Human Action by Ludwig von Mises — in one-syllable words (inspired by the summaries of famous philosophical works by Jason Brennan). Here is a short summary, before launching into a part-by-part treatment:
You can choose. With this true face, we can use just our wits to learn some more true facts: like you act in time, you have doubt about fate, and that you give up your least liked piece of a thing to get more of what you want. If you live with a group that you trade with, you should each own the goods you use to make things with and trade them for cash. The cash math will help with your growth plans. If you don’t, your group will break and rot. If any bank makes fake cash and lends it out, it will cause a boom and bust. Folks are blind to these facts; you must help them see.
You act. To act means to choose. To choose means you like one thing more than what you give up to get it. You act so you’re less sad, and more glad. A thing that you want is called a “good”. When you act, the good you give up is your “means”, and the good you get for it is an “end”.
Of course, just cuz you can act does not mean you do act — there are some things you do in life where you did not have a choice; like kick your leg out when a doc strikes your knee, or blush when your crush smiles at you. This book will just hone in on those times where you can or have made a choice.
To know that you can act means we can use just our wits to learn some more true facts. Like: you act in time (you act to change what is to what will be based on your grasp of the past), you have doubt in fate (if you thought you were bound by fate, you would not choose to act, but just roll with the tides), and that you give up your least liked piece of a thing to get more of what you want.
By the way, if you think it’s fine to say that folks from a race, class, caste, or state think in ways at odds with your race/class/caste/state, I’ve got some bad news for you. You’re so, so, so, so wrong. To start with, if they don’t think like you, how do you know what they want? What of the mind of a guy who is “mixed” race/class/caste/state? How does the fact that there are monks and slobs born to kings of each race and state fit in with this view? What of low class grunt who works his way to own a firm of his own?
The tools of our mind work, in that they aid us in our quest to change the world. To claim that some, whom we share a world with, do not have use of the same tools, must mean that those folks will at no time have the same odds in their quest to change the world. This view is not in line with the facts.
You live in with lots of more folks. This is your small bit of the world, call it a realm. All of us act. It can be the case that you want one thing more than some other guy (or gal). If they have a thing you want and you have a thing they want, then you can trade things. Trade makes both of you less sad, and more glad, than no trade.
What makes us not like the beasts is our skill in the use of our mind. Thoughts come first, then change. When it comes time to choose which thoughts to act on, be wise. Some think good thoughts “win out” in the long run. Not true: lots of bad thoughts have caused lot of grief, war, and death. It did not have to be that way.
What does it mean to know the worth of a thing? If the world was just you on a beach with some trees and a few fish, but no one else in sight, then all that we have to think about is what you want. But that’s not so fun.
So let’s spice things up. Now you have a friend who washed up the shore, and let’s say that friend is me. You and I are not the same; our ends may not be the same, our grasp of the past may not be the same, and so on. How do the two of us figure out what would have the most worth? Or what to do first?
Turns out, the best way to solve this is with cash: let he or she who wants to pay the most for a good, get to use that good. This will work for a bunch of points, but the best one is that you can do math with cash. Since cash is the good all folks want the most, it lets us weigh how much a good is worth to me and how much it’s worth to you on the same scale.
This cash math lets you check if a good is worth the costs. It lets you weigh how much a good is worth to you when I want to use it, too. Cash math is a huge deal, as it is the base of how we, all of us, grasp the past and make plans about what to do next.
When large groups of folks take part in trade, step by step they build a cool web where each act has pull and sway on all folks. To build this web, each guy or girl in the group needs to own their own stuff, act on their own choice, have a chance to save, and have a chance to get quite good at one thing. And a chance to take risks, and earn gains or harms.
A price is how much cash one guy paid to trade for a good. The more folks there are who want to buy and sell a good, the more the price gets close to a set price. All talk of a “lone” firm that buys or sells is vague and should cease.
The Birth of Cash
Cash is what we call the thing that all folks want the most in their part of the world. Did we need a wise king to tell us to use cash? This may shock you, but no. Think about it:
Why do you, me, and the rest of ’em all want cash? It’s not to eat or look at; but to use to find more guys and gals to trade with. Just think: what would a world with no cash look like? You need to find a guy who has a thing you want and wants a thing you have. What are the odds of that?!
