Human Action, Chapters 18–19

Human Action, Chapters 18–19

Date and Time: October 21, 2026, 21:30

Location: Online

Participants: mori, Bench Press, kdg

Title: Human Action

Author: Ludwig von Mises

Year of Publication: 1949

Covered Sections: 18–19

1. Key Summary of Chapters 18 and 19

Today’s range covers interest rates and time preference.

The discussion began with the concern that the logic of interest arising from time may also have implications for AI.

The concepts of the period of production, the duration of serviceableness, and the period of provision appear here.

In short, time is not homogeneous.

It is an irreversible flow that is valued more highly the closer it is to the present.

Time preference was understood not as a psychological tendency but as a categorical precondition of action, a kind of a priori category.

Capital goods are not an independent factor of production, but rather “accumulated nature, labor, and time.”

This differs from the way the left thinks about capital goods, as something that exists on its own and is handed down automatically.

Capital goods are ultimately created by human effort.

Interest is not compensation for the productivity of capital, like a dividend.

It is the market manifestation of time preference—that is, the discounting of future goods relative to present goods—so it cannot be abolished by any institution.

Because people prefer things now, future goods are cheaper.

The big picture was understandable, but some details, such as “originary interest in the changing economy,” were difficult.

2. The Intuitiveness of Misesian Economics

This chapter seems to serve as a simplification of the complicated concept of interest into time preference, in preparation for the later discussions of credit expansion and the business cycle.

Misesian economics has no abstract notion such as “value creation.”

It simply lays out what economically active people roughly calculate in their heads.

That is why the concepts are simple and immediately resonate with practitioners.

Formulas barely appear, and when they do, they are only at the level of addition and subtraction.

People engaged in real economic activity do not calculate with formulas either.

Those who rely on formulas are mathematical economists oriented toward a planned economy.

3. A Lack of Capital Is a Lack of Time: Linking It to Korea’s Economic Development

The Chapter 18 argument that “capital goods are accumulated time” and that “a lack of capital is a lack of time” is very intuitive.

Securing capital goods means getting temporally closer to one’s goal—in other words, gaining time.

This logic explains well why developing countries first seek to secure capital through attracting foreign capital and increasing savings, as the first step in catching up with advanced countries.

Nature, labor, and time must be combined for something to become a capital good.

Korea, too, focused on securing capital in the early stages of economic development, and Japan played a major role in that.

At the time, the usual economic prescriptions were prioritizing agriculture or pursuing self-sufficiency.

Korea, because of the division-of-labor structure during the Japanese colonial period, was an agriculture-centered country, and Latin America followed a similar path.

Even so, it is striking that Korea focused from the beginning on capital accumulation and industrialization.

One interpretation offered was that this was the result of natural selection: Korea survived because it did so.

There was also a counterargument.

Those who first proposed and pushed for it must have had their reasons.

The plans for capital accumulation and economic development were established under the Syngman Rhee government and carried forward by Park Chung-hee.

It would be good if someone could clarify the point of ideological connection between them.

4. Korea-Japan Claims Funds and the Kubota Remarks

There has long been criticism that Park Chung-hee, at the time of Korea-Japan normalization, did not distribute the claims funds he received to the direct victims but had the state use them instead.

From the logic of Chapter 18, however, this can be evaluated positively rather than negatively.

That is because the funds were used for capital formation.

The view was also raised that the reparations themselves had an aspect of extracting by force something that could not really have been obtained.

The principle of property settlement under the U.S. military government was that property left in Korea would go to the Korean government, and property left in Japan would go to the Japanese government.

As a result, Japanese who returned to Japan were not compensated for property they had left in Korea.

Later, Korea reopened what had already been settled and extracted compensation, arguing that diplomatic normalization was impossible without it.

From the perspective of the Japanese returnees, they too might have grounds to demand compensation.

In this connection, the Kubota reckless remarks (1953) were mentioned.

These were statements that Japan had benefited Korea over 36 years by reforesting barren mountains, building railroads, and expanding rice paddies.

The main reason Kubota was condemned was that he claimed Japan also had claims against Korea, and that if Japan had not advanced into Korea, Korea would have been occupied by China or Russia.

An interpretation was offered that the root of this logic lies in the U.S. military government’s principles for handling property.

The argument that the funds extracted in this way should then have been redistributed ignores the fact that the country had no capital at the time and that no other country would lend to it.

5. The Success Factors of Syngman Rhee and Park Chung-hee, and Private Organizations

The biggest reason Syngman Rhee and Park Chung-hee succeeded was that they themselves were not corrupt—or more precisely, that they did not build private organizations to sustain corruption.

Corruption becomes a structural problem because one must continually cultivate loyal groups to maintain power, and corruption becomes rampant in the process of raising funds for them.

The late Joseon period, when efforts were made to strengthen royal authority, is an example.

The left talks about the corruption of authoritarian regimes, but it does not understand the system of corruption.

There may have been people around them who benefited a little, but there was no systematic organization to prop up the regime when it began to shake.

That is why it dispersed easily.

While reading Travelers in the Third Reich, it felt as though Hitler in his early days resembled Park Chung-hee.

The difference was that Hitler built a private organization.

Without such an organization, he would not have been able to take power, and because of that organization, he could not stop and went all the way to the end.

Hitler himself may not have been personally corrupt, but creating a system for maintaining power was itself the real corruption.

6. AI and Time Preference

Because AI has no life, the issue of time preference would likely be different for AI than for humans.

Even if AI were to have consciousness or a self, its approach to time preference would be different, and precisely for that reason, consciousness might never arise.

