"There are basic insights of economics that are (still) largely unknown or ignored by the general public."

"[T]here are basic insights of economics ... that are largely unknown or ignored by the general public. W]e have to deal with ideas centuries old, on which the thought of professional economists has never made any permanent impression. ... [O]ur public thought, our legislation, and even our popular economic nomenclature are what they would have been if Smith, Ricardo, and Mill had never lived, and if such a term as political economy had never been known. ...
    "Before such a thing as economic science was known arose the [erroneous] theory of the 'balance of trade.' ... that trade between two nations could not be advantageous to both. ... And yet the combined arguments of economists for a hundred years [that there can be no trade between two nations which is not advantageous to both] have not sufficed to change the nomenclature or modify the ideas of commercial nations upon the subject. … The terms 'favourable' and 'unfavourable,' as applied to the supposed balance of trade, still mean what they did before Adam Smith was born. ...
    "From the economic point of view, the value of an industry is measured by the utility and cheapness of its product. From the popular point of view, utility is nearly lost sight of, and cheapness is apt to be considered as much an evil on one side as it is a good on the other. The benefit is supposed to be measured by the number of labourers and the sum total of wages which can be gained by pursuing the industry. ...
    "[There is a] general belief throughout the community that the rate of interest can practically be regulated by law. Not dissimilar from this is the wide general belief that laws making it difficult to collect rents and enforce the payment of debts are for the benefit of the poorer classes. They are undoubtedly for the benefit of those classes who do not expect to pay. But the fact, so obvious to the business economist, that everything gained in this way comes out of the pockets of the poor … is something which the law-making public have not yet apprehended.
    "That you cannot eat your cake and have it, too, is a maxim taught the school-boy from earliest infancy. But, when the economist applies the same maxim to the nation, he is met with objections and arguments, not only on the part of the thoughtless masses, but of influential and intelligent men."

~ Simon Newcomb from his 1893 article 'The Problem of Economic Education.' Hat tip Timothy Taylor (The Coversable Economist) who observes that " the outcome of economic policies is not determined by their announced intentions of politicians or by their popularity, but by the underlying realities of how firms and consumers will react."

 

"Why do consumers, who interact with markets every day, have essentially no idea where prices come from?"

"Why do consumers, who interact with markets every day, have essentially no idea where prices come from? I think it’s because they have zero incentive to learn. If I’m a price-taking customer buying in a competitive spot market, then all that matters to me is the price. I could have a crazy theory about where the price comes from that involves the phases of the moon and the appetite of my pet cat. Or I could have a sophisticated theory based on supply and demand analysis. The market won’t punish me for my crazy theory any more than it will reward me for my sophisticated theory. In many areas, knowing something makes you better at it. Knowing about ocean currents and weather patterns makes you a better sailor. Knowing about chemistry and physiology makes you a better pharmacist. But knowing about supply and demand does nothing to make you better at grocery shopping. This is one of the virtues of free markets–they require precious little economic knowledge from their participants. On the other hand, this is one of the great challenges of economic education. People have little tangible incentive to learn and understand economics."

~ Washington Uni economist Ian Fillmore, quoted in 'People Don't Understand Prices'

"People such as Trump, Sanders, Rubio, & Warren – and those who are enchanted by the sorts of things that such people say and write – are ignorant of what percolates and hums so productively beneath what the eyes of such myopic people perceive" #QotD

"People such as Trump, Sanders, Rubio, and Warren – or Gabriel Zucman, Oren Cass, George Monbiot, and Tucker Carlson – and those who are enchanted by the sorts of things that such people say and write, are utterly ignorant of what percolates and hums so productively beneath what the eyes of such myopic people perceive...
    "The portion of an iceberg looming silently beneath the surface of the water is nothing as compared to the portion of the market economy that is beneath the economy’s ‘surface’ – the supply chains, the financial flows, the incredible specialization, the engineering talent, the marketing skills, the management genius, the gumption and drive and determination of ordinary men and women. And the complexity of the iceberg is non-existent compared to the complexity of the modern economy."

          ~ Don Boudreaux, from his post 'If I Could Draw...'  

. 

REPRISE: How the Stock Market and Economy Really Work

As the president and his supporters tout the inflating stock market bubble as a sign of prosperity, reprising this myth-busting guest post by Kel Kelly could not be more timely.
[NB: An MP3 audio file of this article, narrated by Keith Hocker, is available for download.]

                                                                                                                                                                                                                                                                  

"A growing economy consists
of prices falling, not rising."

The stock market does not work the way most people think. A commonly-held belief — on Main Street as well as on Wall Street — [and in the White House as well as CNN] is that a stock-market boom is the reflection of a progressing economy: as the economy improves, companies make more money, and their stock value rises in accordance with the increase in their intrinsic value. A major assumption underlying this belief is that consumer confidence and consequent consumer spending are drivers of economic growth.

A stock-market bust, on the other hand, is held to result from a drop in consumer and business confidence and spending — due to either inflation, rising oil prices, or high interest rates, etc., or for no real reason at all — that leads to declining business profits and rising unemployment. Whatever the supposed cause, in the common view a weakening economy results in falling company revenues and lower-than-expected future earnings, resulting in falling intrinsic values and falling stock prices.

This understanding of bull and bear markets, while held by academics, investment professionals, and individual investors alike, is technically correct if viewed superficially but,  because it is based on faulty finance and economic theory, it is substantially misconceived .


In fact, the only real force that ultimately makes the stock market or any market as a whole rise (and, to a large extent, fall) over the longer term is simply changes in the quantity of money and the volume of spending in the economy. Stocks rise when there is inflation of the money supply (i.e., more money in the economy and in the markets). This truth has many consequences that should be considered.

Since stock markets can fall — and fall often — to various degrees for numerous reasons (including a decline in the quantity of money and spending); our focus here will be only on why they are able to rise in a sustained fashion over the longer term.

The Fundamental Source of All Rising Prices

For perspective, let's put stock prices aside for a moment and make sure first to understand how aggregate consumer prices rise. In short, overall prices can rise only if the quantity of money in the economy increases faster than the quantity of goods and services. (In economically retrogressing countries, prices can rise when the supply of goods diminishes while the supply of money remains the same, or even rises.)

