Human Action, Chapters 11–13

Date and Time: September 2, 2026, 21:00

Location: Online

Participants: kdg, mori, Bench Press

Book Title: Human Action

Author: Ludwig von Mises

Year of Publication: 1949

Covered Sections: 11–13

Economic Calculation (Chapters 11–13)

1. The Link Between Subjective Ordinality and Market Cardinality: The “Emergent Leap” of Economic Calculation and the Logical Gap

The Translation from Ordinal to Cardinal: The Nature of the Uneven Gap

At the meeting, a deep question was raised about the logical gap between the major premise Mises firmly established in Part One—“subjective preferences exist only as ordinal rankings”—and the claim he emphasizes in Part Three—that a society based on the division of labor necessarily requires cardinal economic calculation.

According to Mises’s text, these two stages are not connected through a mathematically smooth, linear transformation. Value in the human mind can never be measured or quantified.

However, when these unmeasurable ordinal preferences collide and are traded (exchanged) in the crucible of the “market,” where private property and the division of labor are secured, “cardinal money prices” emerge as the product of that interaction.

Prices Are Not Measures of Value but “Historical Facts”

Money prices are not “units” that quantify the magnitude of subjective satisfaction. They are merely “historical facts” reflecting the choices market participants have demonstrated up to yesterday.

Therefore, it is entirely natural that the leap from ordinal to cardinal feels uneven. This clearly establishes the Austrian School’s distinct subjectivist theory of price formation: prices are not value itself, but only “a compass and historical guide provided by the market to aid future action.”

2. The Mysticism of Macroeconomic Statistics and the “Blurry Picture”: Mises’s Critique of Statistics and British Hong Kong’s No-Statistics Approach

Statistics Are Only a Blurry Historical Picture

Immediately after the presentation, the group discussed the nature of statistics as Mises describes it in the text. According to Mises, statistics are not tools for revealing economic laws; they are merely a “blurry picture” that quantifies past historical events after the fact.

Statistics cannot capture the dynamism of constantly changing human action, and attempts to plan the future on that basis produce cognitive error.

The Case of “No-Statistics” in British-Ruled Hong Kong

In this connection, a historical example was presented: John Cowperthwaite, the former Financial Secretary of British Hong Kong, deliberately refrained from compiling national economic statistics, including GDP.

At the time, the Hong Kong government refused to collect statistics on the grounds that “once such statistics are produced, bureaucrats are tempted to interfere and control” out of a social-engineering impulse.

This was treated as a monumental real-world case showing how Mises’s insight was brilliantly borne out in history: he regarded attempts to calculate the total wealth or national income of an entire country as a kind of pyramid mysticism and warned against government intervention based on statistical figures.

3. The Two Faces of Stabilization Policy: Cases from Modern Korean History (Park Chung Hee vs. Chun Doo Hwan) and Mises’s Critique of the “Stabilization Ideology”

The Essence of the “Stabilization Ideology” Criticized by Mises

The stabilization ideology that Mises harshly criticizes in the text refers to a kind of monetary constructivism that seeks to artificially fix the purchasing power of money or manipulate price indices and the like in order to control the market’s dynamic price fluctuations.

This is a frail intellectual error born of humanity’s desire to escape an uncertain future.

The Difference Between Stabilization Policies at the End of the Park Chung Hee Government and the Beginning of the Chun Doo Hwan Government

Late Park Chung Hee government (late 1970s): The Heavy and Chemical Industry (HCI) drive and the state-led forced credit expansion (fiscal outlays) used to support it brought about severe inflation.

Attempts at stabilization during this period had a strongly control-oriented character, with the state directly suppressing prices.

Chun Doo Hwan government (early 1980s, Kim Jae-ik framework): This took a different course from the artificial price controls criticized by Mises.

The core of the Chun Doo Hwan government’s stabilization policy was sharp cuts in government spending (fiscal austerity) and control of the money supply.

Rather than forcibly pressing down market prices through government intervention, this was an effort by the government to stop its own credit expansion and resource distortion—the chief causes of inflation—and thereby restore the normal value of money and the market’s signaling system.

Accordingly, it was evaluated as a policy decision consistent with the direction Mises advocates: sound money and the restoration of the market’s self-generating capacity.

4. Distrust of Money and Free Trade: The “Weltanschauung” of Control and Design

Why They Cannot Believe That “If You Only Stabilize Money and Let People Trade, People Will Prosper”

Regardless of whether they are on the left or in the mainstream conservative camp, most political forces deeply distrust the liberal truth that if only the “stability of money’s value,” the medium of market exchange, and “free trade” are secured, society as a whole will prosper spontaneously.

The “Control-Oriented Worldview” Hidden Behind That Distrust

The members of the group identified a worldview difference at the root of that distrust: namely, a fundamental distrust of human beings and the market.

They do not view individuals as acting agents who realize their own ends, but as objects to be arranged by the state or elite planners—objects of control and correction.

This was ultimately identified as the worldview of arrogant Social Engineering, which believes society can be artificially molded, as well as a mode of thinking oriented toward hegemonic consolidation.

5. Moving Toward the Conclusion of Volume I and Anticipation for Volume II

The Completion of the Theoretical Fortress of Praxeology

Through the fourth week’s meeting, the group confirmed that the vast theoretical fortress of Volume I of Human Action—from the inner axiom of the individual (Part One), through social cooperation (Part Two), to economic calculation (Part Three), the core tool of civilizational decision-making—had nearly been completed.

Eager Anticipation for Volume II (The Market Process and Indirect Exchange)

Now that all the theoretical tools—the compass—have been equipped, the group concluded the 4th session with strong confidence and anticipation that Volume II, which they will soon encounter, with its full-fledged treatment of the market process, money and monopoly, and the Austrian School’s signature business cycle theory, will be far more dynamic and engaging.

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Original title: <인간행동> 11~13장

Author: Jayujuui Ipmun Dokseo Toron Moim

Date: 2026-09-04

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=reading01&pn=1&idx=29477