Human Action Model

People only act if they're currently dissatisfied, have a vision for what could be and a path to get there.

In Human Action, Ludwig von Mises frames economics through the lens of praxeology, or the study of human behavior through the choices of individuals. Simply put, “Human action is purposeful behavior” where actors are constantly choosing between different options and selecting their preferences, writes Mises. In Human Action, Mises states that people act because they are never fully satisfied with their state of being and are constantly making strides to improve their personal well-being; “Acting man is eager to substitute a more satisfactory state of affairs for a less satisfactory. His mind imagines conditions which suit him better, and his action aims at bringing about this desired state. The incentive that impels a man to act is always some uneasiness.”

Mises joins his philosophical discussions of human actions with tangible economic practices by using the concept of action to explain value: “Value is not intrinsic, it is not in things. It is within us; it is the way in which man reacts to the conditions of his environment. Neither is value in words and doctrines, it is reflected in human conduct. It is not what a man or groups of men say about value that counts, but how they act.” Put simply, items do not have objective value. Rather, individuals assign subjective values to different objects.

Ultimately, Mises argues that government-controlled economic regimes (e.g., socialism) are unfeasible because it is impossible for a central authority to fully know and anticipate the desires of its population. Instead, Mises maintains that a free market is more successful because it will respond and adapt to individual choices more readily.

Applying Mises’ Human Action

While Human Action provides a refutation of central planning and supports the idea that individuals benefit from a free and open society, it also discusses the conditions that are necessary for people to act—whether in their communities, at their jobs, or in society more generally.

In Good Profit (2015), Charles Koch writes about Mises’ human action model:

"Monetary rewards are powerful incentives, but many other factors are critical to creating incentives that improve societal well-being. Ludwig von Mises believed there are three requirements for humans to act: (1) Dissatisfaction with the present state of affairs, (2) a vision of a better state, and (3) belief that we can reach that better state. When just one of these requirements is missing, people will not act."
Ludwig von Mises