When the supply of goods and services rises faster than the supply of money however — as happened during most of the 1800s — the unit price of each good or service falls, since a given supply of money has to buy, or "cover," an increasing supply of goods or services. (See Fig. 1)

Fig 1: NZ & British Price Level, 1860-1910

For those lost in the bewildered state of most presidents or modern economists, this may still seem perplexing, but could not be more straightforward mathematically -- George Reisman derives the critical formula for the formation of economy-wide prices:¹ In this formula, price (P) is determined by monetary demand (D) divided by supply of goods and services (S):

P=D/S

The formula shows us that it is mathematically impossible for aggregate prices to rise by any means other than (1) increasing monetary demand, or (2) decreasing supply; i.e., by either more money being spent to buy goods, or fewer goods being sold in the economy.

In our developed economy, the supply of goods is not decreasing, or at least not at enough of a pace to raise prices at the usual rate of 3–4 percent per year; instead prices are rising due to more money entering the marketplace.

The same price formula noted above can equally be applied to asset prices — stocks, bonds, commodities, houses, oil, fine art, etc. It also pertains to corporate revenues and profits, for as Fritz Machlup states:

It is impossible for the profits of all or of the majority of enterprises to rise without an increase in the effective monetary circulation (through the creation of new credit or by dis-hoarding).

To return to our focus on the stock market in particular, it should be seen now that the market cannot continually rise on a sustained basis without an increase in money — specifically bank credit — flowing into it.

There are other ways the market could go higher, but their effects are purely temporary.

For example, an increase in net savings involving less money spent on consumer goods and more invested in the stock market (resulting in lower prices of consumer goods) could send stock prices higher, but only by the specific extent of the new savings, assuming all of it is redirected to the stock market.

The same applies to reduced tax rates. These would be temporary effects resulting in a finite and terminal increase in stock prices. Money coming off the "sidelines" could also lift the market, but once all sideline money was inserted into the market, there would be no more funds with which to bid prices higher. The only source of ongoing fuel that could propel the market — any asset market — higher is new and additional bank credit. As Machlup writes,

If it were not for the elasticity of bank credit … [then] a boom in security values could not last for any length of time. In the absence of inflationary credit, the funds available for lending to the public for security purchases would soon be exhausted, since even a large supply is ultimately limited. The supply of funds derived solely from current new savings and current amortisation allowances is fairly inelastic.… Only if the credit organisation of the banks (by means of inflationary credit), or large-scale dishoarding by the public make the supply of loanable funds highly elastic, can a lasting boom develop.… A rise on the securities market cannot last any length of time unless the public is both willing and able to make increased purchases. (Emphasis added.)

The last line in the quote helps to reveal that neither population growth nor consumer sentiment alone can drive stock prices higher. Whatever the population, it is using a finite quantity of money; whatever the sentiment, it must be accompanied by the public's ability to add additional funds to the market in order to drive it higher.⁴

Understanding that the flow of recently-created money is the driving force of rising asset markets has numerous implications. The rest of this article addresses some of these implications.

The Link between the Economy and the Stock Market

The primary link between the stock market and the economy — in the aggregate — is that an increase in money and credit pushes up both GDP and the stock market simultaneously.

A progressing economy is one in which more goods are being produced over time. What represents real wealth is not money per se [not even crypto-money], but real "stuff." The more cars, refrigerators, food, clothes, medicines, and hammocks we have, the better off our lives. We saw above that if more goods are produced at a faster rate than money then prices will fall. With a constant supply of money, wages would remain the same in money terms while prices fell, because the supply of goods would increase while the supply of workers would not—meaning higher real wages. But even when prices rise due to money being created faster than goods, prices still fall in real terms, because wages rise faster than prices. In either scenario, if productivity and output are increasing, goods get cheaper in real terms.

This is what rising prosperity looks like.

Obviously, then, a growing economy consists of prices falling, not rising. No matter how many goods are produced, if the quantity of money remains constant then the only money that can be spent in an economy is the particular amount of money existing in it (and velocity, or the number of times each dollar is spent, could not change very much if the money supply remained unchanged).

This alone reveals that GDP does not necessarily tell us much about the number of actual goods and services being produced; it only tells us that if (even real) GDP is rising, the money supply must be increasing, since a rise in GDP is mathematically possible only if the money price of individual goods produced is increasing to some degree.⁵ Otherwise, with a constant supply of money and spending, the total amount of money companies earn — the total selling prices of all goods produced — and thus GDP itself would all necessarily remain constant year after year.

"Consider that if our rate of inflation were high enough, used cars would rise in price just like new cars, only at a slower rate."

The same concept would apply to the stock market: if there were a constant amount of money in the economy, the sum total of all shares of all stocks taken together (or a stock index) could not increase. Plus, if company profits, in the aggregate, were not increasing, there would be no aggregate increase in earnings per share to be imputed into stock prices.

In an economy where the quantity of money was static, the levels of stock indexes, year by year, would stay approximately even, or even drift slightly lower⁶ — depending on the rate of increase in the number of new shares issued. And, overall, businesses (in the aggregate) would be selling a greater volume of goods at lower prices, and total revenues would remain the same. In the same way, businesses, overall, would purchase more goods at lower prices each year, keeping the spread between costs and revenues about the same, which would keep aggregate profits about the same.

Under these circumstances, ‘capital gains’ from speculation (the profiting from the buying low and selling high of assets) could be made only by stock picking — by investing in companies that are expanding market share, bringing to market new products, etc., thus truly gaining proportionately more revenues and profits at the expense of those companies that are less innovative and efficient.

The stock prices of the gaining companies would rise while others fell. Since the average stock would not actually increase in value, most of the gains made by investors from stocks would be in the form of dividend payments. By contrast, in our world today, most stocks — good and bad ones — rise during inflationary bull markets and decline during bear markets. The good companies simply rise faster than the bad.

Similarly, housing prices under static money would actually fall slowly — unless their value was significantly increased by renovations and remodelling. Older houses would sell for much less than newer houses. To put this in perspective, consider that if our rate of inflation were high enough, used cars would rise in price just like new cars, only at a slower rate — but just about everything would increase in price, as it does in countries with hyperinflation. The amount by which a home "increases in value" over 30 years really just represents the amount of purchasing power that the dollars we hold have lost: while the dollars lost purchasing power, the house — and other assets more limited in supply growth — kept its purchasing power.

Since we have seen that neither the stock market nor GDP can rise on a sustained basis without more money pushing them higher, we can now clearly understand that an improving economy neither consists of an increasing GDP nor does it cause the overall stock market to rise.