Quite low, it turns out: so low, in fact, that we find a thing that will please most to trade as soon as possible. We know this from the past both in the past and right now. We see dudes in jail trade packs of smokes or fish like cash all the time. If crooks (and kids) can sort this out, then for sure no one had to wait for a wise king to tell them to trade like this.
The Worth of Cash
Now some rude dude might ask, “Come on Ash, these are nice tall tales you’ve spun, but let’s get real. Can you give me the root cause of the worth of cash right now?”
To which I would say, yes.
You know most of us used to trade with coins made of ores like gold, but now we use cards and notes and stuff that has no link to any good that you can touch? Why do you work so hard to add some ones and zeros to the bank app on your phone? How do you know how much of those ones and zeros to give for a book, a car, or a drink at a bar?
Your guess of the worth of cash right now is based on two things: what it used to be worth in the past, *and* what you guess it will be worth the next time you want to spend it. Do you see how this is just like the true fact about time from up top?
How far back?
Now you might push back a bit and ask, “If the worth of cash this year is based on what it used to be worth last year and will be worth next year, and last year it was worth what it used to be worth the prior year and what folks thought it would be worth this year, and so on and so forth… Where do you stop? The Big Bang? That’s dumb, right?”
My quip to that: yes, it would be dumb if that’s what I meant. Here’s where that line stops: when a good first comes to be used as cash! Before a good is used as cash, we know how to think about that with no fuss. It’s just after a good becomes cash that folks use this new rule to judge its worth.
Booms and Busts
Once in a while, just when it feels like things are on the right track, there are a lot of pains at once. Jobs lost, shops close, and lots of doubt for what will be in store next. Then, when we look at the past, we see this kind of thing is not new. So what gives?
The source is the banks. In lieu of loans from what folks have saved, they’ll loan out fake cash — notes that vow there is (or will be) cash there, when in fact there won’t be. This fake cash is lent out at low rates, which tempts two kinds of folks: those who should not be lent to in the first place, and those who want to make things that won’t be ready for a long time.
What goes wrong is that the low rates also tempt those who should save more to in fact save less. Thus, when fake cash is lent out, lots of folks spend their cash this year (this is the boom); but won’t have much to fall back five or ten years down the line, when those firms have their goods up for sale. Hence, out of the blue, a bunch of us learn we’ve run out of money. This is the bust, and it can’t be stopped.
Lots of “work” you do, you do for the fun of it. Like when you go on a hike, play a game, or prep a meal for a spouse. You do this work for free.
Some work you get paid to do. You get paid based on how much worth you bring to the firm that hired you. Yes, it’s true that you want to get paid the all the cash in the world, but there are other folks who can and will work for less. At the same time, a firm wants to get you to work for free, but since there are more firms that want you to work for them, they fight (with their deep cash bags) to see who can pay you the most.
This is what leads your wage to go up over time. Also, be real: there are times when you can find work, but choose not to. The only time this is a big deal is when a state makes some rules that try to force firms to pay you more than you’re worth.
If all the goods used as means in a realm, or in a large group, or a big part of the world are owned by one guy (or a bunch of guys) who choose what to do with those goods at their whim, then none of those goods will have a price. And with no price, you will not be able to do the cash math that you need to learn how much each good is worth.
The guy (or group of guys, or state) will not solve this with sham trades and a made up price for each good. I don’t care if he’s the most nice, most smart guy (or group of guys) of all time — still can’t do the cash math, which will make it vain to plan for growth.
If the group of guys in charge cut back from reign over all of the goods used as means to just some of them, it will still mess up the cash math big time. Plus, there will always be a guy who will want to push to own more of the goods. They’ll say all kinds of crap to get you to trust them: that it’s for the “good of us all”; or some kind “fair tax”; or that we need to let them own our stuff cuz of “the war”.
If you did not get that cash math is at the heart of growth, you would fall for this scam like a fool. This is why you need to read this book and more books like it, and talk to your friends. In the past, the old guard did not think that bad thoughts could hold so much sway. Now most folks are blind to what is in front of them. Don’t err like the old guard. Help the blind see. The fate of the realm is in your hands.