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Human Action

Written by Ludwig von Mises in 1940, then updated and rewritten in English in 1949, Human Action concisely depicts the integration of society, politics, economics and all people working together for mutual betterment by focusing on what serves each of them best. It has never been done better, though many times it has been described very well. The following synopsis was posted by “Silver” at The Mental Militia, an online community of thoughtful strivers for liberty.

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Some of my recent research led me to re-read this remarkable short essay by von Mises in Human Action.

I won’t quote the text, but it is very much worth reading. I will paraphrase in order to make a few points relevant to our times.

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Our civilization is remarkable, supporting more people in greater abundance than at any time in human history. Large metropolitan centers, a considerable number of middle-sized towns, innumerable small towns, even remote rural areas all partake of the bounty. The inhabitants of urban areas are supplied with food and raw materials not only from the neighboring rural districts, but also from distant provinces. At one time, most of the provisions were exchanged for the products of the city-dwellers’ processing activities. There is an extensive trade between the various regions of the globe. Not only in the processing industries, but also in agriculture there is a tendency toward further specialization. The various parts of the globe were no longer economically self-sufficient. They were interdependent.

What brought about the decline and decay of civilization was the disintegration of this economic interconnectedness, not barbarian invasions.

The freedom granted to commerce and trade had always been restricted. “Free trade” laws, really centrally planned managed trade, imposed complex and costly regulation intended to assist politically favored groups. The authorities were quick to check what they considered profiteering. This prevented the evolution of an efficient wholesale trade in a growing number of commodities.

The climax came when the government resorted to currency debasement and price controls. With the system of maximum prices the practice of debasement completely paralyzed both the production and the marketing of the vital foodstuffs and disintegrated society’s economic organization. The more eagerness the authorities displayed in enforcing the maximum prices, the more desperate became the conditions of the urban masses dependent on the purchase of food. Commerce in grain, oil, and other necessities vanished altogether. To avoid starving, people deserted the cities, settled on the countryside, and tried to grow grain, vegetables, and other necessities for themselves. Large landowners restricted their excess production of food and began to produce in their gulches the products which they needed. Large-scale agribusiness became unprofitable as price controls capped revenues while hyperinflation caused the costs of production to soar. Since ADM and their ilk could no longer sell in the cities, they could no longer patronize the urban artisans either. The rich and powerful began employing handicraftsmen in gulches. Big-scale farming was abandoned in favor of receiving rents from tenants or sharecroppers. These were people who fled the cities for gulches and turned to tilling the soil. A tendency toward the establishment of self-sufficiency of each gulch emerged. The economic function of the cities, of commerce, trade, and urban industrial production, shrank. The highly developed economic structure degraded to medieval forms of landed power, feudalism, and small independent gulches.

The PTB [powers-that-be] were alarmed at the fall of the financial and military power of their government. Their efforts were futile as it did not affect the root of the evil. All of their laws and regulations could not reverse the trend toward social disintegration which was caused precisely by too much law and regulation. Few were aware that the process was induced by the government’s interference with prices and by currency debasement. Laws prohibiting migration from the cities were useless. The political system decayed to the point where only the most wealthy citizens could afford to run and win high office. This only accelerated the retrogression of the division of labor. Laws nationalizing banks, insurance companies, airlines, oil companies, farmers, even shipowners were completely ineffective in stemming the decline.

Civilization collapsed because its moral code and legal system were at odds with the requirements of the free market. A social order is doomed if the actions which its normal functioning requires are rejected by the standards of morality, are declared illegal by the laws of the country, and are prosecuted as criminal by the courts and the police. The empire crumbled to dust because it lacked the spirit of liberalism and free enterprise. The policy of interventionism and the public’s placing increasing power in the hands of one man destroyed the mighty empire. The barbarian hordes just picked up the pieces.

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In summary:

1) The collapse was / will be triggered by the imposition of price controls – currency debasement is already here.
2) The flight to the gulches will begin. The rich and powerful will gain control of most of them. Gulches will most likely evolve to a medieval economic model that could last for a millennium.
3) Laws that nationalize whole sections of the economy will not help and will only hasten the collapse.
4) A society that vilifies trade and profits, rewards failure, and punishes the most successful members with taxes and criminal persecution is doomed.