This is not to say that a link does not exist between the money that particular companies earn and their value on the stock exchange in our inflationary world today, but that the parameters of that link — valuation relationships such as earnings ratios and stock-market capitalisation as a percent of GDP — are rather flexible, and as we will see below, change over time. Money sometimes flows more into stocks and at other times more into the underlying companies, changing the balance of the valuation relationships.

Forced Investing

As we have seen, the whole concept of rising asset prices and stock investments constantly increasing in value is an economic illusion. What we are really seeing is our currency being devalued by the addition of new currency issued by the central bank. The prices of stocks, houses, gold, etc., do not really rise; they merely do better at keeping their value than do paper bills and digital checking accounts, since their supply is not increasing as fast as are paper bills and digital checking accounts.
"An improving economy neither consists of an increasing GDP nor does it cause the overall stock market to rise."

The fact that we have to save so much for the future is, in fact, an outrage. Were no money printed by the government and the banks, things would get cheaper through time, and we would not need much money for retirement, because it would cost much less to live each day then than it does now. But we are forced to invest in today's government-manipulated inflation-creation world in order to try to keep our purchasing power constant.

To the extent that some of us even come close to succeeding, we are still pushed further behind by having our "gains" taxed.
The whole system of inflation is solely for the purpose of theft and wealth redistribution. In a world absent of government printing presses and wealth taxes, the armies of investment advisors, pension-fund administrators, estate planners, lawyers, and accountants associated with helping us plan for the future would mostly not exist. These people would instead be employed in other industries producing goods and services that would truly increase our standards of living.

The Fundamentals are Not the Fundamentals

If it is, then, primarily newly-printed money flowing into and pushing up the prices of stocks and other assets, what real importance do the so-called fundamentals — revenues, earnings, cash flow, etc. — have? In the case of the fundamentals, too, it is newly printed money from the central bank, for the most part, that impacts these variables in the aggregate: the financial fundamentals are determined to a large degree by economic changes.

For example, revenues and, particularly, profits, rise and fall with the ebb and flow of money and spending that arises from central-bank credit creation. When the government creates new money and inserts it into the economy, the new money increases sales revenues of companies before it increases their costs; when sales revenues rise faster than costs, profit margins increase.

Specifically, how this comes about is that new money, created electronically by the government and loaned out through banks, is spent by borrowing companies.⁷ Their expenditures show up as new and additional sales revenues for businesses. But much of the corresponding costs associated with the new revenues lags behind in time because of technical accounting procedures, such as the spreading of asset costs across the useful life of the asset (depreciation) and the postponing of recognition of inventory costs until the product is sold (cost of goods sold). These practices delay the recognition of costs on the profit-and-loss statements (i.e., income statements).


Since these costs are recognised on companies' income statements months or years after they are actually incurred, their monetary value is diminished by inflation by the time they are recognised. For example, if a company recognises $1 million in costs for equipment purchased in 1999, that $1 million is worth less today than in 1999; but on the income statement the corresponding revenues recognised today are in today's purchasing power. Therefore, there is an equivalently greater amount of revenues spent today for the same items than there was ten years ago (since it takes more money to buy the same good, due to the devaluation of the currency).

"With more money being created through time, the amount of revenues is always greater than the amount of costs, simply because most costs are incurred when there is less money existing."

Another way of looking at it is that, with more money being created through time, the amount of revenues is always greater than the amount of costs, since most costs are incurred when there is less money existing. Thus, because of inflation, the total monetary value of business costs in a given time frame is smaller than the total monetary value of the corresponding business revenues. Were there no inflation, costs would more closely equal revenues, even if their recognition were delayed.

In summary, credit expansion increases the spreads between revenue and costs, increasing profit margins. The tremendous amount of money created since 2008 is what is responsible for the fantastic profits companies had been reporting (even though the amount of money loaned out was small, relative to the increase in the monetary base).

Since business sales revenues increase before business costs, with every round of new money printed, business profit margins stay widened; they also increase in line with an increased rate of inflation. This is one reason why countries with high rates of inflation have such high rates of profit.⁸

During bad economic times, when the government has quit printing money at a high rate, profits shrink, and during times of deflation, sales revenues fall faster than do costs.


It is also new money flowing into industry from the central bank that is the primary cause behind positive changes in leading economic indicators such as industrial production, consumer durables spending, and retail sales. As new money is created, these variables rise based on the new monetary demand, not because of resumed real economic growth.

A final example of new money affecting the fundamentals is interest rates. It is said that when interest rates fall, the common method of discounting future expected cash flows with market interest rates means that the stock market should rise, since future earnings should be valued more highly. This is true both logically and mathematically. But, in the aggregate, if there is no more money with which to bid up stock prices, it is difficult for prices to rise, unless the interest rate declined due to an increase in savings rates.

In reality, the help needed to lift the market comes from the fact that when interest rates are lowered, it is by way of the central bank creating new money that hits the loanable-funds markets. This increases the supply of loanable funds and thus lowers rates. It is this new money being inserted into the market that then helps propel it higher.

(I would personally argue that most of the discounting of future values [PV calculations] demonstrated in finance textbooks and undertaken on Wall Street are misconceived as well. In a world of a constant money supply and falling prices, the future monetary value of the income of the average company would be about the same as the present value. Future values would hardly need to be discounted for time preference [and mathematically, it would not make sense], since lower consumer prices in the future would address this. Though investment analysts believe they should discount future values, I believe that they should not. What they should instead be discounting is earnings inflation and asset inflation, each of which grows at different paces.)⁹

Asset Inflation versus Consumer Price Inflation

Newly-printed money can affect asset prices more than consumer prices. Most people think that the Federal Reserve and other central banks have done a good job of preventing inflation over the last twenty-plus years. The reality is that it has created a tremendous amount of money, but that the money has disproportionately flowed into financial markets instead of into the real economy, where it would have otherwise created drastically more price inflation.

There are two main reasons for this channelling of money into financial assets. The first is changes in the financial system in the mid and late 1980s, when an explosive growth of domestic credit channels outside of traditional bank lending opened up in the financial markets. The second is changes in the US trade deficit in the late 1980s, wherein it became larger, and export receipts received by foreigners were increasingly recycled by foreign central banks into US asset markets.¹⁰ As financial economist Peter Warburton states,

a diversification of the credit process has shifted the centre of gravity away from conventional bank lending. The ascendancy of financial markets and the proliferation of domestic credit channels outside the [traditional] monetary system have greatly diminished the linkages between … credit expansion and price inflation in the large western economies. The impressive reduction of inflation is a dangerous illusion; it has been obtained largely by substituting one set of serious problems for another.

