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NOTE VII. Action Within the World

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CHAPTER VII. ACTION WITHIN THE WORLD 1. THE LAW OF MARGINAL UTILITY

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Action sorts and grades. Originally it knows only ordinal numbers, not cardinal numbers.

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But the external world to which acting man must adjust his conduct is a world of quantitative

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of Determinantness.

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In this world, there exist quantitative relations between cause and effect.

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If it were otherwise, if definite things could render unlimited services, such things would

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never be scarce, and could not be dealt with as means.

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Acting man values things as means for the removal of his uneasiness.

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From the point of view of the natural sciences, the various events which result in satisfying

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Acting human needs appear as very different. Acting man sees in these events only a more

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or less of the same kind. In valuing very different states of satisfaction and the means

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for their attainment, man arranges all things in one scale and sees in them only their relevance

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for an increase in his own satisfaction. The satisfaction derived from food, and that derived

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from the Enjoyment of a Work of Art, are, in acting man's judgment, a more urgent or

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a less urgent need.

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Valuation and action place them in one scale of what is more intensively desired and what

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is less.

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For acting man, there exists primarily nothing but various degrees of relevance and urgency

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with regard to his own well-being.

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Quality and quality are categories of the external world.

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Only indirectly do they acquire importance and meaning for action.

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Because everything can only produce a limited effect, some things are considered scarce

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and treated as means.

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Because the effects which things are able to produce are different, acting man distinguishes

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various classes of things.

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These means of the same quantity and quality are apt always to produce the same quantity

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of an effect of the same quality.

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Action does not differentiate between concrete definite quantities of homogeneous means.

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But this does not imply that it attaches the same value to the various portions of a supply

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of homogeneous means.

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Each portion is valued separately.

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To each portion its own rank in the scale of value is assigned.

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But these orders of rank can be ad libitum interchanged among the various portions of

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the same magnitude.

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If acting man has to decide between two or more means of different classes, he grades

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the individual portions of each of them.

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He assigns to each portion its special rank.

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In doing so, he need not assign to the various portions of the same means orders of rank

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which immediately succeed one another.

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The assignment of orders of rank through the valuation is done only in acting and through

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acting.

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How great the portions are to which a single order of rank is assigned depends on the individual

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Actual and unique conditions under which man acts in every case.

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Action does not deal with physical or metaphysical units which it values in an abstract academic

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way.

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It is always faced with alternatives between which it chooses.

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The choice must always be made between definite quantities of means.

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It is permissible to call the smallest quantity which can be the object of such a decision

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a unit.

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But one must guard oneself against the error of assuming that the valuation of the sum

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of such units is derived from the valuation of the units, or that it represents the sum

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of the valuations attached to these units.

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A man owns five units of commodity A and three units of commodity B.

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He attaches to the units of A the rank orders 1, 2, 4, 7 and 8. To the units of B the rank

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orders 3, 5 and 6. This means, if he must choose between two units of A and two units

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of B, he will prefer to lose two units of A rather than two units of B. But if he must

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choose between three units of A and two units of B, he will prefer to lose two units of

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B rather than three units of A. What counts always and alone in valuing a compound of

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several units is the utility of this compound as a whole, that is, the increment in well-being

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dependent upon it, or, what is the same, the impairment of well-being which its loss must

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bring about.

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There are no arithmetical processes involved, neither adding nor multiplying.

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There is evaluation of the utility dependent upon the having of the portion, compound or

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supply in question.

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Utility means in this context simply causal relevance for the removal of felt uneasiness.

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Every man believes that the services a thing can render are apt to improve his own well-being,

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and calls this the utility of the thing concerned.

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For praxeology, the term utility is tantamount to importance attached to a thing on account

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of the belief that it can remove uneasiness.

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The praxeological notion of utility, subjective use-value in the terminology of the earlier

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for Senior Austrian Economists, must be sharply distinguished from the technological notion

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of utility, objective use-value in the terminology of the same economists.

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Use-value in the objective sense is the relation between a thing and the effect it has the

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capacity to bring about.

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It is to objective use-value that people refer in employing such terms as the heating value

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or Heating Power of Coal.

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Subjective use value is not always based on true objective use value.

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There are things to which subjective use value is attached because people erroneously believe

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that they have the power to bring about a desired effect.

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On the other hand, there are things able to produce a desired effect to which no use value

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Value is attached because people are ignorant of this fact.

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Let us look at the state of economic thought which prevailed on the eve of the elaboration

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of the modern theory of value by Carl Menger, William Stanley Jevons and Leon Valra.

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Whoever wants to construct an elementary theory of value and prices must first think of utility.

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Nothing indeed is more plausible than to assume that things are valued according to

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to their Utility.

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But then a difficulty appears, which presented to the older economists a problem they failed

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to solve.

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They observed that things whose utility is greater are valued less than other things

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of smaller utility.

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Iron is less appreciated than gold.

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This fact seems to be incompatible with the theory of value and prices based on the concepts

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of utility and use value.

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The economists believed that they had to abandon such a theory and tried to explain the phenomena

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of value and market exchange by other theories.

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Only late did the economists discover that the apparent paradox was the outcome of a

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vicious formulation of the problem involved.

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The valuations and choices that result in the exchange ratios of the market do not decide

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between gold and iron.

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A living man is not in a position in which he must choose between all the gold and all

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the iron.

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He chooses at a definite time and place, under definite conditions, between a strictly limited

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quantity of gold and a strictly limited quantity of iron.

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His decision in choosing between 100 ounces of gold and 100 tons of iron does not depend

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and at all on the decision he would make if he were in the highly improbable situation

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of choosing between all the gold and all the iron.

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What counts alone for his actual choice is whether under existing conditions he considers

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the direct or indirect satisfaction which 100 ounces of gold could give him as greater

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or smaller than the direct or indirect satisfaction he could derive from 100 tons of iron.

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He does not express an academic or philosophical judgment concerning the absolute value of

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gold and of iron.

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He does not determine whether gold or iron is more important for mankind.

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He does not prorate as an author of books on the philosophy of history or on ethical

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principles.

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He simply chooses between two satisfactions, both of which he cannot have together.

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To prefer and to set aside, and the choices and decisions in which they result, are not

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acts of measurement.

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Action does not measure utility or value, it chooses between alternatives.

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There is no abstract problem of total utility or total value.

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There is no radiocinative operation which could lead from the valuation of a definite

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quantity or number of things, to the determination of the value of a greater or smaller quantity

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or number.

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There is no means of calculating the total value of a supply if only the values of its

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parts are known.

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There is no means of establishing the value of a part of a supply if only the value of

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and the Total Supply is known.

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There are in the sphere of values and valuations no arithmetical operations.

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There is no such thing as a calculation of values.

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The valuation of the total stock of two things can differ from the valuation of parts of

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these stocks.

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An isolated man owning seven cows and seven horses may value one horse higher than one

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The Theory of Money and Credit

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Must Choose Between Total Supplies.

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The question whether gold as such and iron as such is more useful and valuable is reasonable

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only with regard to a situation in which mankind, or an isolated part of mankind, must choose

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between all the gold and all the iron available.

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The judgment of value refers always only to the supply with which the concrete act of

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choice is concerned.

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A supply is, ex definitione, always composed of homogeneous parts, each of which is capable

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of rendering the same services as, and of being substituted for, any other part.

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It is therefore immaterial for the act of choosing which particular part forms its object.

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All parts, units, of the available stock are considered as equally useful and valuable

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if the problem of giving up one of them is raised.

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If the supply decreased by the loss of one unit, acting man must decide anew how to use

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the various units of the remaining stock.

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It is obvious that the smaller stock cannot render all the services the greater stock

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could.

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That employment of the various units which under this new disposition is no longer provided

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for was in the eyes of acting man the least urgent employment among all those for which

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he had previously assigned the various units of the greater stock.

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The satisfaction which he derived from the use of one unit for this employment was the

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The smallest among the satisfactions which the units of the greater stock had rendered

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to him.

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It is only the value of this marginal satisfaction on which he must decide if the question of

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renouncing one unit of the total stock comes up.

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When faced with the problem of the value to be attached to one unit of a homogeneous supply,

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man decides on the basis of the value of the least important use he makes of the units

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of the Whole Supply. He decides on the basis of marginal utility.

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If a man is faced with the alternative of giving up either one unit of his supply of

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A or one unit of his supply of B, he does not compare the total value of his total stock

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of A with the total value of his stock of B. He compares the marginal values both of

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A and of B. Although he may value the total supply of A higher than the total supply of

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B, the marginal value of B may be higher than the marginal value of A. The same reasoning

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holds good for the question of increasing the available supply of any commodity by the

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acquisition of an additional definite number of units. For the description of these facts,

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Choice does not need to employ the terminology of psychology, neither does it need to resort

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to psychological reasoning and arguments for proving them.