A different view was also presented.

AI has no desires, whereas desire is a unique attribute of human individuals engaged in economic activity.

In response, there was a counterargument that desire and want are ultimately also matters of survival and time preference.

Because this element is not taken into account, AI may be inadequate even as a predictive model.

If AI were to engage in economic activity, its form would likely be closer to the evenly rotating economy.

The more Human Action is read, the stronger the sense becomes that AI cannot be a subject of action.

7. The Cause of Western Prosperity: Mises and Acemoglu

p. 574: Mises rejects the interpretation that the West became prosperous because of accidental environmental advantages.

His view is that the West created laws and institutions that made large-scale saving and accumulation possible, and that these were products not of geography but of reason.

This contrasts with the environmental determinism of Jared Diamond’s Guns, Germs, and Steel.

It is striking that long before Acemoglu’s research—recognized with a Nobel Prize for arguing that institutions matter, and represented in Why Nations Fail—Mises was already saying essentially the same thing.

Another important point noted was that capital does not inherently create anything, and even capitalists cannot use capital however they wish.

This refers to the constraints of convertibility.

8. A Generational Perception That “Capital Exists to Be Consumed”

A recent realization came from conversations with people in their 40s and 50s.

People now in their 40s and 50s seem to think, “Everyone dies, so you have to spend everything before you go,” and therefore that capital exists to be consumed.

This is a misunderstanding that sees capital goods not as accumulated nature, labor, and time, but as something to be used up and eliminated.

Since they think capital should naturally all be spent, they also take high taxes for granted.

They see accumulated capital itself as a problem, and inheritance as an even bigger problem.

They fail to consider the importance of capital accumulation.

A lack of understanding of capital may be this society’s biggest problem, so this issue needs to be publicized and taught intensively.

9. The Flow of the Book, How to Read It, and AI’s Learning from Books

The theme of this range is, in effect, time itself.

The flow moves from capital to interest, and then on to interest rates and the business cycle.

The book is structured to begin with microeconomics and gradually expand into macroeconomics.

If one tries to follow every detail one by one, it is easy to lose sight of the overall flow, so it is better to move quickly through topics one is not interested in.

As a supplementary method, it was suggested to first grasp the overall flow through a summary and then read the original text.

An experience was also shared of asking AI to explain pages that were hard to understand.

The fact that AI can even identify which passage of Human Action it is dealing with makes it seem as though it has actually learned the book.

There has been news that AI companies are buying secondhand paper books in bulk, cutting them apart, scanning them, and using them for training.

That was supposedly Claude’s method, and it seems others are following suit.

After trying all kinds of approaches, companies appear to have concluded that having AI read books is the most effective method.

In the end, whether for AI or for humans, the foundation is reading books and studying.

Claims that synthetic data must be used because there is no data left to learn from are meaningless.

10. Reconfirming Detailed Points in Chapter 18

The concept of capital: the concept of capital has no substance corresponding to it in the physical world; it exists only in the mind of the planner.

Intermediate goods are called capital goods, but since they can at the same time also be consumer goods, capital goods are temporary.

The point that capital is a praxeological concept is meaningful.

There is no investment without speculation: all action involves speculation.

Even an investment believed to be completely safe can produce bad results.

Critique of the classical three-factor correspondence: the pairing of labor-wages, land-rent, and capital-profit is artificial.

In reality, these are one whole, but because they were split apart for analytical purposes, people came to mistakenly think that capital exists independently and produces something on its own.

11. The Case for Tax Simplification

If capital goods must be viewed in broad aggregate terms, then the tax system too should be reduced to just income tax, VAT (consumption tax), and property tax.

For property tax, it would be reasonable to aggregate everything—whether real estate or anything else—by assessed value and levy a uniform rate.

For example, if it is KRW 1 billion, then 1 percent.

In The Story of the Romans, Nanami Shiono repeatedly says that taxes should be simple.

Rome collected a flat 10 percent without asking whether there was profit. The trace of that remains in the tithe.

Rome prospered and commerce developed because its tax system was simple.

Many countries have collapsed because of taxes.

When the tax system is complex and collection is difficult, as in the Chinese dynasties, odd categories of taxation are created, and once collection is entrusted to agents, it becomes even more complicated.

Nanami Shiono wrote that whenever politicians asked her to give lectures, she always advised them to simplify the tax system.

If one insists on discussing tax fairness, the principles must be clear, and above all predictability is important.

Taxpayers must be able to predict and act on their tax burden based on their own income and assets.

The current tax system is not predictable.

The self-employed do not know how to handle expenses, so they end up spending everything first and processing it as expenses, which prevents accumulation.

Progressive taxation makes prediction even more difficult.

This is even more true when inflation is added on top.

To say something is predictable means everyone can estimate it in the same way, which in turn means equality.

Nanami Shiono’s “tax simplification” can be read as meaning that the state guarantees predictability in individuals’ economic activity.

Even if a tax seems complicated or feels like double taxation, it is acceptable as long as it is predictable.

It should not be changed casually, but now it is frequently changed and even applied retroactively.

In Korea, the tax office imposes first and bargaining follows.

In the United States, people have long used tax filing software without needing tax accountants.

In Korea, because of rule-of-thumb practices such as rough standards by industry, it is impossible to systematize through software, and tax accountants are needed to make discretionary adjustments.

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Original title: <인간행동> 18~19장

Author: Ja-yu-ju-ui Ip-mun Dok-seo To-ron-mo-im

Date: 2026-10-22

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=reading01&pn=1&idx=29648