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The Astonishing Power of the Free Market: How Did Mises Prove the Advantages of Capitalism?
In the history of economics, Ludwig von Mises is undoubtedly a landmark thinker. His masterpiece "Human Action: An Economic Essay" is not only a classic economics book, but also a philosophical exploration, which deeply explores the operation of the free market and its importance in society. Mises argued that the free market was far superior to any government-planned economic system in meeting human needs and was the basis for the development of a civilization.
Mises stated that market-generated money prices are critical in determining the optimal use of resources to satisfy consumer demand.
Mises emphasized that the currency price generated in the market economy is not only the basis of economic calculation, but also the core of ensuring the rational allocation of resources. The government's political intervention will not only distort market prices, but also cause misallocation of resources and wrong investment of capital, ultimately leading to economic instability.
The scientific status of economics
In the introduction, Mises proposed that the rise of economics as a science stems from the regularity of market phenomena and their interdependence. Various philosophical schools of economics faced challenges of acceptance, but Mises countered common criticisms of economics, arguing that the ideas of classical economists had improved people's living standards and promoted liberal policies and technological progress.
He pointed out, "Economic problems cannot be isolated because they are only part of human action."
Human action and its basis
In his discussion of human action, Mises emphasized that "purposeful behavior" is the core of human action and is distinguished from simple reflexive behavior. His praxeology aims to understand how humans make choices to achieve their subjective goals. Action must be accompanied by some uneasiness and the need to imagine a better state.
Mises believed that causality is a necessary condition for action, and uncertainty is an integral part of human action.
The importance of economic calculation
Mises's economic calculation theory emphasizes that only market prices can solve problems involving resource allocation. He opposed the traditional economics view of currency as a neutral tool and believed that the value of every market transaction was subjective and based on people's judgments of needs. Sound economic calculation requires private property and a widely accepted medium of exchange (i.e. money) to be able to occur.
Economics of market society
Mises's economics not only focuses on individual actions, but also emphasizes the benefits of social cooperation and division of labor. He analyzed the characteristics of the market economy in detail and pointed out that consumer choice is the key to promoting enterprise development, and competition is the best mechanism to ensure the effective allocation of resources. In such a system, individuals are not only the proposers of actions, but also the subjects of operations.
He pointed out, "In a market economy, consumers are the sovereign, and their purchasing decisions determine which companies will expand and which companies will shrink."
Conclusion
In summary, through the work "Human Action", Mises not only proved the operating principles of the free market and the social progress it brings, but also deeply explored the foundation of economics as a science. Is capitalism really the best choice to promote the development of human civilization? How should we view the current economic system and its future direction?
