always a moral hazard and that's a timeless Insight that's true today as it was back then Well a couple quick devil's advocate questions one one thing that Mises talks about Not at length, but but alludes to in this book is democracy which he was a democrat someone who thought saw democracy as the as the best available path to a laissez-faire society Do you think Given the benefit of time today he would still think that or do you think that that was the Given that he was a man from old Europe and had seen two world wars Do you think that that's that he was right? I think he would still hold this position today, but only in combination with the possibility of Yes, self-determination if you want to call it that or a secession right, right? so and then the biggest I think is in On the theory of democracy all have pointed out this even or so Is that democracy can only work in relatively small communities. It's nothing for for the entire world or for big multinational communities Yeah, Mises saw that Having different peoples or different nations in the European sense under one democratic government was was a recipe for For for nationality conflicts, so he would be he would be good on that today The other the other point to make though in the early 1950s when he was in the US and the old right was still active including Isabel Patterson And so on they severely criticized Mises for his stand on on democracy on on what they saw was unlimited democracy Talk a little bit about his utilitarian view can utilitarianism justify laissez-faire or did we need Rothbard to come along and create a new natural rights Foundation for for laissez-faire a normative approach. I Don't think Mises was a Utilitarian in the strict sense even though he referred to himself as a utilitarian I think what Mises did was to look at at at what would lead to human flourishing and social peace and prosperity And the division of labor and in that sense, he was a consequentialist He said well, we need laissez-faire capitalism to allow society to coalesce and flower and anything that goes against this No matter how small is a movement towards the destruction of society So he's not a utilitarian a benthamite sense not even in a broader sense of a rule utilitarian Like Hayek seem to have been Yeah, well, I think in terms of policy conclusions There are nuances the differences are not very big and I think Whether you consider him a utilitarian or whether you prefer the Rothbardian natural rights approach Yeah, this caters to different tastes. I would think in terms of the ultimate conclusions that are reached Divide is not very big and I think Mises has has delivered a strong defense. I mean, this is not not flawless and there are inconsistencies and Things to debate even in the Misesian in the Misesian system But that's that's true for everyone for everything. So Yeah Last point I'd like to touch on the end of the book Amesis has some fairly harsh words for academia. He also has some X he also exhorts ordinary people to learn economics and study about it He says this is a the proper and main study for all, you know ordinary lay people talk about the end of the book and the the teaching of economic science and Mises his view on the proper way to teach economic science Well, yeah, Mises insists that economics shouldn't be something for an elite group of experts It's very important and he you pointed out that he was a democrat he Advocated the democratic system and in a democracy it's of crucial importance that the voters have At least a basic understanding of economic principles that they can understand the consequences the intended and unintended consequences of Political decisions and and propositions that the different parties are making and letting the people vote on Yes, I I think they should I mean that they should be prepared. They they should do some advanced reading advanced reading like hazlets economics in one lesson and And then work themselves up to Rothbard's man economy and state and then then read this book I think I think an intelligent lay person will be able to grapple with the book and get the main lessons that are important out of the book and And it's actually an important it's a joy to read it's not difficult to read Well, we are out of time ladies and gentlemen the scholars edition of human action is available at Mises.org you can read the HTML version completely free Thanks so much to dr. Joe Salerno and to Carl Friedrich Israel for joining us and have a great weekend Subscribe to Mises weekends via iTunes you stitcher and SoundCloud or listen on Mises.org and YouTube you