And, as bond-fund guru Bill Gross said,

what now appears to be confirmed as a housing bubble, was substantially inflated by nearly $1 trillion of annual reserve flowing back into US Treasury and mortgage markets at subsidised yields.… This foreign repatriation produced artificially low yields.… There is likely near unanimity that it is now responsible for pumping nearly $800 billion of cash flow into our bond and equity markets annually.

This insight into the explanation for a lack of price inflation in recent decades should also show that the massive amount of reserves the Fed created in 2008 and 2009 — in response to the recession — might not lead to quite the wild consumer-price inflation everyone expects when it eventually leaves the banking system but instead to wild asset price inflation.

One effect of the new money flowing disproportionately into asset prices is that the Fed cannot "grow the economy" as much as it used to, since more of the new money created in the banking system flows into asset prices rather than into GDP. Since it is commonly thought that creating money is necessary for a growing economy, and since it is believed that the Fed creates real demand (instead of only monetary demand), the Fed pumps more and more money into the economy in order to "grow it."

That also means that more money — relative to the size of the economy — "leaks" out into asset prices than used to be the case. The result is not only exploding asset prices in the United States, such as the NASDAQ and housing-market bubbles but also in other countries throughout the world, as new money makes its way into asset markets of foreign countries.¹³

A second effect of more new money being channelled into asset prices is, as hinted above, that it results in the traditional range of stock valuations moving to a higher level. For example, the ratio of stock prices to stock earnings (P/E ratio) now averages about 20, whereas it used to average 10–15. It now bottoms out at a level of 12–16 instead of the historical 5. A similar elevated state applies to Tobin's Q, a measure of the market value of a company's stock relative to its book value. But the change in relative flow of new money to asset prices in recent years is perhaps best seen in the chart below, which shows the stunning increase in total stock-market capitalisation as a percentage of GDP (figure 2).

Figure 2: The Size of the Stock Market Relative to GDP Source: Thechartstore.com

The changes in these valuation indicators I have shown above reveal that the fundamental links between company earnings and their stock-market valuation can be altered merely by money flows originating from the central bank.

Can Government Spending Revive the Stock Market and the Economy?

So, can government spending revive the stock market and the economy then? The answer is: yes and no. Government spending does not restore any real demand, only nominal monetary demand. Monetary demand is completely unrelated to the real economy, i.e., to real production, the creation of goods and services, the rise in real wages, and the ability to consume real things — as opposed to a calculated GDP number.

Government spending harms the economy and forestalls its healing. The thought that stimulus spending, i.e., taking money from the productive sector (a de-accumulation of capital) and using it to consume existing consumer goods or using it to direct capital goods toward unprofitable uses (consuming existing capital), could in turn create new net real wealth — real goods and services — is preposterous.

What is most needed during recessions is for the economy to be allowed to get worse — for it to flush out the excesses and reset itself on firm footing. Recession is a process of recovery from earlier gross misallocations. Broken economies suffer from a misallocation of resources consequent upon prior government interventions, and can therefore be healed only by allowing the economy's natural balance to be restored. Falling prices and lack of government and consumer spending are part of this process.

Given that government spending cannot help the real economy, can it help the specific indicator called GDP? Yes it can. Since GDP is mostly a measure of inflation, if banks are willing to lend and borrowers are willing to borrow, then the newly created money that the government is spending will make its way through the economy. As banks lend the new money once they receive it, the money multiplier will kick in and the money supply will increase, which will raise GDP.

"What is most needed during recessions is for the economy to be allowed to get worse — for it to flush out the excesses and reset itself on firm footing."

As for the idea that government spending helps the stock market, the analysis is a bit more complicated. Government spending per se cannot help the stock market, since little, if any, of the money spent will find its way into financial markets. But the creation of money that occurs when the central bank (indirectly) purchases new government debt can certainly raise the stock market. If new money created by the central bank is loaned out through banks, much of it will end up in the stock market and other financial markets, pushing prices higher.

Summary

The most important economic and financial indicator in today's inflationary world is money supply. Trying to anticipate stock-market and GDP movements by analysing traditional economic and financial indicators can lead to incorrect forecasts. To rely on these "fundamentals" today is to largely ignore the specific economic forces that most significantly affect those same fundamentals — most notably the changes in the money supply. Therefore, the best insight into future stock prices and GDP growth is gained by following monetary indicators.

---

Kel Kelly is the Head of Economic and Commodity Research at an international energy and agribusiness firm and the author of The Case for Legalizing Capitalism. Kel holds a degree in economics from the University of Tennessee, an MBA from the University of Hartford, and an MS in economics from Florida State University. He lives in Atlanta.
A version of this 2010 article first appeared at the Mises Daily


NOTES 
1.See G. Reisman, Capitalism: A Treatise on Economics (1996), p.897, for a fuller demonstration. Most of the insights in this paper are derived from the high-level principles laid out by Reisman. For additional related insights on this topic, see Reisman, "The Stock Market, Profits, and Credit Expansion," "The Anatomy of Deflation," and "Monetary Reform."
2.F. Machlup, The Stock Market, Credit, and Capital Formation (1940), p. 90. 3.Ibid., pp. 92, 78. 4.For a holistic view in simple mathematical terms of how the price of all items in an economy may or may not rise, depending on the quantity of money, see K. Kelly, The Case for Legalizing Capitalism (2010), pp 132–133. 5.Price increases are supposedly adjusted for, but "deflators" don't fully deflate. Proof of this is the very fact that even though rising prices have allegedly been accounted for by a price deflator, prices still rise (real GDP still increases). Without an increase in the quantity of money, such a rise would be mathematically impossible. 6.To gain an understanding of earning interest (dividends in this case) while prices fall, see Thorsten Polleit's "Free Money Against 'Inflation Bias'."
7.Most funds are borrowed from banks for the purpose of business investment; only a small amount is borrowed for the purpose of consumption. Even borrowing for long-term consumer consumption, such as for housing or automobiles, is a minority of total borrowing from banks. 8.The other main reason for this, if the country is poor, is the fact that there is a lack of capital: the more capital, the lower the rate of profit will be, and vice versa (though it can never go to zero). 9.Any reader who is interested in exploring and poking holes in this theory with me should feel free to contact me to discuss. 10.This recycling is what Mises's friend, the French economist Jacques Reuff, called "a childish game in which, after each round, winners return their marbles to the losers" (as cited by Richard Duncan, The Dollar Crisis (2003), p. 23). 11.P. Warburton, Debt and Delusion: Central Bank Follies that Threaten Economic Disaster (2005), p. 35. 12.[12] William H. Gross, "100 Bottles of Beer on the Wall."
13.It's not actually American dollars (both paper bills and bank accounts) that make their way around the world, as most dollars must remain in the United States. But for most dollars received by foreign exporters, foreign central banks create additional local currency in order to maintain exchange rates. This new foreign currency — along with more whose creation stems from "coordinated" monetary policies between countries — pushes up asset prices in foreign countries in unison with domestic US asset prices.