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If we say that the acts of choice do not depend on the value attached to a whole class of

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wants, but on that attached to the concrete wants in question, irrespective of the class

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in which they may be reckoned, we do not add anything to our knowledge, and do not trace

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This mode of speaking in terms of classes of wants becomes intelligible only if we remember

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the role played in the history of economic thought by the alleged paradox of value.

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Carl Menger and Boehm-Bawerk had to make use of the term class of wants in order to refute

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The objections raised by those who considered bread, as such, more valuable than silk, because

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the class want of nourishment is more important than the class want of luxurious clothing.

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Today the concept class of wants is entirely superfluous.

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It has no meaning for action, and therefore none for the theory of value.

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It is, moreover, liable to bring about error and confusion.

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Construction of concepts and classification are mental tools.

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They acquire meaning and sense only in the context of the theories which utilize them.

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Classes are not in the world.

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It is our mind that classifies the phenomena in order to organize our knowledge.

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The question of whether a certain mode of classifying phenomena is conducive to this

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once and or not is different from the question of whether it is logically permissible or

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not.

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It is nonsensical to arrange various once into classes of once in order to establish

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that such a classification is of no avail whatever for the theory of value.

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The law of marginal utility and decreasing marginal value is independent of Goessen's

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First Law of the Saturation of Wants, First Law of Goson.

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In treating marginal utility, we deal neither with sensuous enjoyment nor with saturation

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and satiety.

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We do not transcend the sphere of praxeological reasoning in establishing the following definition.

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We call that employment of a unit of a homogeneous supply which a man makes if his supply is

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n units, but would not make, if other things being equal, his supply were only n minus

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one units, the least urgent employment, or the marginal employment, and the utility derived

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from it, marginal utility.

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In order to attain this knowledge, we do not need any physiological or psychological experience,

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knowledge or reasoning.

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It follows necessarily from our assumptions that people act, choose, and that, in the

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first case, acting man has N units of a homogeneous supply, and in the second case, N-1 units.

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Under these conditions, no other result is thinkable. Our statement is formal and a prioristic,

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and does not depend on any experience.

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There are only two alternatives.

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Either there are or there are not intermediate stages between the felt uneasiness which impels

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a man to act, and the state in which there can no longer be any action, be it because

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the state of perfect satisfaction is reached, or because man is incapable of any further

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improvement in his conditions.

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In the second case, there could be only one action.

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As soon as this action is consummated, a state would be reached in which no further action

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is possible.

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This is manifestly incompatible with our assumption that there is action.

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This case no longer implies the general conditions presupposed in the category of action.

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Only the first case remains.

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But then there are various degrees in the asymptotic approach to the state in which

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which there can no longer be any action. Thus the law of marginal utility is already implied

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in the category of action. It is nothing else than the reverse of the statement that what

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satisfies more is preferred to what gives smaller satisfaction. If the supply available

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increases from n minus 1 units to n units, the increment can be employed only for the

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The removal of a want which is less urgent or less painful than the least urgent or least

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painful among all those wants which could be removed by means of the supply n-1.

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The law of marginal utility does not refer to objective use value, but to subjective

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use value.

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It does not deal with the physical or chemical capacity of things to bring about a definite

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Effect in general, but with their relevance for the well-being of a man as he himself

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sees it under the prevailing momentary state of his affairs.

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It does not deal primarily with the value of things, but with the value of the services

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a man expects to get from them.

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If we were to believe that marginal utility is about things and their objective use value,

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We would be forced to assume that marginal utility can as well increase as decrease,

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with an increase in the quantity of units available. It can happen that the employment

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of a certain minimum quantity, n units of a good A, can provide a satisfaction which

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is deemed more valuable than the services expected from one unit of a good B. But if

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Suppose the supply of A available is smaller than N. A can only be employed for another

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service which is considered less valuable than that of B. Then, an increase in the quantity

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of A from N minus 1 units to N units results in an increase of the value attached to one

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unit of A. The owner of 100 logs may build a cabin which protects him against rain better

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A Man Who's Savings Amount To One Hundred Dollars May Not Be Willing to Carry Out a Raincoat

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as expected. There is no question of any such thing as a law of increasing utility.

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The law of marginal utility must be confused neither with Bernoulli's doctrine Demensura

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Sortis nor with the Weber-Feckner law. At the bottom of Bernoulli's contribution were

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the generally known and never disputed facts that people are eager to satisfy the more

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and that a rich man is in a position to provide better for his wants than a poor man.

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But the inferences Bernoulli drew from these truisms are all wrong.

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He developed a mathematical theory that the increment in gratification diminishes with

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the increase in a man's total wealth.

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His statement that as a rule it is highly probable that for a man whose income is five

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One ducat means not more than half a ducat for a man with an income of 2,500 ducats is

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merely fanciful.

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Let us set aside the objection that there is no means of drawing comparisons other than

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entirely arbitrary ones between the valuations of various people.

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Bernoulli's method is no less inadequate for the valuations of the same individual with

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various amounts of income.

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He did not see that all that can be said about the case in question is that with increasing

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income every new increment is used for the satisfaction of a want less urgently felt

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than the least urgently felt want already satisfied before this increment took place.

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He did not see that in valuing, choosing and acting there is no measurement and no establishment

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of Equivalence, but grading, that is, preferring and putting aside.

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Thus, neither Bernoulli nor the mathematicians and economists who adopted his mode of reasoning

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could succeed in solving the paradox of value.

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The mistakes inherent in the confusion of the Weber-Feckner law of psychophysics and

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the subjective theory of value have already been attacked by Max Weber.

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Max Weber, it is true, was not sufficiently familiar with economics and was too much under

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the sway of historicism to get a correct insight into the fundamentals of economic thought.

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But ingenious intuition provided him with a suggestion of a way toward the correct solution.

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The theory of marginal utility, he asserts, is not psychologically substantiated, but

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rather, if an epistemological term is to be applied, pragmatically, that is, on the employment

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of the categories, ends and means.

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If a man wants to remove a pathological condition by taking a definite quantity of a remedy,

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the intake of a multiple will not bring about a better effect.

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The surplus will have either no effect other than the appropriate dose, the optimum, or

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or it will have detrimental effects.

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The same is true of all kinds of satisfactions, although the optimum is often reached only

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by the application of a large dose, and the point at which further increments produce

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detrimental effects is often far away.

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This is so because our world is a world of causality and of quantitative relations between

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cause and effect.

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He who wants to remove the uneasiness caused by living in a room with a temperature of

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35 degrees will aim at heating the room to a temperature of 65 or 70 degrees. It has

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nothing to do with the Weber-Fechner law that he does not aim at a temperature of 180 or

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300 degrees. Neither has it anything to do with psychology. All that psychology can do

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Two for the explanation of this fact is to establish as an ultimate given that man as

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a rule prefers the preservation of life and health to death and sickness.

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What counts for praxeology is only the fact that acting man chooses between alternatives.

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That man is placed at crossroads, that he must and does choose, is, apart from other

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Conditions due to the fact that he lives in a quantitative world and not in a world without

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quantity, which is even unimaginable for the human mind.

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The confusion of marginal utility and the Weber-Feckner law originated from the mistake

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of looking only at the means for the attainment of satisfaction and not at the satisfaction

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itself.

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If the satisfaction had been thought of, the absurd idea would not have been adopted of

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of Explaining the Configuration of the Desire for Warmth by Referring to the Decreasing

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Intensity of the Sensation of Successive Increments in the Intensity of the Stimuli.

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That the average man does not want to raise the temperature of his bedroom to 120 degrees

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has no reference whatever to the intensity of the sensation for warmth.

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That a man does not heat his room to the same degree as other normal people do and as he

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he himself would probably do if he were not more intent upon buying a new suit or attending

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the performance of a Beethoven symphony, cannot be explained by the methods of the natural

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sciences.

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Objective and open to a treatment by the methods of the natural sciences are only the problems

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of objective use-value.

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The valuation of objective use-value on the part of acting man is another thing.

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2. THE LAW OF RETURNS

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A note to our listeners.

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Several passages in this section of chapter 7 are composed in a style that may be difficult

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to follow when they are read aloud.

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Listeners intent upon achieving full understanding of this material should consult pages 127,

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128 and 130 of the Scholar's Edition of Human Action, available as a free download from

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from Mises.org.

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Quantitative definiteness in the effects brought about by an economic good means with regard

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to the goods of the first order, consumer's goods.

