Dear Professor Mankiw,
A little over five years ago, a student of yours emailed you asking if you had read Ludwig von Mises’s Human Action. You responded that, while slightly embarrassed, you had not read Human Action on account of its age — published in 1949, it is well beyond the 20-30 year limit you suggest as relevant literature — and the fact that Mises and the Austrians are considered fringe figures by modern mainstream academia. I thought that these excuses were weak and rather unfitting for an intellectual of your stature. They seem more appropriate to professors who rather employ their time teaching what is already known than to a scholar who has spent his life advancing the subject he teaches. I hope that perhaps I can nudge you toward reconsidering your opinion on picking up Mises’s magnum opus.
Before focusing on Mises, his contributions to economics, and why you should read Human Action, I turn to John Maynard Keynes. Most Austrians would take this opportunity to emphasize the differences between Mises and Keynes, but instead I bring attention to the latter’s contributions — to make a point. There is absolutely no doubt that Keynes was the most influential economist of the second half of the 20th century. Even those who did not accept his theories nevertheless were forced into accepting the macroeconomic models developed from The General Theory. As Milton Friedman once famously said, “In one sense, we are all Keynesians now.”
Keynes’s economics can be found in almost every major academic journal. There is a vast library of literature dealing with economic theory that owes its existence to the publication of Keynes’s magnum opus and prior works, including Treatise on Money. More significantly, there have been hundreds of books and articles dedicated to reinterpreting Keynes and his economics — John R. Hicks’s “Mr. Keynes and the Classics,” Lawrence R. Klein’s The Keynesian Revolution, and Lord Robert Skidelsky’s three-volume biography come to mind immediately. You know better than I the pervasive influence of Keynes in modern macroeconomics.
Time and Money
However, reading Roger Garrison’s Time and Money, a book dedicated to uniting the Keynesian, monetarist, and Austrian frameworks by at least providing a common macroeconomic model, made me realize that you cannot really understand Keynes without reading Keynes yourself. Upon reviewing the vast expanse of interpretations, I appreciated the fact that each of these Keynesian interpretations comes with a flavor of the author’s personal tastes: reading Hicks’s Value and Capital, or whatever other post-Keynesian interpretation you prefer, is insufficient to really understand what Keynes and his theories were about. Instead, you get a Hicksian-Keynesian, or a Kleinian-Keynesian (and so on and so forth) angle.
As influenced as modern macro is by Keynes, the heterogeneity in mainstream macroeconomics that has developed over the past 50-70 years makes it impossible to really know Keynesian economics without returning to its roots. I have no doubt that you have read The General Theory, and I have little doubt that you agree with me here.
With Mises’s Human Action, all of this is true tenfold. It is not that there have been so many deviations from Human Action that it is hard to tell what is actually Misesian and what is not. I think that it is of great significance that the Austrian School remains, to a relatively large degree, homogeneous. Almost all Austrian economists agree with a core theoretical backbone — the pricing and coordination process being a large part of it — and advances in theory, except for a few select cases (for example, the integration of monetary disequilibrium theory), have come with an impressive amount of agreement between relevant economists.
Nevertheless, as you yourself state, Austrian economics is a heterodox school of thought, and this has precluded the school from having its theories well voiced amongst modern mainstream academia. More likely than not, Austrian insights have not been repeated in the publications that you read.[1]
Just because Austrian economics does not hold a very prominent place in the mainstream today does not mean that Austrian economics has nothing to offer. Nor do you need to convert to the Austrian School to reap some profit out of reading Human Action. Even if you walk away from the reading agreeing with nothing and frustrated at just how wrong Mises had gotten everything, I would wager a paycheck that you would walk away a more learned man.[2] Human Action is not just about epistemology, economic history, and philosophy. Human Action opens you to a unique perspective of looking at the world, and more specifically at economic science. It offers an alternative method of approaching economics by making it a science relevant only to individual man. This perspective is unavailable, in its uncompromising original, anywhere else.
In his 1931 lectures to the London School of Economics, now published as Prices and Production, Hayek wrote that the accelerating trend of fracturing and isolating economics into different bodies would be very damaging. Hayek’s warning went unheeded, and today we face an economic science that has befallen exactly the fate that Hayek cautioned against.
Human Action is not subject to this problem. Mises’s book is complete in the sense that it unifies micro- and macroeconomics into one general body of economic theory. Mises begins his work with the individual human market actor and slowly spreads from there, developing a singular economic model that spans an incredible number of subtopics. The book is united by means of the aforementioned Misesian perspective, which puts everything into the same context and allows the reader to understand exactly what Mises means and implies.
If you are expecting a close-minded, repetitive treatise on a peripheral view of economics, then you will definitely be surprised. Mises was a brilliant defender of laissez-faire capitalism, and he was adamant in his analysis. But few scholars were more widely read and few scholars were as generous. Mises was never interested in advancing an agenda. His only concern was discovering the truth: correct economic theory. His examinations were never based on speculation or sloppy conjecture. Mises was one of the greatest intellectuals of the 20th century — I daresay greater than Keynes even, which does not imply that Mises was necessarily right and Keynes necessarily wrong — and Human Action will leave you with that impression.
However, my intention is not to show you how persuasive Mises is, or to suggest that reading Human Action will permanently change your world outlook. We both know that such a thing would be ridiculous; reading The General Theory has not persuaded me to Keynes, and I am sure that reading Human Action will not be any more convincing to you. Intellectual minds move slowly toward new conclusions — and for the better, since if we were as fickle as some would like us to be, then academia would never approach anything remotely close to the truth.
The only thing I can guarantee is that upon finishing Human Action you will have appreciated taking the time to read Mises’s masterpiece.
“Human Action will plant a small seed of influence in your mind.
You will not be swayed, and your political and economic opinions will not suddenly change — if Human Action had that power there would have never been a Keynesian revolution, only a Misesian revolution — but Human Action will plant a small seed of influence in your mind. This is the inevitable result of looking at the world through a very different lens. It opens your mind to avenues of approach that it had never before even been aware of, no matter how small or insignificant those avenues seem to you. I think that this is a gain that even an established, respected economist can appreciate; you could say that reading Human Action passes the cost-benefit analysis, even considering your undoubtedly busy schedule.
If all of this is still insufficient to persuade you, then I am afraid that the only thing I can fall back on is good old fashion barter. If you read Human Action, I will gladly read your Macroeconomics. I think this is a fair trade — although, thinking about it, my gain would be much greater than yours; not only do I get you to read Human Action, but I get to enjoy the pleasure of reading one of the most widely used macroeconomics textbooks in the United States.
Sincerely,
Jonathan M. Finegold Catalán
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Notes
[1] I should stress, though, that I am definitely not claiming that no portion of the Austrian body of theory has been incorporated into mainstream economic thought — such a claim would be highly erroneous — and so one is left only with the choice of returning to the source.
[2] That I take this risk is notable, because there is no doubting that you are a far more learned man than most already!