Why Mises “should be awarded an immediate posthumous Nobel Prize indeed, more than one”

 

As the Nobel committee considers who it may name on Monday as this year’s recipient of the  The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel –and others debate who should receive it now and in the past -- two tributes are paid to the economist who most deserved the award but was never be so honoured, and his magnum opus with which every thinking human being should be familiar.

What Mises’s Human Action Means to Me
From the foreword to the new digital edition of Human Action,
by Lawrence Reed

Forty-six years ago, I enrolled as a freshman at Grove City College in Pennsylvania for one reason. His name was Dr. Hans F. Sennholz, one of only four individuals ever to earn a PhD under the tutelage of Ludwig von Mises [the other three were Israel Kirzner, Murray Rothbard, and George Reisman – Ed.]. Sennholz was himself an extraordinary and inspiring professor, but the special magic of his lectures came from knowing that I was getting my economics just one generation removed from the master himself. I was enthralled on a daily basis. [I felt something of the same by undertaking Reisman’s suberb Programme of Self-Education in Economics – Ed.]

Ludwig von Mises remains not only the pre-eminent economist of the Austrian school, but also a towering figure within the science of economics itself. It is a tragic oversight that a Nobel Prize never came his way while the award has often been bestowed upon individuals of fewer insights and lesser consequence.

If only the world appreciated how he brilliantly and thoroughly demolished socialism nearly a century ago, millions of early deaths and untold misery could have been avoided in the decades since. Fifty Nobels would be insufficient to appropriately honor the man, but the world we know is hardly fair.

Mises and FEE

Diving into Human Action as a student of Sennholz in the 1970s, I found Mises challenging. I had little if any prior knowledge of such terms as “praxeology,” “a priori reasoning,” “catallactics” and a host of others I was confronting for the first time. I found many of his other works more accessible, such as The Theory of Money and Credit; Socialism; Bureaucracy; Planned Chaos; and The Anti-Capitalist Mentality.

But with Human Action, his magnum opus, [a new digital edition now available for free download – Ed.] Mises was aiming at high-brow intellectuals who exercised great influence by animating others, namely, the so-called “second-hand dealers in ideas” who sway the masses that make up the general public. So when you read Human Action, you’re not reading newspaper column material; you’re reading the original wisdom that a professor absorbs before he teaches the student who becomes the columnist.

Mises occupies a special place in the history of the organisation I lead, the Foundation for Economic Education (FEE). Human Action itself was published only when our founder Leonard E. Read agreed to buy nearly the entire first print run and distribute it. This is what kicked off the book to become a big seller for many decades. Read gave Mises writing projects and kept his books in print, and boosted his professional standing among many donors and journalists in America.

Within a decade after his emigration to the U.S. in the wake of the Nazi onslaught in Europe, he felt “at home” in our ancestral mansion in Irvington, New York, where he was a frequent lecturer. FEE, notably trustee Lawrence Fertig, helped support Mises in the years he taught classes and seminars in nearby New York City.

Read was profoundly influenced by the man and his ideas, as was long-time FEE staff member and Mises biographer, Bettina Bien Greaves. In all the years that the name “Mises” was virtually synonymous with “Austrian economics,” FEE and Mises were joined at the intellectual hip. His image prominently adorns a wall of honor in our new Atlanta, Georgia headquarters.

The Legacy of a Masterpiece

In 1978, five years after Mises passed away, Nobel laureate and fellow Austrian economist F. A. Hayek reflected on his late mentor:

Though I learned that he (Mises) usually was right in his conclusions, I wasn’t always satisfied by his arguments, and retained to the end a certain critical attitude which sometimes forced me to build different constructions, which however, to my great pleasure, usually led to the same conclusions. I am to the present moment pursuing the questions which he made me see, and that, I believe, is the greatest benefit one scientist can confer on one of the next generation.

So it is indeed with great pleasure that we at FEE present this digital version of a classic in economics, Human Action, to new generations of readers.

Human Action: A Timeless Masterpiece
From the introduction to the new digital edition,
by Richard Ebeling

Ludwig von Mises’s majestic magnum opus, Human Action: A Treatise on Economics, was published on September 14, 1949. In the nearly seven decades since its appearance, Human Action has come to be recognized as one of the truly great classics of modern economics.

Often a "classic" means a famous book considered to have made important contributions to a discipline that is reverentially referred to but is rarely ever read. In economics, Adam Smith’s Wealth of Nations is the typical example of such a work. Every economist has heard of the "invisible hand" and the notion of self-interest furthering the public interest through the incentive mechanism of the market, but probably few economists nowadays have actually read more than a handful of snippets and brief passages from Smith's treatise. [More’s the pity – Ed.]

However, Human Action uniquely stands out as a classic in the literature of economics. Not only among Austrian economists but also for a growing number of other people, Mises's brilliant treatise continues to be read and taken seriously as a cornerstone for understanding the nature of the free society and the workings of the market economy.

It has taken on even more significance in these early decades of the twenty-first century precisely because of the economic crises through which the world has been passing. It rings just as relevant today as when it was published in 1949 because the issues that Mises dealt with in Human Action and in many of his other works still dominate the public-policy discourses of our own time.

The World When Human Action was Published

It is perhaps useful to recall the state of the world when Human Action appeared in 1949. The Soviet system of central economic planning had been imposed on all of Eastern Europe. In Asia, Mao Zedong’s communist armies were just completing their conquest of the Chinese mainland. In Western Europe, many of the major non-communist governments were practicing what one free market critic called “national collectivism” – a form of repressed inflation with price and wage and foreign exchange controls, and Keynesian influenced “full employment” policies with deficit spending and “easy money.”