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A quantity A of cause brings about, either in a definite period of time or at all, a

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quantity alpha of effect.

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With regard to the goods of the higher orders, producer's goods, it means a quantity B of

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of Cause brings about a quantity beta of effect. Provided the complementary cause, C, contributes

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the quantity gamma of effect. Only the concerted effects, beta and gamma, bring about the quantity

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P of the good of the first order, D. There are in this case three quantities, B and C

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C of the two complementary goods, B and C, and P of the product D.

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With B remaining unchanged, we call that value of C which results in the highest value of

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P over C, the optimum.

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If several values of C result in this highest value of P divided by C, then we call that

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the Optimum, which results also in the highest value of P. If the two complementary goods

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are employed in the optimal ratio, they both render the highest output, their power to

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produce, their objective use value is fully utilized, no fraction of them is wasted. If

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we deviate from this optimal combination by increasing the quantity of C without changing

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If we are considering the quantity of B, the return will, as a rule, increase further, but not in proportion to the increase in the quantity of C.

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If it is at all possible to increase the return from P to P1 by increasing the quantity of one of the complementary factors only, namely by substituting Cx for C,

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Being Greater Than One, we have, at any rate, P1 is greater than P, and P1C is less than

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PCX.

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For if it were possible to compensate any decrease in B by a corresponding increase

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in C, in such a way that P remains unchanged, the physical power of production proper to

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B would be unlimited, and B would not be considered as scarce and as an economic good.

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It would be of no importance for acting man whether the supply of B available were greater

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or smaller.

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Even an infinitesimal quantity of B would be sufficient for the production of any quantity

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of D, provided the supply of C is large enough.

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On the other hand, an increase in the quantity of B available could not increase the output

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of D if the supply of C does not increase.

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The total return of the process would be imputed to C. B could not be an economic good.

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A thing rendering such unlimited services is, for instance, the knowledge of the causal

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The formula, the recipe that teaches us how to prepare coffee, provided it is known, renders

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unlimited services.

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It does not lose anything from its capacity to produce however often it is used.

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Its productive power is inexhaustible.

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It is therefore not an economic good.

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Acting man is never faced with a situation in which he must choose between the use value

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The Law of Returns asserts that for the combination of economic goods of the higher orders, factors

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of production, there exists an optimum.

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If one deviates from this optimum by increasing the input of only one of the factors, the

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physical output either does not increase at all, or at least not in the ratio of the increased

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input.

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This law, as has been demonstrated above, is implied in the fact that the quantitative

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definiteness of the effects brought about by any economic good is a necessary condition

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of its being an economic good.

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That there is such an optimum of combination is all that the law of returns, popularly

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called the law of diminishing returns, teaches.

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There are many other questions which it does not answer at all, and which can only be solved

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and a posteriori by experience.

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If the effect brought about by one of the complementary factors is indivisible, the

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optimum is the only combination which results in the outcome aimed at.

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In order to dye a piece of wool to a definite shade, a definite quantity of dye is required.

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A greater or smaller quantity would frustrate the aim sought.

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He who has more coloring matter must leave the surplus unused.

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He who has a smaller quantity can die only a part of the piece.

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The diminishing return results in this instance in the complete uselessness of the additional

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quantity which must not even be employed because it would thwart the design.

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In other instances a certain minimum is required for the production of the minimum effect.

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Between this minimum effect and the optimal effect, there is a margin in which increased

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doses result either in a proportional increase in effect or in a more than proportional increase

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in effect.

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In order to make a machine turn, a certain minimum of lubricant is needed.

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Whether an increase of lubricant above this minimum increases the machine's performance

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in proportion to the increase in the amount applied, or to a greater extent, can only

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be ascertained by technological experience.

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The law of returns does not answer the following questions.

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1.

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Whether or not the optimum dose is the only one that is capable of producing the effect

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sought.

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2.

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Whether or not there is a rigid limit above which any increase in the amount of the variable

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is quite useless.

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3. Whether the decrease in output brought about by progressive deviation from the optimum

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and the increase in output brought about by progressive approach to the optimum

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result in proportional or non-proportional changes in output per unit of the variable factor.

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All this must be discerned by experience.

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Experience, but the law of returns itself, that is, the fact that there must exist such

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an optimum combination, is valid a priori.

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The Malthusian law of population, and the concepts of absolute overpopulation and underpopulation

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and optimum population derived from it, are the application of the law of returns to a

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special problem.

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They deal with changes in the supply of human labor, other factors being equal.

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Because people, for political considerations, wanted to reject the Malthusian law, they

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fought with passion, but with faulty arguments, against the law of returns, which, incidentally,

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they knew only as the law of diminishing returns of the use of capital and labor on land.

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Today we no longer need to pay any attention to these idle remonstrances.

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The law of returns is not limited to the use of complementary factors of production on

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land.

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The endeavors to refute or to demonstrate its validity by historical and experimental

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investigations of agricultural production are needless as they are vain.

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He who wants to reject the law would have to explain why people are ready to pay prices

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for Land.

401
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If the law were not valid, a farmer would never consider expanding the size of his farm.

402
00:37:48.920 --> 00:37:55.100
He would be in a position to multiply indefinitely the return of any piece of soil by multiplying

403
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his input of capital and labor.

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People have sometimes believed that while the law of diminishing returns is valid in

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agricultural production, with regard to the processing industries, a law of increasing

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Diminishing Returns prevails. It took a long time before they realized that the law of

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returns refers to all branches of production equally. It is faulty to contrast agriculture

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and the processing industries with regard to this law. What is called, in a very inexpedient,

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even misleading terminology, the law of increasing returns, is nothing but a reversal of the

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The law of diminishing returns An unsatisfactory formulation of the law of returns

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If one approaches the optimum combination by increasing the quantity of one factor only,

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the quantity of other factors remaining unchanged, then the returns per unit of the variable

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factor increase either in proportion to the increase or even to a greater extent.

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A machine may, when operated by two workers, produce P. When operated by three workers,

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three P. When operated by four workers, six P. When operated by five workers, seven P.

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When operated by six workers, also not more than seven P. Then the employment of four

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workers renders the optimum return per head of the worker, namely six divided by four

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p, while under the other combinations the returns per head are respectively 1 half p, p, 7 divided

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by 5, p, and 7 divided by 6, p.

420
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If instead of two workers, three or four workers are employed, then the returns increase more

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than in relation to the increase in the number of workers.

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They do not increase in the proportion 2, 3, 4, but in the proportion 1, 3, 6.

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We are faced with increasing returns per head of the worker, but this is nothing else than

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the reverse of the law of diminishing returns.

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If a plant or enterprise deviates from the optimum combination of the factors employed,

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it is less efficient than a plant or enterprise for which the deviation from the optimum is

427
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is smaller. Both in agriculture and in the processing industries, many factors of production

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are not perfectly divisible. It is, especially in the processing industries, for the most

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part easier to attain the optimum combination by expanding the size of the plant or enterprise

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than by restricting it. If the smallest unit of one or of several factors is too large

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To change to allow for its optimal exploitation in a small or medium-sized plant or enterprise,

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the only way to attain the optimum is by increasing the outfit's size.

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It is these facts that bring about the superiority of big-scale production.

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The full importance of this problem will be shown later in discussing the issues of cost

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accounting.

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3.

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and Labor as a Means

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The employment of the physiological functions and manifestations of human life as a means

439
00:41:27.980 --> 00:41:30.160
is called labor.

440
00:41:30.160 --> 00:41:35.520
The display of the potentialities of human energy and vital processes, which the man

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whose life they manifest does not use for the attainment of external ends, different

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from the mere running of these processes, and from the physiological role they play

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in the biological consummation of his own vital economy is not labor, it is simply life.

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Man works in using his forces and abilities as means for the removal of uneasiness, and

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in substituting purposeful exploitation of his vital energy for the spontaneous and carefree

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discharge of his faculties and nerve tensions.

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Labor is a means, not an end in itself.

448
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Every individual has only a limited quantity of energy to expend, and every unit of labor

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can only bring about a limited effect.

450
00:42:24.080 --> 00:42:27.880
Otherwise, human labor would be available in abundance.

451
00:42:27.880 --> 00:42:33.440
It would not be scarce, and it would not be considered as a means for the removal of uneasiness

452
00:42:33.440 --> 00:42:36.480
and economized as such.

453
00:42:36.480 --> 00:42:42.520
In a world in which labor is economized only on account of its being available in a quantity

454
00:42:42.520 --> 00:42:47.920
insufficient to attain all ends for which it can be used as a means.

455
00:42:47.920 --> 00:42:53.440
The supply of labor available would be equal to the whole quantity of labor which all men

456
00:42:53.440 --> 00:42:56.500
together are able to expend.

457
00:42:56.500 --> 00:43:01.400
In such a world, everybody would be eager to work until he had completely exhausted

458
00:43:01.400 --> 00:43:04.680
his momentary capacity to work.

459
00:43:04.680 --> 00:43:10.560
The time which is not required for recreation and restoration of the capacity to work, used

460
00:43:10.560 --> 00:43:16.160
up by previous working, would be entirely devoted to work.

461
00:43:16.160 --> 00:43:21.800
Every non-utilization of the full capacity to work would be deemed a loss.

462
00:43:21.800 --> 00:43:26.880
Through the performance of more work, one would have increased one's well-being.

463
00:43:26.880 --> 00:43:31.920
That a part of the available potential remained unused would be appraised as a forfeiture

464
00:43:31.920 --> 00:43:38.360
of well-being, not compensated by any corresponding increase in well-being.

465
00:43:38.360 --> 00:43:42.660
The very idea of laziness would be unknown.

466
00:43:42.660 --> 00:43:48.040
Nobody would think, I could possibly do this or that, but it is not worthwhile, it does

467
00:43:48.040 --> 00:43:51.840
not pay, I prefer my leisure.

468
00:43:51.840 --> 00:43:57.480
Everybody would consider his whole capacity to work as a supply of factors of production

469
00:43:57.480 --> 00:44:01.400
which he would be anxious to utilize completely.

470
00:44:01.400 --> 00:44:06.360
Even a chance of the smallest increase in well-being would be considered a sufficient

471
00:44:06.360 --> 00:44:12.240
incentive to work more if it happened that at the instant no more profitable use could

472
00:44:12.240 --> 00:44:16.040
be made of the quantity of labor concerned.

473
00:44:16.040 --> 00:44:19.300
In our actual world, things are different.

474
00:44:19.300 --> 00:44:22.920
The expenditure of labor is deemed painful.

475
00:44:22.920 --> 00:44:28.720
Not to work is considered a state of affairs more satisfactory than working.

476
00:44:28.720 --> 00:44:33.920
Leisure is, other things being equal, preferred to travail.

477
00:44:33.920 --> 00:44:39.720
will work only when they value the return of labor higher than the decrease in satisfaction

478
00:44:39.720 --> 00:44:48.080
brought about by the curtailment of leisure. To work involves disutility.

479
00:44:48.080 --> 00:44:53.640
Psychology and physiology may try to explain this fact. There is no need for praxeology

480
00:44:53.640 --> 00:45:00.120
to investigate whether or not they can succeed in such endeavors. For praxeology, it is a

481
00:45:00.120 --> 00:45:05.900
The datum that men are eager to enjoy leisure and therefore look upon their own capacity

482
00:45:05.900 --> 00:45:11.240
to bring about effects with feelings different from those with which they look upon the capacity

483
00:45:11.240 --> 00:45:14.160
of material factors of production.

484
00:45:14.160 --> 00:45:20.440
Man, in considering an expenditure of his own labor, investigates not only whether there

485
00:45:20.440 --> 00:45:26.180
is no more desirable end for the employment of the quantity of labor in question, but

486
00:45:26.180 --> 00:45:31.660
But no less, whether it would not be more desirable to abstain from any further expenditure

487
00:45:31.660 --> 00:45:33.540
of labor.

488
00:45:33.540 --> 00:45:38.940
We can express this fact also in calling the attainment of leisure an end of purposeful

489
00:45:38.940 --> 00:45:43.460
activity or an economic good of the first order.

490
00:45:43.460 --> 00:45:49.820
In employing this somewhat sophisticated terminology, we must view leisure as any other economic

491
00:45:49.820 --> 00:45:53.700
good from the aspect of marginal utility.

492
00:45:53.700 --> 00:45:59.340
We must conclude that the first unit of leisure satisfies a desire more urgently felt than

493
00:45:59.340 --> 00:46:05.660
the second one, the second one a more urgent desire than the third one, and so on.

494
00:46:05.660 --> 00:46:11.740
Reversing this proposition, we get the statement that the disutility of labor felt by the worker

495
00:46:11.740 --> 00:46:16.820
increases in a greater proportion than the amount of labor expended.

496
00:46:16.820 --> 00:46:23.140
However, it is needless for praxeology to study the question of whether or not the disutility

497
00:46:23.140 --> 00:46:29.180
of Labor increases in proportion to the increase in the quantity of labor performed, or to

498
00:46:29.180 --> 00:46:36.220
a greater extent. Whether this problem is of any importance for physiology and psychology,

499
00:46:36.220 --> 00:46:42.900
and whether or not these sciences can elucidate it, can be left undecided. At any rate, the

500
00:46:42.900 --> 00:46:48.500
worker knocks off work at the point at which he no longer considers the utility of continuing

501
00:46:48.500 --> 00:46:53.900
Banking Work as a sufficient compensation for the disutility of the additional expenditure

502
00:46:53.900 --> 00:46:55.540
of labor.

503
00:46:55.540 --> 00:47:00.980
In forming this judgment, he contrasts, if we disregard the decrease in yield brought

504
00:47:00.980 --> 00:47:07.140
about by increasing fatigue, each portion of working time with the same quantity of

505
00:47:07.140 --> 00:47:10.420
product as the preceding portions.

506
00:47:10.420 --> 00:47:16.740
But the utility of the units of yield decreases with the progress of the labor performed and

507
00:47:16.740 --> 00:47:20.820
and the increase in the total amount of yield produced.

508
00:47:20.820 --> 00:47:25.780
The products of the prior units of working time have provided for the satisfaction of

509
00:47:25.780 --> 00:47:30.900
more important needs than the products of the work performed later.

510
00:47:30.900 --> 00:47:36.620
The satisfaction of these less important needs may not be considered as a sufficient reward

511
00:47:36.620 --> 00:47:42.020
for the further continuation of work, although they are compared with the same quantities

512
00:47:42.020 --> 00:47:44.660
of physical output.

513
00:47:44.660 --> 00:47:49.980
It is therefore irrelevant for the praxeological treatment of the matter whether the disutility

514
00:47:49.980 --> 00:47:56.140
of labor is proportional to the total expenditure of labor, or whether it increases to a greater

515
00:47:56.140 --> 00:47:59.300
extent than the time spent in working.

516
00:47:59.300 --> 00:48:05.420
At any rate, the propensity to expend the still unused portions of the total potential

517
00:48:05.420 --> 00:48:12.340
for work decreases, other things being equal, with the increase in the portions already

518
00:48:12.340 --> 00:48:13.820
expended.

519
00:48:13.820 --> 00:48:19.120
Whether this decrease in the readiness to work more proceeds with a more rapid or a less

520
00:48:19.120 --> 00:48:25.200
rapid acceleration is always a question of economic data, not a question of categorical

521
00:48:25.200 --> 00:48:27.360
principles.

522
00:48:27.360 --> 00:48:33.680
The disutility attached to labor explains why in the course of human history, concomitantly

523
00:48:33.680 --> 00:48:39.480
with the progressive increase in the physical productivity of labor brought about by technological

524
00:48:39.480 --> 00:48:46.280
Development, and more abundant supply of capital, by and large a tendency toward shortening

525
00:48:46.280 --> 00:48:49.600
the hours of work developed.

526
00:48:49.600 --> 00:48:54.800
Among the amenities which civilized man can enjoy in a more abundant way than his less

527
00:48:54.800 --> 00:49:00.520
civilized ancestors, there is also the enjoyment of more leisure time.

528
00:49:00.520 --> 00:49:06.320
In this sense, one can answer the question, often raised by philosophers and philanthropists,

529
00:49:06.320 --> 00:49:10.960
Whether or not economic progress has made men happier?

530
00:49:10.960 --> 00:49:16.480
If the productivity of labor were lower than it is in the present capitalist world, man

531
00:49:16.480 --> 00:49:22.400
would be forced either to toil more or to forsake many amenities.

532
00:49:22.400 --> 00:49:27.760
In establishing this fact, the economists do not assert that the only means to attain

533
00:49:27.760 --> 00:49:34.600
happiness is to enjoy more material comfort, to live in luxury or to have more leisure.

534
00:49:34.600 --> 00:49:40.280
They simply acknowledge the truth that men are in a position to provide themselves better

535
00:49:40.280 --> 00:49:44.400
with what they consider they need.

536
00:49:44.400 --> 00:49:49.980
The fundamental praxeological insight that men prefer what satisfies them more to what

537
00:49:49.980 --> 00:49:56.320
satisfies them less, and that they value things on the basis of their utility, does not need

538
00:49:56.320 --> 00:50:03.660
to be corrected or complemented by an additional statement concerning the disutility of labor.