In Human Action, Ludwig von Mises opposed every one of these trends and policies, plus many others in contemporary social philosophy, philosophy of science, and economic theory and method. He challenged the foundations, logic, and conclusions of every facet of twentieth century collectivism.

In 1949, Mises’s arguments were often ignored or scorned as the reactionary misconceptions of a man out-of-step with the more “progressive” ideas and economic policies of the postwar period. In this second decade of the twenty-first century, however, it is evident that it was Mises who understood far better than the vast majority of the contemporary economists and policy advocates the fundamental flaws in socialism, interventionism, and the welfare state.

Mises, the Enlightenment-Like Philosopher

Human Action was the revised and improved outgrowth of an earlier German-language treatise, Nationalökonomie, which Ludwig von Mises had published in May 1940 while he was still living in Geneva, Switzerland, after fleing the Nazis and shortly before he permanently moved to the United States.

Mises’s friend and fellow Austrian economist, Friedrich A. Hayek, said in a review of the earlier German version:

There appears to be a width of view and an intellectual spaciousness about the whole book which are much more like that of an eighteenth century philosopher than that of a modern specialist. And yet, or perhaps because of this, one feels throughout much nearer reality, and is constantly recalled from the discussion of technicalities to the consideration of the great problems of our time . . . It ranges from the most general philosophical problems raised by all scientific study of human action to the major problems of economic policy of our time.

A few months later another review appeared, this one by Walter Sulzbach, a prominent free market German economist then living in the United States. He, too, emphasised the uniqueness of the man and the work. “Mises has written a remarkable book,” Sulzbach said.

Few economists of our generation can boast of a similar achievement. It is the work of a man who combines an immense knowledge of economic history, economic theories and present-day facts with a thoroughly logical mind.

And as Mises’s American student and friend, Murray Rothbard explained many years after the first appearance of Human Action:

‘Human Action’ is it: Mises’s greatest achievement and one of the finest products of the human mind in our century. It is economics whole . . . In addition to providing this comprehensive and integrated economic theory, ‘Human Action’ defended Austrian economics against all of its methodological opponents, against historicists, positivists, and neoclassical practitioners of mathematical economics and econometrics. He also updated his critique of socialism and interventionism.

Fellow student George Reisman was more direct in his tribute paid on the 100th anniversary of Mises’s birth:

Von Mises is important because his teachings are necessary to the preservation of material civilisation…
    [W]hen von Mises appeared, there was virtually no systematic intellectual opposition to socialism or defense of capitalism. Quite literally, the intellectual ramparts of civilisation were undefended. What von Mises undertook, and which summarises the essence of his greatness, was to build an intellectual defense of capitalism and thus of civilisation…
    Von Mises's two most important books are ‘Human Action’ and ‘Socialism,’ which best represents the breadth and depth of his thought. [These are not for beginners, however. They should be preceded by some of von Mises's popular writings, such as ‘Bureaucracy’ and ‘Planning For Freedom.’] …
    Von Mises must be judged not only as a remarkably brilliant thinker but also as a remarkably courageous human being. He held the truth of his convictions above all else and was prepared to stand alone in their defense. He cared nothing for personal fame, position, or financial gain, if it meant having to purchase them at he sacrifice of principle. In his lifetime, he was shunned and ignored by the intellectual establishment, because the truth of his views and the sincerity and power with which he advanced them shattered the tissues of fallacies and lies on which most intellectuals then built, and even now continue to build, their professional careers…
    Today, von Mises's ideas at long last appear to be gaining in influence …
    Von Mises's books deserve to be required reading in every college and university curriculum not just in departments of economics, but also in departments of philosophy, history, government, sociology, law, business, journalism, education, and the humanities. He himself should be awarded an immediate posthumous Nobel Prize indeed, more than one. He deserves to receive every token of recognition and memorial that our society can bestow. For as much as anyone in history, he laboured to preserve it. If he is widely enough read, his labors may actually succeed in helping to save it.
   

Ludwig von Mises’s Life and Career

Ludwig von Mises was born in Lemberg, Austria-Hungary on September 29, 1881. Though originally interested in history, shortly after entering the University of Vienna in 1900 he turned to economics after reading Principles of Economics by Carl Menger, the founder of the Austrian School of Economics. While at the university he studied with Eugen von Böhm-Bawerk, the person perhaps most responsible for establishing the internationally respected reputation of the Austrian School in the late nineteenth and early twentieth centuries. In 1906 Mises was awarded a doctoral degree in jurisprudence (at the time economics was studied as part of the law faculty at the University of Vienna).

Beginning in 1909, Mises was employed at the Vienna Chamber of Commerce, Crafts and Industry as an economic analyst within the department of finance, rising to the position of a senior secretary with the Chamber in the years between the two World Wars and played a prominent role in the economic policy discussions in the Austria of the 1920s and 1930s. Living in an ideological environment dominated by socialist, interventionist and increasingly totalitarian ideas, his was mostly a rearguard defense of classical liberal and free market policies.

In 1934, Mises was offered and accepted a position as Professor of International Economic Relations at the Graduate Institute of International Studies in Geneva, Switzerland. It was shortly after arriving in Geneva that he set about a project that he had long had in mind, the writing of a comprehensive treatise on economics that finally became Nationalökonomie, and then Human Action, in its final and finished form.

After arriving in the United States in 1940, he settled in New York City, eventually being appointed as a visiting professor in the Graduate School of Business at New York University a position he held until retirement at the age of 89, in 1969. Ludwig von Mises passed away on October 10, 1973, at the age of 92.

The Meaning and Logic of Human Action

In the late 1920s and early 1930s, Mises wrote a series of essays in which he argued that economics was a distinct science derived from the insight that all social processes arise from the choices and actions of the individual participants in the social and market order. Attempts to reduce conscious and intentional human conduct to the physical methods of the natural sciences would not merely distort any real understanding of human decision-making and activity, it would create a serious false impression that social and market processes could be manipulated and controlled in more or less the same manner as inanimate matter in a laboratory experiment.

In Human Action, this theme was refined and fully developed. All of the social processes have their origin in and can be reduced to the actions and reactions of individual human beings. Being human himself, the social scientist can draw upon a source of knowledge unavailable to the natural scientist: introspection. That is, the social scientist can look within and trace out the logic and formal characteristics of his own mental processes.