539
00:50:03.660 --> 00:50:10.060
These propositions already imply the statement that labor is preferred to leisure only in

540
00:50:10.060 --> 00:50:17.540
so far as the yield of labor is more urgently desired than the enjoyment of leisure.

541
00:50:17.540 --> 00:50:23.640
The unique position which the factor labor occupies in our world is due to its non-specific

542
00:50:23.640 --> 00:50:25.580
character.

543
00:50:25.580 --> 00:50:32.020
All nature given primary factors of production, that is, all those natural things and forces

544
00:50:32.020 --> 00:50:37.960
The methods that man can use for improving his state of well-being have specific powers

545
00:50:37.960 --> 00:50:39.600
and virtues.

546
00:50:39.600 --> 00:50:44.060
There are ends for whose attainment they are more suitable, ends for which they are less

547
00:50:44.060 --> 00:50:48.880
suitable, and ends for which they are altogether unsuitable.

548
00:50:48.880 --> 00:50:55.840
But human labor is both suitable and indispensable for the performance of all thinkable processes

549
00:50:55.840 --> 00:50:58.520
and modes of production.

550
00:50:58.520 --> 00:51:04.280
It is, of course, impermissible to deal with human labor as such in general.

551
00:51:04.280 --> 00:51:10.680
It is a fundamental mistake not to see that men and their abilities to work are different.

552
00:51:10.680 --> 00:51:16.240
The work a certain individual can perform is more suitable for some ends, less suitable

553
00:51:16.240 --> 00:51:21.420
for other ends, and altogether unsuitable for still other ends.

554
00:51:21.420 --> 00:51:26.320
It was one of the deficiencies of classical economics that it did not pay enough attention

555
00:51:26.320 --> 00:51:41.960
Men do not economize labor in general, but the particular kinds of labor available.

556
00:51:41.960 --> 00:51:47.480
Wages are not paid for labor expended, but for the achievements of labor, which differ

557
00:51:47.480 --> 00:51:51.120
widely in quality and quantity.

558
00:51:51.120 --> 00:51:57.000
The production of each particular product requires the employment of workers able to perform

559
00:51:57.000 --> 00:52:00.620
the particular kind of labor concerned.

560
00:52:00.620 --> 00:52:06.560
It is absurd to justify the failure to consider this point by reference to the alleged fact

561
00:52:06.560 --> 00:52:13.200
that the main demand for and supply of labor concerns unskilled common labor, which every

562
00:52:13.200 --> 00:52:19.380
healthy man is able to perform, and that skilled labor, the labor of people with particular

563
00:52:19.380 --> 00:52:25.180
inborn faculties and special training is by and large an exception.

564
00:52:25.180 --> 00:52:30.640
There is no need to investigate whether conditions were such in a remote past or whether even

565
00:52:30.640 --> 00:52:37.060
for primitive tribesmen, the inequality of inborn and acquired capacities for work was

566
00:52:37.060 --> 00:52:40.300
the main factor in economizing labor.

567
00:52:40.300 --> 00:52:46.580
In dealing with conditions of civilized peoples, it is impermissible to disregard the differences

568
00:52:46.580 --> 00:52:50.040
in the Quality of Labor Performed.

569
00:52:50.040 --> 00:52:56.820
Work which various people are able to perform is different, because men are born unequal,

570
00:52:56.820 --> 00:53:02.100
and because the skill and experience they acquire in the course of their lives differentiate

571
00:53:02.100 --> 00:53:05.740
their capacities still more.

572
00:53:05.740 --> 00:53:10.900
In speaking of the non-specific character of human labor, we certainly do not assert

573
00:53:10.900 --> 00:53:14.700
that all human labor is of the same quality.

574
00:53:14.700 --> 00:53:19.780
What we want to establish is rather that the differences in the kind of labor required

575
00:53:19.780 --> 00:53:25.300
for the production of various commodities are greater than the differences in the inborn

576
00:53:25.300 --> 00:53:28.020
capacities of men.

577
00:53:28.020 --> 00:53:34.220
In emphasizing this point, we are not dealing with the creative performances of the genius.

578
00:53:34.220 --> 00:53:39.620
The work of the genius is outside the orbit of ordinary human action and is like a free

579
00:53:39.620 --> 00:53:44.220
gift of destiny which comes to mankind overnight.

580
00:53:44.220 --> 00:53:50.100
We furthermore disregard the institutional barriers denying some groups of people access

581
00:53:50.100 --> 00:53:54.660
to certain occupations and the training they require.

582
00:53:54.660 --> 00:54:00.700
The innate inequality of various individuals does not break up the zoological uniformity

583
00:54:00.700 --> 00:54:07.100
and homogeneity of the species man to such an extent as to divide the supply of labor

584
00:54:07.100 --> 00:54:10.340
into disconnected sections.

585
00:54:10.340 --> 00:54:15.640
Since the potential supply of labor available for the performance of each particular kind

586
00:54:15.640 --> 00:54:23.680
of work exceeds the actual demand for such labor, the supply of every kind of specialized

587
00:54:23.680 --> 00:54:30.480
labor could be increased by the withdrawal of workers from other branches and their training.

588
00:54:30.480 --> 00:54:36.140
The quantity of need satisfaction is in none of the branches of production permanently

589
00:54:36.140 --> 00:54:43.140
Labor is the most scarce of all primary means of production because it is, in this restricted sense, non-specific, and because every variety of production requires it.

590
00:55:06.140 --> 00:55:08.980
requires the expenditure of labor.

591
00:55:08.980 --> 00:55:14.540
Thus the scarcity of the other primary means of production, that is, the non-human means

592
00:55:14.540 --> 00:55:20.840
of production supplied by nature, becomes for acting men a scarcity of those primary

593
00:55:20.840 --> 00:55:28.420
material means of production whose utilization requires the smallest expenditure of labor.

594
00:55:28.420 --> 00:55:35.100
Of course, some natural resources are so scarce that they are entirely utilized.

595
00:55:35.100 --> 00:55:41.300
It is the supply of labor available that determines to what an extent the factor nature in each

596
00:55:41.300 --> 00:55:47.200
of its varieties can be exploited for the satisfaction of needs.

597
00:55:47.200 --> 00:55:52.620
If the supply of labor which men are able and ready to perform increases, production

598
00:55:52.620 --> 00:55:54.960
increases too.

599
00:55:54.960 --> 00:56:00.580
Labor cannot remain unemployed on account of its being useless for the further improvement

600
00:56:00.580 --> 00:56:03.740
of need satisfaction.

601
00:56:03.740 --> 00:56:09.400
A good, self-sufficient man always has the opportunity of improving his condition by

602
00:56:09.400 --> 00:56:12.220
expending more labor.

603
00:56:12.220 --> 00:56:18.840
On the labor market of a market society, there are buyers for every supply of labor offered.

604
00:56:18.840 --> 00:56:24.440
There can be abundance and superfluity only in segments of the labor market.

605
00:56:24.440 --> 00:56:30.120
It results in pushing labor to other segments and in an expansion of production in some

606
00:56:30.120 --> 00:56:33.520
other provinces of the economic system.

607
00:56:33.520 --> 00:56:39.440
On the other hand, an increase in the quantity of land available, other things being equal,

608
00:56:39.440 --> 00:56:45.080
could result in an increase in production only if the additional land is more fertile

609
00:56:45.080 --> 00:56:48.960
than the marginal land tilled before.

610
00:56:48.960 --> 00:56:54.680
Under free mobility of labor, it would be waste to improve barren soil if the reclaimed

611
00:56:54.680 --> 00:57:00.640
area is not so fertile that it compensates for the total cost of the operation.

612
00:57:00.640 --> 00:57:06.880
The same is valid with regard to accumulated material equipment for future production.

613
00:57:06.880 --> 00:57:13.240
The serviceableness of capital goods also depends on the supply of labor available.

614
00:57:13.240 --> 00:57:18.540
It would be wasteful to use the capacity of existing facilities if the labor required

615
00:57:18.540 --> 00:57:24.280
could be employed for the satisfaction of more urgent needs.

616
00:57:24.280 --> 00:57:29.780
Complementary factors of production can only be used to the extent allowed by the availability

617
00:57:29.780 --> 00:57:33.020
of the Most Scarce Among Them.