As Mises expressed it, “action” is reason applied to purpose. By understanding the logic of his own reasoning processes, the social scientist can comprehend the essentials of human action: that man, as a conscious being, invariably finds some aspects of his human condition unsatisfactory; he imagines ends or goals that he would like to attain in place of his present or expected circumstances; and he perceives methods or means to try to achieve them.

But he soon discovers that some of the means with which he could attain ends are limited in quantity and quality relative to their potential uses. Hence, man is confronted with the necessity to choose among the desired ends and has to set some aside either for a day or forever, so those means may be used for the pursuit of other ends to which he has assigned greater importance or significance.

Few human decisions, however, are completely categorical, that is, either/or. Most are incremental, that is, giving up a little bit of one attainable end so as possibly to attain a little bit more of some other desired end; thus, most choices are made at the “margin.”

From these elementary and self-evidently true foundations, Mises argued, all the complex theorems of economics can be, in principle, traced out. And this he attempts to do in Human Action with razor-sharp reasoning and often biting rhetoric in response to critics.

The “laws” of economics, Mises insisted, are not open to quantitative verification or falsification or prediction. The laws of economics, in other words, as Mises explains in careful detail in Human Action, are logical, not empirical, relationships. Why? Because man has volition, free will, the ability to change his mind and imagine new possibilities that make his actions and responses in the future different in their concrete form from what they were yesterday or today. Hence, the search for a quantitative economics for deterministic prediction of what men and markets will do today, tomorrow, or a year from now is the pursuit of the unattainable.

The Law of Human Association and the Market Economy

For Mises, one of the greatest accomplishments of mankind was the discovery of the higher productivity arising from the division of labour. The classical economists’ analysis of comparative advantage, under which specialisation in production increased the qualities, qualities and varieties of goods available to all participants in the network of exchange, was more than merely a sophisticated demonstration of the mutual gains from trade.

In Mises’s view, as he expressed it in Human Action, the law of comparative advantage is in fact “the Law of Human Association.” The mutual benefits resulting from permanent and extensive specialisation of activities was the origin of society and the starting point for the development of civilisation.

That is why a central concept throughout Human Action is Mises's insistence on the essential importance of economic calculation.

The rationality of the market economy arises from its ability to allocate the scarce means of production in society for the most efficient satisfaction of consumer wants in a complex system of division of labour: that is, to see to it that the means at people’s disposal are applied to their most highly valued uses as expressed in the free choices of participants in the market. This requires some method through which alternative uses for those scarce means and their relative value in those competing applications can be discovered.

Economic Calculation as the “Compass” of Market Action

In the early decades of the twentieth century, socialists of almost all stripes were certain that the institutions of the market economy could be done away with – either through peaceful democratic means or violent revolution – and replaced with direct government ownership or control of the means of production with no loss in economic productivity or efficiency.

Mises's landmark contribution in his earlier work, Socialism (1922) was to demonstrate that only with market-based prices expressed through a medium of exchange (money) could rational decision-making be undertaken for the use and application of the myriad means of production to assure the effective satisfaction of the multitudes of competing consumer demands in society.

"Monetary calculation is the guiding star of action under a system of division of labour," Mises declared in Human Action, where he refined his argument and replied to his collectivist critics. "It is the compass of the man embarking on production." 

The significance of the competitive process, as Mises had expressed it in his earlier volume, Liberalism (1927), is that it facilitates "the intellectual division of labor that consists in the cooperation of all entrepreneurs, landowners, and workers as producers and consumers in the formation of market prices. But without it, rationality, i.e., the possibility of economic calculation, is unthinkable."

Economic Irrationality of Central Planning and Interventionism

Such rationality in the use of means to satisfy ends is impossible in a comprehensive system of socialist central planning, once again he insisted in Human Action. Mises asked, how will the socialist planners know the best uses for which the factors of production under their central control should be applied without such market-generated money prices?

Without private ownership of the means of production, there would be nothing (legally) to buy and sell. Without the ability to buy and sell, there would be no bids and offers, and therefore no haggling over terms of trade among competing buyers and sellers. Without the haggling of market competition there would, of course, be no agreed-upon terms of exchange. Without agreed-upon terms of exchange, there are no actual market prices. And without such market prices, how will the central planners know the opportunity costs and therefore the most highly valued uses for which those resources could or should be applied? With the abolition of private property, and therefore market exchange and prices, the central planners would lack the necessary institutional and informational tools to determine what to produce and how, in order to minimise waste and inefficiency.

It was for this reason that Mises had declared back in 1931:

From the standpoint of both politics and history, this proof [of the ‘impossibility’ of socialist planning] is certainly the most important discovery by economic theory  . . . It alone will enable future historians to understand how it came about that the victory of the socialist movement did not lead to the creation of the socialist order of society.

At the same time, as Mises demonstrates in Human Action the inherent inconsistencies in any system of piecemeal political intervention in the market economy. Price controls and production restrictions on entrepreneurial decision-making bring about distortions and imbalances in the relationships of supply and demand, as well as constraints on the most efficient use of resources in the service of consumers.

The political intervener is left with the choice of either introducing new controls and regulations in an attempt to compensate for the distortions and imbalances the prior interventions have caused, or repealing the interventionist controls and regulations already in place and allowing the market once again to be free and competitive. The path of one set of piecemeal interventions followed by another entails a logic in the growth of government that eventually could result in the entire economy coming under state management. Hence, interventionism consistently applied could lead to socialism on an incremental basis.

Monetary Manipulation and the Business Cycle

The most pernicious form of government intervention, in Mises's view, was political control and manipulation of the monetary system. One of Mises’s most important contributions to economics had been in 1912 with his book, The Theory of Money and Credit, followed in 1928 by Monetary Stabilization and Cyclical Policy.

Contrary to both the Marxists and the later Keynesians, Mises did not consider the economy-wide fluctuations experienced over the business cycle to be an inherent and inescapable part of the free-market economy. Waves of inflations and depressions were the product of political intervention in money and banking. And this included the Great Depression of the 1930s, Mises argued.

He offered a richer and more systematic exposition of his theory in Human Action. Under various political and ideological pressures, governments had monopolised control over the monetary system. They used the ability to create money out of thin air through the printing press or on the ledger books of the banks to finance government deficits and to artificially lower interest rates to stimulate unsustainable investment booms.

Such monetary expansions always tended to distort market prices resulting in misdirection of resources, including labour, and mal-investments of capital. The inflationary upswing that is caused by an artificial expansion of money and bank credit sets the stage for an eventual economic downturn. By distorting the rate of interest — the market price for borrowing and lending — the monetary authority throws savings and investment out of balance, with the need for an inevitable correction.

The "depression" or "recession" phase of the business cycle occurs when the monetary authority either slows downs or stops any further increases in the money supply. The imbalances and distortions become visible, with some investment projects having to be written down or written off as losses, with reallocations of labor and other resources to alternative, more profitable employments, and sometimes significant adjustments and declines in wages and prices to bring supply and demand back into proper order.

The Keynesian revolution of the 1930s, which then dominated economic-policy discussions for decades following the Second World War, was based on a fundamental misconception of how the market economy worked. What Keynes called "aggregate demand failures" (to explain the reason for high and prolonged unemployment) distracted attention from the real source of less-than-full employment: the failure of producers and workers on the "supply side" of the market to price their products and labour services at levels that potential demanders would be willing to pay. Unemployment and idle resources were a pricing problem, not a demand-management problem. Mises considered Keynesian economics basically to be nothing more than a rationale for special-interest groups, such as trade unions, who didn't want to adapt to the reality of supply and demand, and what the market viewed as their real worth.

No Alternative to a Functioning Free Market Economy

Thus Mises's conclusion in Human Action from his analysis of socialism and interventionism, including monetary manipulation, was that there is no alternative to a thoroughgoing, unhampered, free-market economy — and one that included a market-based monetary system such as the gold standard.

Both socialism and interventionism are, respectively, unworkable and unstable substitutes for capitalism. The classical liberal defends private property and the free-market economy, Mises insisted, precisely because it is the only system of social cooperation that provides wide latitude for freedom and personal choice to all members of society, while generating the institutional means for coordinating the actions of billions of people in the most economically rational manner.

But the heart of the interventionist system is government control of the monetary system — indeed, it a system of monetary central planning through the institution of central banking. During the Second World War, the German free-market economist Gustav Stolper, then in exile in America from war-torn Europe, pointed out in his book, This Age of Fables (1942):

Hardly ever do the advocates of free capitalism realise how utterly their ideal was frustrated at the moment the state assumed control of the monetary system…. A ‘free’ capitalism with government responsibility for money and credit has lost its innocence. From that point on it is no longer a matter of principle but one of expediency how far one wishes or permits governmental interference to go. Money control is the supreme and most comprehensive of all government controls short of expropriation.

Stolper went on to say,

There is today only one prominent liberal theorist consistent enough to advocate free, uncontrolled competition among the banks in the creation of money. [Ludwig von] Mises, whose intellectual influence on modern neo-liberalism was very strong, has hardly made one proselyte for that extreme conclusion.

It is in the pages of Human Action that Mises details the advantages and benefits of a private competitive banking system based on a commodity such as gold. Fortunately, over the last thirty years or so, Mises's analysis and defense of gold-backed, private competitive banking in place of government-monopoly central banking has finally begun to win over a growing number of Austrian economists and other advocates.

Too Big to Fail Means Moral Hazard

Since the financial crisis of 2008-2009, the argument often has been made that some banks are too big to fail, that depositors need to have their various types of bank accounts protected and guaranteed, and that the repercussions of allowing the financial markets to adjust to the post-boom reality would be too harsh. Mises responded to these types of arguments in 1928 even before the Great Depression began and again in the pages of Human Action, with a warning about what today is understood as "moral hazard," the danger of reinforcing the repetition of bad decisions by the government bailing out mistakes made in the market:

In any event, the practice of intervening for the benefit of banks, rendered insolvent by the crisis, and of the customers of these banks, has resulted in suspending the market forces which could serve to prevent a return of the expansion, in the form of a new boom, and the crisis which inevitably follows. If the banks emerge from the crisis unscathed, or only slightly weakened, what remains to restrain them from embarking once more on an attempt to reduce artificially the interest rate on loans and expand circulation credit?
    If the crisis were ruthlessly permitted to run its course, bringing about the destruction of enterprises which were unable to meet their obligations, then all entrepreneurs — not only banks but also other businessmen — would exhibit more caution in granting and using credit in the future. Instead, public opinion approves of giving assistance in the crisis. Then, no sooner is the worst over, than the banks are spurred on to a new expansion of circulation credit.

The Continuing Relevance of Mises’s Human Action

Just as there was a huge shift toward more and bigger government in the years leading up to Mises's writing of Human Action, so today there are still many across the political spectrum who a call for a similar expansion of governmental presence and domination of even more of social life, especially in health care, education, and the energy sector — as well as a much greater control over the financial and capital markets.

But where will all the money come from to fund this new gargantuan largess for expanded political paternalism? In the Austria of the interwar period of the 1920s and 1930s, Mises had witnessed and explained the consequences from unrestrained government spending that finally resulted in the "eating of the seed corn" — capital consumption.

Mises warned of this danger, too, in Human Action, and the fact that there must be a point at which the interventionist welfare state will have exhausted "the reserve fund" of accumulated wealth, after which the consumption of capital becomes the only basis upon which to continue to feed the fiscal demands of the redistributive state. Those currently in political power in the world’s capitals seem hell-bent on bringing this about in the decades ahead.

Many of the political-economic trends since the original appearance of Human Action in 1949 have done nothing, therefore, to diminish the importance of Ludwig von Mises’s insight and profound analysis of the market order and its collectivist alternatives. Indeed, the social, political, and economic conditions of our world today give Ludwig von Mises's treatise a refreshing relevance matched by few other works written over the last century. That is why it is being read by more and more people today, rather than simply being one of those many "classics" collecting dust on a shelf.

If enough people discover and rediscover the timeless truths in the pages of Human Action, the ideas of Ludwig von Mises may well assist us in stemming the growing tide toward an even larger Leviathan State.

---

Lawrence W. Reed is President of the Foundation for Economic Education and the author of Great Myths of the Great Depression and the forthcoming book, Real Heroes: Inspiring True Stories of Courage, Character and Conviction.
Richard M. Ebeling is BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina. He was president of the Foundation for Economic Education (FEE) from 2003 to 2008.
These posts first appeared at the Foundation for Economic Education (FEE), with which Mises was associated, and who have just released a new digital edition of Mises’s classic for both iBook and Kindle:

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