618
00:57:33.020 --> 00:57:39.020
Let us assume that the production of one unit of P requires the expenditure of seven units

619
00:57:39.020 --> 00:57:46.880
of A and of three units of B, and that neither A nor B can be used for any production other

620
00:57:46.880 --> 00:57:56.580
than that of P. If 49A and 2000B are available, no more than seven P can be produced. The

621
00:57:56.580 --> 00:58:04.540
The available supply of A determines the extent of the use of B. Only A is considered an economic

622
00:58:04.540 --> 00:58:13.140
good. Only for A are people ready to pay prices. The full price of P is allowed for seven units

623
00:58:13.140 --> 00:58:20.420
of A. On the other hand, B is not an economic good, and no prices are allowed for it. There

624
00:58:20.420 --> 00:58:24.620
There are quantities of B which remain unused.

625
00:58:24.620 --> 00:58:30.700
We may try to imagine the conditions within a world in which all material factors of production

626
00:58:30.700 --> 00:58:37.940
are so fully employed that there is no opportunity to employ all men or to employ all men to

627
00:58:37.940 --> 00:58:40.980
the extent that they are ready to work.

628
00:58:40.980 --> 00:58:43.880
In such a world, labor is abundant.

629
00:58:43.880 --> 00:58:49.460
An increase in the supply of labor cannot add any increment whatever to the total amount

630
00:58:49.460 --> 00:58:51.220
of Production.

631
00:58:51.220 --> 00:58:57.820
If we assume that all men have the same capacity and application for work, and if we disregard

632
00:58:57.820 --> 00:59:04.540
the disutility of labor, labor in such a world would not be an economic good.

633
00:59:04.540 --> 00:59:09.300
If this world were a socialist commonwealth, an increase in population figures would be

634
00:59:09.300 --> 00:59:13.400
deemed an increase in the number of idle consumers.

635
00:59:13.400 --> 00:59:19.760
If it were a market society, wage rates paid would not be enough to prevent starvation.

636
00:59:19.760 --> 00:59:25.360
Those seeking employment would be ready to go to work for any wages, however low, even

637
00:59:25.360 --> 00:59:28.900
if insufficient for the preservation of their lives.

638
00:59:28.900 --> 00:59:34.340
They would be happy to delay, for a while, death by starvation.

639
00:59:34.340 --> 00:59:40.080
There is no need to dwell upon the paradoxes of this hypothesis and to discuss the problems

640
00:59:40.080 --> 00:59:41.740
of such a world.

641
00:59:41.740 --> 00:59:43.900
Our world is different.

642
00:59:43.900 --> 00:59:48.020
Labor is more scarce than material factors of production.

643
00:59:48.020 --> 00:59:52.940
We are not dealing at this point with the problem of optimum population.

644
00:59:52.940 --> 00:59:58.220
We are dealing only with the fact that there are material factors of production which remain

645
00:59:58.220 --> 01:00:05.200
unused because the labor required is needed for the satisfaction of more urgent needs.

646
01:00:05.200 --> 01:00:11.120
In our world, there is no abundance, but a shortage of manpower, and there are unused

647
01:00:11.120 --> 01:00:19.180
material factors of production, that is, land, mineral deposits, and even plants and equipment.

648
01:00:19.180 --> 01:00:24.280
This state of affairs could be changed by such an increase in population figures that

649
01:00:24.280 --> 01:00:30.340
all material factors required for the production of the foodstuffs, indispensable in the strict

650
01:00:30.340 --> 01:00:35.700
meaning of the word, for the preservation of human life, are fully exploited.

651
01:00:35.700 --> 01:00:41.940
But as long as this is not the case, it cannot be changed by any improvement in technological

652
01:00:41.940 --> 01:00:44.540
methods of production.

653
01:00:44.540 --> 01:00:49.660
The substitution of more efficient methods of production for less efficient ones does

654
01:00:49.660 --> 01:00:55.660
not render labor abundant, provided there are still material factors available whose

655
01:00:55.660 --> 01:01:00.000
utilization can increase human well-being.

656
01:01:00.000 --> 01:01:06.800
On the contrary, it increases output and thereby the quantity of consumers' goods.

657
01:01:06.800 --> 01:01:09.700
Labor-saving devices reduce want.

658
01:01:09.700 --> 01:01:14.640
They do not bring about technological unemployment.

659
01:01:14.640 --> 01:01:21.080
Every product is the result of the employment both of labor and of material factors.

660
01:01:21.080 --> 01:01:27.480
Man economizes both labor and material factors.

661
01:01:27.480 --> 01:01:33.040
Immediately Gratifying Labor and Immediately Gratifying Labor

662
01:01:33.040 --> 01:01:39.320
As a rule, labor gratifies the performer only immediately, namely through the removal of

663
01:01:39.320 --> 01:01:43.800
uneasiness which the attainment of the end brings about.

664
01:01:43.800 --> 01:01:49.200
The worker gives up leisure and submits to the disutility of labor in order to enjoy

665
01:01:49.200 --> 01:01:54.760
either the product or what other people are ready to give him for it.

666
01:01:54.760 --> 01:02:01.120
The expenditure of labor is for him a means for the attainment of certain ends, a price

667
01:02:01.120 --> 01:02:04.700
paid and a cost incurred.

668
01:02:04.700 --> 01:02:10.720
But there are instances in which the performance of labor gratifies the worker immediately.

669
01:02:10.720 --> 01:02:15.620
He derives immediate satisfaction from the expenditure of labor.

670
01:02:15.620 --> 01:02:17.600
The yield is twofold.

671
01:02:17.600 --> 01:02:23.520
It consists on the one hand in the attainment of the product and on the other in the satisfaction

672
01:02:23.520 --> 01:02:28.000
and that the performance itself gives to the worker.

673
01:02:28.000 --> 01:02:34.400
People have misinterpreted this fact grotesquely and have based on this misinterpretation fantastic

674
01:02:34.400 --> 01:02:37.460
plans for social reforms.

675
01:02:37.460 --> 01:02:43.680
One of the main dogmas of socialism is that labor has disutility only within the capitalist

676
01:02:43.680 --> 01:02:49.280
system of production, while under socialism it will be pure delight.

677
01:02:49.280 --> 01:02:55.640
We may disregard the effusions of the poor lunatic Charles Fourier, but Marxian scientific

678
01:02:55.640 --> 01:03:00.080
socialism does not differ in this point from the utopians.

679
01:03:00.080 --> 01:03:05.960
One of its foremost champions, Carl Koutsky, expressly declares that a chief task of a

680
01:03:05.960 --> 01:03:13.100
proletarian regime will be to transform labor from a pain into a pleasure.

681
01:03:13.100 --> 01:03:18.640
The fact is often ignored that those activities which bring about immediate gratification

682
01:03:18.640 --> 01:03:24.720
and are thus direct sources of pleasure and enjoyment are essentially different from labor

683
01:03:24.720 --> 01:03:27.240
and working.

684
01:03:27.240 --> 01:03:34.520
Only a very superficial treatment of the facts concerned can fail to recognize these differences.

685
01:03:34.520 --> 01:03:40.920
Paddling a canoe as it is practiced on Sundays for amusement on the lakes of public parks

686
01:03:40.920 --> 01:03:47.240
can only from the point of view of hydromechanics be likened to the rowing of boatsmen and galley

687
01:03:47.240 --> 01:03:48.960
of Money Slaves.

688
01:03:48.960 --> 01:03:53.740
When judged as a means for the attainment of ends, it is as different as is the humming

689
01:03:53.740 --> 01:04:00.400
of an aria by a rambler from the recital of the same aria by the singer in the opera.

690
01:04:00.400 --> 01:04:06.280
The carefree Sunday paddler and the singing rambler derive immediate gratification from

691
01:04:06.280 --> 01:04:11.560
their activities, but no immediate gratification.

692
01:04:11.560 --> 01:04:17.200
What they do is therefore not labor, not the employment of their physiological functions

693
01:04:17.200 --> 01:04:22.880
for the attainment of ends other than the mere exercise of these functions.

694
01:04:22.880 --> 01:04:25.200
It is merely pleasure.

695
01:04:25.200 --> 01:04:27.160
It is an end in itself.

696
01:04:27.160 --> 01:04:31.940
It is done for its own sake and does not render any further service.

697
01:04:31.940 --> 01:04:39.160
As it is not labor, it is not permissible to call it immediately gratifying labor.

698
01:04:39.160 --> 01:04:44.520
Perhaps a superficial observer may believe that labor performed by other people gives

699
01:04:44.520 --> 01:04:50.360
rise to immediate gratification, because he himself would like to engage in a kind of

700
01:04:50.360 --> 01:04:55.920
play which apparently imitates the kind of labor concerned.

701
01:04:55.920 --> 01:05:02.640
As children play school, soldiers and railroad, so adults too would like to play this and

702
01:05:02.640 --> 01:05:03.840
that.

703
01:05:03.840 --> 01:05:08.840
They think that the railroad engineer must enjoy operating and steering his engine as

704
01:05:08.840 --> 01:05:12.660
as much as they would if they were permitted to toy with it.

705
01:05:12.660 --> 01:05:18.960
On his hurried way to office, the bookkeeper envies the patrolman, who, he thinks, is paid

706
01:05:18.960 --> 01:05:22.420
for leisurely strolling around his beat.

707
01:05:22.420 --> 01:05:28.120
But the patrolman envies the bookkeeper, who, sitting on a comfortable chair in a well-heated

708
01:05:28.120 --> 01:05:34.700
room, makes money by some scribbling, which cannot seriously be called labor.

709
01:05:34.700 --> 01:05:39.700
that the opinions of people who misinterpret other people's work and consider it a mere

710
01:05:39.700 --> 01:05:43.780
pastime need not be taken seriously.

711
01:05:43.780 --> 01:05:49.740
There are, however, also instances of genuine, immediately gratifying labor.

712
01:05:49.740 --> 01:05:55.740
There are some kinds of labor of which, under special conditions, small quantities provide

713
01:05:55.740 --> 01:05:58.220
immediate gratification.

714
01:05:58.220 --> 01:06:03.060
But these quantities are so insignificant that they do not play any role at all in the

715
01:06:03.060 --> 01:06:08.900
The Complex of Human Action and Production for the Satisfaction of Wants

716
01:06:08.900 --> 01:06:14.880
Our world is characterized by the phenomenon of the disutility of labor.

717
01:06:14.880 --> 01:06:20.340
People trade the disutility-bringing labor for the products of labor.

718
01:06:20.340 --> 01:06:25.580
Labor is, for them, a source of immediate gratification.

719
01:06:25.580 --> 01:06:31.780
If a special kind of labor gives pleasure and not pain, immediate gratification and

720
01:06:31.780 --> 01:06:37.880
and not disutility of labor, no wages are allowed for its performance.

721
01:06:37.880 --> 01:06:44.660
On the contrary, the performer, the worker, must buy the pleasure and pay for it.

722
01:06:44.660 --> 01:06:50.980
Hunting game was and is for many people regular disutility creating labor.

723
01:06:50.980 --> 01:06:54.180
But there are people for whom it is pure pleasure.

724
01:06:54.180 --> 01:06:59.400
In Europe, amateur hunters buy from the owner of the hunting ground the right to shoot a

725
01:06:59.400 --> 01:07:05.440
a definite number of game of a definite type. The purchase of this right is separated from

726
01:07:05.440 --> 01:07:11.280
the price to be paid for the bag. If the two purchases are linked together, the price by

727
01:07:11.280 --> 01:07:18.560
far exceeds the prices that can be obtained on the market for the bag. A shammy buck, still

728
01:07:18.560 --> 01:07:25.520
roaming on the precipitous rocks, has therefore a higher cash value than later, when killed,

729
01:07:25.520 --> 01:07:49.800
Creative Genius

730
01:07:49.800 --> 01:07:55.240
Far above the millions that come and pass away tower the pioneers,

731
01:07:55.240 --> 01:08:00.840
The men whose deeds and ideas cut out new paths for mankind.

732
01:08:00.840 --> 01:08:06.000
For the pioneering genius, to create is the essence of life.

733
01:08:06.000 --> 01:08:10.720
To live means, for him, to create.

734
01:08:10.720 --> 01:08:12.600
Leaders are not pioneers.

735
01:08:12.600 --> 01:08:17.000
They guide people along the tracks pioneers have laid.

736
01:08:17.000 --> 01:08:23.000
The pioneer clears a road through land hitherto inaccessible, and may not care whether or

737
01:08:23.000 --> 01:08:36.700
The activities of these prodigious men cannot be fully subsumed under the praxeological

738
01:08:36.700 --> 01:08:38.880
concept of labor.

739
01:08:38.880 --> 01:08:45.100
They are not labor because they are for the genius, not means, but ends in themselves.

740
01:08:45.100 --> 01:08:48.660
He lives in creating and inventing.

741
01:08:48.660 --> 01:08:55.680
For him there is no leisure, only intermissions of temporary sterility and frustration.

742
01:08:55.680 --> 01:09:01.840
His incentive is not the desire to bring about a result, but the act of producing it.

743
01:09:01.840 --> 01:09:07.020
The accomplishment gratifies him neither immediately nor immediately.

744
01:09:07.020 --> 01:09:12.540
It does not gratify him immediately, because his fellow men at best are unconcerned about

745
01:09:12.540 --> 01:09:18.380
it, more often even greeted with taunts, sneers and persecution.

746
01:09:18.380 --> 01:09:23.880
Many a genius could have used his gifts to render his life agreeable and joyful.

747
01:09:23.880 --> 01:09:31.000
He did not even consider such a possibility, and chose the thorny path without hesitation.

748
01:09:31.000 --> 01:09:36.680
The genius wants to accomplish what he considers his mission, even if he knows that he moves

749
01:09:36.680 --> 01:09:39.700
toward his own disaster.

750
01:09:39.700 --> 01:09:46.000
Neither does the genius derive immediate gratification from his creative activities.

751
01:09:46.000 --> 01:09:53.080
Writing is, for him, agony and torment, a ceaseless excruciating struggle against internal

752
01:09:53.080 --> 01:09:55.720
and external obstacles.

753
01:09:55.720 --> 01:09:58.360
It consumes and crushes him.

754
01:09:58.360 --> 01:10:05.880
The Austrian poet Grielpartzer has depicted this in a touching poem, Farewell to Gastein.

755
01:10:05.880 --> 01:10:11.720
We may assume that in writing it he thought not only of his own sorrows and tribulations,

756
01:10:11.720 --> 01:10:17.720
but also of the greater sufferings of a much greater man, of Beethoven, whose fate resembled

757
01:10:17.720 --> 01:10:23.880
his own, and whom he understood, through devoted affection and sympathetic appreciation, better

758
01:10:23.880 --> 01:10:27.460
than any other of his contemporaries.

759
01:10:27.460 --> 01:10:34.000
Nietzsche compared himself to the flame that insatiably consumes and destroys itself.

760
01:10:34.000 --> 01:10:38.920
Such agonies are phenomena which have nothing in common with the connotations generally

761
01:10:38.920 --> 01:10:45.100
are closely attached to the notions of work and labor, production and success, bread-winning

762
01:10:45.100 --> 01:10:47.760
and enjoyment of life.

763
01:10:47.760 --> 01:10:53.340
The achievements of the creative innovator, his thoughts and theories, his poems, paintings

764
01:10:53.340 --> 01:10:59.720
and compositions, cannot be classified praxeologically as products of labor.

765
01:10:59.720 --> 01:11:04.240
They are not the outcome of the employment of labor which could have been devoted to

766
01:11:04.240 --> 01:11:11.240
for the production of other amenities, for the production of a masterpiece of philosophy, art or literature.

767
01:11:11.240 --> 01:11:18.240
Thinkers, poets and artists are sometimes unfit to accomplish any other work.

768
01:11:18.240 --> 01:11:27.240
At any rate, the time and toil which they devote to creative activities are not withheld from employment for other purposes.

769
01:11:27.240 --> 01:11:32.680
Conditions may sometimes doom to sterility a man who would have had the power to bring

770
01:11:32.680 --> 01:11:34.960
forth things unheard of.

771
01:11:34.960 --> 01:11:41.000
They may leave him no alternative other than to die from starvation or to use all his forces

772
01:11:41.000 --> 01:11:44.780
in the struggle for mere physical survival.

773
01:11:44.780 --> 01:11:52.440
But if the genius succeeds in achieving his goals, nobody but himself pays the costs incurred.

774
01:11:52.440 --> 01:11:59.280
Goethe was perhaps, in some respects, hampered by his functions at the court of Weimar, but

775
01:11:59.280 --> 01:12:05.020
certainly he would not have accomplished more in his official duties as minister of state,

776
01:12:05.020 --> 01:12:12.600
theatre manager and administrator of mines, if he had not written his plays, poems and novels.

777
01:12:12.600 --> 01:12:19.420
It is, furthermore, impossible to substitute other people's work for that of the creators.

778
01:12:19.420 --> 01:12:24.680
If Dante and Beethoven had not existed, one would not have been in a position to produce

779
01:12:24.680 --> 01:12:31.640
the Divina Commedia or the Ninth Symphony by assigning other men to these tasks.

780
01:12:31.640 --> 01:12:38.760
Neither society nor single individuals can substantially further the genius and his work.

781
01:12:38.760 --> 01:12:44.280
The highest intensity of the demand and the most peremptory order of the government are

782
01:12:44.280 --> 01:12:45.800
ineffectual.

783
01:12:45.800 --> 01:12:49.440
The genius does not deliver to order.

784
01:12:49.440 --> 01:12:54.880
Men cannot improve the natural and social conditions which bring about the creator and

785
01:12:54.880 --> 01:12:56.760
his creation.

786
01:12:56.760 --> 01:13:03.000
It is impossible to rear geniuses by eugenics, to train them by schooling, or to organize

787
01:13:03.000 --> 01:13:04.900
their activities.

788
01:13:04.900 --> 01:13:11.400
But of course, one can organize society in such a way that no room is left for pioneers

789
01:13:11.400 --> 01:13:13.900
and their path-breaking.

790
01:13:13.900 --> 01:13:19.540
The creative accomplishment of the genius is an ultimate fact for praxeology.

791
01:13:19.540 --> 01:13:23.860
It comes to pass in history as a free gift of destiny.

792
01:13:23.860 --> 01:13:29.500
It is by no means the result of production in the sense in which economics uses this

793
01:13:29.500 --> 01:13:31.540
term.

794
01:13:31.540 --> 01:13:33.300
4.

795
01:13:33.300 --> 01:13:39.120
Production Action, if successful, attains the end sought.

796
01:13:39.120 --> 01:13:42.680
It produces the product.

797
01:13:42.680 --> 01:13:45.420
Man is not an act of creation.

798
01:13:45.420 --> 01:13:49.540
It does not bring about something that did not exist before.

799
01:13:49.540 --> 01:13:55.360
It is a transformation of given elements through arrangement and combination.

800
01:13:55.360 --> 01:13:58.760
The producer is not a creator.

801
01:13:58.760 --> 01:14:04.020
Man is creative only in thinking and in the realm of imagination.

802
01:14:04.020 --> 01:14:08.660
In the world of external phenomena, he is only a transformer.

803
01:14:08.660 --> 01:14:14.160
All that he can accomplish is to combine the means available in such a way that, according

804
01:14:14.160 --> 01:14:19.740
to the laws of nature, the result aimed at is bound to emerge.

805
01:14:19.740 --> 01:14:25.260
It was once customary to distinguish between the production of tangible goods and the rendering

806
01:14:25.260 --> 01:14:27.780
of personal services.

807
01:14:27.780 --> 01:14:33.940
The carpenter who made tables and chairs was called productive, but this epithet was denied

808
01:14:33.940 --> 01:14:39.360
to the doctor, whose advice helped the ailing carpenter to recover his capacity to make

809
01:14:39.360 --> 01:14:46.380
tables and chairs. A differentiation was made between the doctor-carpenter nexus and the

810
01:14:46.380 --> 01:14:53.660
carpenter-tailor nexus. The doctor, it was asserted, does not himself produce. He makes

811
01:14:53.660 --> 01:15:00.420
a living from what other people produce. He is maintained by carpenters and tailors.

812
01:15:00.420 --> 01:15:06.200
At a still earlier date, the French physiocrats contended that all labor was sterile unless

813
01:15:06.200 --> 01:15:09.340
it extracted something from the soil.

814
01:15:09.340 --> 01:15:14.860
Only cultivation, fishing and hunting, and the working of mines and quarries were, in

815
01:15:14.860 --> 01:15:17.340
their opinion, productive.

816
01:15:17.340 --> 01:15:22.680
The processing industries did not add to the value of the material employed anything more

817
01:15:22.680 --> 01:15:27.580
than the value of the things consumed by the workers.

818
01:15:27.580 --> 01:15:33.180
Today economists laugh at their predecessors for having made such untenable distinctions.

819
01:15:33.180 --> 01:15:38.020
However, they should rather cast the beam out of their own eyes.

820
01:15:38.020 --> 01:15:44.060
The way in which many contemporary writers deal with various problems, for instance advertising

821
01:15:44.060 --> 01:15:50.020
and marketing, is manifestly a relapse into the crude errors which should have disappeared

822
01:15:50.020 --> 01:15:52.020
long ago.

823
01:15:52.020 --> 01:15:57.180
Another widely held opinion finds a difference between the employment of labor and that of

824
01:15:57.180 --> 01:16:04.920
of Material Factors of Production. Nature, it is asserted, dispenses its gifts gratuitously,

825
01:16:04.920 --> 01:16:11.700
but labor must be paid for by submitting to its disutility. In toiling and overcoming

826
01:16:11.700 --> 01:16:18.220
the disutility of labor, man adds something to the universe that did not exist before.

827
01:16:18.220 --> 01:16:26.580
In this sense, labor is creative. This, too, is erroneous. Man's capacity to work is given

828
01:16:26.580 --> 01:16:33.760
in the universe, as are the original and inherent capacities of the land and the animal substances.

829
01:16:33.760 --> 01:16:39.920
Nor does the fact that a part of the potentiality of labor can remain unused differentiate it

830
01:16:39.920 --> 01:16:43.280
from the non-human factors of production.

831
01:16:43.280 --> 01:16:46.320
These too can remain unused.

832
01:16:46.320 --> 01:16:51.500
The readiness of individuals to overcome the disutility of labor is the outcome of the

833
01:16:51.500 --> 01:17:04.580
Only the human mind that directs action and production is creative.

834
01:17:04.580 --> 01:17:08.980
The mind, too, appertains to the universe and to nature.

835
01:17:08.980 --> 01:17:12.840
It is a part of the given and existing world.

836
01:17:12.840 --> 01:17:18.420
To call the mind creative is not to indulge in any metaphysical speculations.

837
01:17:18.420 --> 01:17:23.740
We call it creative because we are at a loss to trace the changes brought about by human

838
01:17:23.740 --> 01:17:29.420
action farther back than to the point at which we are faced with the intervention of reason

839
01:17:29.420 --> 01:17:32.760
directing human activities.

840
01:17:32.760 --> 01:17:37.020
Production is not something physical, natural and external.

841
01:17:37.020 --> 01:17:40.740
It is a spiritual and intellectual phenomenon.

842
01:17:40.740 --> 01:17:46.980
Its essential requisites are not human labor and external natural forces and things, but

843
01:17:46.980 --> 01:17:54.020
The decision of the mind to use these factors as means for the attainment of ends.

844
01:17:54.020 --> 01:17:59.620
What produces the product is not toil and trouble in themselves, but the fact that the

845
01:17:59.620 --> 01:18:02.940
toilers are guided by reason.

846
01:18:02.940 --> 01:18:08.420
The human mind alone has the power to remove uneasiness.

847
01:18:08.420 --> 01:18:14.480
The materialist metaphysics of the Marxians misconstrues these things entirely.

848
01:18:14.480 --> 01:18:18.480
The productive forces are not material.

849
01:18:18.480 --> 01:18:23.280
Production is a spiritual, intellectual and ideological phenomenon.

850
01:18:23.280 --> 01:18:31.120
It is the method that man, directed by reason, employs for the best possible removal of uneasiness.

851
01:18:31.120 --> 01:18:36.120
What distinguishes our conditions from those of our ancestors, who lived one thousand or

852
01:18:36.120 --> 01:18:41.800
twenty thousand years ago, is not something material, but something spiritual.

853
01:18:41.800 --> 01:18:47.440
The material changes are the outcome of the spiritual changes.

854
01:18:47.440 --> 01:18:52.920
Production is alteration of the given according to the designs of reason.

855
01:18:52.920 --> 01:18:59.020
These designs, the recipes, the formulas, the ideologies, are the primary thing.

856
01:18:59.020 --> 01:19:06.080
They transform the original factors, both human and non-human, into means.

857
01:19:06.080 --> 01:19:09.120
Man produces by dint of his reason.

858
01:19:09.120 --> 01:19:13.420
Praxeology chooses ends and employs means for their attainment.

859
01:19:13.420 --> 01:19:18.720
The popular saying, according to which economics deals with the material conditions of human

860
01:19:18.720 --> 01:19:22.280
life, is entirely mistaken.

861
01:19:22.280 --> 01:19:26.100
Human action is a manifestation of the mind.

862
01:19:26.100 --> 01:19:33.440
In this sense, praxeology can be called a moral science, geisteswissenschaft.

863
01:19:33.440 --> 01:19:40.160
Of course we do not know what mind is, just as we do not know what motion, life, electricity

864
01:19:40.160 --> 01:19:42.400
are.

865
01:19:42.400 --> 01:19:48.400
Mind is simply the word to signify the unknown factor that has enabled men to achieve all

866
01:19:48.400 --> 01:19:54.520
that they have accomplished, the theories and the poems, the cathedrals and the symphonies,

867
01:19:54.520 --> 01:19:56.680
The Motor Cars and the Airplanes